Yesterday, we published a note regarding a change in enrollment policy for the federal health insurance exchange, Healthcare.gov, and the state based exchanges. Specifically, HHS is drastically limiting Special Enrollment for a "permanent move." In that note we focused largely on the implications for insurers like UNH, AET and MOH. However, in light of Tom Tobin's note this morning on AHS and his ongoing examination of the #ACATaper, we thought it would offer a few points on the flip-side - the implications of the policy change to providers.
Recall that about 60 percent of people enrolled in federal and state exchanges were previously uninsured with the largest portion coming from people with incomes at or below 250 percent of the federal poverty level. This result is much different from what most people (policy makers, insurers, economists and the Congressional Budget Office) thought would happen. They expected a larger shift of people from employer-based coverage to the exchanges.
- The elimination of the Special Enrollment Period for a "permanent move" is most likely to shift people back to uninsured status not to insured status (after waiting for the next open enrollment period.)
- Providers, especially hospitals, are very adept at running patients through all eligibility screens when they present at the hospital. These patients will still present at a hospital or clinic but the case workers will have one less option when screening for coverage. The other SEPs are pretty restrictive (release from incarceration, addition of a newborn, etc.) so assuming the patient needs treatment, they will be admitted as a "patient pay" case while the hospital sorts out what if anything the patient can pay. More likely than not, especially if the hospital is non-profit under recent IRS regulations, the patient will be treated on an uncompensated basis.
- A certain portion of patients that sought non-emergent care and received coverage from the permanent move SEP long enough to have the necessary elective procedure (like a hip or knee replacement) will simply forego treatment.
- Bottom line is that Healthcare.gov enrollment should drop, provider admissions will go down, and uncompensated care will go up as a result of this rule change thus magnifying the trends already identified in the #ACATaper thesis Tom Tobin has been discussing.
- If you toss a recession into the mix, the admissions drop may be muted as a portion of this SEP population shifts to Medicaid due to income changes.
- We do not yet know how many enrollees in 2014 and 2015 gained coverage through a SEP but the insurance industry said that 13 payers received $25 billion in claims from Jan., 1, 2014 to June 30, 2015 for SEP enrollees, according to a recently released report by Oliver Wyman.
- Rule becomes effective in July so impact should occur in back half of 2016.
