Insurance companies are struggling with a new request by the Obama administration to make sure people receive medical benefits under healthcare reform come Jan. 1, even if they miss a sign-up deadline set for next Monday.
The government has sought to reassure consumers, already frustrated by technical problems that stalled access to its HealthCare.gov enrollment website in October and November, that those who need coverage starting on New Year's Day will be able to sign up.
Last week, the administration appealed to the insurance industry to accept people who sought benefits past the Dec. 23 enrollment deadline for Jan. 1, and to consider approving retroactive coverage for consumers who signed up during the month of January.
On Wednesday, the nation's largest organization of insurers said that individuals who select their health insurance plan on the exchanges set up under the national healthcare reform law by the Dec. 23 deadline will have until Jan. 10 to pay and still receive coverage as of Jan. 1, 2014.
Some insurers had already announced similar moves individually, but now plans selling insurance on either the state or federal exchanges will voluntarily honor the delayed payment schedule, America's Health Insurance Plans said in a statement.
AHIP’s board announced that it was “voluntarily” making the one-time change to the payment deadline to protect consumers from potential gaps in coverage caused by the myriad technical failures of the Healthcare.gov website.
“Significant progress has been made in recent weeks to improve the enrollment process for consumers, but more work needs to be done to resolve the back-end challenges, particularly those related to processing enrollment files, to ensure all consumers who selected a plan are enrolled in coverage,” the AHIP statement.
It’s the second deadline extension since Obamacare signups began on Oct. 1. The president’s signature healthcare law originally required Americans to select a health plan by Dec. 15, but moved the date to Dec. 23 after nonstop problems, including the system repeatedly freezing or crashing as well as generating duplicate enrollments, cancellation notices and mistakes about federal subsidies.
Some state-based exchanges said they are not adopting the timeline, which could create confusion for consumers who must pay insurers to be covered. Many individuals will receive government subsidies to help offset the cost of insurance sold on the exchanges, but they still must pay the balance.
"Healthcare is local. The arrangements are local. The delivery is local. The payment is local ... Consumers in California need to have paid by January 6th," Peter Lee, Executive Director of Covered California said during a conference call with journalists.
Connecticut, which had moved its payment date to Jan. 7 for some shoppers, also said that it was sticking to its due dates, saying that the changing information, rules and policies are confusing and a challenge for consumers.
Insurers are plenty worried that some consumers will sign up for retroactive January plans only if they have incurred a hefty medical bill. It is unclear what the costs of that would be or how many shoppers might take advantage of the policy.
"It creates a situation where someone might be able to apply for insurance when they have already had services" such as in the emergency room, said Mary Beth Chambers, spokeswoman for Blue Cross Blue Shield of Kansas. "It's like calling for homeowners insurance when your house is already on fire."
Chambers said that such cases would probably be "few and far between."
BCBS of Kansas, the largest insurer in a state where about 14 percent of the population is uninsured, has decided earlier to give people until Jan. 10 to pay their premiums and receive retroactive coverage beginning Jan. 1. They are still hewing to the Dec. 23 enrollment deadline while they study the feasibility of allowing retroactive sign-ups as late as Jan. 31.
Some of these changes and the technical problems associated with the rollout of the Affordable Care Act, commonly called Obamacare, could lead to people facing a gap in coverage next month. It could also create new political problems for President Barack Obama over his signature domestic policy, which opposition Republicans have tried to derail for years.
Aetna Inc, one of the biggest players on the exchange, is going to extend the payment date until Jan. 8, make service workflow changes to support the deadline shift to Dec. 23 from Dec. 15 and already planned to ensure customers will not miss important appointments, such as cancer treatments. But it said some of the administration's suggestions would require systems changes and more service support people, which was not viable.
"We are concerned that changing the rules at this late date and allowing for this degree of variability will lead to significant consumer confusion about the marketplace," Aetna spokeswoman Cynthia Michener said.
Cigna Chief Executive David Cordani said the company will decide this week which measures to pursue. The company, which has only a small business catering to individuals, said that its employer-based plans already offer similar programs to ensure continuity of coverage.
Other insurers, including Molina Healthcare Inc which is selling Obamacare plans in 9 states, have said they will be extending the payment deadline but are stopping there.
The request has raised concerns among some Wall Street analysts over a steady stream of changing regulations. Moody's, which reviews credit ratings of companies, said the additional conditions are a negative influence on insurers' business, requiring administrative changes to track new customers, and will be confusing for doctors and consumers.
Enrollment in Obamacare plans has picked up in December, due to fixes for HealthCare.gov, which serves 36 states, and as consumers nationwide anticipate the Dec. 23 deadline for Jan. 1 benefits. The Congressional Budget Office has estimated that 7 million people will sign up for coverage by the time enrollment for all of 2014 ends on March 31.
But the pace of enrollments so far - 365,000 people by the end of November - has cast doubt on the government's ability to reach that many people in the program's first year.
Wall Street analysts have lowered their estimates for enrollment to almost half the CBO estimate, or less. Insurers have tempered their expectations as well. For the larger players like Aetna, WellPoint and Humana, the exchange market is just a fraction of their total membership, which range from more than 10 million people to 40 million at UnitedHealth Group Inc.
More than 150 million people receive insurance through their employers and 100 million others have health coverage through government programs - Medicare for the elderly and Medicaid for the poor.
Brian Hale, a senior vice president for health policy at Jackson Hewitt Tax Service in Nashville, Tennessee, said that he believes the number of people trying to sign up for Jan. 1 Obamacare coverage is a fraction of the 10 to 20 million people in the market for individual insurance this year.
Out of that, the number who may be truly displaced is "a much smaller number of people then it's been made out to be," Hale said.
Ron Williams, the former CEO of Aetna who now advises private equity firm Clayton, Dubilier & Rice, said he believed insurers could allow for retroactive coverage for a few more days in January and still mitigate the risk of high costs.
"There is some risk there; it is a limited risk," Williams said.
Funding under the healthcare law may help cover some of that risk, or the costs that come when very sick people sign up at a disproportionate rate versus healthy people.
Vantage Health Plan in Louisiana is also planning to extend the deadline for people to enroll for Jan. 1 coverage, but has not decided how long to do so, according to Billy Justice, Vantage's marketing and sales director.
Justice said that the law prohibits insurers from denying coverage to someone with a prior illness "and there should be risk adjustments at the end of the year for insurance companies that get the highest risk."
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