A significant problem looms for the Affordable Care Act when the next open enrollment period begins in November, according to many health care experts and media accounts. The administration announced on June 26 that those currently enrolled would be automatically renewed in the same plan for 2015.
There is a growing concern this will cause many who received subsidies, through Covered California or the federal exchange, to see sharp rises in after-subsidy insurance premiums due to the way subsidies are calculated. Many who are auto-enrolled will end up paying more than they needed to for coverage because they will not realize that last year’s best choice won’t be this year’s best choice.
- Automatic Renewal = Automatic Premium Increase?
The automatic renewal of plans for people already enrolled through the either Covered California exchange or in other states Healthcare.gov was intended to allow greater focus on enrolling the uninsured as well as easing pressure on both web sites.
But many people who do nothing and allow their plans to be automatically renewed will likely face a substantial increase in what they have to pay. Subsidies for plans sold through the exchanges are determined according to a person’s income and the premium of the second-lowest ‘silver’ level plan available in each market, called the benchmark plan.
The 2014 benchmark plan in California and other states will be replaced with a different benchmark plan in 2015. Most of the 2014 benchmark plans have higher premiums in 2015. This combination of plan change and higher premiums will lead to much higher out-of-pocket costs for many of those who are auto-enrolled in the same plan, as the Obama administration intends to do.
For example, in 2014 several benchmark Anthem Blue Cross & Blue Shield plans, had a monthly premium of $354 for a 40-year old. In 2015 the same plan will cost approximately $363 according to rate approval information.
If the value drops by $90, then someone automatically re-enrolled in the 2014 benchmark plan from Anthem could see their monthly premium skyrocket by nearly $100 or more once the premium increase for the former benchmark plan is included.
- Critics fault auto-enrollment plan
According to the president of a health care think tank, “every time the Obama administration has changed the law to make it less onerous for consumers – like automatic re-enrollment – it winds up creating new pitfalls for consumers. In this case, millions of consumers could face higher premium and out-of-pocket costs because the plan they selected for this year might not qualify for extra subsidies next year, The law’s endless administrative complexity shows the impossibility of trying to centrally plan one-sixth of the economy. We need to put the market and consumers in charge of choices, not bureaucrats, politicians, and regulators.”
Some point out that the auto-enrollment plan goes against the idea that people should be actively involved in the selection of their own health insurance plans. “A passive auto re-enrollment can be useful, but we shouldn’t coddle consumers,” said Yevgeniy Feyman, a health policy fellow at the Manhattan Institute. “If we want patients to be good consumers when it comes to purchasing health insurance, some level of administrative burden will be necessary.”
Modified from a news.heartland.org article