ACA markets prepare for chaos as subsidy talks drag on
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Affordable Care Act exchanges could face a new round of administrative upheaval if Congress finds common ground on extending enhanced ACA subsidies next month.
The big picture: Retroactively reinstating the enhanced subsidies after their expiration at year's end would require reprocessing millions of consumers' personal information and setting up special enrollment periods.
- The hardest part, though, could be reaching consumers who drop coverage in response to spiking premiums to let them know the numbers have changed.
The ACA marketplace went through this kind of a drill once before, when pandemic-era benefit enhancements took effect in the middle of 2021.
- An ongoing open enrollment period allowed people to sign up for coverage or change to a more generous plan.
- Administrators also automatically applied enhanced subsidies to enrollees who qualified, said Ellen Montz, a managing director at Manatt Health who led the federal ACA marketplace during the Biden administration.
What they're saying: "There's a lot of work there, but we can do it very quickly," Jessica Altman, executive director of Covered California, the state's ACA marketplace said.
- More concerning to Altman is finding potentially tens of thousands of people who shopped for coverage but didn't opt in because of the cost, or who switched to skimpier plans to save money.
- Covered California's board has given it $20 million in contingency funds to support system changes in the event the ACA subsidies are renewed, including outreach and marketing, she said.
Idaho's health insurance marketplace has also been planning all year for different scenarios, executive director Pat Kelly told Axios. If a clean subsidy extension were hypothetically passed on a Monday, Your Health Idaho would shut down its website the following weekend to reprocess customers' tax credits.
- Kelly said he anticipates setting up a special enrollment period and using email, text and other communication channels to get the word out.
- Health and Human Services, when asked how the federal marketplace is preparing, said it doesn't comment on potential legislative actions.
Yes, but: There are other ideas on the table beyond a straight extension, like capping subsidy eligibility at specific income levels, that could add administrative headaches.
- "The more complicated any any extension gets, the harder it will be for marketplaces to adjust, and the harder it will be to to communicate the changes to people," said Larry Levitt, executive vice president for health policy at KFF.
Between the lines: The posted premiums for next year — which are increasing by an average of 26% — are already locked in, health policy experts say.
- Some states had insurers this fall submit two different rates, one with a subsidy extension factored in and one without. But it's too late to simply swap in those fallback rates.
- "I would venture to say that those rates are probably not actuarially sound at this point, and then it's a nonstarter to have folks refile rates," Montz said.
Insurers could see higher profits next year if Congress extends the subsidies and healthy enrollees don't drop out of the market en masse. But they're legally required to eventually rebate enrollees excess revenue from premiums that isn't spent on medical claims.
Zoom out: Health insurers stand ready to help implement enhanced subsidies, if they're renewed, insurance trade group AHIP said.
- "If Congress acts, health plans will work quickly with federal and state regulators to ensure consumers can access their more affordable coverage options as soon as possible," CEO Mike Tuffin said in a statement Wednesday.
- An extension would also be a better outcome financially for health insurers, strategy firm Capstone wrote in an analyst note.
- But difficulties around premium pricing and administrative burdens could contribute to enrollee churn, creating a new set of headaches, the note adds.
