The stakes are enormous for Obamacare in the fall’s open enrollment season, after defections from major insurers.
Major insurers are fleeing Obamacare marketplaces due to mounting financial losses from a sicker-than-expected population. To stop the bleeding, the administration is hinting at starting an ad campaign to boost enrollment and changing regulations to bail out insurers before the Affordable Care Act’s fourth open enrollment starts in November.
Insurer participation is vital to Obamacare as more insurers can lead to greater competition and keep premiums down for consumers. A recent study by the consulting firm Avalere Health found that the withdrawals from insurers could hinder competition in a third of marketplaces.
Without adequate competition or insurer participation, the marketplaces could collapse and consumers could lose coverage.
Officials have hinted recently that they will seek to make improvements to the risk adjustment program, which redistributes funds from plans with lower-risk enrollees to plans with sicker enrollees.
“We are exploring options to modify the ACA’s permanent risk adjustment program to better adjust for the highest-cost enrollees and their actuarial risk, which would achieve some of the same risk-sharing benefits as the reinsurance program,” said Kevin Counihan, CEO of healthcare.gov, in an Aug. 11 blog post. Residents in 38 states use healthcare.gov to sign up for Obamacare.
The reinsurance program is different from risk adjustment in that it pays plans that enroll higher-cost individuals. The program expires after this year, a factor in proposed steep rate hikes for some plans.
Counihan and the administration haven’t said exactly what they are going to do to improve the risk adjustment program.
An expert said it could modify the program by charging every insurer a small payment, then using that money to absorb some of the cost from sicker enrollees.
Such a change would “function like a reinsurance program,” said Elizabeth Carpenter, senior vice president at the consulting firm Avalere Health.
Changes to risk adjustment and other regulations appear to be a likely route as the administration wouldn’t have to go through Congress to do it, Carpenter said. The Republican-controlled Congress has made repealing Obamacare a top policy goal.
The administration has pointed to other actions it has done recently to help stave off insurer defections. Those including reaching out to seniors on the exchange and transitioning them to Medicare and implementing new rules to prevent misuse of special enrollment periods.
Such enrollment periods let people enroll in Obamacare year-round but can wreak havoc on insurer finances as people can sign up when they get sick and then leave after they get better.
The administration also pointed to a recent federal report that found medical costs for enrollees was largely unchanged from 2014 to 2015, a sign the risk pool could be improving.
However, some insurers have found little satisfaction in the moves or the findings.
Aetna recently announced it is leaving Obamacare marketplaces in all but four states next year after suffering losses of $200 million. It joins Humana and UnitedHealth, major insurers that are leaving Obamacare marketplaces next year due to financial losses stemming from high medical claims.
Carpenter said that to improve the risk pool, increasing enrollment remains the “ultimate goal” for Obamacare, as bringing in healthier enrollees could mitigate problems in the risk pool.
The Department of Health and Human Services told the Washington Examiner that it is planning to increase outreach for open enrollment. That outreach will include speaking with people who paid the penalty for not having insurance in the past and reaching out to 26-year-olds who are transitioning off their parents’ plans.
The New York Times reported that the administration is planning an ad campaign that will include testimonials of Obamacare plans. The revelation drew ire from Senate Majority Leader Mitch McConnell, who said the administration should redirect any funding for Obamacare ads to fighting the spreading Zika virus.
The administration has not announced a goal for signups for the fourth open enrollment, which runs from November to January.
For 2016, it had a goal of about 10 million people signing up and purchasing a plan by the end of this year. It appears likely the administration could meet that goal, as figures from June say that 11 million people have paid for Obamacare.
However, that figure is well behind the 21 million that the nonpartisan Congressional Budget Office projected for Obamacare in 2016.
“What we know is there are still uninsured people in the country,” Carpenter said.
The healthcare law’s penalty for those without insurance has been “insufficient to induce people to purchase insurance,” she added.
Some studies have shown that getting insurance on the exchanges is more expensive than paying the penalty, prompting uninsured consumers to just pay the penalty.
The penalty for not getting insurance this year and beyond is $695 per person, or 2.5 percent of household income.
