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Auto-Renewal
The potential transition to an SBM could present opportunities to rethink policies around automatic re-enrollment (“auto-renewal”). Broadly, the existing policies governing auto-renewal in the FFM have been adopted by states with SBMs. However, Maine officials could use this opportunity to leverage auto-renewal policies to advance the policy goals of accessible and affordable health insurance.
This section explores current auto-renewal policies and how the State of Maine could expand their impact under an SBM. First, we provide an overview of the purpose and current state of auto-renewal policies, as well as possibilities for change. We then detail five policies Maine could implement and the potential impact and feasibility of each. As the State considers its approach to policies around auto-renewal, we recommend the following: 1. Design more consumer-friendly auto-renewal notices. 2. Set the default for consumers eligible for cost-sharing reductions to high-value silver plans. 3. Auto-renew consumers with discontinued plans into Clear Choice plans. 4. Explore using auto-renewal defaults to incentivize carriers to lower costs. 5. Consider allowing consumers to choose their auto-renewal priorities. Background
Auto-renewal policies create a backstop to provide consumers continuity of insurance coverage if they do not actively re-enroll through the marketplace during open enrollment. The ACA envisioned active consumer engagement in marketplace enrollment, providing consumers an annual opportunity to find a health insurance plan that best fits their health care and affordability needs.
However, despite the benefits of active shopping, a portion of consumers do not do so. Reasons for this behavior could include limited time, indifference about their plan, insufficient information about open enrollment, or the complexity of shopping.i They could also be satisfied with their current plan despite changes that may have been made or the availability of new attractive alternatives. Consumers historically marginalized by the health care system, such as those with lower incomes or living in highly rural areas, may face higher barriers to actively re-enrolling. Insurance carriers, consumer advocates, and government officials alike recognize that auto-renewing people into plans provides an important backstop to help consumers maintain their health insurance coverage if they do not actively search and enroll in a plan each year. In 2019, 30% of Maine residents who re-enrolledii in the marketplace for 2020 relied on auto-renewal.142 On average in 2018, 29% of re-enrollees on the FFM and 38% of re-enrollees on SBMs relied on auto-renewal instead of actively re-enrolling into a plan.143 Auto-renewal policies provide consumers continuity of coverage by auto-renewing consumers into the same plan or with the same carrier. At the same time, auto-renewal policies provide carriers some certainty that they will retain a percentage of consumers regardless of changes carriers make to those plans. This reduces carriers’ incentives to provide higher-quality plans and/or to offer plans at lower costs in order to compete with other carriers.
Current Auto-Renewal Policies
The enabling regulations of the ACA lay out the hierarchy by which auto-renewal takes place on the FFM. Each existing plan is mapped to a plan for the following year, a process known as “crosswalking.” FFM auto-renewal policies prioritize defaulting consumers into the same plan or, if not available, the most similar plan available with the same carrier and metal tier.iii If the same carrier stops offering any plans in the same metal tier or exits the market entirely, consumers are defaulted into the most similar plan available with another carrier. States that operate SBMs have so far adopted the same or similar auto-renewal policies. Consumers who purchase an insurance plan on the FFM typically receive two notices by mail regarding auto-renewal before the start of the OEP.144,iv One is a
i Research has shown that consumers are prone to status quo bias, which may result in them staying with their initial insurance plan even if prices change or if new options that better fit their needs become available. Taylor, Erin Audrey, Katherine Grace Carman, Andrea Lopez, Ashley N. Muchow, Parisa Roshan, and Christine Eibner, Consumer Decisionmaking in the Health Care Marketplace. Santa Monica, CA: RAND Corporation, 2016. https://www.rand.org/pubs/research_reports/RR1567.html. ii CMS uses the term “re-enroll” to mean people who were in the marketplace last year and still are, as opposed to new enrollees. iii Carriers are tasked with creating the crosswalk for their plans, including which is most similar in the event an existing plan is discontinued for the subsequent year. This crosswalk is subject to review by the Bureau of Insurance. iv While the two-notice system can create confusion for consumers and is not ideal, it is unlikely that a single notice would be possible given federal laws regarding renewal notices
redetermination notice sent by the marketplace and covers what actions the consumer must take to receive their subsidy, if eligible, for the subsequent year. The other is a renewal notice sent by the carrier; it details the plan into which the carrier will auto-renew the consumer, any changes to the plan relative to the consumer’s plan from the prior year, and the premium after applying any APTC based on the income on the consumer’s tax returns from the previous year. The FFM requires carriers to use the FFM-developed templates for renewal notices to FFM consumers. However, states are able to develop state-specific notices so long as the notices include all of the essential information required by the federal notices.145
