Covered California Takes Aim At System Gamers

By Emily Bazar

It may soon become harder to enroll in Covered California health plans outside the regular open-enrollment period.

Covered California, the state health insurance exchange, wants to tighten the rules for special-enrollment periods by making consumers provide documentation proving they’re eligible.

The change, proposed by Covered California’s staff, comes amid concerns that some people are waiting until they get sick to sign up for health insurance during a special-enrollment period, driving up costs.

Consumers can become eligible for special-enrollment periods during the year if they experience certain “qualifying life events” such as the loss of health insurance, marriage, divorce, or the birth or adoption of a child. But no proof is required from Covered California customers, and insurers say that some have abused the process.

The Covered California board of directors is expected to vote on the proposal in April. If approved, it is expected to take effect in June.

“We want people to enroll in special-enrollment periods. … We also have an obligation to make sure that people who enroll in special-enrollment periods qualify,” said Covered California Executive Director Peter Lee at the agency’s monthly board meeting.

John Bertko, Covered California’s chief actuary, said there are “credible indications” that people who sign up during special enrollment have higher health costs than those who sign up during open enrollment. He believes the difference can be attributed partly to people who are gaming the system.
Plus, he said, the number of people who sign up during special enrollment is growing.

Unless Covered California ensures that only those who are eligible qualify for special enrollment, premiums could go up an additional 2 percent to 5 percent, he estimated.

“In the absence of action, we would be potentially facing higher rate increases in 2017,” Lee said.

Obamacare created new enrollment rules for people who buy coverage from a health insurance exchange or the open market. Under the law, they can only sign up or switch plans during the annual open-enrollment period, which ended on Jan. 31 for 2016.

But if they experience one of those life events midyear, they will qualify for a special-enrollment period. Customers of Covered California currently don’t have to prove they are eligible. They “attest” that a qualifying event occurred.

Under the proposal, consumers would have to show documentation –- such as a marriage license or birth certificate. Health plans would forward the documentation to Covered California. If the health plans didn’t receive documentation from consumers within 10 days, Covered California said it would reach out to give them another chance.

Changing the policy could lead to 10 percent to 25 percent lower enrollment during special enrollment, Bertko said.

But consumer advocates opposed the proposal, saying they’re not convinced there’s a problem, especially because the data behind it is “not final or proven,” as Lee said.

They believe requiring documentation will make insurance inaccessible to people who are eligible but have trouble proving it, especially immigrants and low-wage workers. For instance, they said, how can someone prove he was terminated from his minimum-wage job?

“There’s a lot of evidence that reliance on paper documents will serve as a barrier to enrollment,” said Michelle Lilienfeld, senior attorney at the National Health Law Program. “The documentation that will be required in many instances may not even exist.”

Insurers, however, voiced support.

Bill Wehrle of Kaiser Permanente said Kaiser data show that Covered California enrollees who sign up during special enrollment periods have “significantly higher utilization of medical care” than those who sign up for comparable special enrollment periods in the private market, which requires documentation.

About 20 percent of people who apply for a special-enrollment period in the private market are turned away because they can’t document their eligibility, he said.

Of those, he said, about 5 percent later sign up for Kaiser plans through Covered California special enrollment, where they aren’t asked to show proof, he said.

Earlier this year, the federal government tightened rules for special-enrollment periods available through the federal health insurance exchange,

Among other things, it eliminated several circumstances that would trigger eligibility for special-enrollment periods, clarified special-enrollment rules for people who move, and warned that it may seek proof of eligibility from some consumers.

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