Smart default policy helps low-income registrants avoid inferior health plans

The authors of the study in JAMA Health Forum previously observed that people who automatically re-enrolled in Covered California (the state of California’s health insurance market) were much more likely to be placed in a dominated plan than people who made a choice.

“A short study we conducted also found that automatic re-enrollment was very supportive of retention in the Affordable Care Act (ACA) markets,” said lead author David Anderson, MS, associate researcher at Duke University Margolis Center for Health Policy in Durham, North Carolina.

When the Biden administration’s desire for greater subsidies for ACA buyers first emerged, “we realized that our previous research was immediately relevant because there would likely be more people placed in dominated plans than it was. ‘otherwise, and we wanted to know the breadth and scope of this potential. problem, ”said Anderson Contemporary OB / GYN®.

The current study in JAMA Health Forumassessed 2018 individual enrollment data for 748,087 enrolled in California covered, with an average age of 44.8 years and 54.6% female.

California market premium data and the U.S. bailout premium tax credit subsidy program for 2021 revealed that 5.8% of sample enrollees defaulted on dominated health plans.

Of these registrants, 98% had incomes below 250% of the Federal Poverty Level (FPL).

A smart default policy resulted in an average decrease in monthly premiums of $ 102.47, an average reduction in individual annual medical deductibles of $ 1,960, and an average reduction in specialty prescription copayments of $ 49.56.

“We weren’t surprised that automatic re-enrollment resulted in some people being placed in dominated plans,” Anderson said. “We were, however, slightly surprised by the magnitude of the costs incurred by individuals who would default to dominated plans: $ 1,200 in additional average annual premium and over $ 1,900 in additional deductibles.”

For the more than 90% of people who are placed in a strictly dominated regime because of their income below 250% of the FPL, the premium component of a bad default is 4% to 6% of income, or 2 to 3 weeks before tax. Pay.

“Other studies have shown that cost sharing is a significant barrier to care,” Anderson said. “Patients as consumers are not savvy buyers who will buy high-value and effective care while forgoing low-value care. More often than not, patients as consumers will simply stop receiving care. Our study illustrates a potential financial barrier to care that can have clinical impacts. “

For the 2022 open enrollment period, the biggest challenge for implementing the study’s proposed smart default policy is time, according to Anderson. “Insurers, regulators and stock market operators have, at best, a tiny window to implement any new operational changes, while trying to respond to COVID and other components of the US bailout, such as the ‘unemployment insurance for people earning 133% of the FPL. “

Some states may also have legal barriers to implementation, including legislative guidelines on automatic re-enrollment hierarchies.

“Nonetheless, we believe our general proposal can be adopted for the 2023 open enrollment period,” Anderson said.

Anderson noted that choosing insurance is a challenge under the best circumstances and prime environments. “ACA marketplaces are not the best environment of choice,” he said. “Where there are steps that can be taken to provide registrants with an improved choice situation by removing objectively bad choices from the default, exchanges should take steps to help improve the quality of the choice.”

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Disclosure

Anderson does not report any relevant financial disclosure.

Reference

Anderson DM, Rasmussen PW, Drake C. Estimated results of plan enrollment after changes to auto-renewal rules in the US health insurance market. JAMA Health Forum. 2021; 2 (7): e211642. doi: 10.1001 / jamahealthforum.2021.1642


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