What a difference a bad year can make. President Joe Biden’s last special enrollment period on the health insurance exchange has resulted in a flood of sick, expensive customers signing up for coverage. Health plans aren’t sure they need more of these members.

With a second pandemic-related special enrollment period and states set to restart Medicaid eligibility re-determination that could lead to people transitioning to the individual market, the potential new enrollment population is heading in their direction.

Some insurers selling on the Affordable Care Act marketplace responded by cutting or ending the commissions they charge independent agents and brokers to steer customers on their own terms.

Ronnell Nolan, president and CEO of U.S. Health Agents, said large operators including Molina Healthcare, Anthem and some Blue Cross and Blue Shield companies, as well as insurtech firms Bright Health Group and Oscar Health, cut their commissions in early April.

“They didn’t want that business,” Nolan said.

None of the insurers identified in this article responded to interview requests.

Agents and brokers make a living on commissions, so these decisions by operators caught them by surprise. “I got agents and agents to reach out and say, ‘I don’t know what I’m going to do, this is my whole business,'” Nolan said.

There are other considerations, said Marcy Buckner, senior vice president of government affairs for the National Association of Health Insurers.

“This is a concern for us, not only because workers aren’t getting paid, but also because it could drive people to specific operators, which can distort the market and have adverse effects,” said Marcy Buckner, the company’s senior vice president of government affairs. National Association of Health Insurers.

Regulators are also watching. “We are concerned about the impact to consumers, especially those whose circumstances caused them to enroll mid-year, and are actively investigating this matter,” a Centers for Medicare and Medicaid Services spokesperson wrote in an email. In 2016, the agency warned insurers not to cut commissions in plan years to avoid special insured customers, suggesting it could amount to illegal discriminatory marketing.

Open Door

The Affordable Care Act provides for an annual enrollment period during which eligible customers can choose a policy and apply for financial assistance. These limits are once a year to prevent consumers from waiting to get coverage until they have a medical need. The law also provides for special enrollment periods that allow people to get coverage when they experience qualifying life events, such as losing job-based health benefits, getting married, or moving to another state.

Insurers’ concerns about adverse selection during special enrollment are as old as the health insurance market itself. For example, according to Oliver Wyman, individuals who signed up during the special enrollment period at the start of exchange insurance in 2014 had a monthly fee per member that was 10% higher than those who signed up during the open enrollment period Report Commissioned by insurance trade group AHIP.

The COVID-19 pandemic has prompted the Biden administration to launch a special six-month enrollment period in 2021 that will make it more widely available than ever for insurers to enroll new, potentially sicker patients. The Department of Health and Human Services reported that 2.8 million people registered, a record for the number of special registrations on the Federal Exchange. State-run health insurance exchanges have largely reopened enrollment in response to the pandemic.

In addition, the American Relief Program Act allows people with incomes up to 150% of the poverty line ($20,385 for a single person) to enroll in an exchange program year-round. Registration under the initiative began last month. The policy, which applies to federal exchanges and is optional for state-operated markets, expires in late 2022, along with the enhanced subsidies created by the regulation.

“People who sign up now need care now,” said Duane Wright, a senior research analyst at Bloomberg Intelligence. “They’re not signing up because they may need care sometime in the next 12 months.”

The executive branch also announced a policy Eliminate what the ACA calls home breakdowns, which could make another 2 million people eligible for exchange programs.

Add in the millions who could lose Medicaid coverage and switch to exchanges, and health insurers face the prospect of many new customers that could prove costly.

disgust arrive Adverse choose

At first glance, insurers like Anthem and Molina Healthcare, which have substantial overlap between their Medicaid and exchange businesses, would appear to want to pay brokers to help clients sign up when Medicaid Redetermination CV, Wright said. Regulators paused redecision during the pandemic, but when it does restart, 16 million people are expected to lose Medicaid coverage.

Insurance companies that cover them under Medicaid managed care could turn those people into an exchange program, Wright said. About one-third of those who leave Medicaid will be eligible for exchange subsidies, according to the Urban Institute.

But Wright said the threat of adverse selection could deter some insurers from trying to attract those customers.

financial calculation
Molina Healthcare’s recent experience reflects an increase in individual market registrations for the industry, with the company’s communication base more than doubling last year to 728,000 members.

Molina Healthcare CEO Joseph Zubretsky said on an earnings call in February that the insurer’s strategy has been to focus on Medicaid and was not prepared for the expensive exchange customers it attracted during last year’s special enrollment period.

“We never intended to have 728,000 [exchange] Membership,” Zubretsky said on the conference call. “It’s a feature of the special registration period that not only increases membership beyond anyone’s expectations, but also adds a significant factor of adverse selection.

The insurer will generate an additional $150 million in revenue for each month after Medicaid resets are postponed until April, Zubretsky said. Once reset, insurers expect to lose about 200,000 Medicaid customers and $1.3 billion in revenue. He said Molina Healthcare wanted to switch those who would qualify for the highly subsidized “Silver” exchange plan and avoid those who bought the low-cost, high-deductible “Bronze” plan.

Anthem, the second-largest Medicaid operator in the U.S. with 10.6 million members, has been acquiring local Medicaid programs last year. The insurer expects 45% of enrollees to no longer be eligible for the program once redetermination begins, Chief Financial Officer John Gallina said on an earnings call in October.

With former Medicaid beneficiaries signing up for employer-sponsored coverage, the company expects this to provide a “tailwind” for its group insurance business, Gallina said. He said that after the re-determination, Anthem’s current 20 percent of Medicaid members will be eligible for the subsidy exchange program.

Exchange programs offer insurers potentially higher profits than employer coverage, according to compiled data Kaiser Family Foundation.

But they also carry a greater risk, says Rick Kes, RSM’s healthcare partner. Anthem may not tolerate the uncertainty of another special enrollment period, preferring instead to invest in a more stable line of business, he said. “In employer-sponsored care, the health insurance company may often be just a [third-party administrator]. The employer bears the risk of the claim,” he said.

Insurtech Oscar Health posted a net loss of $571.4 million in 2021 and boasted that one in 15 exchange registrants participated in its program, and Bright Health Group also cut payments to brokers on April 1.

Bright Health Group explained to brokers that its $1.1 billion net loss last year stemmed from higher-than-expected exchange registrations. “We do not require our brokers to write our products without commission,” the company wrote in a notice to brokers. “We know they’re going to write about a competitor’s product, and that’s okay.”