Simply letting Patient Protection and Affordable Care Act (PPACA) exchange plan enrollees keep their plans without re-enrolling could change the plans’ exposure to health claim risk.
Steve Zaharuk, a senior vice president at Moody’s Investors Service, talks about that possibility in a commentary on the new Centers for Medicare & Medicaid Services (CMS) “auto re-enrollment” proposal.
Because many investors use Moody’s ratings when deciding whether to buy bonds, and how high of an interest rate to seek, Moody’s views on a matter can have an effect on health insurers’ access to affordable credit.
CMS — the arm of the U.S. Department of Health and Human Services (HHS) in charge of the PPACA public exchange system — wants to let most people who bought “qualified health plan” (QHP) coverage through HHS-run exchanges stay in their QHPs in 2015 without taking active steps to re-enroll. An automatic QHP re-enrollment system would ease strain on the HHS exchange enrollment system and let HHS focus on reaching out to the uninsured, officials said.
The proposal could help insurers that had good exchange QHP sales this year, Zaharuk says. ”With the ability to retain a sizable block of their business, administrative costs will be more predictable, and policyholder inertia will likely result in retaining many healthier, less risky individuals,” Zaharuk writes.
But Zaharuk says the proposal could hurt a QHP issuer that raises prices. Healthy enrollees who see prices rising may jump on the Web and shop for new QHPs, Zaharuk says.
Sick enrollees may be more likely to stick with their QHPs, even if prices rise, because they are in the middle of courses of treatment and need to keep their doctors and hospitals, Zaharuk says. ”Insurers will have to ensure that the rate increases are sufficient to cover the health risks associated with their covered population… while, at the same time, remain competitive enough to attract and retain a portion of the healthier population,” Zaharuk added.