Why Delaying Obamacare Has Insurers Freaking Out

The individual mandate and enrollment periods need to work as planned or consumers could face rate shock.

A woman looks at the HealthCare.gov insurance exchange internet site Oct. 1, 2013.
National Journal
Sam Baker
Oct. 31, 2013, 1 a.m.

The health in­sur­ance in­dustry already had plenty to freak out about with the im­ple­ment­a­tion of the Af­ford­able Care Act. Simply com­ply­ing with the law is a massive un­der­tak­ing, nev­er mind the ter­rible Health­Care.gov de­but. But the botched rol­lout has pro­duced a new source of anxi­ety for in­surers: the grow­ing bi­par­tis­an sup­port for delay­ing parts of the act’s im­ple­ment­a­tion.

Re­pub­lic­ans have wanted to delay the law’s in­di­vidu­al in­sur­ance man­date for years. They’ve voted on it in the House, and Sen. Marco Ru­bio, R-Fla., is keep­ing the idea alive in the up­per cham­ber. Delay­ing the man­date would be ter­rible news for in­sur­ance com­pan­ies, but so far they haven’t had to take a strong po­s­i­tion on most of the GOP’s pro­pos­als. They have been count­ing on polit­ic­al grid­lock to take care of the is­sue: A delay wouldn’t hap­pen, so in­surers didn’t have to break with their anti-Obama­care al­lies or pub­licly side with pro-Obama­care Demo­crats on the is­sue.

That tone is chan­ging, though, in the wake of Health­Care.gov’s woes. Sen. Joe Manchin, D-W.Va., is work­ing on a bi­par­tis­an bill to delay the in­di­vidu­al man­date for a year, a move that has set off alarms in­side the in­dustry. “The in­di­vidu­al man­date is in­ex­tric­ably linked to the in­sur­ance-mar­ket re­forms in­cluded in the health care re­form law,” said Robert Zirkel­bach, a spokes­man for Amer­ica’s Health In­sur­ance Plans, the in­dustry’s lead­ing trade or­gan­iz­a­tion.

The health care law es­sen­tially strikes a deal with in­sur­ance com­pan­ies: They are re­quired to cov­er people with preex­ist­ing con­di­tions, and they can’t charge people more based on those con­di­tions. Both of those policies will cost in­surers money — po­ten­tially, a lot of it. So the law also in­cludes three tools to min­im­ize their fin­an­cial risks: the in­di­vidu­al man­date; sub­sidies to help people af­ford in­sur­ance; and a defined win­dow to buy cov­er­age.

If law­makers start fid­dling with those in­cent­ives, the equa­tion gets worse for in­surers. There are minor changes that the in­dustry could prob­ably weath­er, maybe eas­ily. But just the idea of weak­en­ing those safe­guards is enough to make in­surers nervous. A hand­ful of states tried in the 1990s to en­force guar­an­teed cov­er­age, but without the safe­guards that Obama­care in­cludes for in­surers. Premi­ums in those states skyrock­eted, grow­ing by double di­gits each year un­til they were so ex­pens­ive that the re­forms ended up in­creas­ing the num­ber of un­in­sured people.

Demo­crats pro­tect­ive of the Af­ford­able Care Act have held the line so far on changes to its im­port­ant pro­vi­sions. The in­di­vidu­al man­date might not be polit­ic­ally pop­u­lar, but Obama­care won’t work without it, so the party was stuck with it. That put Demo­crats and in­surers on the same team.

This un­enthu­si­ast­ic al­li­ance is start­ing to weak­en now be­cause of the web­site’s short­falls. The site’s myri­ad tech­nic­al prob­lems have made it su­premely dif­fi­cult for any­one to shop for cov­er­age, much less en­roll in a plan. Some Demo­crats see those fail­ings as a bur­den on con­sumers and ar­gue that it’s only fair to give people a break from the law’s oth­er re­quire­ments.

A delay in the in­di­vidu­al man­date re­mains un­likely, even though it’s get­ting fresh at­ten­tion on Cap­it­ol Hill. But in­surers are also wor­ried about an­oth­er pro­pos­al that’s at­tract­ing Demo­crat­ic sup­port bey­ond the mod­er­ate, per­en­ni­ally vul­ner­able Joe Manchins of the world.

Sen. Jeanne Shaheen, D-N.H., is lead­ing a push to ex­tend the open en­roll­ment peri­od — the six-month win­dow dur­ing which con­sumers are able to buy cov­er­age through the law’s new in­sur­ance mar­ket­places. The win­dow opened Oct. 1 and runs to March 31.

Yet if en­roll­ment wasn’t avail­able for one or two of those six months, Shaheen ar­gues, Wash­ing­ton should add an­oth­er month or two on the end, to give people the full win­dow.

“Ex­tend­ing this peri­od will give con­sumers crit­ic­al time in which to be­come fa­mil­i­ar with the web­site and choose a plan that is best for them,” Shaheen wrote in a re­cent let­ter to Health and Hu­man Ser­vices Sec­ret­ary Kath­leen Se­beli­us. “In­di­vidu­als should not be pen­al­ized for lack of cov­er­age if they are un­able to pur­chase health in­sur­ance due to tech­nic­al prob­lems.”