Designing New Auto-Renewal Policies
While auto-renewal policies have historically existed to provide continuity of coverage for consumers, they could be more tailored to consumers’ needs and potentially increase affordability. A key challenge of designing auto-renewal policies is that there is significant variation in consumer preferences regarding plan choice along numerous dimensions, including affordability and coverage. Some stakeholders suggested that preferences vary substantially based on the circumstances of consumers, such as their age, the providers available in their area, and health care utilization. The State of Maine should also ensure its auto-renewal policies are inclusive of the varying needs of a diverse population. One stakeholder indicated that current renewal policies often result in consumers paying more for the same benefits instead of paying the same amount for fewer benefits. Maine’s Clear Choice plans will create standardization of benefits and the copays, deductibles, and coinsurance for these benefits. These could allow for more innovative auto-renewal policies because they reduce the variation between plans and make crosswalking more straightforward. Additionally, Maine officials can explore ways to use auto-renewal policies to increase enrollment in Clear Choice plans. As we interviewed stakeholders to ask about auto-renewal policies, many offered comments about auto-renewal notices, while providing less feedback on broader auto-renewal policy changes. In particular, stakeholders had little to say about using auto-renewal to incentivize carrier behavior or allowing consumers to select their default options. As such, stakeholder perspectives may change once they more fully consider the implications of such a policy change on their business models and/or the experience of consumers.
Recommendation 1: Design auto-renewal notices to be more consumer-friendly.
As described earlier, the marketplace and carriers mail consumers notices in advance of open enrollment. In addition to providing detailed information about auto-renewal, these notices present an important opportunity to encourage consumers to actively shop for plans. Several consumer advocates interviewed raised concerns that consumers struggle to understand auto-renewal notices. Maine officials should ensure the notices provide clear and succinct information to consumers. The following section lists feasible changes that could be made to improve notices.
Policy Considerations
1. Encourage active shopping by including information about comparable Clear Choice Plans on the redetermination notice. The redetermination notice offers an opportunity to encourage active shopping. Maine could provide basic details about the two or three Clear Choice Plans most similar to the consumer’s current plan. This could encourage consumers to actively shop, especially if another carrier clearly offers a better plan at a similar cost or a similar plan for a lower cost. 2. Leverage consumer engagement opportunities for feedback to make notices clearer. Consumer advocates suggested changes such as using plain language, translating the notice into other languages, and shortening the length.v They also suggested more clearly communicating any changes to consumers’ plans. For example, one stakeholder recommended that carrier auto-renewal notices emphasize when a consumer’s current providers move out-of-network. Proposed changes should undergo user testing before being adopted.
3. Pair mail notices with digital notifications. E-mail notifications could allow consumers to click on a link that takes them directly to the marketplace, facilitating active re-enrollments. In addition to the mailed notices, Maine could consider defaulting consumers into e-mail notifications and allowing consumers to opt out. This approach would help to ensure that consumers do not miss critical information and deadlines. Further, this would be an additional way to reach individuals who do not have a permanent mailing address, move frequently, or check their mail less frequently due to the use of PO boxes.
4. Maintain the current timing of notices. Currently, auto-renewal notices must be sent by the end of October so that consumers are aware of their auto-renewal status before the start of open enrollment. Some stakeholders recommended giving consumers information earlier, while others worried that sending the renewal notice too early would undermine the ultimate goal of encouraging consumers to actively shop during open enrollment. The existing timeline is likely the best path forward to ensure consumers are informed about how auto-renewal might change their plans, while also keeping the notification close enough to open enrollment to encourage active shopping. Sending digital notices as well as mail notices could mitigate the risk that auto-renewal notifications reach consumers after the start of the OEP.
Consumer Impact
Providing consumers clearer auto-renewal notices and access to translated notices will decrease complexity for consumers in understanding their auto-renewal policies and could advance health equity by targeting messaging towards communities that have historically struggled to enroll in coverage. For instance, sending both mail and digital notifications could more effectively reach those who lack stable housing and may miss mail notifications. Working with consumer advocacy groups on these changes would likely further advance health equity by centering community needs in decision-making processes. If consumers have a clearer understanding of the plans they will be auto-renewed into, and auto-renewal notifications encourage them to actively shop, consumers may be more likely to select more affordable plans that meet their coverage needs.
