Consumers Take Advantage Of Exchange Plan Loopholes

August 8, 2016

In the (still) new world of the public exchanges, health plan consumers have been taking advantage of loopholes in the enrollment system, especially as it relates to special enrollment periods (SEPs).

The loopholes and how consumers exploit them are detailed in a recent article in Managed Healthcare Executive. According to the article, the public exchange “trusts but does not verify” claims that would result in an exemption. Some examples of claims people can make that render them exempt include:

  • Recently moved
  • Lost previous health coverage
  • Lost Medicaid eligibility
  • Had a change in family status (birth, marriage, etc.)

Jay Wolfson, a professor of public health, medicine, and pharmacy at the University of South Florida, explained two main types of people who falsely claim eligibility for the SEP: 1) people who cannot afford coverage and 2) those simply trying to game the system because they can.

Wolfson speculated that the former category exists because people can wait up to three months to pay for care, meaning they can rack up health expenses in that time and then cancel their coverage before they pay. According to Wolfson, it is unclear what motivates the latter category, Although it might have to do with resistance to the individual mandate.

Many health insurers have expressed concern about SEP system abuse. In comments submitted to CMS, the Blue Cross Blue Shield Association said, “Individuals enrolled through SEPs are utilizing up to 55% more services than their open enrollment counterparts, suggesting that SEP enrollees are sicker or waiting until they need care to enroll. SEP enrollees are also incurring costs in double digit magnitudes over the rest of the ACA risk pool.”

This cost gets spread over the risk pool, raising rates for everyone. That said, the article revealed that many are still optimistic that these loopholes will get closed and the issue will be resolved.

Interviewed for the article, John Barkett, director of policy affairs for Willis Towers Watson, said “In my opinion, plans are more likely to lobby public exchanges to change or enforce the rules than they are to pull out because of gaming. These are solvable problems for public exchanges, and CMS is already taking steps to resolve them.”

To read the complete article in Managed Healthcare Executive, click here.

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