Okay America, you had plenty of time to sign up for health insurance under the Affordable Care Act (ACA). But still, you said you didn’t know about the penalties for not having coverage by the open enrollment deadline. So, the President and his administration set up a special enrollment period (SEP), running from March 15 to April 30. Surely, with this extra time, all latecomers were able to purchase 2015 health insurance coverage through the nation’s federal exchanges, right?
Well, no. It turns out that this additional six-week enrollment period was … kind of disappointing. After all of the publicity and man-hours, only about 147,000 people signed up in the 36 federal exchanges. And about 100,000 more enrolled during the extra time in other states.
How disappointing was this small pool of late enrollees to the Obama administration? The results were released on May 19, 2015, in a pretty low-key manner; through a Twitter feed (under the #ACATaxTime hashtag). Here’s the Tweet, in all its glory:
From March 15 to April 30, 147,000 consumers signed up for coverage through http://t.co/eTfU7hSMWR using the tax special enrollment period.
— HealthCare.gov (@HealthCareGov) May 19, 2015
All but three states -- Colorado, Idaho and Massachusetts -- allowed their residents to sign up for late enrollment. California reported the highest number of late enrollees, 33,000 people as of April 28. And New York has yet to provide its final tally, so this number could rise. But even so, this isn’t good news for those people that failed to enroll.
However, these low numbers are also a problem for states running their own exchanges. As of early May 2015, almost half of the 17 insurance state-run Marketplaces, as well as Washington, D.C., faced financial problems. If no solutions are found, these Marketplaces may not be able to function effectively under the healthcare law.
So what could explain the low turnout for this late enrollment period? This was the first year that many consumers had to deal with the ACA’s tax implications, as well as the SEP. There’s also the thought that many people weighed paying for health coverage against paying the penalty for not doing so; apparently, a good chunk went with the penalty instead.
Hawaii’s Health Exchange at Risk
But why are these exchanges having these problems in the first place? One reason is that these states relied on federal grant money to help fund their exchanges’ development and initial maintenance. And now, this grant money is running out. Even worse, these states may not be able to use their savings. Medicare's Inspector General has warned that utilizing these saved funds for regular operations may be illegal.
For a good example, look no further than President Obama’s home state of Hawaii. The “Aloha State,” which runs its own health insurance exchange, actually failed to sign anyone in the six-week SEP. This state received more than $200 million in federal grants to fund its exchange; it’s actually the state facing the biggest threats to its exchange.
For most of its existence, Hawaii’s exchange has faced serious problems. Just after its initial launch in Oct. 2013, technical problems closed the exchange down. Now, the lack of funding may mean a permanent shutdown. The state’s Democratic governor, David Ige, admitted that as of yet, Hawaii has no way to fund the exchange. Estimates show that about $28 million over seven year is needed, although ongoing technical malfunctions could increase this figure.
In the event that Hawaii’s exchange fails to prove that it’s workable and sustainable, the state may have to switch to a federally run exchange. But despite the funding and technical issues, the governor and healthcare experts still believe that their exchange can succeed. However, Hawaii has drawn up contingency plans for a shutdown, just in case.
Another state, Colorado, is facing problems due to mounting costs with their exchange. The state had put aside $13.6 million for their exchange’s call center, but new estimates show more than $21 million will be needed. As a result, Colorado is now considering a major hike in the per-policy fee for insurers selling on the exchange. And while this fee applies to insurers, the state’s consumers will be held responsible.
No Quick Fix for State-Run Exchanges
While these states scramble for funding and other necessities, for now, they may be stuck in limbo. These state-run exchanges could switch over to the federal exchange, and currently, Minnesota and Vermont, are considering this change. First and foremost, the Supreme Court is currently ruling on whether the federal exchanges can legally issue subsidies. As such, states are avoiding making any big decisions about their exchange before this ground-breaking ruling comes down.
And once the Supreme Court rules, the state-run exchanges could still be dealing with major problems. Should the Court rule against the administration, states that never built their own healthcare exchanges may have to do so. However, as many of these states were previously opposed to the ACA, they may not want to build their own exchanges from scratch. Plus, without the federal funding, they’ll have to pay for their exchanges on their own.
Additionally, the federal exchange is facing technical and administrative problems of its own. One big issue is how insurers receive payments of subsidies for premiums and out-of-pocket expenses. Insurers are still getting paid with an awkward, old-fashioned process, in place since January 2014. This involves health plans basically filling out monthly spreadsheets to inform the Department of Health and Human Services (HHS) how much they should be receiving.
As of now, no firm date for when the automatic process will replace this older process is planned as of yet. The Centers for Medicare & Medicaid Services (CMS) states that they’re beginning to test out the automated system. The administration also announced a delay in the process of reconciling a second smaller set of subsidies paid to insurers; this delay will extend until April 2016. These subsidies reduce the out-of-pocket costs of certain lower-income Obamacare enrollees.
For the future, it doesn’t look as though ACA enrollment will be radically different in 2016. Next year, the open enrollment period will run from Nov. 1, 2015 through Jan. 31, 2016. As this is a smaller window than this year’s, many worry that potential enrollees will again fail to sign up in time. And next year, those who fail to enroll will also face higher penalties; $695 per person or 2.5 percent of household income.