HealthCare.gov is still terrible. Should Obama delay the individual mandate?

October 18, 2013

Welcome to Health Reform Watch, Sarah Kliff’s regular look at how the Affordable Care Act is changing the American health-care system — and being changed by it. You can reach Sarah with questions, comments and suggestions here. Check back every Monday, Wednesday and Friday afternoon for the latest edition, and read previous columns here.

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About a month ago, and well before the Affordable Care Act marketplaces launched, Citi Research did a survey of health insurance investors. It asked them whether they expected the Oct. 1 launch date to get delayed. Just 16 percent said yes and, that made sense: The Obama administration repeatedly committed to opening the marketplaces at the start of the month.Citi asked the investors another question: Would the open enrollment period get extended beyond March 31, the current end-date for signing up for coverage on the new marketplaces? That was the more surprising question: 55 percent expected that this would happen. Even before the marketplaces had a pretty disastrous launch, the plurality of health-care investors expected consumers to get more time to purchase coverage.

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"We were surprised that over half of the investors responding to the survey expect the exchange open enrollment period to be extended beyond March 31, 2014," Citi analysts Gary Taylor and Carl McDonald wrote. "Extending the open enrollment period would have a detrimental impact on adverse selection and plan margins, in our view."

Now that we're two weeks into open enrollment, and shoppers aren't facing much luck actually enrolling, there's chatter among health wonks about what that means for the sign-up period: Could it get extended? The individual mandate delayed? Some other option?

First off, we probably won't have answers for at least another few weeks. The open enrollment period is 182 days long and, right now, we've still got 164 days to go. Shoppers can sign up on Nov. 1, or Dec. 1, and still buy coverage that begins on Jan. 1.

If the problems happening now though persist until the end of the month, that's when you might see more serious talk of policy changes that give people more of an opportunity to sign up.

“We clearly have one important deadline here, which is December 15,” says Ron Pollack, president of Families USA. “They have to be fixed prior to that, so people can get enrolled in January. That means if we haven’t seen very substantial progress before the end of this month, that’s worrisome.”

If the administration does want to give people more time to sign up -- or allow them an out from the individual mandate's penalties for not carrying coverage.

One option that has come up a lot is delaying the individual mandate, particularly in states that have an exchange that doesn't work. If Texans only get a small shot at signing up for coverage, the thinking goes, why should they be penalized for not carrying insurance?

That might be the perspective from the individual -- but  certainly not the insurance companies' view. They have banked on the individual mandate as a key piece of the Affordable Care Act. It's what stops us from buying insurance en route to the emergency room and enrolling in coverage right at the moment when we foresee a giant hospital bill.

Delaying the individual mandate only in states with glitchy Web sites could, in a weird way, make the federal health-care coverage there a whole lot worse. Without the requirement to purchase coverage, fewer healthy people would likely sign up, and more sick people would flood the system. That, in turn, would likely lead to higher premiums next year in those states that are already having problems with HealthCare.gov. They would, after all, have to figure out a way to cover the costs of their very sick enrollees pool.

A slightly different option would be to extend the open enrollment period, as many investors already expect. The current period, which stretches from Oct. 1 through March 31, was set in Health and Human Services regulations. It doesn't show up anywhere in the Affordable Care Act. Extending the open enrollment period would give people more time to enroll in coverage, but could still leave them vulnerable to at least part of the individual mandate penalty.

The health-care law allows someone to go uncovered for less than three months without facing the individual mandate penalty. That means if someone purchases coverage that starts in March, for example, they would dodge the penalty: Their lapse of coverage would be two months, in January and February.

Buying coverage that starts in April, however, means that an individual would need to pay a penalty for the three months she spent without coverage. That would be $23.75 (a quarter of the $95 penalty) or 0.25 percent of her income, whichever is larger (we're talking quarters here because the penalty is pro-rated, with 1/12 of the fine applied to each month spent uninsured).

In a situation where the open enrollment period was extended, perhaps through the summer, there could still be an individual mandate fee that would nudge consumers to enroll a bit earlier. This situation still wouldn't be as ideal to insurers: Each month that open enrollment continues is another one where shoppers can employ the buy-en-route-to-the-ER strategy.

One other option on the table would be using the individual mandate exemption process to give people a way out from the fine. Right now, there are a number of ways to get an out from the individual mandate. If you belong to a religious group that objects to health insurance or live abroad, for example, you're not required to pay the fine.

An exemption also exists for those who cannot purchase affordable insurance coverage through the marketplace. That's defined as a plan that costs less than 9.5 percent of an individual's income. What if a shopper can't find that plan, because the Web site wouldn't work? There's some thinking that they might be able to apply for an exemption from the penalty because of those hurdles.

KLIFF NOTES: Top health policy reads from around the Web.

Insurers are getting faulty data from the health exchange. "Emerging errors include duplicate enrollments, spouses reported as children, missing data fields and suspect eligibility determinations, say executives at more than a dozen health plans. Blue Cross & Blue Shield of Nebraska said it had to hire temporary workers to contact new customers directly to resolve inaccuracies in submissions. Medical Mutual of Ohio said one customer had successfully signed up for three of its plans." Christopher Weaver and Louise Radnofsky in The Wall Street Journal.

The House Energy and Commerce Committee is investigating the Web site. "The House Energy and Commerce Committee announced Thursday they have scheduled a hearing on the issue for Oct. 24, and have asked Health and Human Services Secretary Kathleen Sebelius to attend. Committee member Rep. Leonard Lance, R-N.J., told Fox News' Greta Van Susteren Thursday night he wants Sebelius to testify at the hearing but she has not so far responded "favorably" to the proposition." Fox News.

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