From January 2014 to September 2015, Covered California has provided private health insurance to two million people. 1.3 million of them are still enrolled, while 700,000 are no longer with Covered California. But the good news is that of those 700,000 people, 85 percent simply switched to other health insurance coverage. People who gained access to employer-sponsored coverage accounted for the largest segment of those who left Covered California. The individual health insurance market has always served a segment of the population that’s in flux between employer sponsored plans; the difference is that now they can get an individual plan to cover them during that gap without having to worry about pre-existing conditions.
There are still more than 3.8 million uninsured residents in California, and two million of them are eligible for Medi-Cal or subsidies in the exchange. Covered California is ramping up their outreach to focus on those two million people and enroll as many of them as possible during the 2016 open enrollment period. The exchange has noted that while 84 percent of uninsured California residents are aware of the ACA’s penalty for being uninsured, 36 percent don’t know about the subsidies that are available through the exchange to offset the cost of coverage. Education and outreach continue to be important as we head into round three of Obamacare open enrollment. Covered California is focusing particularly on Latinos and African Americans, as they have the highest uninsured rate in the state.
Heading into the 2016 open enrollment period, Covered California is hiring 500 temporary call center workers who will augment the exchange’s permanent call center.
2016 rates and carriers
After negotiating a six week delay for publicizing 2016 rate proposals, Covered California announced on July 27 that the weighted average rate increase for their plans would be a mere 4 percent next year, and that consumers who shop around (which should be everyone!) would have the opportunity to lower their premiums by an average of 4.5 percent, and as much as ten percent in some areas of the state. The small overall rate hike for 2016 comes on the heels of an average rate increase of just 1 percent in 2015.
In addition to making rates available months in advance of open enrollment, Covered California also began allowing existing policy-holders to renew or make changes to their coverage starting October 12 – nearly three weeks before the start of open enrollment.
Two new carriers have joined Covered California for 2016: Oscar Health Plan and United Healthcare – bringing the total number of exchange carriers from ten to twelve. The ten current insurers are: Anthem Blue Cross of California, Blue Shield of California, Chinese Community Health Plan, Health Net, Kaiser Permanente, L.A. Care Health Plan, Molina Healthcare, Sharp Health Plan, Valley Health Plan, and Western Health Advantage. All of these insurers also participated in the 2014 marketplace. Not all insurers are available in all parts of the state though; in some ZIP codes just a single company offers plan options in 2015. Peter Lee, executive director of Covered California, notes that the lack of competition in rural areas is a long-standing issue and not one created by the formation of Covered California.
Covered CA is one of ten state-run exchanges that has an “active purchaser” model, meaning that they negotiate directly with carriers to make sure that rates, networks, and benefits are as consumer-friendly as possible (the other state-run exchanges simply set minimum standards that carriers must meet, and then allow the sale of any plans that meet those guidelines).
United Healthcare applied in January to join Covered California state-wide, but the exchange initially rejected the proposal, citing a rule that requires carriers to wait at least three years to enter the marketplace if they didn’t offer plans for sale starting in 2014. In February, the exchange issued a compromise, allowing United Healthcare the opportunity to sell plans in five of the state’s 19 regions where fewer than three carriers offer coverage. The compromise provides the possibility for more competition and choices for consumers, while also preventing carriers from sitting out the initial years of open enrollment and then undercutting existing plans state-wide in subsequent years.
Charles Gaba reports that Covered CA is aiming to increase their effectuated enrollment total by 200,000 people during the 2016 open enrollment period that runs from November 1 to January 31.
Covered California had announced in August 2014 that they would have stand-alone adult and family dental plans available for purchase in 2015, but that was delayed until 2016 because of problems with the exchange website. Stand-alone dental coverage is available from Covered California for 2016, and five carriers are offering coverage: Access Dental Plan, Anthem Blue Cross, Delta Dental of California, Dental Health Services, and Premier Access.
Undocumented immigrant children can get Medi-Cal
California lawmakers considered options in 2015 for providing access to health insurance for the state’s undocumented immigrants. As it was originally written, SB4 would have extended Medi-Cal to undocumented immigrants who qualified based on income, and would also have allowed undocumented immigrants with higher incomes the opportunity to purchase health insurance through Covered California, albeit without access to subsidies. This would have required a federal waiver however, because the ACA does not allow undocumented immigrants to enroll in coverage through the exchanges, even if they pay the entire premiums themselves.
