About 1.2 million people who bought coverage on HealthCare.gov in 2014 dropped their health plan and picked a new one through the site for 2015, the Obama administration said Wednesday.
The extent of people’s willingness to consider shifting to a different insurance carrier came as a surprise to federal officials, said Andy Slavitt, a former top executive at UnitedHealth Group who is now principal deputy administrator at Centers for Medicare and Medicaid Services and will become acting administrator on Monday.
“This is a much more active consumer than anybody expected,” Mr. Slavitt said, noting that in other programs such as the federal employees’ health plan, or Medicare prescription drug benefits, as few as 10% of customers changed plans from year to year. “We wanted to create maximum choice while we had maximum consumer protection,” he said.
Nearly 2 million people were automatically re-enrolled in their 2014 plans after taking no action for 2015. And just over 1 million came back to the site to review their options but made no changes, according to new figures from CMS, the federal agency overseeing implementation of the federal health law. In all, 4.17 million of this year’s sign-ups under the health law are people who had coverage through HealthCare.gov in 2014.
The Obama administration decided last summer to automatically renew coverage for people who didn’t come back to the site. They made that decision to minimize the risk that people would drop out, even though supporters of the health law worried it could financially harm people who didn’t review their insurance choices.
The decision benefited insurers who offered low prices in the first year of the law’s exchanges and scooped up large numbers of customers, since many of those people did remain loyal.
Many people using HealthCare.gov to buy insurance had good reason to shop around for 2015. Carriers that scooped up the largest number of customers in the first year typically increased their rates for the second year by around 10%, The Wall Street Journal found. At the same time, many insurers that were new to the exchanges for 2015, or had fared poorly the first year, offered aggressively low rates in an effort to undercut the market leaders.
That influx of lower-priced plans had an additional, unexpected twist: It pulled down the value of tax credits that many customers received to offset the cost of premiums. The credits are pegged to the price of the second-lowest-cost midrange plan in a given geographic area, as well as an enrollee’s income.
As a result, some people who kept their old coverage found their premium for 2015 rise at the same time the value of their tax credit went down.
HealthCare.gov officials made the decision in the summer to automatically renew coverage for people who did nothing. Shortly before the site re-opened in mid-November, they began a push to encourage people to come back to the site to see whether they could save money by switching plans. Officials have said they will continue the automatic renewal policy for 2016.
Mr. Slavitt said that among the people who actively returned to switch health plans, there were some 580,000 who did so after the initial mid-December deadline to make changes for the start of 2015, and were likely motivated by seeing a jump in their premiums in January.
He said he wasn’t worried about the people who didn’t consider changing insurers. “They will have had a couple rounds of bills that they would have to pay. We know the most important vote a consumer gets is with their pocketbook.”
The administration also said it added about 4.7 million newcomers through HealthCare.gov for 2015 coverage. That makes for a total of about 8.8 million people who have picked plans through HealthCare.gov, they said. Across the country, including 13 states that are running their own insurance exchanges, 11.4 million have signed up for insurance for this year. The Obama administration hasn’t said how many of these people gained coverage after previously being uninsured.
Date: February 25, 2015