The Los Angeles Times has reported that Covered California, the largest state’s health insurance exchange under the Affordable Care Act, has started releasing to insurance agents throughout the state the names and contact information of tens of thousands of persons who started an application using the state’s online system but failed to complete it.
The Covered California director Peter Lee acknowledges the practice but says that the outreach program still complies with privacy laws and was reviewed by the exchange’s legal counsel. “I can see a lot of people will be comforted and relieved at getting the help they need to navigate a confusing process,” explained Lee.
I am hardly as confident as Covered California’s lawyers apparently were that this practice was legal.
The law requires that disclosures to third parties be necessary and I do not see why Covered California could not have contacted non-completers directly and ask them if they wanted help from an insurance agent rather than disclosing their identity to insurance agents. But even if the practice could be said to be borderline legal, it is difficult to imagine a practice more likely to sabotage enrollment efforts in California — and, since California’s interpretation could be precedent for other states — elsewhere.
For every person unable to complete their application online in California and who will, with the comforting help provided by insurance agents, now want to complete it, there are likely 10 who will be turned off by the cavalier attitude towards privacy exhibited by this government agency. Beyond a violation of ACA privacy safeguards, the action is either a sign of desperation about enrollment figures, even in a state that boasts of its success such as Peter Lee’s California, or monumental stupidity.
If California wanted to create an adverse selection death spiral, it would be difficult to be more effective than, without notice or consent, releasing personally identifiable information to insurance agents.