Allowing Americans more time to enroll for health coverage under Obamacare may raise premiums and cut into profits, insurers are telling members of Congress in a bid to stop such a move.
Extending the enrollment period would have a “destabilizing effect on insurance markets,” said Robert Zirkelbach, a spokesman for the Washington-based lobbyist group American’s Health Insurance Plans. Allowing younger, healthy Americans to sign up later, as they probably would, means less revenue for insurers counting on those premiums to help defray the cost of sicker customers, threatening industry profits.
“If you can enroll at any point in the year, then you can just wait until you get sick,” Brian Wright, an analyst with Monness Crespi Hardt in New York, said in a telephone interview. “This isn’t the industry crying foul and exaggerating the issue, this is actually one of those issues where there is a well-grounded reason for the concerns.”
It’s a message the industry is taking to Congress after Republicans there, along with at least 10 Democrats, have suggested enrollment be extended beyond its current March 31 deadline because of issues with healthcare.gov, the federal health insurance website that’s been plagued by software miscues.
Consumers who don’t have coverage through their employers or government health programs are being encouraged to sign up by mid-December for plans that take effect Jan. 1. After March 31, the Patient Protection and Affordable Care Act imposes penalties on Americans without coverage.
A later deadline would stretch insurers past the time when by law they must set rates for 2015. If insurers only have information from sicker, costlier patients in hand by the time they have to start reporting premiums to the federal government, it may force them to boost premium costs for the next year ahead, Zirkelbach said.
“Extending the open enrollment period could also cause significant uncertainly and instability in 2015 premium rates,” he said in a written statement. “Health plans would have to start submitting premiums to regulators before knowing who is enrolled in their insurance plans.”
Aetna Inc. (AET) Chief Executive Officer Mark Bertolini said yesterday on a call with analysts that he is concerned the flaws with healthcare.gov will lead to an extension of the enrollment deadline.
“We worry about things like extended open enrollment and for how long that goes,” Bertolini said. “We think the level of participation of the full population in the exchanges is important, so the enrollment process on the website is incredibly important to get right because, as individuals try these websites, the younger, healthier people aren’t going to give them more than one shot.”
In a letter sent to Health and Human Services Secretary Kathleen Sebelius last week, the 10 Democratic senators, including seven facing re-election next year, said they are “discouraged and frustrated with the problems.”
“Extending this period will give consumers critical time in which to become familiar with the website and choose a plan that is best for them,” the senators wrote. “Individuals should not be penalized for lack of coverage if they are unable to purchase health insurance due to technical problems.”
Top Obama administration officials say extending the deadline isn’t necessary.
Representative Kevin Brady, a Texas Republican, yesterday asked Marilyn Tavenner, the administrator of the Centers for Medicare and Medicaid Services, if she would “guarantee no American will experience a gap” in insurance coverage.
“What I can guarantee is that we have a system that’s working,” Tavenner answered during a hearing on the health-care law before the House Ways and Means Committee.
Tavenner said that while the exchange enrollment system has worked for some users, it isn’t functioning at the ideal speed or success rate. The healthcare.gov website can now simultaneously process 17,000 customers per hour -- about five a second -- “with almost no error rates,” said Julie Bataille, a spokeswoman for Tavenner’s agency.
Jeffrey Zients, a consultant brought in last week to help fix the exchange’s flaws, has said the website will be working smoothly by the end of November.
President Barack Obama appointed Zients, his incoming chief economic adviser, to advise the Health and Human Services how to correct the system before taking on his other job. The federal government website serves consumers in 36 states, including Texas and Florida. Fourteen states and the District of Columbia established websites for their residents to sign up for health insurance plans.
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