DON'T Auto-Renew in November: A simple explanation (UPDATED)

Me, June 26, 2014:

As an aside, I also question the wisdom of not requiring everyone to re-enroll each year. Obviously HHS is trying to minimize the inconvenience/hassle factor, but it seems to me that this is just going to cause even greater confusion than it would if they simply issued a blanket statement: If you enrolled via an ACA exchange, you have to renew once a year even if nothing else has changed.

I don't see doing this as a big deal; people have to renew their license plates every year even if it's for the same car, for example. They don't have to make it that complicated...just have big Yes/No radio buttons once you log in that says "Have you had any significant changes in (income, dependents, etc...provide a list) since (date of existing policy enrollment)?" If no, then you click "Save" and you're done. If yes, then you go ahead and make whatever changes are necessary.

OK, they can't make it quite that simple because...read on...

Sam Baker, National Journal, yesterday:

"We get into a very dangerous situation if we just tell everybody they can just auto-enroll," Houchens said.

Again, all of this is avoidable. These are the risks of auto-renewal. Anyone who goes back in to HealthCare.gov to get a new eligibility determination will see their updated subsidy as well as the current list of available plans.

UPDATE: I was being so glib about "beating everyone to the punch" with my early recommendation on this that I failed to actually explain the problem:

In a nutshell, the issue is this: Obviously, the subsidy that 85% of exchange QHP enrollees receive will increase or decrease if your income changes, along with other personal situation changes. This is expected and reasonable to most people.

However, due to the way that those subsidies are calculated, they may also change as the actual premium amounts change. Specifically, they're based on whatever the second cheapest Silver plan available to them is.

So, let's say that for 2014, the 2nd cheapest Silver plan available was $500/month, and based on that (along with your household income, etc.) you received a $200/month subsidy. Since you happened to choose that plan, the cost to you is $300/month.

For 2015, let's say that nothing changed at your end. Your income, household size, etc. all stayed the same; you didn't move, and so on. In fact, the plan you chose doesn't even change; it stays at $500/month even. Based on this, you're expecting your cost to stay $300/month.

However, what if their competitors lower their rates? Suddenly the 2nd cheapest plan is no longer $500/mo, but, say, $400/mo. The subsidy calculation changes, and suddenly instead of a $200/mo subsidy, you're only getting $100/mo, meaning you owe an extra $100/month (alternately, when tax time comes around the following year, you now owe $1,200 more than you thought). In that situation, you'd have been better off switching to a different, cheaper plan.

On the other hand, what if the 2nd cheapest Silver plan goes up to $600/month? The subsidy calculation changes the other way, and now you're receiving a $250/month subsidy, even though nothing else changed. You get to save an additional $600/year, hooray!

Either way, double check your options in November even if you don't think you need to!!

In fairness, it's really Caroline Pearson, Paul Houchens & Adrianna McIntyre who deserve credit for bringing this issue to light (at least, they're the first ones I know of who brought it up, anyway).

Read the Baker piece; it's the most thorough explanation of the problem that I've seen. See also takes by Jonathan Cohn of the New Republic and Kevin Drum of Mother Jones, who concludes:

...if you or a friend is enrolled in Obamacare, here's the bottom line: don't just mindlessly auto-renew. Take a few minutes to find out if anything has changed that affects your annual premiums. Don't wait till next year to find out via a letter from the IRS.