Obamacare to Look Past Unpaid Premiums to Avoid Lapses

Health insurers are being asked by the U.S. government to be lenient with Obamacare customers who miss the Dec. 23 deadline for enrolling in the program or are late with their initial payment.

The Obama administration yesterday encouraged insurers to honor any late sign-ups with retroactive coverage, let people pay only part of their premiums, and honor treatments for patients who go to out-of-network doctors. It’s also considering stretching out the already-extended Dec. 23 cutoff to enroll.

The moves are intended to smooth the nation’s transition into an overhauled health-care system next year, as millions of Americans change insurers or gain coverage they’ve never had. The administration earlier in the day said that an expiring insurance program for sick Americans who’ve been refused coverage by private carriers will be extended for one month.

“The steps we’re taking today will help ensure Americans seeking quality, affordable health coverage can do so with even more peace of mind and with further confidence it will be there if and when they need it,” Kathleen Sebelius, the U.S. Health and Human Services secretary, said on a conference call.

The botched October rollout of the government-run insurance exchange where people are supposed to shop for health coverage has suppressed enrollment in President Barack Obama’s signature domestic policy initiative and stoked political backlash. That’s forced him to stitch together delays and concessions.

Coverage Gap

Obama had already pushed back a key application deadline, delayed a small-business health exchange and tried to placate hundreds of thousands of people who risk losing current insurance plans that won’t meet new government standards for 2014. His administration also said it would extend by one month an expiring insurance program for “high-risk” pools of sick Americans who’ve been refused coverage by private carriers.

“Extending the Pre-Existing Condition Insurance Plan will give tens of thousands of people with a history of cancer or another serious disease the security of knowing they will not face a costly gap in coverage on Jan. 1 if they cannot enroll in a marketplace plan,” Chris Hansen, president of the American Cancer Society’s lobbying office, said in an e-mail.

The main government-run health exchange created by the Patient Protection and Affordable Care Act was plagued by software errors and bugs at its start on Oct. 1, preventing hundreds of thousands of people from enrolling. Americans in 36 states using the federal system had been given until Dec. 23 to sign up for coverage effective Jan. 1.

Canceled Policies

“How many extensions and waivers is it going to take for the administration to admit the consequences of Obamacare that are hitting millions of Americans they promised it would help?” Senate Republican Leader Mitch McConnell of Kentucky said in a statement.

Insurers complained the administration risks creating more complications for the companies and their customers by making last-minute changes to the program.

“With only weeks to go before coverage begins, continued changes to the rules and guidance could exacerbate the challenges associated with helping consumers through the enrollment process,” Karen Ignagni, the president and CEO of America’s Health Insurance Plans, the industry’s Washington lobby group, said in a statement. “Health plans will continue to do everything they can to protect consumers from potential coverage disruptions caused by the ongoing technical problems with healthcare.gov.”

Plan Enrollments

Almost 365,000 people in October and November chose a private plan through federal and state exchanges, according to data released this week by the Centers for Medicare and Medicaid Services. Those plans would take effect Jan. 1. An additional 803,000 have been determined eligible for state-run children’s health plans or for Medicaid, the program for the poor.

Hundreds of thousands of Americans have meanwhile received letters from their current insurers saying their coverage will be canceled after Dec. 31 because those plans don’t comply with requirements of the health law. Thus far, new enrollment under the law is less than the number of cancellations.

“We’re confident that millions of Americans will have access to affordable health care coverage than ever have before,” Julie Bataille, a spokeswoman for the Centers for Medicare and Medicaid Services, said on the conference call.

Obama responded last month by giving insurers and state regulators the option of extending the policies by one year. Aetna Inc. (AET), the third-biggest U.S. health insurer, decided it would be too difficult to do so in time for Jan. 1. There are too many administrative hurdles to reinstate the plans, Aetna Chief Financial Officer Shawn Guertin said in an interview.

Enrollment Pace

The pace of enrollment has quickened since October, when the federal exchange website serving 36 states didn’t work properly or consistently for millions of Americans. The administration has set a goal of signing up 7 million people by the March 31 end of open enrollment.

With more Americans enrolling, concern has turned to the website’s problems passing along accurate data to insurers and what that means for people trying to get covered. Aetna said many of the people signing up have yet to pay their premiums.

“We have a bigger number of applicants than people who have paid,” Guertin said. “That’s a situation that I am a little bit worried about, that people will think they have completed the process but haven’t paid the premium yet.”

The disjointed process of having customers shop through the government-run marketplace and then pay insurers separately has created a risk that people who have chosen a plan won’t actually be covered Jan. 1. And if people don’t pay by Dec. 31, insurers may end up stuck with a disproportionate number of sicker and costlier customers.

“You have to remember that many times we are dealing with low-income people,” Robert Laszewski, an Alexandria, Virginia-based consultant to carriers, said in a telephone interview last week. “They signed up and they certainly want the insurance, but do they have the money or have they changed their mind by Dec. 31? Nobody’s done this before.”

To contact the reporter on this story: Alex Wayne in Washington at awayne3@bloomberg.net

To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.