SB4 passed the Senate in early June, the Assembly in September, and was signed into law by Governor Jerry Brown on October 9, 2015. But the final version of the legislation – renamed the Health for All Kids Act – focuses solely on Medi-Cal access for undocumented immigrant children under the age of 19. Four other states – New York, Illinois, Washington, and Massachusetts – along with Washington D.C.. have established similar eligibility rules for children, but California’s immigrant population is the largest among them, and encompasses a quarter of the whole country’s undocumented immigrant population (in 2013, there were an estimated 2.67 million undocumented immigrants in California).
SB4 will take effect in May 2016, and an estimated 170,000 undocumented immigrant children will be newly-eligible for Medi-Cal. Their eligibility will be based solely on household income, without regard for immigration status.
SB10 was also introduced in 2015, and will be taken up again in the 2016 legislative session. It would pick up where SB4 leaves off, and would complete the original intent of SB4. SB10 would allow adults age 19 and over to enroll in Medi-Cal without regard for immigration status, and would also allow undocumented immigrants with income above the Medi-Cal threshold to purchase unsubsidized coverage in the exchange, assuming a waiver allowing them to do so is granted by HHS.
Coverage options for pregnant women
Currently, under federal regulations, the birth or adoption of a child is a qualifying event, but pregnancy is not (HHS revisited this question in early 2015, and reiterated their position that pregnancy is not a qualifying event at the federal level). This means that although the mother and baby both have access to health insurance once the child is born, they do not have access to coverage during the pregnancy if the mother lacks insurance and doesn’t qualify for any of the other special enrollment periods.
In early 2015, New York and California made headlines as lawmakers in both states considered legislation that would make pregnancy a qualifying event and allow pregnant women the option to purchase coverage in the exchange outside of the annual open enrollment period. As it was originally written, CA AB1102 would have allowed a pregnant woman access to a new health plan when she becomes pregnant, but only if she did not already have minimum essential coverage. AB1102 passed the Assembly in June, but in July the text of the legislation was altered significantly. The revised version (which is now filed as inactive with the Senate) simply says that an applicant who is rejected for coverage – for any reason, including attempting to enroll outside of open enrollment – shall be directed to MRMIP and/or Covered California for more assistance.
MRMIP (California Major Risk Medical Insurance Program) is the state’s high risk pool. AB1102 was introduced by Assemblymember Miguel Santiago, and I spoke with his office about the changes to the bill. They said that the language of the bill was adjusted once it was brought to their attention that MRMIP is still available in California, and serves as an option for a pregnant woman – or anyone else – who’s trying to enroll in a plan outside of open enrollment. It doesn’t give enrollees the level of choice or premium subsidy that they would get if pregnancy were to be made a qualifying event, and MRMIP still has annual and lifetime benefit maximums. But it’s better than nothing (in most states, the high risk pools are no longer operational now that the ACA has eliminated the concept of pre-existing conditions; high risk pools existed in order to provide coverage for people who were uninsurable in the private market prior to 2014).
In addition to MRMIP, California integrated MCAP enrollment into Covered California as of October 2015. MCAP (Medi-Cal Access Program) offers coverage to uninsured pregnant women who aren’t eligible for no-cost Medi-Cal, and whose income is between 213 percent and 322 percent of the federal poverty level (213 is the upper threshold for no-cost Medi-Cal for pregnant women). A pregnant woman is counted as two people for Medi-Cal and MCAP eligibility, so a single pregnant woman would qualify for MCAP with an income up to $51,294. And MCAP recently eliminated a requirement that women enroll by the 30th week of pregnancy, so women in California who meet the income requirements for MCAP can enroll at any point during their pregnancy.
MRMIP, Medi-Cal, and MCAP all have year-round enrollment for eligible applicants, so they offer options for uninsured women who become pregnant outside of general open enrollment.
Exchange caps monthly prescription costs
The cost of high-end prescription drugs is a growing problem for healthcare cost sustainability, and the rising cost of prescriptions is cited repeatedly in justifications provided by insurers requesting double digit rate increases. But the cost of specialty medications can also be an insurmountable burden for patients, even when they have health insurance. For high end specialty medications, like Sovaldi, it’s not uncommon for patients to reach their maximum out-of-pocket exposure very quickly, paying thousands of dollars per month in coinsurance for their medications.
