Connecticut Republican leaders this week announced there's a new problem with Obamacare: Constituents calling to say their insurance policies had been canceled because the subsidies that help discount their premiums hadn’t been paid.
Like other controversies related to the health law, this one fell into something of a gray area. Its scope was unclear: Were these isolated cases, or signs of a widespread problem? In an election year, how much was this concern charged with politics? GOP leaders have been critical of the state’s health insurance exchange and Obamacare, and the way they described the problem wasn’t fully accurate.
But according to people involved with insurance, the issue of mistaken policy cancellations is real, if not necessarily widespread.
In a letter to exchange CEO Kevin Counihan, House Minority Leader Lawrence F. Cafero Jr., and Senate Minority Leader Pro Tem Leonard A. Fasano wrote that constituents’ premium subsidies reportedly hadn’t been paid by Access Health CT, the state’s exchange. “If this is the case, we find it extremely troubling that this situation has been allowed to occur,” they wrote.
The letter isn’t entirely correct: The federal government, not Access Health, is responsible for paying subsidies to the insurers. And Anthem Blue Cross and Blue Shield, the only insurer that acknowledged having issues related to subsidies, said it wouldn’t cancel a member solely because the subsidy wasn’t paid.
But there have been some problems with the information the exchange transmits to insurers about clients that have, in some cases, led to billing issues or members' policies being canceled, according to insurance brokers and others involved in coverage. The information sent from Access Health is supposed to include details about clients and whether the person is entitled to a subsidy. It's used to generate each client's bill, so inaccuracies in the data could lead to a customer being billed for -- and paying -- the wrong amount.
Anthem acknowledged that there have been cases in which it learned a member had been entitled to a subsidy only after the person’s policy had been canceled following a grace period. In those cases, the company reinstated the member and provided retroactive coverage, spokeswoman Sarah Yeager said in a statement. Insurance companies are supposed to receive information about customers’ eligibility for subsidies in the enrollment information they get from Access Health.
State Healthcare Advocate Victoria Veltri said her office has handled a few cases in which exchange customers have gotten billed for the wrong amount from their insurer, often because the insurance company didn’t deduct the amount that would be covered by the federal subsidy. She said there have been some glitches with the transmissions of information that go from Access Health to the insurers.
“I don’t think it’s that widespread,” said Veltri, who also serves as vice chairwoman of the exchange’s board. “I would think we’d be getting more calls about this.”
The lack of clarity on how broad the issue is points to a bigger challenge in evaluating how Connecticut’s roll out of the massive health law is going. With no ready way to collect data on customers’ experiences, it’s difficult to gauge what’s an isolated anecdote and what’s a systemic issue. That’s particularly challenging on a topic that’s so polarizing, with supporters looking to tout any success and critics looking to expose any flaws.
Rep. Rob Sampson, R-Wolcott, said he’s had constituents whose policies were canceled after problems with their subsidies. Sampson, the ranking House member on the legislature’s Insurance and Real Estate Committee, has pushed for more data reporting from Access Health, but the measure his caucus proposed earlier this year died in committee.
Sampson said he understands there will be glitches in any major undertaking, but he said the exchange needs to be more forthcoming about problems.
“The one issue I have more than anything, I guess, is that Access Health never does anything but take credit for good things and dismisses bad things as if they’re not their responsibility,” Sampson said.
In their letter, Cafero and Fasano noted that Connecticut's exchange has been "held up repeatedly as the model for how states might incorporate the Affordable Care Act," and asked for information about the source of the problem, how many people are affected, and what will be done to address it.
Counihan, the exchange CEO, replied that Access Health had not received any complaints of the sort the Republican leaders cited.
He said in an interview that he wasn’t aware of policies getting canceled because of subsidy issues.
Counihan said less than 2 percent of the exchange’s customers have made complaints, which could cover issues including getting incorrect premiums or problems with subsidies. More than 240,000 people have enrolled in coverage through the exchange -- about 80,000 in private insurance plans and nearly 160,000 in Medicaid.
When someone enrolls in private insurance through Access Health, the exchange transmits information about the person, his or her plan selection and any subsidies through something known as an “834,” an electronic file that the insurance company then retrieves.
Tim Tracy Jr., president of the Connecticut Chapter of the National Association of Health Underwriters and a Fairfield insurance broker, said he’s aware of insurers sometimes receiving 834 files with missing or inaccurate information. In the case of one of his clients, the insurance company received an 834 that said to terminate the person’s coverage, so the carrier did, Tracy said.
“There can always be some issues with those 834 file feeds,” he said.
Counihan said there are three main causes of issues with 834s: vendor errors, consumer errors and late changes to client files during the application process.
In the case of paper applications, errors could occur if the vendor that enters the information into the exchange’s system submits data incorrectly. If the person entering the data leaves the income line blank, for example, the 834 would show the applicant doesn’t qualify for a subsidy, even if the person’s application contained income information.
In other cases, Counihan said, applicants have appeared to try to get themselves the best subsidy possible by entering different income levels and counties. Each separate application can trigger an 834 to be sent to a carrier. “We’ve had instances where there have been north of 15 different applications for the same person,” Counihan said.
Another issue can arise if a person makes a change to an application that was already filed, such as entering a different ZIP code or adding a family member. That generates a new 834, which the insurer might get after already preparing the customer's billing statement.
Asked if there could be problems with the exchange’s system that contributed to problematic 834s, Counihan said the exchange’s IT team had examined it and concluded that was not the case. He noted that software errors tend to be consistent.
“We’ve processed 208,000 of these things,” he said. “It feels to me like if that were the case, we’d have this huge number of 834 problems, and we’re not.”
Counihan also cited another issue with subsidies: People who apply for coverage sometimes don’t accurately represent their income, leading them to qualify for a larger discount on their premiums than they’re really entitled to. If a subsequent verification process determines that their income is higher, their subsidies are reduced, and a new 834 is sent to the insurer. As a result, a person’s next premium bill might be much higher than the previous ones.
“Have I heard about that being a screaming issue? No,” Counihan said. “Do I think that it’s impacted some people? I’m sure it has.”
“How many people it’s impacted I don’t know, but we’re in the process of calling the carriers right now to try to better understand that,” he added.
A spokeswoman for ConnectiCare Benefits said the company is not aware of customer policies being canceled because of subsidies being unpaid. According to the insurer HealthyCT, the company has not had any issues with 834s or subsidies.
Asked if it had any issues with inaccurate 834s coming from Access Health, ConnectiCare Benefits issued a statement saying: “As expected with any complex implementation, our first year of selling health plans through Access Health CT has included some administrative challenges. We work closely with Access Health CT to resolve processing issues on a case by case basis as they arise. Issues are corrected and treated as improvement opportunities for the future.”