State Feasibility
Improving auto-renewal notices is highly feasible, as the cost to improve notices should be minimal. Almost all stakeholders interviewed, including carriers, thought that auto-renewal notices should be clearer. Developing new notification guidance in consultation
v In June 2020, HHS published a final rule on Section 1557 of the ACA regarding Non-Discrimination Regulations. These regulations eliminated requirements that non-discrimination notices must include the availability of language assistance services and taglines in the top 15 languages spoken by individuals with limited English proficiency in the state. (Musumeci, MaryBeth, Jennifer Kates, Lindsey Dawson, Alina Salganicoff, Laurie Sobel, and Samantha Artiga. “The Trump Administration’s Final Section 1557 Non-Discrimination Regulations Under the ACA and Current Status”. 18 September 2020. Kaiser Family Foundation. https://www.kff.org/racial-equity-and-health-policy/issue-brief/the-trump-administrations-final-rule-on-section-1557-non-discrimination-regulations-under-the-aca-and-current-status/) AUTO-RENEWAL | 39
with consumer advocacy groups may take some resources initially, but would not generate ongoing costs. Recommendation 2: Set the default for consumers eligible for cost-sharing reductions to the high-value silver plans.
Under the ACA, consumers between 138% and 250% FPL are eligible for cost-sharing reductions (CSRs), in addition to receiving subsidies.vi For most eligible consumers, plans that incorporate CSRs are only available at the silver tier and have the same premium as nonCSR silver plans.vii Known as “high-value” silver plans, these plans have an actuarial value of 94% for consumers between 138% and 150% FPL, compared to 70% for a non-CSR silver plan and 80% for a gold plan. Because high-value silver plans and the lowest-cost silver plans have the same premiums within carriers, there is a risk that CSR-eligible consumers purchase a silver plan that does not give them the highest actuarial value at that premium. The State of Maine could create an auto-renewal policy that requires carriers to auto-renew CSR-eligible consumers under 250% FPL into the carrier’s high-value silver plans, unless they are enrolled in a gold plan that has a lower premium.viii
Consumer Impact
This policy would be highly beneficial to CSR-eligible consumers because it would ensure they are receiving higher-value plans with lower out-of-pocket costs for the same premiums. Since all carriers are required to offer high-value silver plans, consumers would keep their carriers and there would be minimal disruption to consumers’ continuity of coverage. This policy could improve health equity because it specifically targets low-income, CSR-eligible consumers to ensure they receive the financial subsidies to which they are entitled.
State Feasibility
This should be highly feasible because it will not increase costs for the State, carriers, or consumers. With regard to operational feasibility, carriers will need to map a separate crosswalk for the CSR-eligible consumers and submit it to the Bureau of Insurance
Recommendation 3: Auto-renew consumers into Clear Choice plans when carriers discontinue non-standardized plans.
When Maine shifts to Clear Choice plans, all carriers will have to discontinue a majority of their existing plans, as they will only be allowed to offer three non-standardized plans in addition to the Clear Choice designs.ix Maine officials could consider creating an auto-renewal policy that requires defaulting consumers enrolled in any discontinued plans into standardized plans. Over time, this practice may further advance the State’s goal of bringing more consumers into plans that offer more comprehensive coverage and lower cost-sharing than non-standardized plans are likely to have.
For the purposes of the one-time shift to Clear Choice plans, any consumers under 250% FPL could be auto-renewed into the lowest-cost high-value Clear Choice silver plan with the same carrier. Consumers above 250% FPL should be renewed into the lowest-cost Clear Choice plan with the same carrier at the same metal tier.
Consumer Impact
This policy could increase affordability and coverage for consumers because Clear Choice plans are intended to create a set of marketplace offerings across which carriers compete on the basis of price and quality.
