“Losing Medicaid coverage? Don’t worry, we automatically enrolled you into a Marketplace plan.”
This was just one innovative approach the State of Massachusetts used pre-ACA. It helped at-risk people keep some kind of healthcare coverage.
High-risk populations may lose coverage before 2023, despite having access to $0 premiums.
We interviewed academic policy experts who helped explain what it could mean for state agencies bracing for the end of the Public Health Emergency (PHE).
About the Experts, McIntyre and Shepard from Harvard University
Adrianna McIntyre, Ph.D., M.P.H., M.P.P., and Mark Shepard, Ph.D. speak to the potential use of automatic policies to address administrative burdens prohibiting enrollment in health coverage in their most recent study.
McIntyre works as an Assistant Professor of Health Policy and Politics in the Department of Health Policy and Management at the Harvard T.H. Chan School of Public Health. She focuses on the politics of health reform and barriers to take-up and retention of subsidized health insurance.
Shepard, an Assistant Professor at Harvard Kennedy School of Government and a faculty research fellow at the National Bureau of Economic Research (NBER), studies policy design in health insurance markets, particularly in public programs.
Automatic Enrollment and Retention Policies Once Curved Coverage Lapses in At-Risk Populations
McIntyre and Shepard shared an overlooked piece of healthcare history. Before ACA, Massachusetts auto-enrolled people that were hard to reach. Or changed their policy for them.
Like we may see in a few months, people would lose Medicaid eligibility, and they were hard to contact. Instead of losing all coverage, Massachusetts Health Connector auto enrolled them in $0 premium plans. The automatic enrollment policy minimized the typical coverage losses seen during churn and required no enrollee action.
To further combat coverage loss, Massachusetts also targeted those about to lapse in the Marketplace coverage. When outreach methods failed, members would automatically transition to $0 premium plans.
Automatic retention mitigated the fallout of rising premium payments, not unlike those expected following the expiration of the American Rescue Plan Act (ARPA).
Recent Enrollment Gains Due to Affordability Provisions May be Lost without Policy Shifts
Back in the present day, recent policy changes that expanded access to coverage will soon expire.
“With the unwinding of the public health emergency and the end of the continuous coverage previsions, I think this work is more pressing than ever,” McIntyre states.
McIntyre and Shepard expect the issue of inaccessible and convoluted coverage to escalate following the end of the PHE. Conservative estimates expect disenrollment rates to reach 17.94% during upcoming Medicaid reassessments.
Recent statistics released by Medicaid and CHIP Payment and Access Commission (MACPAC) noted the very lower rate of exchange coverage take-up among those who disenrolled from Medicaid or Children’s Health Insurance Program (CHIP). Less than 4% successfully completed the transition for Medicaid to Marketplace, much lower compared to previous estimates.
Additionally, the ARPA, which improved affordability for those with annual incomes below 150% of the federal poverty level (FPL), is set to expire. Many enrolled in $0 plans would need to pay a premium in 2023.
Transitioning enrollees to new Marketplace plans could result in massive coverage losses due to the lack of an effective targeting strategy for the uninsured populations.
Examining past automatic policies that prevent coverage lapses in volatile populations may inform future efforts in the Marketplace.
Health Plans Benefit from Improved Risk Pools with Automatic Policies
Pre-ACA automatic policies lowered health plans’ risk pools in addition to extending coverage. Those enrolled via automatic enrollment and retention were younger and healthier compared to the benchmark Marketplace population.
McIntyre suggests that low-risk individuals composed most of the researched population due to their general lack of investment in their health insurance.
Those without chronic conditions think less about their coverage and might be less likely to open related mail. Individuals without dependents or who had been enrolled for less than one year were more likely to benefit from automatic policies.
Limitations to Infrastructure and Legislation Prohibit the Utilization of Automatic Policies
Barriers in the health insurance space make it impossible to enact automatic policies across all states without infrastructure and legislative changes.
