Why insurers should actually encourage the use of special enrollment periods

Health insurers' push to reduce the number of consumers who enroll during special enrollment periods (SEPs) could end up hurting the Affordable Care Act marketplace more than helping it, argues a blog post from Health Affairs.

The Centers for Medicare & Medicaid Services is currently planning to change policies surrounding SEPs to address insurers' concerns that they are being abused, and some of the country's largest insurers have announced that they will no longer pay brokers for applications completed outside of the standard enrollment periods. Indeed, the Blue Cross Blue Shield Association notes that Blues plan members who enroll during SEPs use 55 percent more services than those who sign up during standard open enrollment, FierceHealthPayer has reported.

But in her blog post, Laurel Lucia, the Health Care Program Manager at the UC Berkeley Center for Labor Research and Education, paints a different picture, saying that SEPs do not foster abuse. In fact, tightening rules around SEPs may not be in the best interest of consumers or the marketplace. Here are a few reasons why:

  • Special enrollment periods are actually underused, since fewer than 15 percent of consumers who are eligible for a SEP enroll. Between 8 million and 10 million Americans could be eligible for SEPs each year, but only about 940,000 actually enroll.
  • Short duration and high turnover are normal for the individual marketplace, and were quite common even before the ACA; among those enrolled in individual market in January 2010, only 62 percent remained in that coverage five months later.
  • SEP enrollee costs are higher, on average, since mid-year enrollment usually happens when someone is suddenly hit with a large need for healthcare services, which suggests that a large share of the SEP-eligible population is failing to enroll. If more healthy individuals were encouraged to take advantage of SEPs they qualify for, this would reduce adverse selection and help keep average premiums down, the post says.

"It is in the best interest of marketplaces, insurers and potential enrollees alike to maximize enrollment of eligible individuals who experience qualifying life events," Lucia writes. "Which includes making mid-year enrollment processes for eligible individuals simple and easy."

To learn more:
- here is the Health Affairs blog post