State Feasibility
This policy should be highly feasible to implement, as it would have minimal operational and financial costs. This policy presents an opportunity to increase the use of Clear Choice plans, which are supported by many consumer advocates. Carriers, who have voiced opposition to standardized plans generally, may not support this policy.
vi While the Trump administration ended cost-sharing payments to carriers, the silver plans that automatically reflect cost-sharing reductions are still required to be offered to those eligible. vii American Indian/Native Alaskan enrollees can receive cost-sharing reductions for any metal level plan purchased through the Marketplaces. viii There are instances where the gold plan costs less because of silver-loading. ix A non-standardized plan can only be offered in a service area where the carrier offers at least one clear choice design plan at the same tier. (Maine State Legislature. “Public Law, Chapter 653 = 129th Maine Legislature. “An Act to Enact the Made for Maine Health Coverage Act and Improve in Maine”. http://legislature.maine.gov/legis/ bills/bills_129th/chapters/PUBLIC653.asp) 40 | AUTO-RENEWAL
Maine officials could create policies that incentivize carriers to lower costs for consumers—whether through premiums or out-of-pocket costs like deductibles, copays, and coinsurance. Consumers may face fewer sharp increases in premiums and out-of-pocket costs if carriers compete on price to capture a higher share of auto-renewals. Conversely, a strict focus on cost may harm consumers reliant on their current plans for continuity of care and encourage carriers to offer narrower networks to create lower-cost plans. Additionally, if consumers are often shifted to other carriers, this could disincentivize carriers from investing in preventive care that would likely save costs later. Therefore, the State should identify opportunities to set auto-renewal defaults that could incentivize carriers to lower prices while maintaining consumers’ existing level of coverage. Few other states have used auto-renewal policies to incentivize carriers to lower their costs. When consumers lose their eligibility for the Massachusetts ConnectorCare subsidy, they are mapped to the lowest-cost silver plan, instead of the most similar plan, if neither their current plan nor any other plans from the same carrier are available. Florida identified two options for implementing cost-reduction defaults for auto-enrollment into Medicaid managed care.146 However, this is only possible because people sometimes enroll in Medicaid without selecting a carrier. In the marketplace, all consumers must actively select a carrier.
Policy Considerations
We identified the following circumstances under which defaulting consumers into lower-cost plans could be appropriate. 1. When consumers age out of their catastrophic plans Currently, consumers can buy catastrophic plans if they are under the age of 30 or have a hardship or affordability exemption. Maine officials could consider auto-renewing consumers who age out of their catastrophic plans into a plan based on cost, regardless of carrier. This policy would impact relatively few Maine residents; in 2019, 965 marketplace enrollees, or 1.3% of all Maine enrollees, chose catastrophic plans.147 When the State shifts to standardized plans, any consumers under 250% FPL and previously in catastrophic plans should be auto-renewed into the lowest-cost high-value silver Clear Choice plan, regardless of carrier. Consumers above 250% FPL and previously in a catastrophic plan should be renewed into the lowest-cost Clear Choice bronze plan, regardless of carrier. 2. When consumers lose APTC subsidies because their income exceeds 400% FPLx Maine officials could consider changing the default auto-renewal for consumers who lose eligibility for subsidies (due to increased income) to the lowest-cost Clear Choice plan within the same metal level, regardless of carrier.
3. When no plans are available from the same carrier in the same metal level If a carrier discontinues a consumer’s plan and does not offer other plans in the same metal level, current FFM policies allow carriers to renew these consumers into a different metal level. Maine officials could consider a policy that instead auto-renews these consumers into the lowest-cost Clear Choice plan available in the same metal level, regardless of carrier. This would be relatively easy to implement, but would likely have a limited impact because the participation by the three carriers in Maine’s individual market has been relatively steady across the state’s regions since the introduction of the reinsurance program.
Consumer Impact
Each policy consideration laid out above could increase affordability directly for a relatively small subset of consumers by defaulting them into plans with a lower total cost while incentivizing insurers to lower costs in order to increase their market share. However, these policies risk interrupting a consumer’s continuity of care if the default shifts change the consumer’s carrier. Defaulting all consumers into Clear Choice plans (Recommendation 3) would ensure a minimum standard into which consumers are defaulted.
State Feasibility
This policy should be highly feasible to implement, with minimal operational and financial costs. Implementing such a policy may require the BOI to be more involved in developing auto-renewal crosswalks, as some consumers would be crosswalked into a different carrier. In instances where consumers would be auto-renewed
x This policy should not be extended to consumers under 400% FPL who lose subsidies based on the price of plans they select. That could lead carriers to increase premiums so that more consumers receive subsidies and thus are not auto-renewed into lower-cost plans.
to a different carrier, clear notices would be critical to communicate this change. Carriers may oppose one or more of these options if they anticipate it would cause them to lose consumers. Consumer advocates could support these changes, provided that plan and carrier changes are clearly communicated.
