People who try to buy health insurance after the annual open-enrollment period could soon face stricter scrutiny before getting covered under a proposal aimed at cracking down on those who forgo insurance, then enroll once they get sick.
The proposed change would apply to people who buy individual-market insurance through Access Health CT, the state’s health insurance exchange. Insurance companies in Connecticut and other states have raised concerns that, without strict enforcement of sign-up rules, some people will wait to enroll until they get sick, incur high medical costs and then drop coverage – driving up premiums for all customers.
Potential customers are supposed to sign up for individual-market coverage through the exchange during the open-enrollment period, unless they qualify for a specific exception, such as having lost their insurance midyear because they lost their job or got divorced. Those with a qualifying reason to get covered midyear generally have 60 days to sign up through a “special enrollment period.”
But currently, Access Health allows people to begin receiving coverage before verifying that they really qualify for the exception. As a result, people could get 30 days of coverage even if they did not actually qualify for a midyear sign-up.
Access Health CEO Jim Wadleigh said insurers have indicated that special enrollment period sign-ups could account for 6 to 10 percent of premium costs.
Access Health officials want to change the way special enrollment periods are handled to require verification before a person’s coverage can begin.
The exchange’s board is expected to vote on the proposal Jan. 26. If approved, the policy change probably would take effect in March, Wadleigh said.
The open enrollment period for 2017 is going on now and ends Jan. 31.
In many cases, the exchange can automatically verify that a person qualifies for a special enrollment period. That’s the case for people who lose Medicaid coverage because their income rises, for example.
But there could be more room for abuse of the provision allowing people to qualify for a special enrollment period if they lost their previous insurance coverage, Wadleigh said. When Access Health followed up with some midyear enrollees who claimed that as the reason for signing up last year, he said, some said they had lost coverage a year earlier – well outside the timeframe that would permit them to sign up.
“My gut tells us that we’re going to find a lot of individuals get sick and then want to enroll,” Wadleigh said.
The insurance industry has raised that concern at the state and national level.
“Anthem recognizes that [special enrollment periods] provide necessary access to health insurance coverage for eligible individuals with valid qualifying events,” Anthem Blue Cross and Blue Shield President Jill Hummel wrote in a letter to Access Health last year. “We are concerned, however, about the largely negative impact on marketplace stability of some individuals abusing [special enrollment periods].”
One analysis conducted on behalf of two health insurance trade groups found that people who sign up midyear incur significantly higher costs. The firm Oliver Wyman analyzed individual-market data from 13 insurers, and found that, on average, people who signed up during special enrollment periods incurred monthly costs that were 41 percent higher in the first three months they were covered, compared to those who signed up during open enrollment. Midyear enrollees were also significantly more likely to drop coverage.
“There is considerable concern among insurers that individuals are using [special enrollment periods] to delay purchasing health insurance until a need arises,” the firm wrote.
“The inference that can be drawn from the data is that some consumers are in some instances enrolling for just long enough to obtain medical care, and then dropping coverage shortly thereafter driving up premiums for consumers who purchase coverage during the open enrollment period or who meet the Exchange’s [special enrollment period] criteria,” Hummel wrote.
Not everyone agrees that the higher costs reflect abuse. In an article in Health Affairs last year, Timothy Jost, an emeritus professor at the Washington and Lee University School of Law, wrote that it wasn’t surprising that people who signed up through special enrollment periods might use more health care services; he noted that in many cases, a job loss – which could leave someone in need of coverage outside the open-enrollment period – is accompanied by health problems.
“The question is whether fraud is in fact occurring,” he wrote.
This is not the first time the exchange has sought to get stricter on the use of midyear sign-ups. Until last year, Access Health did not verify whether people seeking a special enrollment period had a qualifying reason.
In her letter, which was written while the exchange was contemplating adding the verification process last year, Hummel urged officials to do the verification before allowing people to begin their coverage.
An Anthem spokeswoman said Wednesday that the company supports tighter requirements.
ConnectiCare, the other insurance company that sells coverage through the exchange, also supports the proposed change.
“Eligibility verification prior to a health insurance plan becoming effective is critical,” the company said in a statement.