Insurers Say Costs Are Climbing As More Enroll Past Health Act Deadline

WASHINGTON — Eager to maximize coverage under the Affordable Care Act, the Obama administration has allowed large numbers of people to sign up for insurance after the deadlines in the last two years, destabilizing insurance markets and driving up premiums, health insurance companies say.

The administration has created more than 30 “special enrollment” categories and sent emails to millions of Americans last year urging them to see if they might be able to sign up after the annual open enrollment deadline. But, insurers and state officials said, the federal government did little to verify whether late arrivals were eligible.

That has allowed people to wait until they become ill or need medical services to sign up, driving up costs broadly, insurers have told federal health officials.

“Individuals enrolled through special enrollment periods are utilizing up to 55 percent more services than their open enrollment counterparts” who sign up in the regular period, the Blue Cross and Blue Shield Association, whose local member companies operate in every state, told the administration.

In a notice published recently in the Federal Register, the administration said it had “heard concerns that these special enrollment periods may be subject to abuse,” and asked for evidence. The insurance companies obliged.

“Many individuals have no incentive to enroll in coverage during open enrollment, but can wait until they are sick or need services before enrolling and drop coverage immediately after receiving services, making the annual open enrollment period meaningless,” Steven B. Kelmar, an executive vice president of Aetna, said in a letter to Sylvia Mathews Burwell, the secretary of health and human services.

A quarter of the applications that Aetna received in the health law’s public insurance marketplace last year came through special enrollment periods, he said.

Administration officials said they wanted to prevent any misuse or abuse of special enrollment periods, and they are expected to outline their plans this week. But, they said, people must be able to sign up late when they have a legitimate reason. And many have.

Kevin J. Counihan, the chief executive of the federal insurance marketplace, said nearly 950,000 people used special enrollment periods to get coverage through from late February to the end of June 2015. That, he said, shows the marketplace is working to meet people’s needs.

In a typical email in September, federal officials told consumers: “You may still be able to get 2015 coverage. Certain life changes like losing your coverage, having a child, turning 26, moving or getting married may qualify you for a special enrollment period. See if you qualify.”

And people have been helped.

“I was terminated from my job in March,” said Nancy T. Frost, 61, a truck-driving instructor from Farmingdale, Me., who needed insurance after the last open enrollment ended in early 2015. “All of a sudden, you don’t have a job, and you don’t have health insurance. I did not know when I would start on a new job, and I did not want to be fined for not having insurance. I was lucky to be able to sign up for affordable care outside the sign-up period, and am very appreciative of it.”

Insurers always knew that consumers would come and go for various reasons, but they have been surprised at the amount of turnover.

“On average,” Aetna said, “special enrollment period enrollees stay with us for less than four months, while enrollees who come to us during the annual open enrollment period maintain their coverage on average for eight to nine months.”

Daniel J. Schumacher, the chief financial officer of UnitedHealthcare, the insurance unit of UnitedHealth Group, said more than 20 percent of its marketplace customers signed up after open enrollment ended last year. And they used 20 percent more health care than people who signed up before the deadline, he said.

The National Association of Insurance Commissioners, representing state officials, is troubled by the trend.

“State regulators are concerned that consumers are not required to provide documentation to substantiate their eligibility for a special enrollment period,” the association said in a letter to the federal Department of Health and Human Services. “We know of many cases where individuals with serious medical conditions purchased coverage midyear by simply checking the right box or using the right language, and their eligibility was not questioned.”

Such concerns could portend higher insurance rates broadly. In setting current premiums, insurers say, they did not realize how many people would sign up after the deadline and how much care they would use. That information may affect future rates and benefits. Insurers are supposed to file their proposed rates and benefits for 2017 in April and May this year.

Greg Thompson, a spokesman for Health Care Service Corporation, which runs Blue Cross Blue Shield plans in Illinois, Montana, New Mexico, Oklahoma and Texas, said one-fourth to one-third of its marketplace customers came in through special enrollment periods. And in their first month of coverage, he said, they were much more likely to generate large claims.

What’s more, said Anthony Mader, a vice president of Anthem, another big insurer, “enrollees coming in through special enrollment periods are more than twice as likely to drop coverage after a short period of time as individuals enrolling during open enrollment.”

“This practice,” he said, “is harming the stability of the exchange markets and resulting in higher premiums.”

But like so many aspects of the Affordable Care Act, pain for some is gain for others. Alena and Andrei Dzianisau of Charlotte, N.C., came here from Belarus seven years ago. When they applied for insurance last year, they fell into a gap: They could not qualify for Medicaid because North Carolina has not expanded eligibility. But their income was below the poverty level, so, under federal law, they could not obtain subsidies for private insurance. Later, Mrs. Dzianisau earned additional income as a babysitter, which made them eligible for subsidies, and they signed up in a special enrollment period.

Loss of coverage, such as Medicaid or employer-sponsored insurance, is a common reason for people to seek a special enrollment period. In some cases, insurers and state officials said, consumers lose coverage because they failed to pay premiums, then sign up with the same or a different insurer a few months later during a special enrollment period. Under federal rules, that is not supposed to happen.

The federal government allows people to sign up or switch health plans outside open enrollment for various reasons. Lawyers said it was not easy to find a complete list of the eligibility criteria, which have been set forth in regulations, bulletins, official policy statements, manuals and informal “guidance documents.” Some of the reasons are straightforward, like getting married or having a baby.

Others are more complicated and less clear-cut. Consumers may, for example, be eligible for a special enrollment period in “exceptional circumstances” and in “other situations determined appropriate” by the Centers for Medicare and Medicaid Services. The circumstances may include “a serious medical condition” that kept a person from enrolling.

Even companies that strongly support the Affordable Care Act say officials need to do more to check eligibility.

Anthony A. Barrueta, a senior vice president at Kaiser Permanente, a large health plan, said the potential for misuse of special enrollment periods “poses a significant threat to the affordability of coverage, and to the viability” of federal and state exchanges.

Consumer advocates said they had not seen evidence of abuse.

“Most consumers are confused by the rules on special enrollment periods and do not understand the system well enough to try to game it,” said Christine Speidel, a lawyer at Vermont Legal Aid. On the other hand, she said, “many people feel that insurance is not affordable, even with subsidies, and they will call the marketplace to see if they qualify for insurance when they get sick.”

Moreover, consumer advocates said, the government is partly responsible for the proliferation of special enrollment periods.

In some cases, they said, consumers tried to sign up before the deadline, but were stymied by errors in government computer systems. In other cases, they said, people needed a special enrollment period because they had been improperly dropped from the rolls or left in limbo while trying to resolve questions about their citizenship.

Enroll America, a nonprofit group with close ties to the Obama administration, said the government “should not tighten eligibility or verification standards in ways that could place an undue burden on consumers.”

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