'Obamacare' Enrollment Season Is Here

The open enrollment period for 2023 individual major medical insurance rumbled to life today — and gives agents and advisors a new chance to talk to clients about prices, inflation and long-term financial planning.

Average premiums on benchmark coverage available through HealthCare.gov — the site created under the health care legislation dubbed Obamacare — will increase 4% next year, after falling an average of about 3% this year, according to the Centers for Medicare and Medicaid Services.

The Nationwide retirement research arm reported last week that 24% of the 1,140 U.S. adults it surveyed have reduced, or are preparing to reduce, retirement plan contributions because of health care expenses.

Kristi Rodriguez, a senior vice president at Nationwide Financial, says the high, and unpredictable, cost of health care gives financial professionals a chance to get clients’ and prospects’ attention.

Many people “are terrified about what rising health care expenses could mean for their retirement plans,” Rodriguez

The Background

Congress created the Affordable Care Act public exchange system, which is known to the general public as “Obamacare,” in an effort to encourage young, healthy people to sign up for private health coverage and hold down the premiums by lowering the overall average claims.

The exchange is supposed to provide a “Travelocity for health insurance.”

Originally, ACA drafters expected each state to run its own state-based exchange. Eighteen states now manage and run their own exchanges.

The Centers for Medicare and Medicaid Services set up HealthCare.gov to provide exchange services in states that were unwilling or unable to do that. HealthCare.gov now runs the ACA exchange programs in 30 states and administers exchange programs for three other states.

Exchange managers, insurers and regulators developed the enrollment period calendar system, or restrictions on when people can sign up for coverage without showing they have what the government classifies as a good reason to be signing up for coverage, in an effort to push healthy people to pay for coverage even when they do not expect to need health care.

The individual major medical open enrollment period will run from today through Jan. 15, 2023, in states that use HealthCare.gov to run or administer their exchange programs.

Other states can set their own enrollment period dates.

States usually use the same enrollment calendar for individual coverage sold outside the ACA exchange system, to avoid pushing sicker people toward, or away from, exchange plans.

The individual major medical open enrollment period is separate from the Medicare Advantage plan and Medicare Part D prescription drug plan annual election period, which runs from Oct. 15 through Dec. 7.

Early Indicators

There are early signs that enrollment activity for 2023 could be at least as strong as 2022 enrollment activity was.

HealthCare.gov had registered 64,848 individual health insurance agents and brokers for this enrollment period as of Monday, up 19% from the number it had registered by Oct. 31, 2021, and up 35% from the number it had registered by Oct. 31, 2020.

Google Trends, a website that provides summaries of Google search activity data, shows that search activity for health insurance enrollment-related terms such as “HealthCare.gov” has been about the same in the past week as it was before the start of the enrollment period for 2022 coverage.

More Reasons to Track It

Many life, annuity and retirement professionals got their start in health insurance sales, then gave up on major medical insurance for people 65 when implementation of the Affordable Care Act framework changed the products and slashed compensation for producers in the individual market.

Here are five reasons why companies like Nationwide are still showing an interest in major medical insurance.

1. Some clients get their health coverage that way.

Even in the income range for people with income over 400% of the federal poverty level, or $54,360 for an individual and $111,000 for a family of four in most of the country, 4.9% of adults ages 18 through 64 were uninsured when a government survey team interviewed them in 2020, and 6.6%, were paying for their own, directly purchased health coverage, according to the U.S. Centers for Disease Control and Prevention.

Some of the people who bought their own coverage obtained coverage through the ACA exchange system, and some bought individual coverage through the off-exchange market.

Access to individual coverage, purchased on or off the exchange, is especially important to the kinds of self-employed people who are candidates for using the kinds of life insurance policies, disability insurance policies, retirement plans and estate planning services aimed at self-employed clients.

2. It has created enormous health coverage distribution organizations.

About 14.5 million had signed up for 2023 health coverage through the ACA public exchange system as of January 2022, according to CMS data.

Publicly traded private web brokers have suggested that their health insurance customer relationships have a lifetime value of about $1,000 each. That suggests that the ACA public exchange programs may have enrollee relationships with a value of more than $14 billion.