Sunday, November 23, 2014

Obamacare and the hand of big brother

Like your Obamacare plan? HHS may re-enroll you in a different one

When President Obama’s healthcare law went into effect and millions of Americans had their plans canceled despite promises to the contrary, the administration argued that the new law would provide those who were displaced with better options. But under changes being contemplated by the Department of Health and Human Services, people who like their Obamacare plans might not get to keep their plans.
Or at least, not by default.
In a Friday night news dump, HHS released proposed new regulations for the 2016 benefit year (with open enrollment proposed for next Oct. 1 through Dec. 15), including one rule that outlines a new policy for dealing with re-enrollment.
"Under current rules, consumers who do not take action during the open enrollment window are re-enrolled in the same plan they were in the previous year, even if that plan experienced significant premium increases," HHS wrote. "We are considering alternative options for re-enrollment, under which consumers who take no action might be defaulted into a lower cost plan rather than their current plan. We are considering allowing states to pursue these sorts of re-enrollment alternatives for coverage in 2016. The [federal exchange] is exploring such an approach for coverage in 2017."
This could be seen as a way for HHS to make sure people save money and the government spends less on subsidies. But it’s also a demonstration of how the sprawling nature of Obamacare creates new problems that require more bad solutions.
To have a functioning market under Obamacare, HHS must enroll a critical mass of people, particularly younger and healthier people, to offset the cost of covering older and sicker beneficiaries. The law mandates that everybody gets covered.
Given how difficult it was to enroll people in Obamacare last year, particularly after the wave of technical problems, HHS wants to make sure it doesn’t have to redo all the hard work it takes to renew individual policies every year. So that explains the desire to automatically renew everybody who already has a plan — unless they want to change their policies.
The problem is there was a backlash against this, as people realized that in many cases their plans were getting more expensive, due to a combination of normal inflation and the mountain of regulations Obamacare places on insurance.
So now HHS is proposing to fix this with another rule that would bump people off their Obamacare plans into plans that, while cheaper, may not meet their needs in terms of deductibles, choice of doctors, or a litany of other factors that drive health insurance choices — unless they navigate the Obamacare exchange each year to pick a new plan.
UPDATE: Margot Sanger-Katz of the New York Times Upshot blog pointed out that the more detailed guidance (on pages 120-22), spells out that individuals, at the time they first sign up for Obamacare, would be given the option of whether they'd want to be auto renewed in the same plan or a cheaper one. However, a year in advance, it would be difficult to evaluate the pluses and minuses of those options, because the details of the plans wouldn't exist yet. A better approach would be to make the default position that coverage has to be renewed by individuals every year, and auto renewal would be an option for those who request it. Of course, such an approach would mean more heavily lifting from HHS and insurers each year to retain customers.

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