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Report: Feds' Broken Payment System for Insurers Impacts Consumers

A broken payment system may discourage insurers from enrolling millions of people who are uninsured, according to a report from the Urban Institute. (franchise opportunities/flickr)
A broken payment system may discourage insurers from enrolling millions of people who are uninsured, according to a report from the Urban Institute. (franchise opportunities/flickr)
February 7, 2018

NASHVILLE, Tenn. – Consumers who lose their health insurance coverage in the middle of the year may have a hard time finding information on coverage – and a new report from the Urban Institute says there's a good reason for that.

One of the study authors Stan Dorn, now a senior fellow with Families USA, says it has to do with the current system used to reimburse insurers.

"When people sign up for coverage midyear, the formulas the federal government is using to compensate health plans don't provide enough money, and that's one reason we're not seeing insurance plans market to consumers in the middle of the year," he explains.

Under the current system, the government offers extra subsidies for insurers that accept high-risk consumers to their plan, and less for healthier – or low risk – people.

Those payments drop significantly for people who enroll midyear.

The study points out that there has been some improvement in the system, with federal fixes making up for about half of policies that were previously underpaid.

Dorn adds that the Affordable Care Act is not part of the problem and says under the law consumers at least can access midyear care when they may not have before the ACA. He says it's just about improving access to care.

"Insurance companies believe, and for good reason, that they will lose money if they enroll a lot of people in the middle of the year,” he explains. “It's not like we're worried that insurance companies aren't making enough money. We need to design a system that incentivizes insurance companies to do good things for American consumers."

According to the Urban Institute, more than 30 million people become uninsured at some point during the year. Causes range from job loss to life changes.

Stephanie Carson, Public News Service - TN