Deadline Day: Insurers Balk at Obamacare Concessions as Health-Risk Pool Thins

(Bloomberg) -- Americans have more time to pay for their new Obamacare health plans, thanks to the insurance industry. What they don’t have is more time to sign up.

The deadline to enroll in plans that begin Jan. 1 is today for most of the U.S., a cutoff that remains firm even as the Obama administration has urged insurers to allow retroactive sign-ups into next month. The industry also balked at leniency for new customers who go to doctors or refill prescriptions not covered by their plans.

The success of the health overhaul relies on a diverse pool of customers where younger, healthier participants balance the costs of covering older, sicker people. Insurers say they can’t make more concessions without putting themselves at risk that patients will wait and sign up only when they need care.

“It’s hard to be nice when it comes to the risk pool,” Dan Mendelson, chief executive officer of the Washington-based consulting company Avalere Health, said in a phone interview. “If it’s just a matter of getting paid later, the companies have sufficient cash flow to cover that sort of thing.”

Aetna Inc., Cigna Corp. and other insurers already agreed to begin coverage at the start of 2014 for at least 1 million people who selected a plan before today as long as they send their checks by Jan. 10. People who buy plans from tomorrow through Jan. 15 will have to wait until Feb. 1 for coverage. The last deadline to sign up in 2014 remains March 31.

Controlling Costs

President Barack Obama has struggled to smooth the path into the Patient Protection and Affordable Care Act, the biggest overhaul of the U.S. health care system since the 1960s. His signature domestic initiative, known as Obamacare, has been hamstrung by regulatory delays, website outages, political backlash and public apathy.

Enrollment had been sluggish, with just 365,000 people selecting private plans on the new state and federal government- run health exchanges through the end of November. Enrollment accelerated in December, Obama said at a Dec. 20 news conference, with more than 500,000 people in the 36 states served by the federal exchange selecting plans in the first three weeks of the month.

“All told, millions of Americans -- despite the problems with the website -- are now poised to be covered by quality affordable health insurance come New Year’s Day,” Obama said.

At least 3.9 million people have been determined eligible for Medicaid, the state-run health program for the poor, or for state children’s health programs since the exchanges opened Oct. 1, the U.S. Centers for Medicare and Medicaid Services said in a report. It’s not known how many of those people have actually signed up for the programs.

Industry Concessions

Gaining concessions from the insurance industry would provide an additional boost, though the changes requested so far by Obama on retroactive enrollment and out-of-network coverage cut straight to the heart of how insurers manage costs.

“As it is, they’re dealing with a lot of uncertainty,” Ana Gupte, an industry analyst with Leerink Swann & Co. in New York, said in a phone interview. “On top of that they have to also loosen their hold on their networks, which is the most important way for them to manage their medical costs for a likely sicker, less healthy population.”

Obama earlier pushed back a key application deadline, delayed a small-business health exchange and extended a program for “high-risk” pools of sick Americans. On Dec. 19, his administration said hundreds of thousands of people whose health plans are being canceled because their coverage doesn’t meet Obamacare rules will be exempt next year from the health law’s mandate that all Americans carry medical insurance.

Meeting Targets

“They’re trying to do everything possible to generate more enrollment,” Mendelson said. “They will be judged on enrollment at the end of the day. If they feel they can make these marginal modifications to enhance enrollment, they’re going to do it.”

The administration had set a goal of signing up 7 million people through the new federal and state insurance marketplaces by the March 31 end of the six-month enrollment period.

Most of the flaws in the enrollment system have been fixed, the administration said. Officials said they sent more than 2 million reconciliation e-mails and made 600,000 phone calls to people who experienced difficulty signing up in October and November.

U.S. Health Secretary Kathleen Sebelius urged the industry on Dec. 12 to be lenient with Obamacare customers who miss today’s deadline for enrolling in the program or are late with their initial payment. The request included honoring late sign-ups with retroactive coverage, letting people pay only part of their premiums and covering treatments for patients who go to out-of-network doctors and pharmacies.

Continued Care

Insurers say that they’ll follow existing policies on what’s known as “continuity of care” -- allowances made to new members so they don’t have to change doctors or medicines while being treated for an illness. At Aetna, the third-biggest U.S. health insurer, new customers have as long as three months to transition to doctors and drugs included in the company’s networks and formularies, said Cynthia Michener, a spokeswoman for the Hartford, Connecticut-based company.

“The benefits and networks we offer on the exchanges were all filed and approved by the states where we participate,” Michener said in an e-mail. “To alter those plans would require approval by state regulators. We would also need to make significant systems changes and/or increase service support, which are not viable.”

Serious Conditions

Continuity-of-care allowances are usually made for serious or long-term conditions such as cancer, pregnancy, mental illness, transplants and multistage surgery.

Joe Mondy, a spokesman for Bloomfield, Connecticut-based Cigna, said the company will abide by the Jan. 10 payment deadline and that “we continue to review” the administration’s other requests. He didn’t say when a decision would be made.

WellPoint Inc., which operates Blue Cross Blue Shield plans in 14 states, said its continuity-of-care policies will allow customers “to continue receiving care from an out-of-network provider for a specified period of time.” The policies vary by state, Kristin Binns, a company spokeswoman, said in an e-mail.

Kaiser Permanente, the Oakland, California-based nonprofit health-care company, agreed to allow late payment for exchange plans but isn’t changing other policies in response to the government’s requests, spokesmen said. Customers who sign up after today will have coverage beginning Feb. 1, John Nelson, a spokesman for the company, said in an e-mail.

Matt Stearns, a spokesman for UnitedHealth Group Inc., the largest publicly traded U.S. insurer, declined to comment.

For reprint and licensing requests for this article, click here.