Tuesday, June 30, 2015

Making automatic renewal of Obamacare insurance work

The Obama administration is floating a proposal to allow "auto-renewal" of ACA insurance plans. This means that the roughly 8 million people that signed up for Obamacare insurance will be automatically renewed in the same insurance plan next year (open enrollment starts again in November) unless they choose a different one.

Making automatic renewal of Obamacare insurance work

0 comments

The Obama administration is floating a proposal to allow “auto-renewal” of ACA insurance plans.  This means that the roughly 8 million people that signed up for Obamacare insurance will be automatically renewed in the same insurance plan next year (open enrollment starts again in November) unless they choose a different one. 

This would make the experience of Obamacare enrollees similar to most workers “auto-renewed” each year by their employers.  When employers auto-renew their workers – it keeps more workers covered, reduces the burden on employees to re-enroll every year, and makes it administratively simple for employers.  The same logic holds true for the Obamacare marketplaces.  If every consumer had to re-enroll every year, some would forget, many would be annoyed, and the system would be stressed more than it needs to be.  Keeping the same plan also makes it easier to keep the same doctor. 

But “auto-renewal” has some dangers.  First, it makes it less likely consumers will comparison shop the prices of insurance plans each year as premiums change.  Less than 3% of people with employer-sponsored insurance choose to change their insurance plan each year.  Perhaps many workers are happy with their coverage but it’s also likely many just don’t take the time to consider switching.  If consumers don’t’ shop around, it decreases competitive pressures between insurers as the number of “auto-renewals” begins to exceed the number of new enrollees that are actively shopping.  

Second, since the federal government is kicking in part of the premium for a majority of Obamacare enrollees, consumers may not pay enough attention to whether they should be switching plans to make better use of that subsidy.  The amount of financial help people get to buy insurance is based on their income and the price of the second cheapest “silver” plan where they live.  Since premium increases across plans will be different, what happens if a new plan is the second cheapest “silver” plan next year? 

More coverage

Let’s take the example of Hillary.  She is 35 years old, makes $30,000 a year, and lives in Philadelphia.  This year, she was eligible for a $77 per month subsidy.  She chose the second cheapest silver plan, and pays about $210 per month.  She could have also used that same $77 subsidy to buy a cheaper or more expensive plan.  When Hillary re-enrolls next year, the price of the second cheapest plan will change and which plan is second cheapest may also change.  So Hillary’s subsidy will change as will the difference in prices between the plans.  So if Hillary doesn’t shop around again, she might end up paying a lot more than she was this year.

Staying in the same plan, even if it is a little more expensive, can have some perks.  For Hillary, it means she will most likely be able to keep the same doctor.  And that continuity is valuable.  But there are some things consumers will need to help them make the best choices.  First, they need a clear and simple description of changes to their plan for the next year.  Second, they need to see how prices will change next year for all plans with their subsidy (assuming their income is stable), not just the one they are enrolled in.  Finally, they need accurate and comprehensive information about which providers and doctors are in and out of each plan’s network.  The Marketplaces need to do a much better job of communicating that information. 

In the long run, the Marketplaces need to go a step further and begin to recommend plans by asking consumers what is important to them in choosing an insurance plan (e.g. premium, network size, cost sharing).   This is how the best consumer websites work.  They simplify the choices in a world where there are too many choices.   But we will leave that conversation for another day.

________________

Editor's Note: Cross-posted on the Voices@LDI blog of the Leonard Davis Institute of Health Economics of the University of Pennsylvania.

 

Assistant Professor of Medicine at the University of Pennsylvania
0 comments
We encourage respectful comments but reserve the right to delete anything that doesn't contribute to an engaging dialogue.
Help us moderate this thread by flagging comments that violate our guidelines.

Comment policy:

Philly.com comments are intended to be civil, friendly conversations. Please treat other participants with respect and in a way that you would want to be treated. You are responsible for what you say. And please, stay on topic. If you see an objectionable post, please report it to us using the "Report Abuse" option.

Please note that comments are monitored by Philly.com staff. We reserve the right at all times to remove any information or materials that are unlawful, threatening, abusive, libelous, defamatory, obscene, vulgar, pornographic, profane, indecent or otherwise objectionable. Personal attacks, especially on other participants, are not permitted. We reserve the right to permanently block any user who violates these terms and conditions.

Additionally comments that are long, have multiple paragraph breaks, include code, or include hyperlinks may not be posted.

Read 0 comments
 
comments powered by Disqus
About this blog

The Field Clinic reports and analyzes health care laws, government policies, and political trends that are transforming the care we receive and the way we pay for it. Read more about our panel of bloggers here.

This blog is produced in partnership with Kaiser Health News, an editorially independent program of the Henry J. Kaiser Family Foundation, a nonprofit, nonpartisan health-policy research and communication organization not affiliated with Kaiser Permanente. Portions of this blog may also be found on Inquirer.com and in the Inquirer's Sunday Health Section.

Follow the Field Clinic on Twitter.

RSS feed.

Robert I. Field, Ph.D., J.D., M.P.H. Professor, School of Law & Drexel School of Public Health
Jeffrey Brenner, MD Founder of the Camden Coalition of Healthcare Providers, Medical Director of the Urban Health Institute at Cooper University Healthcare
Andy Carter President & CEO, The Hospital & Healthsystem Assoc. of Pa.
Robert B. Doherty Senior Vice President of Governmental Affairs & Public Policy American College of Physicians
David Grande, MD, MPA Assistant Professor of Medicine at the University of Pennsylvania
Tine Hansen-Turton Chief Strategy Officer of Public Health Management Corporation
Drew A. Harris, DPM, MPH Director of Health Policy Program at the Jefferson School of Population Health
Antoinette Kraus Director of the Pennsylvania Health Access Network
Laval Miller-Wilson Executive Director of the Pennsylvania Health Law Project
David B. Nash, MD, MBA Founding Dean of the Jefferson School of Population Health
Mark V. Pauly, Ph.D. Professor of Health Care Management, Business Economics and Public Policy at The Wharton School
Howard J. Peterson, MHA Managing Partner of TRG Healthcare, a national healthcare consulting firm
Paula L. Stillman, MD, MBA Healthcare consultant with special expertise in population health and disease management
Elizabeth A. W. Williams Senior Vice President & Chief Communications Officer for Independence Blue Cross
Latest Health Videos
Also on Philly.com:
letter icon Newsletter