ACA Special Enrollment Customers Destabilizing the Program

An Analysis by health consultancy firm Avalere found that people that enroll in the Affordable Care Act (ACA) during special enrollment periods have higher health-care costs than those who sign up during the open-enrollment period. In addition, these people are costing insurers more because of a measurement used to calculate their predicted health benefit is lower than the actual costs they end up using.

The ACA is designed to lower financial risks for insurers covering higher-cost customers. According to Avalere, the financial risk measurement used indicates a lower risk for special enrollment customers, when in reality the financial risk is greater. This means insurers are getting less money than they should from the program while the customers are actually costing them more.

Under the ACA risk adjustment program, health plans with low risk scores give up some of their revenue to plans with high risk scores. However, the data suggests the risk scores may not accurately predict actual costs.

Avalere’s report also indicates that special enrollment customers spend just 3.6 months enrolled in the plan, compared to 7.8 months for open-enrollment customers. The shorter time span means that insures are collecting fewer premiums from the special enrollment customers to cover their higher healthcare costs than the open-enrollment customers.

The Avalere report comes less than a month before the start of the 2017 ACA open-enrollment period. For most people enrollment is only allowed during this period that runs November 1 to January 31. However, the ACA does allow for special enrollment periods to people with certain life events, such as marriage; change in household size or to people who lose healthcare coverage.

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