Currently, the default on the FFM is for consumers to be automatically renewed in their existing plan, if it is available, and to keep consumers with their existing carrier even if their current plan is discontinued. Consumers are not able to change this default on the FFM; to date, no SBM has implemented policies that would allow consumers to choose how their auto-renewal default is selected. In 2019, 57% of Maine consumers who chose to actively re-enroll selected a different plan.xi It may be worth conducting a study of consumers’ motivations to actively switch into other plans to better understand what factors influence this choice.
Maine officials could consider creating a system for consumers to set their own auto-renewal preferences. For example, the SBM could have a webpage where consumers can rank, review, and change their auto-renewal preferences any time until October 1.xii Preferences consumers could rank might include the following examples: • Staying in the same plan, with the same carrier, as they selected the previous year • Staying with the same carrier they selected the previous year • Maintaining continuity of in-network providers • Maintaining the same level of coverage received under their current plan • Prioritizing lower total costs • Prioritizing lower premium costs • Prioritizing lower deductible and out-of-pocket costs All auto-renewal selections would remain within the same metal level as the previous year’s selection.xiii
Policy Considerations
Before implementing this policy, Maine officials should gauge consumer interest in changing their auto-renewal defaults by surveying a random selection of marketplace enrollees. The survey could ask consumers to rank their preferences and ask whether they would prefer to be auto-renewed into their current plan or a plan based on the criteria they selected. If there is little or no interest, the State may not wish to proceed.
If Maine officials implement this policy, they will have to consider the level of aggregation and the timing for sharing consumer preferences with carriers. We suggest that only aggregate numbers be shared to prevent cherry-picking. It would make sense to share the information on a timeline that will influence carriers’ decision-making for the next year’s plans. The State will also need to consider when and how to encourage consumers to indicate their auto-renewal preferences.
Consumer Impact
This option would allow consumers to select an auto-renewal policy based on their priorities around health care coverage. Consumers with lower health care utilization looking to choose lower-cost plans could opt to be automatically renewed into the most affordable Clear Choice plan at their metal level, instead of defaulting into their current plans. This option could also lower costs for consumers by incentivizing carriers to compete on both price and quality. One carrier indicated that they heavily rely on passive auto-renewals, as it is more affordable to keep a customer than to enroll a new one. Providing this option may lead carriers to reconsider their plan offerings and pricing strategy, depending on consumer preferences. Giving consumers more choices increases complexity. One concern might be that consumers may not understand the implications of their auto-renewal selections and select cost as their top priority without realizing it could jeopardize their coverage. Consumer advocacy groups we spoke to often supported the idea of centering consumer decision-making but raised concerns that this could add complexity or disincentivize shop-
xi The rate for the FFM more broadly was lower at 46%. Maine’s rate may be higher because of Anthem’s re-entry into the marketplace. Center for Medicaid and Medicare Services. Source: “2019 and 2020 Marketplace Open Enrollment Period Public Use Files” April 2, 2020. https://www.cms.gov/Research-Statistics-Data-and-Systems/ Statistics-Trends-and-Reports/Marketplace-Products/2020-Marketplace-Open-Enrollment-Period-Public-Use-Files#:~:text=This%20includes%20the%20original%20 2020,enroll%20by%20the%20original%20deadline xii Many states begin processing auto-renewal determination notices in October; ending the ability to change auto-renewal preference one month before open enrollment ensures that the marketplace and carriers can accurately reflect consumers’ preferences in their renewal notices. xiii All consumers would be crosswalked into Clear Choice Plans unless they prioritized staying in the same plan they selected the previous year to further the State’s goal to increase enrollment in plans that offer more comprehensive coverage with lower cost-sharing and to reduce implementation complexity. 42 | AUTO-RENEWAL
ping. Concerns about added complexity could be mitigated by making it clear that selecting an auto-renewal preference is optional.
State Feasibility
This option could be difficult and somewhat costly to implement, as it would require both developing a system to record preferences and conducting consumer outreach. Further, BOI would likely have to take on a larger role in crosswalking plans, as this option creates a high likelihood of cross-carrier auto-renewals.
