Mnemosyne made a good point in comments a couple of days ago that open enrollment for most people is coming up soon:
Open enrollment periods for 2016 for both people who have employer-based insurance and people why buy on the Exchanges start in October. That’s four weeks from now.
You may be one of the lucky ones who can go without insurance in 2016, but the rest of us would like a space to discuss our options for next year and figure out how to navigate the current system since some of our goddamned lives depend on it. You really think that a current cancer or Crohn’s patient is more interested in discussing a theoretical single payer system than s/he is in discussing what the best insurance option is for next year?
It’s nice that you get to live in the airy-fairy future with no current healthcare concerns. That’s not where most of us live right now.
I’ll work on a series of open enrollment explainers and question posts over the next week or two as the point is a great one. What should be done, and how does a decision get made?
Open enrollment is a limited time period where people can buy an insurance plan or change their policies without penalty. Medicare has open enrollment every fall where people can switch from traditional Medicare to Medicare Advantage or vice versa or switch from Big Blue Medicare Advantage to Purple People Eaters Medicare Advantage. Most large employer groups have a general open enrollment for their employees. The two most common times for the open enrollment are for start dates on July 1 or January 1 with a tertiary bump on October 1 as fiscal years reset. The Exchanges are moving towards an open enrollment period that is similar to commercial enrollment periods instead of the six month slow build up of year 1 and the four months in year 2.
Why do insurers want limited open enrollment periods?
The three segments I mentioned above are all guarnateed issue, community rated segments. The same rates (with some differences to define groups, especially on Exchange) are charged for every group member. This is most true on the employer sponsored group side of the business. If I choose Mayhew Broad PPO, I am paying the same price as the 63 year old diabetic who also chose Mayhew Broad PPO. Community rating is, without any other compensating factors, a good deal for the sick and a bad deal for the healthy. I’m most likely subsidizing my sickly co-worker for this contract year.
Open enrollment is a compensating factor. It removes the ability of the healthy to game the system against bad luck. If there was a general enrollment with guarnateed issue and , it would be rational to some degree for healthy 27 year olds to get no insurance until ten minutes after they get told by their doctor that they have cancer. The initial diagnosis appointment would be fairly cheap and could be paid for with cash out of pocket, but the follow-up treatment is a bank breaker. This running naked until needed strategy fails in the hit by a bus or run into a tree while snowboarding scenarios, but it is a significant risk for insurers.
A limited window where people who are currently healthy but have uncertainity over their future health status can lock in insurance counteracts the run naked until needed schema. Right now, my entire family is generally healthy and even with moderate utilization this year (asthma ER visits, broken wrist), we will have paid more in premiums or wages laundered as premiums than the insurance company paid out for our care. However I don’t know if I will pull a Cole and break a leg while making oatmeal next July, I don’t know if my wife will be admitted to the hospital for pneumonia next March, I don’t know if my son will have Type 1 diabetes. I don’t know, and I’ll take a small assured loss to guard agains major surgery or inpatient stays whose costs would sink my family for five years.
Only have a narrow window to buy insurance for a year deprives me of information about my future health status and makes me more willing to buy insurance even though there is a good chance that I won’t need much of it. This uncertainty makes the risk pools much healthier, deeper and more representative of non-tail risk than risk pools that are composed solely of very sick people who know that they need lots of medical care. It keeps average premiums down even as total premiums collected increase.
Major Major Major Major
Thanks for the advice! Was just trying to figure out when enrollment happens for a friend.
Baud
@Major Major Major Major:
How’d it go yesterday?
MomSense
@Major Major Major Major:
Hope it went well yesterday.
Richard, the first year of enrollment was much simpler for me than the second. There were considerably more options at similar price points and it was not so easy to figure out the right one. Fortunately we didn’t use the insurance much beyond wellness exams and regular lab work. There was a price jump from year one to year two. IMO (non-expert) I think they hadn’t anticipated just how sick and costly the Maine population would be. We have a lot of self-employed and seasonal workers in this state who had been going without insurance or were under insured. Deferred health costs are not cheap. I’m hoping it settles out this year.
