Author Topic: Flawed Automatic Obamacare Enrollment Plan Likely To Hike Costs  (Read 215 times)

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Flawed Automatic Obamacare Enrollment Plan Likely To Hike Costs

Posted By Sarah Hurtubise On 12:45 PM 07/28/2014 In | No Comments

Those who automatically re-enroll to keep their current plan will likely receive old or inaccurate financial information from the government, The Associated Press reports.

The problem has arisen because the federal government will provide “the exact dollar amount” of federal subsidies received in 2014 to customers that auto enroll for next year, according to the AP.

“It was our preference for [the administration] to have the capacity to update people’s subsidy information, but they haven’t been able to get that built,” said Brendan Buck, spokesman for America’s Health Insurance Plans, an industry trade group.

But not only could customers’ qualifying information, particularly household income, change and affect the level of subsidies they’re eligible for, the federal calculation for premium subsidies is changing anyway.

The level of federal premium subsidies is determined by the second-least expensive silver-tiered plan offered in each state’s exchange. Because many health plans’ premium rates are in flux (most going up significantly), those benchmarks are changing.

Not all states have released their finalized premium rates for 2015 yet, but health-care analytics firm Avalere found that the plans that serve as the benchmark for subsidies will change in six of nine states that have announced their new rates.

That could mean customers who chose an inexpensive plan on this year’s exchange will likely see a significant uptick in not only their premium rates, but the amount of federal subsidies they’re eligible for. The administration’s auto-enrollment policy could cause many customers who stick with the same plan to experience unexpected hikes in the cost of their health coverage — or cause them to budget too little and end up owing the IRS later on.

“They’re setting people up for large and avoidable premium increases,” Avalere vice president Caroline Pearson told the AP.

With eight in 10 of those who signed up for Obamacare coverage receiving some amount of premium subsidies, auto-enrollment will likely create complications for almost all eight million Obamacare enrollees.

The automatic renewal was supposed to make continuing coverage easier for customers, for one, but also for the Obama administration. The federal government is still working around the clock to get the federal Obamacare website up and running for the next open enrollment period, which begins Nov. 15.

While the administration will hope to attract even more new customers to the health care exchanges, if auto-enrollment doesn’t prove to be a viable option for most returning customers, the website may have to handle double the amount of traffic than expected.

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