On The Public Exchanges

April 22, 2015

A look back at open enrollment, and a look forward at the individual mandate

Given the rocky rollout of the federally managed and state-run health insurance exchanges in their first year, it’s safe to say that both advocates and critics held their collective breath as the second open enrollment period began on October 1, 2014.

Overall, second year enrollments went much more smoothly than the first. Some states did have glitches, but by and large technology was not the issue.

The individual mandate and its associated tax penalty was, however. Specifically, exchanges became concerned that not enough people were aware of the tax implications of not having purchased health care coverage for the plan year 2015.

The penalty, also called the “Shared Responsibility Payment,” is either 1% of annual income or $95 for the 2014 plan year (whichever is higher). In 2015, it goes up to 2% of yearly income or $325.

So, on February 20, 2015 the Centers for Medicare and Medicaid Services (CMS) announced a “special enrollment period” for those enrolling on the federally managed exchange, which covers 35 states and the District of Columbia. It will end on April 30th.

To be eligible, individuals would have to “attest that they first became aware of, or understood the implications of, the Shared Responsibility Payment after the end of open enrollment [February 15, 2015] in connection with preparing their 2014 taxes.”

After the CMS announcement, six of the state-run exchanges followed suit with special enrollment periods of their own. Just three states — Colorado, Idaho and Massachusetts — did not enact special enrollment periods.

Arguably, the most anticipated number at the end of this enrollment period will not be the final enrollment count, but rather the number of individuals who get hit with the penalty. Unlike final enrollment numbers — for which hopes are high — hopes for the tax penalty is that numbers are low.

So otherwise, how did public exchanges fare?

Amidst all the turmoil of shifting deadlines and the looming threat of tax penalties, public exchanges actually performed pretty well during the original enrollment period — although some did better than others.

As of this writing, Maryland doubled its enrollment compared to the last open enrollment period and California was on track to reach its goal of enrolling 500,000 people. Some states’ enrollment periods were uneventful, with a steady tick upward of enrollment numbers to levels that, while not staggering, surpassed the first open enrollment period. For states that implemented special enrollment periods, enrollment figures will continue to climb.

Some exchanges were plagued by issues beyond enrollment — including financial and technical issues, as well as staff turnover. Iowa saw one of its health insurance options, a co-op called CoOpportunity Health, fail due to having an insurer pool that was larger and sicker than anticipated, resulting in more risk than it could afford to bear. Colorado and Minnesota both experienced financial shortfalls and received $322,000 and $34 million respectively to fix their online enrollment portals. Executive directors of some state-run exchanges, including Massachusetts and Vermont, resigned and were replaced.

Despite these difficulties, the overall outcome on the public exchanges has been mostly positive this year. According to a recent Gallup poll, another 3.6 million adults have been added to the rolls of the insured during the latest enrollment period – which means that nearly 9 in 10 Americans now have insurance.

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