The Obama administration on Wednesday outlined a “major overhaul” of its rules for the thousands of people each year who sign up for insurance after the national marketplace deadline, an attempt to quell growing fury among insurers.
In its strongest step yet to crack down on the ObamaCare deadline, the government will now require ObamaCare customers to prove that they are eligible for the law's “special enrollment periods.”
Those sign-up periods — which include circumstances like job loss or a family member's death — allow people to buy coverage mid-year. But the current system has been condemned by insurance companies, who argue it is too easy to abuse.
The substantial change to the program was announced one day after a sharply critical report from the nation’s top insurer group, America’s Health Insurance Plans (AHIP).
In the Tuesday report, the insurance trade group said people who signed up after the deadline had “significantly higher medical claims than others” — suggesting people were waiting until they become sick to sign up for insurance.
The insurance group has long argued that without proof of verification, customers can avoid paying premiums and therefore drag down companies' bottom lines with their steep medical costs. As many as one-third of ObamaCare exchange customers during the first two years had signed up during a special enrollment period, AHIP said.
The administration's shift in policy is one of the first major wins for the new head of AHIP, Marilyn Tavenner, who left her post as the head of Centers for Medicare and Medicaid Services (CMS) last year.
The approach has also been publicly backed by former officials close to the Obama administration, including former Sen. Tom Daschle (D-S.D.).
Covered California, the country's largest state-run marketplace, also announced the policy change last week.
Health officials at the CMS had made one previous effort to appease insurers who have warned about growing numbers of people trying to game the system.
The CMS said last month that they would trim the number of special sign-up periods while promising to clarify the definition of other enrollment periods and strengthen enforcement of existing rules.
But the insurance industry was far from satisfied with the updated policy. Even with the tweaks, the administration would still allow people with an “exceptional circumstance” — which could mean a serious medical condition — to sign up after the deadline.
Health insurers have long pushed for verification as a way to prevent abuse of the system, a stance that was reiterated in its analysis this week.
“Without verification, special enrollment periods are more easily subject to abuse and misuse that compromises affordability and stability for all enrollees,” AHIP wrote in its report.