Covered California offers peek at consumers who use special enrollment periods

Special enrollment made up 13 percent of forced membership for Covered California plans last year--often at a higher cost than open enrollment members--but officials say providing proof of special enrollment eligibility could deter unqualified members and drive costs down.

Special enrollment in Covered California plans saw a slight increase from 11 percent membership enrollment in 2014, although two large plans are approaching 20 percent, according to a presentation in a Covered California board meeting. Officials say that a better verification process for the special enrollment period (SEP) would limit premium increases and result in a healthier risk mix. High premium increases can be a deciding factor in non-subsidized enrollees declining coverage, and for subsidized members, rate increases have implications for the federal budget.

John Bertko, chief actuary at Covered California, outlined six observations of special enrollment plans:

  • SEP members have 15-50 percent higher costs per month than open enrollment period (OEP) members in Covered California's four largest plans.
  • SEP members are two or more years younger than OEP members, which exacerbates the cost difference. In particular, newborns under one year of age are more expensive than children ages 2-18.
  • A large chunk of SEP members do not meet enrollment criteria, and requiring proof of an SEP event (loss of health insurance, marriage, birth, income changes) cuts out 15-35 percent of applicants. The Centers for Medicare & Medicaid Service recently pledged to crack down on abuse by tightening rules surrounding SEP enrollment.
  • Although one Covered California plan reported a trend in "Buy to Use" coverage, and other plans reported higher utilization in SEP members during the first three months of coverage, it's still unclear whether SEP members drop coverage after receiving the necessary care, or because they don't need healthcare services. Other insurers have reported as much as 55 percent more utilization in SEP plans, and membership that lasts half as long as OEPs.  
  • SEPs are trending upward in all Covered California plans and could reach 20 percent of overall membership.
  • COBRA enrollment is down slightly, in part because COBRA enrollees are moving toward Covered California plans with lower rates.

Officials proposed adding a verification process for SEPs in which consumers would be required to provide documentation of a SEP event. As part of that proposed plan, Covered California would electronically verify Medi-Cal enrollment or employment-based plans.

California is currently considering regulations that would prevent insurers from cutting off sales commissions for enrolling higher-cost SEP customers, a tactic UnitedHealth and others have adopted amid mounting losses on marketplace plans. Meanwhile, some health experts have argued that tightening SEP enrollment would have detrimental effect on insurers, enrollees, and marketplace plans.

To learn more:
- here's the Covered California presentation