HHS Payment Rules Discourage Insurers from Enrolling Millions of Uninsured, New Study Shows
Washington, D.C. – A new analysis shows that shortcomings in federal payment rules are a driving factor behind one of the Affordable Care Act’s (ACA) major limitations: the failure to provide prompt coverage to millions of people who become uninsured when they lose jobs that provide health benefits. The Urban Institute study was led by Stan Dorn, Senior Fellow at Families USA.
Previous Urban Institute research found that more than 30 million people become uninsured at some point during the year because of involuntary job loss and other major life changes that let them sign up for health coverage between open enrollment periods, but fewer than five percent of them receive coverage. The new Urban Institute analysis, published in the February issue of Health Affairs, isolates a key cause behind the insurance industry’s ongoing refusal to market to consumers who lose health insurance during the year: federal rules for health plan payment fall significantly short in compensating insurers for the extra health care costs associated with midyear enrollees.
“Since health insurers are underpaid, it is no surprise that they avoid enrolling consumers midyear and, at many companies, deny commissions to brokers and agents who sell insurance outside regular enrollment periods,” said Stan Dorn.
Using data from two large insurance companies, the new study found that recent federal fixes have made up for approximately half of previous underpayments.
“Further improvements are probably needed for carriers to compete by offering value to all eligible consumers throughout the year, rather than by avoiding millions of uninsured consumers who qualify for insurance because of midyear life events,” said study co-author Bowen Garrett.
At the time of the study, Dorn and Garrett were senior fellows at the Urban Institute’s Health Policy Center. Dorn is now with Families USA.