Here are the important Obamacare dates highlighted on Healthcare.gov, the government's health insurance marketplace website:
Source: Healthcare.gov
Based on those dates, when would you expect to have to sign up for health insurance to avoid the penalty under the Affordable Care Act, commonly known as Obamacare? If you guessed March 31, you'd be completely wrong.
Until now.
The ACA says you need to have insurance in effect by March 31, but the coverage starts on the first day of the month after you enroll if you enroll between the first and the fifteenth day of the month. If you enroll on the sixteenth to the end of the month, your coverage doesn't actually start until the first day of the second subsequent month.
Under the strict reading of the ACA, you actually had to sign up for insurance by Feb. 15 so your insurance would start on March 1 and you'd be covered on the March 31 deadline. If you waited until Feb. 16, coverage wouldn't kick in until April 1, after the deadline. Wait until March 31 and you won't actually have coverage until May 1.
Confusing? The White House thought so and announced this week that it wouldn't penalize anyone that signed up for insurance by the end of March. The Presidential Office claims that it's not really delaying anything, but rather interpreting the law as it was intended.
Monetary effect
In theory, this is bad news for WellPoint (WLP 1.24%), Cigna (CI +0.00%), Aetna (AET +0.00%), and the rest of the insurers participating in the exchange. It seems safe to assume the sickest patients will enroll early to get coverage on Jan. 1 while relatively healthy people that had gone without insurance will wait as long as possible to avoid paying the bill for a few months.
For Obamacare to work and keep health insurance costs in check, the insurers need the relatively healthy people to balance out the unhealthy ones. Even if insurers guessed correctly on the final makeup of the insurance pool, it seems likely they may lose money during the first couple of months, paying out more than the premiums can cover.
Of course, smart insurers will have factored in the delayed enrollment by healthy individuals. And really smart insurers -- or perhaps ones that were as confused as the general population -- may have determined their premium prices based on healthy individuals enrolling close to March 31, so the delayed enforcement may have very little effect on insurers' profits in reality.
An actual delay, on the other hand...
Republicans have been pushing for a delay. In case you've forgotten, it's the reason they shutdown the government. And now a few Senate Democrats have broken rank, encouraging President Obama to extend the open enrollment period.
While having more time to enroll in the program would seem to be beneficial, especially if website issues continue, there's a reason that you can't enroll in the program year round. Healthy people would just wait until they got sick and then sign up for insurance. That trick wouldn't work with immediate emergencies, but the uninsured are already gambling that they won't have them under the current system. If patients wait for newly diagnosed chronic conditions, insurers would get stuck with the bill even though the patients didn't pay into the system when they were healthy. Under the current insurance system, people can enroll anytime, but the insurers can deny coverage for preexisting conditions.
As I've been saying for years, the individual mandate and the coverage of preexisting conditions are intertwined. There's no way to have one without the other. Delaying Obamacare would require the government to allow WellPoint, Cigna, Aetna, and the rest of the insurers to go back to denying preexisting conditions.
How likely do you think people are going to let that happen?