A Lack of System Communications and Composability Limit Automation
Inconsistent infrastructure and data siloing limit the ability of Medicaid systems and Marketplaces to communicate. The exchange between Medicaid and Marketplaces is highly variable across the country. Monolithic systems cannot communicate the way they need to.
McIntyre expressed confidence in Massachusetts’ ability to reimplement automatic policies without platform improvements, but other states would struggle, specifically those on the Federally Facilitated Marketplace (FFM).
Premium collection also presents an issue that states would need to address. While automatic policies target those eligible for zero-dollar plans, individuals in this demographic often experience shifts in their projected income.
“[States] don’t have a mechanism in place for collecting premiums for people that aren’t actively selecting into the Marketplaces,” McIntyre explains.
Those enrolled in a $0 dollar plan might transition to a low-cost plan or owe a premium once their yearly income is deduced. Ideally, discrepancies in premium payments are resolved on the backend through payment facilitators; however, those automatically placed in the plan may have never established a payment plan.
Moreover, there is also an issue with APTC (Advanced Premium Tax Credit) liability for consumers who are automatically enrolled in marketplace plans with a projected income that varies from their actual end-of-year income. When this happens, the law currently requires a repayment to the IRS.
Clawback and Elusive 1332 Waivers Present Obstacles to Implementing Automatic Policies
Discrepancies in premium payments due to inaccurate projected incomes also lead to liability issues.
“Tax liabilities that might be imposed on people automatically enrolling or retaining if their best estimate of the person’s income for the year ends up being wrong,” McIntyre elaborates.
Since the Marketplace only collects income information yearly, members might be subject to payments during the tax season even though they did not actively enroll. Workarounds are possible; however, determining who would pay for these premium backlogs would cause contention.
McIntyre suggests that one option for Marketplaces looking to adopt automatic policies is to collect premiums via paychecks and tax returns. This may place enrollees in a difficult financial situation, and enrollee consent would be needed. To avoid unsuspecting costs to enrollees, new policies are required.
Clawback policies under the IRS require a workaround. Possible suggestions include:
- Utilizing tax filing offers the option for individuals to opt into the automatic policies and accept potential costs due to inaccurate income projections.
- Invested states taking on the burden of clawback costs.
- Monthly income estimates like Medicaid eligibility requirements.
- Using either current or past year’s income (whichever is lower) to determine subsidies exclusively for those enrolled in automatic coverage.
Such sweeping changes would require states to seek a notoriously difficult 1332 waiver. The deficit neutrality guardrail requires proposed changes to cost the same or less than the current scenario.
Multifaceted Barriers to Coverage Require States to Adopt Innovative Outreach Methods
Before their most recent publication, McIntyre and Shepard researched strategies to promote the take-up of coverage. Uninsured rates in Massachusetts have consistently been the lowest among the states, meaning a subsection of individuals qualify for free coverage but do not enroll. With costs no longer impacting take-up, there remains the question of the barriers that prevent universal coverage.
McIntyre and Shepard investigated the effectiveness of different outreach methods. Enrollment rates for those receiving a streamlined enrollment letter which only requires the individual to check off a box to enroll and return the form via pre-paid envelope were compared to standard, personalized reminders.
They found no significant difference in enrollment rates for those who received the streamlined form over standard reminders; however, the streamlined form showed an advantage for those eligible for zero-premium plans.
These findings highlight the limitations of recent legislation that focused primarily on increasing affordability. There remains the caveat that effective outreach requires a multi-pronged communication strategy. The approach of the end of the PHE and redaction of continuous coverage greatly increases the possibility of at-risk populations lapsing in coverage.
Data siloing and a lack of industry composability often results in individuals eligible for coverage getting lost in the scuffle. Health plans and government issuers must work together to overcome shifting barriers to coverage.
To learn more about how health plan data can identify individuals at risk for future lapses and how it determines the best outreach methods, download Softheon’s ACA Predictive Analytics Report.