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Megan McArdle: Obamacare counting on insurers to make it work

  • Bloomberg News
  • Published Monday, Dec. 16, 2013, at 12 a.m.

The Department of Health and Human Services recently held a conference call for journalists with Kathleen Sebelius and other members of the Obamacare team in which they announced yet another round of fixes. Most of them are aimed at folks who lost their insurance due to the new Affordable Care Act mandates and who, for one reason or another, have not yet completed a purchase on the federal health-insurance exchange. Here’s what the administration is planning:

•  Insurers will be required to accept payment for policies beginning Jan. 1 as late as Dec. 31, and they will be “encouraged” to accept payment after that. In response to a question, HHS said that at least one insurer, Aetna, had agreed to take payments as late as Jan. 8.

•  The high-risk pools that were established to cover people with pre-existing conditions in the transition will be extended through the end of January for people who haven’t already selected a plan.

•  Insurers are being “strongly encouraged” to treat out-of-network doctors as in-network doctors for acute-care episodes, or if the provider was listed in the plan’s provider directory when the patient enrolled.

•  Insurers are also being “strongly encouraged” to refill prescriptions in the month of January, even if they aren’t covered under the new plan, if they were covered under the patient’s old plan.

When I read the HHS memo on the call, I thought the administration was worried about people who had insurance losing their coverage or finding out that the doctors and treatments they use aren’t covered under their new plans. And indeed, the first question came from Bloomberg’s Alex Wayne, who asked whether it was now possible that the net coverage numbers would be lower in January 2014 than they were this year.

HHS hemmed and hawed. Wayne pressed them, asking whether they were confident that coverage was going to increase. Julie Bataille of the Centers for Medicare and Medicaid Services finally answered that they were confident millions more people were going to have access to affordable coverage – not have it, mind you, just have access to it, in the same way that I have access to a sousaphone and a week on the beach in Maui.

Over the course of the conference call, it became clear, as the Washington Post’s Sarah Kliff wrote, that “much of Health and Human Services’ plan is less about new requirements, and more about pushing insurance plans to take certain steps to smooth the transition into new health care law plans. The administration is ‘encouraging’ insurers to allow people who sign up after the Dec. 23 deadline to start coverage on Jan. 1 – and urging them to accept payments for those January policies after the first of the month.”

It also is “encouraging” insurers to provide coverage to anyone who has made partial payments – one person called them “down payments.” Though no one seemed quite clear what this meant (Do people normally make down payments on a monthly insurance premium? Were people having trouble making their full payments through the system?), my best guess is that officials are asking insurers to cover people whose subsidy calculations were off until the paperwork can be straightened out. But I didn’t really hear a good answer on the call.

This tells us a few things, I think. The first is that the administration is deeply worried about people who had insurance they liked who are now going into January with either no insurance or with insurance that doesn’t cover doctors and treatments they’re receiving. And because the administration has access to the enrollment data, this further suggests to me that the enrollment spike we saw at the very end of November and the beginning of December has not reached a pace at which they can reasonably expect that the 5 million people who had their plans canceled will have replaced their coverage by Jan. 1. There’s no way to know for sure, of course, but if enrollment were still rapidly accelerating, they wouldn’t need to basically beg insurers to help them eke out as many December enrollments as possible.

The second thing it tells you is that the administration has reached the limits of its November strategy of using last-minute rule-making to implement on-the-fly changes to the law. Most in the latest round aren’t even rules, or even changes to rules; they’re requests. The insurers may well go along – they, too, have a big stake in Obamacare’s success. But by making the request in public, the administration has given itself room to blame insurers when people lose access to doctors, drugs or insurance. Now they can say, “Well, we asked them not to do that.”

Day by day, the administration is putting more of the onus on insurers to make this market work – voluntarily, out of the goodness of their hearts or at least out of mutual self-interest. In some ways, that may be a good thing; insurers are pretty good at delivering insurance, so giving them a freer hand may make sense. But, of course, it hands an awful lot of power to insurers that just a few months ago the administration seemed committed to taking away. It probably wouldn’t be doing that if it weren’t worried about how things are going.

Megan McArdle writes for Bloomberg News.

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