Reacting to the troubled rollout of President Obama's health care law, 10 Democratic senators led by New Hampshire's Jeanne Shaheen have signed a letter asking Obama to extend the enrollment period for individuals to purchase insurance through the new exchanges.
However, not only would such an extension require an act of Congress (as I detailed in an earlier post), but it's likely to ruffle the feathers of insurers, who were counting on enrollment ending on March 31.
Why would insurers be bothered? After all, wouldn’t they want to give Americans as much time as possible to purchase their product?
Though that may be the immediate reaction of some, the reality is that a limited open enrollment period is one of the three main ways insurers hope to be able to attract a proper balance of healthy and sick people into the insurance market.
The first two ways that insurers hope to attract young and healthy customers are through the individual mandate (which penalizes people who don’t purchase coverage) and federal subsidies (which make plans cheaper for those with low incomes).
The problem is that if young and healthy individuals don’t qualify for enough subsidies to make insurance affordable, they may decide to simply skip coverage and pay the penalty. If there aren’t any limitations on when they can purchase insurance, that gives them even less incentive to buy. Given that Obamacare doesn’t allow insurers to discriminate against people with pre-existing conditions, healthy people could just wait until they’re sick or injured to purchase coverage.
That’s where the limited open enrollment period comes in. It signals to healthy Americans that if they decide to go uninsured, they’re still taking a risk that if something happens to them outside of open enrollment, they’ll be out of luck.
Insurers worry that even a short-term extension of open enrollment could weaken its effect and distort the risk pool. For instance, what if somebody who didn’t buy insurance in March gets into a major accident in April and decides to purchase coverage during an extended open enrollment?
Keep in mind, insurers already set their rates for 2014 assuming not only that the individual mandate would be in effect, but that open enrollment would end on March 31.
Additionally, pushing back the open enrollment period could compress next year’s timeline, forcing the Department of Health and Human Services to delay other deadlines.
For instance, in 2013, the deadline for insurers to submit their health care plans for government approval was April 30. But creating plans and deciding on rates requires detailed analysis of the risk pool and insurers won't be able to complete that analysis until after open enrollment.
Given all these legal and logistical issues, it isn't surprising that Secretary of Health and Human Services Kathleen Sebelius has indicated that the idea isn't being discussed at this time.