This week’s contributor is Jose Figueroa, an assistant professor of health policy and management at the Harvard T.H. Chan School of Public Health and a physician at the Brigham & Women’s Hospital. His work focuses on understanding issues of quality and equity in healthcare. 

There are a lot of reasons someone might miss a health insurance payment. Maybe money is tight one month. Maybe they didn’t see the bill in the mail or just forgot to send in their check. Whatever the reason, missing a premium payment can have substantial negative effects if it leads someone to lose their coverage, a more common occurrence among individuals with lower incomes.

In a new NBER working paper, Harvard researchers Adrianna McIntyre, Mark Shepard and Myles Wagner evaluated the impact of an old Massachusetts state policy called “automatic retention.” This policy was meant to protect people enrolled in Massachusetts’ pre-ACA health insurance exchange known as “CommCare” from losing insurance coverage due to payment lapses. Like the ACA exchange, CommCare provided access to subsidized private plans. However, unique to CommCare, there was always one plan option with $0 premiums available to people making 100-150% of the federal poverty limit. If someone selected a different subsidized plan but missed a payment for it, then unlike the ACA, which disenrolls people who miss payments, CommCare automatically switched them into the premium-free health plan. (If they settled up on their late payments within 60 days, they could switch back to their original plan, but they would keep coverage unless they cancelled or lost eligibility.).

The results are impressive. The researchers estimated that this feature protected 14% of adults per year from losing health insurance coverage due to payment lapses. The retained adults were often younger and healthier, which is a good thing for the market risk pool. Unfortunately, the study can’t definitively determine exactly why people lapsed on their health plan. The authors point out that it could be due to too much hassle, forgetfulness, issues of affordability, or quite likely, a little bit of everything.

These findings have important implications for other health insurance markets, like the ACA exchanges, which currently do not have this feature baked into their design. However, as the researchers point out, there are important tradeoffs with automatic retention that would need to be addressed if implemented. These include potential increases in public subsidy spending and possible quality reductions among health plans as they may compete to be the lowest priced plan. The authors note that one option to address these concerns and still avoid coverage lapses would be automatically collecting premiums out of people’s taxes or paychecks like in Medicare and employer-based coverage. 

But if our goal is to maximize protection from poor health through health insurance coverage, then auto-retention seems like a worthwhile policy option to investigate.