Al­though it sounds like a minor ad­just­ment, the fact that there’s a defined open-en­roll­ment peri­od is a big deal for in­sur­ance com­pan­ies. Ex­tend­ing the win­dow would be “destabil­iz­ing” for in­surers, Zirkel­bach said.

Their primary goal is to cov­er as many people as pos­sible who won’t file big claims. It’s the defined en­roll­ment win­dow, not the in­di­vidu­al man­date, that pre­vents people from wait­ing to sign up for in­sur­ance un­til they’re on their way to the emer­gency room. So ex­tend­ing the win­dow could make it easi­er for young, healthy people to go without in­sur­ance un­til they ab­so­lutely need it. “If these vi­tal en­roll­ment in­cent­ives were to change, the premi­ums health plans filed for next year would have to in­crease,” Zirkel­bach said.

Wheth­er Con­gress or the ad­min­is­tra­tion will ac­tu­ally try to weak­en the man­date or ex­tend the en­roll­ment win­dow de­pends largely on wheth­er and when Health­Care.gov is fixed. If HHS meets its end-of-Novem­ber dead­line, everything can prob­ably con­tin­ue as sched­uled.

“Un­less there is far more dis­aster than the ad­min­is­tra­tion is ad­mit­ting right now, it would be a really bad idea to delay and cause more prob­lems for in­surers nervous already about what kind of risk pool they’re draw­ing from,” said Tim Jost, a Wash­ing­ton and Lee Uni­versity law pro­fess­or and a sup­port­er of the Af­ford­able Care Act.

But if people still can’t sign up for cov­er­age as we get closer to Dec. 15 — the dead­line to buy a plan that takes ef­fect at the be­gin­ning of the year — the calls for delays will get a lot louder.

“I don’t see what oth­er choice the ad­min would have,” said Dan Schuyler, who tracks the health law’s ex­changes for the con­sult­ing firm Leav­itt Part­ners. If not enough young people en­roll, he said, “I don’t think there’s any oth­er al­tern­at­ive but to ex­tend open en­roll­ment an­oth­er 30 or 60 days.” 

{{ BIZOBJ (video: 4532) }}

What We're Following See More »
‘PULLING A TRUMP’
GOP Budget Chiefs Won’t Invite Administration to Testify
1 days ago
THE DETAILS

The administration will release its 2017 budget blueprint tomorrow, but the House and Senate budget committees won’t be inviting anyone from the White House to come talk about it. “The chairmen of the House and Senate Budget committees released a joint statement saying it simply wasn’t worth their time” to hear from OMB Director Shaun Donovan. Accusing the members of pulling a “Donald Trump,” White House spokesman Josh Earnest said the move “raises some questions about how confident they are about the kinds of arguments that they could make.”

Source:
A DARK CLOUD OVER TRUMP?
Snowstorm Could Impact Primary Turnout
1 days ago
THE LATEST

A snowstorm is supposed to hit New Hampshire today and “linger into Primary Tuesday.” GOP consultant Ron Kaufman said lower turnout should help candidates who have spent a lot of time in the state tending to retail politicking. Donald Trump “has acknowledged that he needs to step up his ground-game, and a heavy snowfall could depress his figures relative to more organized candidates.”

Source:
IN CASE OF EMERGENCY
A Shake-Up in the Offing in the Clinton Camp?
1 days ago
THE DETAILS

Anticipating a primary loss in New Hampshire on Tuesday, Hillary and Bill Clinton “are considering staffing and strategy changes” to their campaign. Sources tell Politico that the Clintons are likely to layer over top officials with experienced talent, rather than fire their staff en masse.

Source:
THE LAST ROUND OF NEW HAMPSHIRE POLLS
Trump Is Still Ahead, but Who’s in Second?
20 hours ago
THE LATEST

We may not be talking about New Hampshire primary polls for another three-and-a-half years, so here goes:

  • American Research Group’s tracking poll has Donald Trump in the lead with 30% support, followed by Marco Rubio and John Kasich tying for second place at 16%. On the Democratic side, Bernie Sanders leads Hillary Clinton 53%-41%.
  • The 7 News/UMass Lowell tracking poll has Trump way out front with 34%, followed by Rubio and Ted Cruz with 13% apiece. Among the Democrats, Sanders is in front 56%-40%.
  • A Gravis poll puts Trump ahead with 28%, followed by Kasich with 17% and Rubio with 15%.
IT’S ALL ABOUT SECOND PLACE
CNN Calls the Primary for Sanders and Trump
7 hours ago
THE LATEST

Well that didn’t take long. CNN has already declared Bernie Sanders and Donald Trump the winners of the New Hampshire primary, leaving the rest of the candidates to fight for the scraps. Five minutes later, the Associated Press echoed CNN’s call.

Source:
×