Obamacare exchange directors want insurers to spend a lot to get people enrolled in health plans now that the American Rescue Plan Act is signed into law.
The $1.9 trillion Covid relief package (H.R. 1319) includes premium subsidies for the first time for people earning over 400% of the federal poverty level. Those households won’t have to pay more than 8.5% of their income on Affordable Care Act policies.
A vigorous advertising and marketing campaign by insurers could be key to reaching millions of consumers who lack health coverage and may be unaware of the enhanced financial aid—and it’s seen as crucial to exchange directors’ hopes of making those subsidies permanent. The Biden administration recently reopened widespread enrollment in the federal Obamacare exchange until May 15.
An estimated 13 million uninsured Americans will become eligible for “big subsidies” worth about $800 a month per household, according to Peter Lee, executive director of Covered California, the largest state ACA exchange. “Many will get coverage that is virtually free,” he said.
Lee was among the exchange directors at a recent conference urging the health insurance industry to ramp up its marketing of ACA plans.
“Health plans, open your checkbooks. Start spending marketing dollars because it’s well spent,” Lee said.
Many states have lost 70% of their unsubsidized individual market enrollees in the past four years, Lee said. He urged insurers at the America’s Health Insurance Plans National Health Policy Conference to start by going after those former customers.
Nationally 25 million Americans can benefit “a lot” from the American Rescue Plan—9 million people already in the marketplaces who will receive greater subsidies, as well as 15 million people not in the marketplaces, Lee said.
There are also about 2.5 million people who have insurance who will be able to get financial help, he said.
While the relief package offers a big opportunity, Lee said there are also challenges. Only about 10% of the 15 million eligible for subsidies are likely to be enrolled, he said, citing Congressional Budget Office estimates. “People think they can’t afford health care” because the bill only provides enhanced subsidies for two years, he said.
Making Changes Permanent
With the American Rescue Plan Act signed into law, the focus now is on whether the increased subsidies it includes will be made permanent. The exchange directors made it clear that they will be pushing hard for that to happen.
Congress will likely consider whether to make the changes permanent when it takes up additional relief legislation this summer, Lee said. “If we sit on our hands and don’t enroll people and show the value of the ACA, this is not going to be permanent,” he said.
The marketplaces and the health insurance industry need to promote the subsidies so that people sign up, Lee said. “If you and we don’t do a good job, these American Rescue Plan changes will be temporary, and not made permanent,” he told insurers at the conference.
Giving people additional time to sign up for coverage will be crucial to getting more people enrolled, Lee said.
Covered California will announce March 15 that it is “having a very long special enrollment period,” opening early in April, he said.
He said the federal government should spend more than $100 million on marketing for special enrollment sign-ups this year, as well as “another hundred or 200” in open enrollment this fall.
He encouraged health plans to spend 0.6% of premiums on marketing. That would be about $80 million in California, he said.
Transition to Exchange Plans
In addition, the industry should convert people who have plans outside of the exchanges to exchange plans, he said. People are only eligible for subsidies if they purchase plans through the marketplaces.
Heather Korbulic, executive director of Nevada’s Silver State Health Insurance Exchange, said she is “anxious” about implementing new rules for the American Rescue Plan, figuring out the cost of implementation, and trying to determine how federal dollars have been allocated to states, and when they can expect the money. The Nevada exchange started in 2020.
“I agree with Peter in terms of needing to get our carriers to really lean in,” as well as getting insurers to transition people who have individual coverage outside of the exchange into plans sold in the exchanges, Korbulic said.
Kevin Patterson, CEO of Connect for Health Colorado, said he is considering spending “more than we have on TV than we ever spent before” to promote new sign-ups.
Agents and brokers will be crucial to help “walk people through” the process of getting enrolled, he said.