Auntie Anne
Thank you, Richard. I am currently preparing Open Enrollment materials for my company OE, so I look forward to your posts – they always give me additional ideas to consider.
Elizabelle
Thanks Richard. Good post.
@Major Major Major Major: Recover well. Plz tell us how you’re doing, when you are up to it.
Yatsuno
Fed Open Enrollment starts in November usually, but the Blues in Washington are really solid so pretty sure I’m not switching any time soon.
@Major Major Major Major: Yes! Status report please?
CONGRATULATIONS!
We just finished open enrollment here at CONGRATULATIONS! HQ. A report is in order.
UHC of course played fast and loose with the ACA rules to kick everyone off the old plan we had (which was great). We’ve ended up paying over 25% more for almost the same level of coverage we had before. Would have been only 13% more if we’d picked Bronze, of course, I wouldn’t have any employees left at the end of the month if we did that, so we ground our teeth and signed up for Silver as the base, Gold for those who wanted to pay more and not have a huge deductible. Almost everyone chose the Gold option, BTW. People REALLY give a shit about having decent coverage.
I know UHC is saying “Thanks, Obama!” every damn day. Me, my feelings on this are decidedly more mixed.
RSA
Nice clear post, Richard. I have an off-topic question for you: Do you have any thoughts about the proportion of people who don’t understand the basic concept of insuring oneself against the risk of something bad happening?
Every once in a while I’ll talk with people who have figured out (a) that they’ve paid a lot more toward insurance than they’ve gotten back in claims or benefits, and they feel ripped off, or (b) that their insurance is paying up on a claim and they say, “Finally I’m getting my money’s worth.” (It’s more common with car insurance than health insurance.)
I ask because I think it would be a lot easier to talk about health insurance if people understood that when you’re covered, that’s a “benefit” all by itself.
WereBear
@RSA: Sadly, there are people who do not understand money in any way except the fact that if they didn’t have to pay for anything they would have a lot more of it.
RSA
@WereBear:
LOL. That’s my experience, too. I’d expected that this would be a guarantee of being poor, but even that’s not the case.
Sasha Goldberg
A lot of people really don’t process the fact that healthiness today is not a promise of healthiness tomorrow. My older sister is a devoted supporter of President Obama but was outraged at how much she would have to pay for real insurance. They had catastrophic insurance which covered almost nothing because her husband was out of work for a while. But since he never goes to the doctor and she had two teenage sons, she just didn’t see why she had to pay so much for insurance.
That aside, I have a question: my daughter will be 25 in October. She has just started doing temp work as a dental hygienist while looking for a permanent position. She is on our insurance. Does she have a choice now between insurance on the exchange or continuing on with our policy for another year? I think we’d do better with an exchange policy than the premium we are paying now for her.
The Raven on the Hill
Isn’t OE starting in November, not October? Or does it start in October in some states?
Richard Mayhew
@The Raven on the Hill: Commercial (employer group plans) sponsored plans from Evil Mega Corp tend to have an open enrollment on October 1 (ish)… it varies.
Medicare/Medicare Advantage this year is : 10/15 to 12/7
Healthcare.gov: 11/1/15 to 1/31/16
Richard Mayhew
@Sasha Goldberg: She is eligible to stay on her parents/guardians insurers until the 1st of the month following her 26th birthday even if she is eligible for other insurance (Exchange, own/spousal/domestic partner employer sponsored coverage, Medicaid, Medicare etc).
Now is it wise to do so? I can’t determine that, but the determination is based on how good your personal coverage is, costs, networks and all that other fun stuff we’ll talk about over the next couple of weeks.
Sasha Goldberg
Thanks,
I appreciate your expertise. I used to volunteer and work at our local free clinic. The complexity of this system is way over the heads of most of that population. I’m not sure how to best serve this population. I really wish they did not include Bronze plans. They are wolves in sheep’s clothing.
My husband is retired military so I never had to struggle with choosing the right plan. Despite many people’s complaints, Tricare is actually quite generous. There are no premiums and out-of-pocket max for active duty family members is $1000.00 per year for the entire family; for retirees is $3000.00. Tricare Young Adult (the program for children 23 to 26) does have premiums. Still, I cannot complain.