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Rhode Island and Nevada data suggests many “enrollees” are not purchasing policies

Under intense pressure from the Obama administration to do so, the America’s Health Insurance Plans’ (AHIP) Board of Directors announced yesterday that health plans are “voluntarily” extending the deadline yet again for consumers to pay their first month’s premium. So long as the individual selects a plan by December 23, 2013, the individual will apparently have until January 10, 2014, to pay their first month premium and get coverage retroactive to January 1. Some states with their own Exchanges may impose different deadlines; the AHIP announcement is not binding on them.

The decision may boost the number of persons who end up with actual coverage in January but encourages people to play games with their insurance. It also further corrupts any meaning that might be accorded to the current metric of ACA success: the number of people putting a plan in their shopping cart.  With the extension of the deadline until past the coverage date and the potential for retroactive coverage, it now makes sense for virtually every American to enroll in the ACA.  This is true even of people who think the odds are extremely slim that they will ever actually purchase a policy. One just selects a plan free of charge before December 23  — personally I might pick a lavish Platinum one — but then decides whether to pay the premium and obtain retroactive coverage if and only if their health goes bad between January 1 and January 10 (or they would otherwise have purchased the policy).  Expect anecdotes of people paying their insurance premiums for retroactive coverage right after they get the bill from the doctor or hospital.

Why would the Obama administration facilitate games with health insurance purchases?

One reason the Obama administration may have taken the unusual step of permitting people to purchase health insurance retroactively is that it is concerned about its ability to handle large amounts of payments between now and the original deadline.  Recall that the back end of healthcare.gov is not functioning ideally. Data from Nevada and Rhode Island hints, however, at another reason that the Obama administration might have made this unusual request of insurance companies. These are the only two states that I can find that have released information on both the number of people who have selected a plan and the number of people who have actually paid so far for coverage.

The conversion rate in Rhode Island is 61%; the conversion rate in Nevada is a miserable 23%.

If these two states are representative of others on which the Obama administration indeed has secret data, perhaps more than a third of those counted as “enrolled” by virtue of putting a plan in their shopping carts may not have actually committed to pay for them. That figure could easily be as low as one half. It would then be yet less surprising that (a) the Obama administration has selected shopping cart placement of the metric for success and (b) keeps repeatedly extending the deadline people have to pay their premium bills.

Rhode Island

The data released by Rhode Island on December 13, 2013, covering the period through the end of November, 2013, shows that of the 2,649 it reported as having selected a plan, just 1,611 had accompanied that selection with a premium payment, a 61% conversion ratio. In other words, 39% of the enrollments are provisional.

Nevada

The data from Nevada from an earlier time is potentially worse.  November 12 Tweet shown below from Nevada HealthLink shows that at that time, when about 2,000 Nevadans had selected a plan, only 513 had paid for it. This is a conversion rate of roughly 26%, 74% would not have paid for the policy.

Data more recently reported in The Las Vegas Review Journal suggests that the low conversion rate may be getting even worse in Nevada. It reported today as follows:

The exchange didn’t release new sign-up numbers by press time, but it said on Dec. 10 that 6,629 consumers had selected qualified health plans, including 1,800 in the first week of December alone. It also told the Review-Journal on Friday that 1,537 people had actually paid for premiums.

If, so, even with the passage of time, the conversion rate is now just 23.2%.  This figure is consistent with reports from some inside the insurance industry. To be sure, this data is still early. And surely an additional number of those who selected after December 10  have now paid along with those who selected a plan after that date. But unless a lot of people are getting out their credit cards to pay health insurance premiums this holiday season, the conversion number in Nevada is rather frightening. Nevadans are likely experts in gaming, and the Obama administration’s pressuring of an acquiescing insurance industry to permit retroactive coverage gives them and gamblers everywhere an additional opportunity to beat the house.

 

Fun question for lawyers and law students

Why isn’t this collaborative extension of an offer to contract a violation of section 1 of the Sherman Antitrust Act? Hint is here.

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