One of the architects of the Obamacare exchanges says the best strategy for saving the beleaguered health law might be to impose a penalty on a certain type of enrollee.
A seldom-discussed problem with the viability of the Affordable Care Act is the number of people who are counted as insured, but who intentionally go without coverage for months.
Those gaps represent significant losses for health plans struggling to remain viable, says Joel S. Ario, former director of the Office of Health Insurance Exchanges at the U.S. Department of Health & Human Services and now a managing director at the consulting firm Manatt Health in Washington, DC.
Ario, one of the architects of the Obamacare exchanges says the best way forward might be to impose a penalty on those who have coverage gaps during the year.
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"Current enrollment is well short of what it could be and should be, and as a former insurance regulator, I know that if you get only part of what you intended, you'll be getting the people who need service right now," he says. "The people that will be missing are the ones who don't need services right now and therefore help balance out the risk pool."
Requiring continuous enrollment would address what amounts to a loophole in the ACA, Ario says. The penalty for not having insurance is a family maximum of $2,085 per year, or 2.5% of household income above the tax return filing threshold for your filing status, whichever is greater. If the person had coverage for part of the year, he or she would pay one twelfth of the fee for each month without coverage.
Those numbers don't stop some people from buying insurance long enough to obtain a service like surgery and then dropping it afterward. Increasing the penalty might make coverage gaps less attractive, but that is unlikely in the future because the mandated coverage already is unpopular, Ario says. But creating a new penalty might be an easier sell.
"You could have a proposal in which if someone shows up for open enrollment and doesn't have continuous enrollment, there were gaps in the coverage in the past year, then there would be some penalty to be paid at that time," Ario says.
"One form could be a permanent penalty like Medicare does now. You just pay more for your coverage. That, however, falls across the people you want in the system, the young and healthy, and the people who are manipulating the system by jumping in and out of coverage."
A better type of penalty might be one that exempts a young person who was slow in obtaining coverage after leaving a parent's plan, for instance, but targets those purposefully gaming the system, he says.
"There are different ways to address it, but the goal is to reward continuous enrollment and penalize people who intentionally create gaps in their service," Ario says.
"That's the kind of thing that we might see proposed after the election. The actuaries say that could be a game changer because it goes at the need to have a more balanced risk pool."
Gregory A. Freeman is a contributing writer for HealthLeaders.