August 5, 2014; National Journal

If you enrolled for health insurance coverage through or one of the state exchanges, you’re probably glad the exercise is over and you’re able to focus on other things. Not so fast. The National Journal did an analysis of the Affordable Care Act (ACA, or Obamacare) and its insurance provisions. The headline result is that people may wish to reapply every year to protect themselves from larger personal contributions to pay for the same coverage.

Under the law’s design, the insurance marketplace changes every year in an attempt to reduce costs and foster competition among insurance companies. If this is true, why would individuals be liable for higher payments to the IRS?

Most people who purchase health insurance through the exchanges receive subsidies to help pay their premiums. These subsidies are based on, among other factors, the cost of a “benchmark” insurance plan. (Most people buy the benchmark plan or one cheaper.) The cost of the benchmark plan changes annually, as insurance companies compete for customers while accounting for the costs of providing insurance and the savings (if any) they’re able to realize in providing coverage.

The subsidies individuals receive are based on the benchmark plan’s cost. If the benchmark cost changes, the individual’s subsidy amount changes. A higher subsidy results in a refund from the IRS. A lower subsidy means the individual is liable for increased payments to the IRS.

The insurance exchanges do not currently have the ability to calculate changes in personal costs for current insurance coverage, so it’s not possible for individuals to easily see what will happen if they keep their current policy. Since the exchanges can’t calculate the cost changes, they can’t communicate those changes to policyholders.

Another consequence of the shifting subsidy picture is the prospect of people needing to change doctors and provider networks if they change insurance coverage to minimize their personal costs. If their personal costs are the primary criterion for insurance policy selection, it’s possible that some people will be changing healthcare providers frequently. Why? Most insurance policies limit the number of doctors and hospitals they include in their networks of coverage. Going to a provider outside the network often results in significant personal costs for individuals’ copayments.

The need for people to change providers to stay “in network” will be inconvenient for the individual, but there’s also a larger problem. Patient mobility from network to network also works against one of the stated goals of the ACA, reducing costs by having an individual assigned to a “medical home” for the long term and reimbursing providers for longer-term wellness outcomes rather than the traditional fee-for-service payment system.

How will healthcare providers and provider networks adapt their care models to accommodate more frequent patient adds and drops than they anticipated?—Michael Wyland