There had been a bit of a wonk debate on how much the Special Enrollment Period (SEP) process is being gamed by people to get coverage when they don’t actually qualify for it. People who know what they are talking about acknowledge that some gaming is going on, but most SEPs are legit. People who are convinced that PPACA is an illusion built upon sand and the entire edifice will collapse in 2011, 2012, 2013, 2014, 2015, 2016, sometime in the near future are convinced that gaming is the dominant enrollment reason.
Now via Allison Bell, Covered California provides some real data:
In November, executives at UnitedHealth Group Inc. (NYSE:UNH) reported that the company was losing hundreds of millions of dollars on individual exchange business, in part because SEP claims were much higher than it had expected….
Covered California staff members talked to the managing actuaries at 12 of the exchange program’s 13 QHP issuers….
“some of the difference is likely attributed to individuals inappropriately claiming SEP events,” according to his presentation.
Nothing is proven, but, at the four major QHP issuers, actuary estimates of the average cost differential for regulars and SEP enrollees range from 0 to about 50 percent higher. Bertko said some types of enrollees who clearly are eligible for SEPs, such as newborn babies, are much more expensive to insure than enrollees who come in during the open enrollment period.
Bertko said some issuers have documented hundreds of cases of off-exchange applicants who first were denied coverage due to their not being able or willing to provide valid proof of SEP eligibility, then re-applying for coverage through Covered California and getting SEP coverage.
So what does this mean?
There is some gaming going on. The matched pair of the same individual getting rejected for a SEP off-Exchange and then being approved for a SEP on Exchange is clear proof.
Verification and validation requirements such as requiring submittal of marriage licenses or divorce decrees, or a bill with the new address will reduce some of this. Income changes can be validated by Covered California calling former employers and asking if Mr. Smith worked there between these dates and that his last salary was what was listed on the subsidy calculation.
Some SEPs will always be more expensive than normal enrollment. Babies are cute but they are expensive until they start walking. Validation requirements add a cost to acquisition so that will deter some healthy individuals who are eligible for validated SEPS to not go that route as the hassle is not worth it. The SEP pool should always be a bit sicker on average than the open enrollment pool.
Gaming is a problem. It is not the dominant problem as insurers who are complaining the loudest about it are the ones’ with questionable strategies in the first place. Putting in place modest verification steps will stop the most egregious gaming and increase the strength of the open enrollment period.
Raven Onthill
I suspect a great deal of it is a reflection of the variability of income of poor people and lower middle income people.
It’s the fault of the poors for…being poor! Oh, noes! I’ve seen the process. For self-employed people, the amount of paperwork demanded is staggering and it takes away from time that might be spent working, bringing in that meager income.
I expect that, as with drug testing of welfare recipients, any changes will find few people evading the law, but it will make coverage yet more expensive and harder to get. Which seems to be the point.
gvg
what is gaming the system in this context?
rikyrah
you always break it down, Mayhew, so that we can understand the issues
rikyrah
Could you do a recap of those states that have NOT expanded Medicaid, and how many people that’s hurting?
low-tech cyclist
This issue has a powerful SEP* field around it. Did you say something, Richard? ;^)
Seriously, as always, I appreciate your translations of health-care wonkery into English that mere mortals can understand.
Something I’d like to add is that, system-wide at least, this problem is shrinking every year, and will continue to do so until pretty much everyone who can be covered in our ACA world, is covered.
There’s two aspects to this: one is the income that insurance companies aren’t getting from the uninsured (which is obviously dropping), and the other is the shrinking number of people without insurance who might be in a position to game the system following a health event. As the number of unenrolled people continues to shrink, the insurance companies, taken as a whole, will be closer to fully compensated for the risks to the entire non-Medicare, non-Medicaid, non-CHIP population, and there will be fewer people potentially taking advantage of that difference. (I hope that made sense.)
There may be individual losers among the insurance companies, but if gaming hasn’t caused the system to collapse yet, chances are diminishing that it will ever happen.
*Somebody Else’s Problem, from the third Hitchhiker book. If something is Somebody Else’s Problem, it disappears from one’s consciousness.
Jim
SEPerate? or SEParate
TallPete
@gvg: ACA allows you and your family to sign up for health insurance outside of the Open Enrollment Period (OEP), if you experience certain qualifying life events, during what is termed a Special Enrollment Period (SEP).
Such qualifying life events include marriage, childbirth, and other major happenings. In most cases, you have 60 days after the date that triggered the qualifying life event to purchase major medical individual or family health insurance coverage.
Problem is “Other major Happenings” include things that are more difficult to prove/check like “Loss of essential coverage” (spouse loses job and ins) or moving to a new coverage area.
Luthe
@Raven Onthill: Yeah, this is my major problem. I bounce from temp job to temp job, each of which pay different salaries and may or may not offer employer coverage. If I reenrolled every time my income changed, I’d be having a ridiculous number of SEPs a year. Not to mention every little tweak on the AccessHealthCT website generates a new “application” and sends you paperwork to match. I’ve had six different sets of “application” paperwork mailed to me in one day.
Right now I suppose I am “gaming” the system by *not* reporting changes in income or employment because I don’t want to deal with re-enrolling every time something changes. Especially when I’ll get bounced from “real” insurance to Medicaid and back (which will also complicate my doctor’s visits, as most of them don’t take Medicaid and I’ll be paying out of pocket).
I love the ACA and I love having insurance, but fucking Loki in a hoopskirt, it’s a pain when you don’t have a permanent income stream.