A significant portion of people who signed up for Obamacare during the pandemic—usually because of job loss—aren’t getting health coverage because they couldn’t pay their initial premiums.
Almost one-third of some 20,000 Maryland enrollees from March through August didn’t activate their plans. In Washington, one-fifth of a 27,000-enrollee sample are still without coverage due to lack of payment, a sign that Obamacare subsidies may not be enough to help uninsured people get coverage in a public health emergency.
Twelve states that operate their own Affordable Care Act exchanges have opened special enrollment periods outside the normal year-end window in response to Covid-19. In other states, uninsured people who lost their jobs are eligible for Obamacare now, but others must wait until November.
People are enticed to sign up, but many are having trouble paying the first premium to start the coverage, Trinity College economics professor Gerardo Ruiz Sanchez found in a recent paper. Once people make the first payment, they are entitled to a 90-day grace period if they don’t make subsequent payments before being cut off.
The findings indicate many people can’t afford ACA coverage even though subsidies are provided for those with incomes between 100% and 400% of the poverty level.
“It’s a great idea to open these special enrollment periods for uninsured people,” Ruiz Sanchez said in an interview. But there are “meaningful differences across demographic groups in the probability of paying the first premium.”
In Washington, 20.4% of people who enrolled using the state’s Healthplanfinder between March 10 and July 1 didn’t pay the initial premium, which is necessary for the coverage to take effect, the paper said.
That percentage is far higher than the national average for regular enrollment, which runs from Nov. 1 to Dec. 15. Just 6% of people didn’t pay premiums during the normal 2020 open enrollment period in all the states, according to data from the Centers for Medicare & Medicaid Services.
People who lost coverage are less likely to pay their initial premium than people using special enrollment for other reasons, such as the birth of a child, the paper found. Lower income people also are less likely to pay the initial premium.
“This provides some empirical evidence that there might be scope for considering a little bit of extra help for them,” Ruiz Sanchez said. “If we’re discussing stimulus checks, if we’re discussing eviction bans, why are we not discussing a little bit of help for people to keep their insurance.”
“The customers who are losing any minimum essential coverage are grappling with how to pay,” Michael Marchand, chief marketing officer for the Washington Health Benefit Exchange, said in an interview.
“If you were to lose coverage today and be able to go onto the exchange and purchase coverage for the remainder of the year, but it was a choice between that and having the necessary internet connections so your kids can go to school at home, what are you going to pick?” Marchand said.
Washington health officials are studying an additional subsidy program that would address “some of the issues around affordability,” Marchand said. California is the only state that has increased Obamacare premium subsidies, expanding them to cover people with up to 600% of the poverty level.
Thousands Don’t Pay
The Maryland Health Benefit Exchange also experienced low payments for people signing up during the special enrollment period it started March 16, Executive Director Michele Eberle said in an interview.
As of Aug. 31, 21,316 people enrolled in Obamacare plans, but only 14,604 people paid initial premiums, a 69% effectuation rate, Eberle said. During the regular 2020 open enrollment period, 77% of enrollees paid initial premiums, she said.
“It all comes down to dollars,” she said. After enrolling in an ACA plan, “they may have realized, ‘I’m not going to have enough money coming in to cover this.’”
Maryland instituted an insurance pool in 2018 to help plans cover catastrophic claims, which helped reduce premiums. They are down 11.9% in the 2021 individual market, the third year of rate decreases, Eberle said.
“That’s how we get more people insured,” she said. “Each year that we’ve dropped the rates, we see more people that don’t qualify for financial assistance enroll.”
Lower Than Expected
The District of Columbia saw a decline in the share of people who paid for coverage after signing up during its special enrollment, Mila Kofman, executive director of the DC Health Benefit Exchange Authority, said in an interview. The district’s special enrollment has been open since the spring.
The district’s effectuation rate for its special enrollment period was 77% in 2020, compared to an 84% rate for regular open enrollment, Kofman said. This year’s figure was “lower than we assumed it would be,” she said.
Special enrollment plan selections have been up as much as 70% compared to 2019, Kofman said. “Based on that, I assumed that the effectuation rates would also be higher because people are taking time to shop around, select a plan, and enroll.”
“The biggest reason is affordability” she said.
Some people are getting job-based coverage in the district’s Small Business Health Options Program, which also opened a special enrollment period. Sign-ups in that program are at 80,650 this month, up from 79,013 in September 2019.