Wow. Now even INSURANCE industry is calling for a federal SEP...and a lot more...
Three days ago, in my "Calls growing for CMS to offer COVID-19 Special Enrollment Period via HealthCare.Gov" post, I noted that:
There's only two reasons why limited-time Open Enrollment Periods exist in the first place:
1. To help prevent people from gaming the system & causing premiums to skyrocket by waiting until they're sick/injured to sign up
2. To help goad/spur people into action (deadlines are proven to be very effective at getting people off their butts)
The thing is, this is a pandemic. "Ensuring a stable risk pool" isn't exactly a top priority for anyone at this particular moment, and the economic consequences of this disaster are going to be rampant for quite awhile no matter what anyway. Right now the top priority should be making certain as many people are covered as possible. And "deadly global pandemic" is likely to be pretty "inspirational", I'd imagine.
In other words, the worst that can happen by allowing a COVID-19 SEP is if no one takes advantage of it, in which case it's no harm, no foul anyway.
Key insurance industry lobbies are now calling for federal lawmakers to open healthcare.gov for a special enrollment period (SEP) to ensure anyone who needs coverage can get it regardless of coverage status, but also request a temporary federal backstop to mitigate the financial risk. ...the insurers also request an increase the Affordable Care Act tax credits and establishment of subsidies to help employers continue to offer insurance...
Again, I'm not surprised that AHIP and BCBSA are onboard with a federal SEP. They've got to know that all of their estimates for the 2020 actuarial risk pool are already shot to hell anyway...not only are they having to cover the costs of COVID-19 testing, but many of them will be covering the treatment of the virus as well, along with what I presume will be a surge in other related complications (pneumonia, emphysema, bronchitis and other respiratory illnesses). There's also the chaos this is gonna cause to other non-COVID-19 treatments, procedures and so forth, although those may actually go down since a lot of elective/non-essential procedures are going to be cancelled or delayed as well.
In other words, it's gonna be a big mess no matter what, so to hell with it...might as well let some more people sign up. It's the other items in the first paragraph are more intriguing to me:
AHIP and BCBSA recommend lawmakers help businesses maintain their workers’ coverage either through payroll tax relief or a refundable credit against employment tax withholdings. Or the relief could include direct subsidies of the employer’s premium obligation for each person covered under the employer’s plan beginning on the day the crisis was declared, the insurers say. They ask that Congress also approve new funding to help newly unemployed Americans keep maintain coverage by creating a 90% subsidy for COBRA or other coverage. The insurers also recommend providing tax credits to people who earn more than the 400% of poverty threshold and structuring the subsidies to be more generous for younger adults to encourage more enrollment.
Well, now. The first part of this is a whole new thing...but the second part basically amounts to endorsing Rep. Lauren Underwood's #HR1868, which would #KillTheCliff on ACA subsidies, capping Silver policy premiums at no more than 8.5% of the household income even for those earning more than 400% FPL, as opposed to the current structure which caps it at 9.8% up to 400% FPL but cuts off assistance altogether over that threshold.
The "more generous for younger adults" part appears to refer to Senator Tammy Baldwin's Advancing Youth Enrollment Act, which would further lower the premium cap by between 0.5 - 2.5 percentage points for enrollees younger than 35 years old on a sliding scale.
The insurance lobbies also urge Congress to establish a temporary, emergency risk mitigation program...
“This should be structured as a backstop contingency program that is triggered only if real-world health insurer costs are significantly higher than expected. Given the enormous uncertainty regarding the costs of the epidemic, we recommend that the program cover a portion of related costs for 2020 and 2021..."
The "backstop contingency program" sounds like a call for a 2-year reinstatement of the federal Reinsurance program tied specifically to COVID-19 expenses, but I could e wrong.
S&P recently ran an analysis of a hypothetical pandemic and found that insurers’ medical loss ratios would increase by 3% to 4% percent under a moderate morbidity scenario and would increase from 10% to 12% under a severe event. Both scenarios would put pressure on profits, but the severe scenario would send insurers’ medical loss ratio (MLR) beyond 100%.
In my big Medical Loss Ratio analysis project last fall, I projected that as large as the 2019 MLR rebate checks were for several million people, I expected the rebates for 2020 and 2021 to be even larger yet. All of that was before the Coronavirus pandemic, of course.
I still expect the MLR rebates to be pretty huge this year...because they'll be based on 2019's revenue and medical claims. In 2021, however, I now expect the COVID-19 crisis to cancel out a lot of the MLR rebates, assuming it turns out to be as ugly as it appears it's going to.
ONE WORD OF CAUTION: It's worth noting that while the cost of testing/treating COVID-19 is obviously going to skyrocket, it's also likely that other types of medical claims may plummet this year, as elective and non-essential medical procedures are delayed or cancelled altogether:
As more healthcare providers are increasingly being asked to assist with the COVID-19 response, it is critical that they consider whether non-essential surgeries and procedures can be delayed so they can preserve personal protective equipment (PPE), beds, and ventilators.
As the conornavirus spreads in Michigan and taxes the capacity of health care providers, Gov. Gretchen Whitmer signed an executive order Friday restricting non-essential medical and dental procedures.
Whitmer ordered that by 5 p.m. Saturday, hospitals, freestanding surgical outpatient facilities, dental facilities and all state-operated outpatient facilities must implement a plan to temporarily postpone all non-essential procedures until the termination of the COVID-19 state of emergency.
That means that routine dental cleanings, cosmetic surgery, bariatric surgery, joint replacement surgery will have to be rescheduled unless postponement would significantly impact the health and safety of the patient.
...Exceptions to the order include procedures to treat advanced cardiovascular disease, cancer testing, treatment and pregnancy related visits and procedures, organ transplants and dialysis.
Of course, dental cleaning and cosmetic surgery isn't usually covered by health insurance anyway, but I presume joint replacements are, and I'm also guessing a lot of people are also voluntarily delaying or cancelling their routine doctor's appointments (unless they're displaying flu-like symptoms), which could also mean fewer medical claims.
In other words, cancellation/delay of other stuff could cancel out at least some of the increase in COVID-19-related expenses, but who knows?
So, is CMS going to actually do anything about any of this? Don't count on it:
Inside Health Policy recently asked whether CMS would establish a similar SEP, and the agency said it was not currently on the table but noted people could enroll if they qualify for existing SEPs.
When a group of Senate Democrats called on CMS to open the federal exchange earlier this week, CMS provided the same reply. The agency reiterated the same stance on Friday.