Potentially the most important health insurance deadline for 2015 has officially come and gone.
Obamacare, or as it's officially known, the Affordable Care Act, began enrolling consumers via state-run exchanges and the federally run health exchange, Healthcare.gov, on November 15, 2014. One of the big changes in this second ever enrollment period was its length, which shrank from six months in 2013-2014 (Oct. 1, 2013 - March 31, 2014) to just three months in 2014-2015 (Nov. 15, 2014 - Feb. 15, 2015). The shorter enrollment period was to take into account that education of the law was expected to be higher in its second year, and that it would have overlapped with midterm elections had the dates been kept static to last year.
A shorter enrollment period also meant consumers had less time to contemplate what they wanted to do in terms of buying health insurance in the upcoming year.
Obamacare enrollments pass the mark
According to the Department of Health and Human Services, through week 12 (Jan. 31 - Feb. 6) 7,749,375 people had selected a plan on the federally-run exchange. There were another 2.9 million people who'd submitted an application but had not at that point selected a plan. The mid-January update from the 13 state-run exchanges led to approximately 2.4 million additional enrollees. In other words, Obamacare enrollments have surpassed the 10 million mark, with more additions left to be tabulated.
If you recall, the projections supplied by the HHS in November prior to the start of the open enrollment period were for just 9.1 million enrollees by the end of 2015. The good news is it appears the initial enrollment figures could surpass that estimate by anywhere from 1 million to as many a 2 million depending on how well state-run exchanges did during the final few weeks of enrollment.
Of course, these initial figures could eventually fall, too. The roughly 8 million enrollees last year turned into just 6.7 million by mid-October because of consumers failing to make their premium payments and having their coverage cancelled.
But, a potentially bigger problem looms large that select lawmakers proposed a fix for last week.
Lawmakers want to change this about Obamacare
According to the Associated Press, three lawmakers have urged the administration to reconsider the Feb. 15 deadline, which, as you recall, the Centers for Medicare and Medicaid Services suggested was a concrete line-in-the-sand enrollment deadline this year.
The reason these lawmakers -- identified as Democrats Sander Levin of Michigan, Jim McDermott of Washington, and Lloyd Doggett of Texas -- want to extend the enrollment deadline, or allow an extension for currently uninsured taxpayers, relates to the substantially higher penalties in place for noncompliance with the individual mandate in 2015. Whereas last year's penalty for not having health insurance was the greater of $95 or 1% of an individual's modified adjusted gross income, in 2015, it jumps to the greater of $325 or 2% of modified-AGI. These lawmakers have suggested that the uninsured aren't going to realize they're facing these penalties until it's too late to sign up.
Another key point made is that the open enrollment period ends before many Americans have their taxes filed. Refunds from these tax returns (since more than 80% of tax filers get a refund) can help pay for premiums or cover penalties associated with not having insurance coverage.
Is anyone surprised?
Should we really be shocked that lawmakers want to provide an Obamacare exemption to those who didn't enroll?
Last week, I questioned whether officials would stick to their line-in-the-sand last day to enroll in Obamacare of Feb. 15. While the CMS wanted to treat this date as a concrete deadline, prior Obamacare deadlines have been met with more wiggle room than Jell-O.
For example, in 2013-2014, both the individual mandate and the employer mandate -- the actionable component of the ACA requiring employers to offer health insurance options and possible subsidies to full-time workers -- were supposed to go into effect. However, in the summer of 2013, the administration announced a phase-in of the employer mandate over 2015 and 2016.
Another example was last year's open enrollment period which ended on March 31, 2014. This was expected to be a rigid deadline following a six-month enrollment period, but regulators allowed last-minute enrollees to file an extension through April 15, 2014.
Deadlines are quickly losing their power with Obamacare, which could eventually wind up hurting enrollment figures if consumers no longer feel there's an urgency behind set deadlines.
A more important date looms for insurers
Ultimately, I don't think you'd find much pushback from insurers whether or not the deadline is extended. Enrollment has already exceeded the expectations of the HHS, so even if the CMS and regulators stick firm to their deadline of Feb. 15, insurers have likely seen some strong enrollment gains. Anthem (NYSE:ANTM) (formerly WellPoint), which operates in a number of states leading in enrollment and reenrollment, and UnitedHealth Group (NYSE:UNH), which expanded to 20 new states in this latest enrollment period, are fully expected to put forth strong enrollment figures when they report their next quarterly results.
The bigger concern for insurers, and investors, is what's going to happen in June, when the U.S. Supreme Court issues its ruling on King v. Burwell. This landmark case that'll be decided upon in June will determine whether or not federally paid subsidies are legal, or if some six-to-seven million people who enrolled through Healthcare.gov will lose their subsidy. With a lot of Anthem's business in state-run exchange states, it'll feel a pinch, but on a much smaller scale compared to some of its peers, such as UnitedHealth Group.
For the time being, I would suggest monitoring how lawmakers approach future enrollment deadlines considering the rising penalties associated with noncompliance. However, I want to make clear that the Supreme Court case this summer is what really has the attention of insurers, and it's also what you as a consumer and investor should be closely monitoring.
Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.
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