States operating their own marketplaces have been able to respond to the COVID-19 pandemic by opening up Special Enrollment Periods–something the federal government has declined to do. (Photo: Shutterstock)
There are record levels of job losses these days, and many of the newly unemployed will turn to the health insurance exchanges set up under the Affordable Care Act, or Medicaid, for health coverage. The COVID-19 pandemic is a real-time example of why state control over health insurance enrollment is important to maintaining a sound financial budget, as well as maintaining affordability for consumers.
As the economic losses of the pandemic continue to take its toll, in a health crisis such as this, having a state-based exchange is critical from a state economic standpoint – it is more cost-effective and flexible in light of shrinking state budgets, revenue declines and increases in Medicaid costs.
In the last few years, we have seen a number of states moving their health exchanges off of the Federally Facilitated Marketplace (FFM) and setting up their own state-based exchange. There are many arguments that can be made for such a transition, but perhaps none as timely as having the ability to pursue a state's own policy goals, without the restrictions of the federal platform. Operating on the FFM is limiting from both the financial and policy perspective.
As we are seeing during the COVID-19 outbreak in the United States, those states operating a State-Based Marketplace (SBM) — both Democrat-and Republican-led states — have been able to respond by opening up Special Enrollment Periods (SEP) for uninsured residents. Particularly in light of a global pandemic, this is exceptionally important to ensure as many people as possible have access to healthcare.
However, states such as New Jersey, the second hardest-hit pandemic state (which is, in fact, currently in the process of transitioning off the FFM), were not able to offer a special enrollment period because the federal government denied it and other states' requests to open one. States operating on the FFM are at the mercy of the federal government, instead of being able to make their own exchange decisions, and, as we've seen, the Trump administration decided against such a move.
The White House made this decision because people that lose coverage due to a job loss, for example, are still able to enroll in a plan, even in those states that are not holding a special enrollment period. There are a handful of other life events that also allow consumers to sign up for health insurance outside of open enrollment: moving, marriage, and divorce, to name a few.
Due to all of the changes in employment and coverage status across the country, Health Management Associates estimates that Medicaid enrollment could increase from 71 million to between 82 and 94 million. That's a big hit to any state's forecasted Medicaid enrollment for the year. And, with nearly 43 million people under unemployment, there are likely to be millions of people enrolling in an Affordable Care Act plan.
Since states operating on the FFM pay a three percent of premium user fee, their bill to the feds will be much higher than anticipated due to the economic downturn, and millions more consumers relying on healthcare.gov. But for the states operating their own exchange, the three percent fee typically paid to the federal government for their use of healthcare.gov, goes directly to the state. These reclaimed dollars can be used for programs including reinsurance pools—which can lower health insurance premiums across the state—or other state budget needs.
These days, the move off of the FFM is much easier due to new policies that encourage states to leverage 1332 waivers, and the move is quicker because end-to-end solutions, including call center, technology, and operations, are readily available from private vendors with a proven track record.
By making this transition, states are able to loosen the federal government's reins and build an exchange tailored for its residents and its policy needs, all while enabling a cost savings of millions of dollars in operational costs. And for the consumer, it provides more choices and greater affordability.
Now that is something we can all get behind on.
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