What auto-enrollment for exchanges means for insurers
The U.S. Department of Health and Human Services recently proposed a plan to automatically renew customers' current marketplace plans unless people opt out of them.
While the new rule aims to improve the customer experience, changes to the renewal process could lead to "painful" repercussions for insurers, according to a new report from Milliman. For instance, variations in net premiums caused by the auto-enrollment process could prevent insurers from retaining members.
Even with nominal premium increases for 2015, the auto-enrollment process will offer members significant financial incentives to purchase coverage using the normal application process. But for insurers that will not increase or decrease rates next year--auto-enrollment bodes well for high renewal rates.
Reports showing strong consumer preference for the lowest-cost plans have led some insurers to forfeit profit margins to secure a larger share of the exchange market. However, forgoing a rate increase will likely preserve market shares for 2015 and put their bottom lines at risk, Milliman noted.
"Pricing uncertainty combined with consumer price sensitivity will likely result in the exchange being more volatile for insurers relative to their traditional lines of business for many years to come," the report states.
With such challenges at hand, Milliman recommends insurers inform their members that going through the redetermination process could lower monthly out-of-pocket costs for 2015.
Insurers aiming to retain exchange enrollees and attract new consumers should look to the first enrollment period for valuable lessons learned, FierceHealthPayer previously reported. Doing just that, healthcare advocacy group Families USA recommends insurers increase the number of and resources for navigators and build a substantial public campaign educating consumers about subsidies, among other suggestions.
- here's the Milliman report (.pdf)
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