Automatic Federal Exchange Plan Renewal Could Increase Costs
HHS' proposal to automatically re-enroll the eight million U.S. residents who signed up for coverage through the federal health insurance exchange during the initial open enrollment period could result in many enrollees paying more for plans that no longer meet their needs, Kaiser Health News' "Stateline" reports (Ollove, "Stateline," Kaiser Health News, 7/25).
HHS last month proposed that consumers who purchased coverage through the federal exchange be automatically re-enrolled with the same coverage plan and the "exact dollar amount" of subsidy they received in 2014 (Alonso-Zaldivar, AP/Sacramento Bee, 7/28). According to "Stateline," states operating their own exchanges would have to decide whether to implement the same policy ("Stateline," Kaiser Health News, 7/25).
However, the proposal could backfire because of the market's changing landscape and consumers' fluctuating income levels, the AP/Bee reports (AP/Sacramento Bee, 7/28).
According to "Stateline," the subsidy amount that a consumer receives is pegged to a given market's second-lowest priced sliver-level plan. However, several states that have the federal exchange likely will have a new benchmark plan in the next open enrollment period as more insurers join the exchanges or tailor their existing plans. As a result, consumers might have to pay substantially higher premium amounts if their market's benchmark plan becomes more or less costly in the next enrollment period.
In addition, it is unclear how many state or federal exchanges will have tools in place that allow consumers to more accurately evaluate plans based on their use, such as tools that help consumers calculate total out-of-pocket costs for a given plan, provide lists of medical providers covered under each plan or list what medications each plan covers ("Stateline," Kaiser Health News, 7/25).
Meanwhile, the automatic renewal plan also does not take into account changes in consumers' personal income levels, AP/Bee reports. According to the AP/Bee, the amount of subsidies consumers receive is tied to their annual incomes, meaning that the 2014 amounts could be outdated or incorrect for many enrollees.
Caroline Pearson, a researcher at Avalere Health, said that unless the Obama administration changes its approach for 2015 enrollment, it is "setting people up for large and avoidable premium increases."
Meanwhile, Ron Pollack, executive director of Families USA, said that while automatic renewal "is not a perfect solution," it is not clear "that there is a better solution in terms of protecting people so they don't lose health coverage" (AP/Sacramento Bee, 7/28).
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