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Health Care

2014 Open Enrollment Period Pushback: The Premium Impact

Health Insurance Medical Benefits

The latest delay to ObamaCare could present some complications for insurers, but experts says consumers can rest assured that the pushback will not directly mean higher premium prices--but they should expect their coverage costs to rise.

Next year’s open enrollment season will start a month later than first planned on Nov. 15 and run through Jan.15 as first confirmed by Fox News Friday morning. The original dates were Oct. 15, 2014 for the kickoff and Dec. 7, 2014 for the end of enrollment.

But experts say the changed dates will not keep premium costs any lower, and in fact, is irrelevant when it comes to determining coverage costs.

“You are delaying open enrollment [in 2014] for one month,” says Manhattan Institute scholar Yevgeniy Feyman. “Premiums are submitted in April, so whether you have open enrollment on Oct. 1 or Nov. 1, those premiums are already set in stone. People will just be enrolling a month later.”

Premium math takes into account the policyholder’s age, location in region and state, income and family members being covered, he says. Under the president’s signature legislation, health status can no longer be weighted in the price determination. Every individual has to have insurance have coverage by the end of 2013’s open enrollment period, beginning on April 1, 2014. Anyone who fails to obtain coverage for more than three months after that date will be fined $95 or 1% of their annual income for not complying with the mandate.

Insurance companies place their premium submission in in April based on the pool of policyholders they have for year one’s open enrollment period and also take into account those they expect to get in the next year. However, the slow start to 2013’s open enrollment period with 106,185 Americans selecting plans in the first month of enrollment could bring higher prices. 

The pace of enrollment is a far cry from the projected seven million people the Obama Administration had aimed to enroll in year one, 2.7 million of which are needed to be young and healthy people needed to keep premiums low. Feyman says as the regulatory environment continues to shift, insurance companies have a harder time placing bids.

“They make certain assumptions based on regulations and how those regulations will play out,” he says. “They may hike up premiums because regulations have been so unpredictable. I am 100% sure premiums will increase, just because of medical inflation and the cost of care increasing.”

He adds that premiums could be even higher if smaller insurers are pushed out of business due to the president’s administrative ‘fix’ announced late last week that allows individuals can keep their plans through 2014, even if they had been previously cancelled for not meeting ACA requirements, if the insurer complies.  

“Small co-op plans with low costs won’t be able to survive in this marketplace with an older and less healthy group of policyholders,” Feyman says.

Larry Kocot, Brookings Institution visiting scholar, says the enrollment pushback on top of the president’s announcement last week just leaves people asking more questions.

“Rates have to be submitted by insurers in April and revealed in October,” Kocot says. “Will the administration alter the April deadline? That is what would give insurers more time to evaluate their rates. A lot has to happen during the rate review period, which takes place all summer long.”

Kocot also says it’s a mystery as to whether insurance companies will be able to revise rates for technical reasons beyond that April deadline, and how this may impact competition between insurers.

“It’s very clear what this move does to the election timeline,” Kocot says, pointing out that the enrollment date and thus premium reveal period is now after the 2014 midterm elections. “But it is much less clear on the rate submission timeline.”

Follow Kate Rogers on Twitter at @KateRogersNews

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