The lesson of BC/BS of NC on special enrollment periods

Obamacare Pummels Blue Cross Blue Shield Of NC--What Can We Learn From This?

By Chris Conover
Forbes, January 30, 2016

Blue Cross and Blue Shield of NC is expecting to lose more than $400 million on its first two years of Obamacare business. In response to its bleak experience with the Obamacare exchange, the company has decided to eliminate sales commissions for agents, terminate advertising of Obamacare policies, and stop accepting applications on-line through a web link that provides insurance price quotes–all moves calculated to limited Obamacare enrollment.

BCBSNC reported an operating loss of $50.6 million in 2014–the first such loss in 15 years. Why? Because its Obamacare policies lost $123 million despite $343 million in various insurer bailouts (the so-called “Three R’s“–risk adjustment, reinsurance, and risk corridors).

What makes this shocking is that BCBSNC is the state’s dominant insurer, covering 72% of the large group market. If a deep-pocketed insurer such as this cannot make a go of Obamacare, that does not bode well for many smaller carriers who do not have large profits on other lines of business with which to absorb whatever losses are generated by policies sold on the Obamacare exchanges.

The fact that one of the nation’s largest insurers, UnitedHealthcare also has raised doubts about its ability to carry plans on the healthcare law’s exchanges beyond 2016 makes clear that this problem is not unique to North Carolina.

The Problem is Getting Worse, Not Better

A large carrier such as BCBSNC can afford to absorb a temporary hit to its profits. But the evidence in NC is that Obamacare losses are growing over time rather than shrinking–a clearly unsustainable business model.

Because of its enormous losses, BCBSNC was able to convince the state’s insurance commissioner to allow a 32.5% average increase in its rates for the 2016 Obamacare policies now being sold.

Special Enrollment Period Enrollees Are a Problem

The special enrollment period is open to people whose circumstances have changed, such as getting married, having children, losing/changing jobs or similar situations. However, many such individuals evidently are staying insured only for several months, generating a lot of medical bills and then discontinuing their coverage.

People who buy their coverage during these special enrollment periods cost twice as much as Obamacare customers who secure their coverage during open enrollment.

Again, this is not unique to NC: earlier this month, in response to complaints by insurance companies, Obamacare administrators eliminated six additional conditions that allowed people to sign up for health coverage outside of the general enrollment period.  According to UPI, these steps will ”make it more difficult for persons without health coverage to financially manipulate or abuse the Affordable Care Act.”

These steps presumably will be good news for the bottom line of insurers such as BCBSNC. But they by no means eliminate various ways in which people have figured out to game the system.

University of Minnesota economist Stephen Parente has calculated that the cost of the least expensive policies on the Obamacare exchanges will more than triple in NC between 2016 and 2017!


Insurer Aetna Lays out Concerns About ACA Exchange Business

By Tom Murphy, AP
ABC News, February 1, 2016

Aetna has joined other major health insurers in sounding a warning about the Affordable Care Act's public insurance exchanges.

The nation's third-largest insurer said Monday that it has been struggling with customers who sign up for coverage outside the ACA's annual enrollment window and then use a lot of care. This dumps claims on the insurer without providing enough premium revenue to counter those costs.

Both Aetna and UnitedHealth Group Inc. said the exchange customers they get outside the annual enrollment window use more health care than those who sign up within it. This includes some cases where it appears that a customer bought coverage, used it and then dropped it.

"Insurance systems tend to get stressed when people can buy coverage when they know they need it and then drop it when they know they don't," Chief Financial Officer Shawn Guertin told The Associated Press.

The Centers for Medicare and Medicaid Services recently outlined several changes it said it was making to help shore up exchange enrollment windows.

Blue Cross-Blue Shield insurer Anthem Inc. also is paying close attention to how the government deals with special enrollment periods as it judges how sustainable the exchange business will be in the future, CEO Joseph Swedish said recently.

UnitedHealth Group has said it will decide this year whether to participate in the public exchanges in 2017. CEO Kevin Counihan said in a Jan. 19 blog post that special enrollment periods will not be available for "the vast majority of consumers." HealthCare.Gov operates public insurance exchanges in 38 states.

"For example, special enrollment periods are not allowed for people who choose to remain uninsured and then decide they need health insurance when they get sick," he wrote.


Sustaining the marketplace for a healthier America

By former Sen. Tom Daschle (D-S.D.)
The Hill, January 29, 2016

To ensure the affordability of healthcare services, we must help individuals not only access health insurance coverage, but also stay covered.
Instead, our current regulatory framework seems to be having the opposite effect.  

For example, there are over 30 “special enrollment periods” – more than that of any other federal government program, including Medicare Advantage.  Rightfully so, these periods are intended to help individuals seek coverage outside of the normal enrollment period due to certain qualifying life events, such as relocating or losing prior coverage.  However, there is little oversight in place to ensure that special enrollment period requirements are satisfied. The unintended consequence is that special enrollment periods enable individuals to only seek coverage when they need care the most – a more costly proposition for the patient and the health care system.

Fortunately, the Centers for Medicare & Medicaid Services (CMS) is already taking an important first step to help address these concerns.  CMS is eliminating six special enrollment periods that are either no longer needed or subject to abuse.

The marketplace will also require greater opportunity for innovation. 

The Affordable Care Act has demonstrated great potential for establishing a high quality, affordable health care market.  Now is the time to leverage that progress and ensure its sustainability by removing barriers that discourage market participation and incentives that make it easier to not seek care.



By Don McCanne, M.D.

The losses experienced by Blue Cross and Blue Shield of North Carolina represent a problem prevalent throughout the nation wherein patients, when they become ill, enter the system during special enrollment periods and then exit once their health care needs are met. The insurers along with CMS have diagnosed the problem. There is nothing wrong with our system of private insurers. It is the patients who are to blame because they are gaming the system.

The solution? Reduce special enrollment periods that were designed to assist patients who fell through the cracks. Instead, protect the insurers by preventing these people from getting coverage for the care that they need. Bankrupt them. That’ll show them.

Reducing special enrollment periods is being touted as one of the improvements that we need in the Affordable Care Act - the type of incrementalism that we should pursue as we reject overtures to establish a single payer national health program. We should pay no regard to the fact that this incremental tweak is designed to assist the private insurers and enhance their profits, at a cost of impairing access and affordability for far too many patients.

Wasn’t the Affordable Care Act designed to provide everyone with affordable access to health care? No. Single payer has such a design, but that was rejected to the benefit of the private insurers.

So now we are supposed to tweak the system to make it work better for patients? No. We are tweaking it to make it work better for private insurers. Damn those patients who try to cheat the insurers by gaming the system.

Oh wait. Under single payer the goal is to deliberately include absolutely everyone. The idea that someone is cheating by trying to sneak into the system is totally foreign to the stewards of egalitarian universal systems. How could anyone even think about devising methods of keeping people out? Perhaps it’s American Exceptionalism at work.