Playing The Enrollment Game

Bill Randell, an insurance broker, adds his thoughts to the current debate about enrollment deadlines being exploited to game the health insurance system:

This past Wednesday, Blue Cross issued a directive that effective May 1, 2010, all new business must be submitted 30 days prior to the effective date. That means that if a group, or individual, were to submit all their paperwork for new coverage on May 15th, for example, the earliest that they can have coverage would be June 15th. In the past, they could have had coverage within 5 to 7 days, not 30 days.

Why would an insurance company institute such a requirement?

Look no further then the article in the Boston Globe earlier in the month entitled, “Short-term customers boosting health costs.”

The never-ending guarantee open enrollment that enables subscribers to obtain health insurance on demand, have pre-existing conditions in full without question and then allows them to cancel without penalty is costing the insurance companies a bundle. This in turn drives up the premiums for everyone in the 50 and under market.

Imagine if employers allowed their employees to enroll anytime that they wanted for their group sponsored health insurance plan and have pre-existing conditions covered in full, instead of the annual monthly open enrollment? Participation would drop dramatically, while the loss ratios would explode since employees would be obtain health insurance only when they needed it.

Blue Cross has decided to at least put a 30 day wait on the current insurance to curtail this abuse. Will it help? Sure will!! The uninsured, however, who need immediate coverage will merely go to other carriers, who have yet to adopt the 30 day wait. What next? All the other carriers will follow the Blue Cross lead and adopt a 30 day wait.

I can understand why Blue Cross has made this change, but let’s address the problem and go with a one month open enrollment, because the next step will be for a carrier to go to 45 day wait and the rest will follow. Then after that 60 days and then where will it stop?