In May, Covered California rolled out a cap on prescription costs that will be effective in 2016, along with various other benefit enhancements that allow consumers access to more care without having to meet steep deductibles. Because Covered California requires plan standardization on and off-exchange, the prescription copay cap will also be available to many consumers purchasing plans outside the exchange. The cap will be linked to the metal level of the plan purchased; for the majority of consumers, the cap will be $250 per specialty medication per month, but it will range from $150 to $500, with bronze plan enrollees having the highest specialty drug copay cap.
The California legislature also created a similar cap state-wide, to include non-grandfathered group and individual plans sold only outside Covered California. Assembly Bill 339 was signed into law in October 2015, and will take effect January 1, 2017. It applies to all non-grandfathered individual and small group plans in the state, and limits the copayment for a 30 day supply of any medication to no more $250, until January 1, 2020. For plans designated as high deductible policies, the copay limit would apply after the deductible is met.
Budget and projections for 2016
In May, Covered California revised its 2016 enrollment projection down to 1.48 million people, growing to nearly 2 million by 2019. The exchange had projected 1.7 million enrollees for 2015, but ended up with 1.4 million – a 1 percent net growth over 2014, which put them among the worst-performing exchanges in terms of year-over-year growth.
In addition to a smaller estimated enrollment, the exchange is also tightening its budget for fiscal year 2016, which started July 1. The budget for the 2016 fiscal year is $332.9 million, which represents a $58 million spending cut when compared with 2015. Covered California still has $100 million in federal start-up money that can be used during the upcoming fiscal year, but no further federal funds are available. The bulk of the exchange’s revenue comes from a $13.95/month fee on every policy, and that source is unchanged from the 2015 fiscal year.
Total private plan enrollment in Covered California exceeded 1.4 million people by April 19. The exchange had a goal of enrolling half a million new applicants in private plans for 2015, and more than 495,000 new consumers selected health plans through Covered California between Nov. 15, 2014, and Feb. 22. Between February 23 and May 10, another 117,024 people enrolled in coverage through the exchange as a result of various qualifying events.
By the end of March, total effectuated enrollment in private plans through Covered CA stood at 1,364,659 people (attrition is a normal part of the individual health insurance market – some enrollees don’t pay their premiums, and others cancel their coverage early in the year). In the press release regarding 2016 rates, the exchange noted that effectuated enrollments were still “more than 1.3 million” as of late July (during the second quarter of 2015, total effectuated enrollment grew slightly, reaching 1,393,567 by the end of June).
Covered California is touting better signup rates among Latinos and African-Americans during the 2015 open enrollment period. Enrollment by minorities lagged in 2014, prompting a reallocation of marketing dollars, the launch of a Spanish-language enrollment website, and an increase in bilingual customer service representatives.
Despite the tax credits that are designed to keep exchange coverage affordable, a recent survey found that 44 percent of Covered California enrollees have difficulty paying their premiums, compared with 25 percent of those with employer-sponsored insurance or private coverage purchased outside the exchange. Covered California CEO Peter Lee noted that the ACA’s premium tax credits don’t give enrollees a “free lunch” and explained that even heavily subsidized premium are a heavy lift for low-income enrollees.
2015 renewals… 92% or 65%?
In addition to new enrollees, about 917,930 existing exchange enrollees re-enrolled for 2015. In late January, the exchange reported that they had implemented the renewal process for about 92 percent of people who were eligible to re-enroll. They put the total number eligible to re-enroll at a little over 1 million people; there had been 1.1 million private plan enrollees as of December, but about 85,000 of them were determined eligible for Medi-Cal for 2015. Of those who re-enrolled for 2015, approximately 386,000 people actively shopped for a renewal policy while about 576,000 people were automatically re-enrolled in the same plans from 2014.
In April, however, Avalere Health reported that Covered California had retained only 65 percent of their 2014 enrollees for 2015, which could leave people wondering which number to believe. In reality, they’re both correct – it just depends on how you look at it. Avalere’s calculation is based on total enrollment as of April 2014, and the percentage of that number that renewed for 2015. Although the exchange reported that they had renewed coverage for 92 percent of their eligible enrollees, that doesn’t count attrition throughout 2014 (attrition is normal in the individual market, and is to be expected), and is based on the number of people who were enrolled in December who re-enrolled for 2015. But the two re-enrollment data points – 65 percent and 92 percent – are an example of how numbers don’t tell the whole story.
If we just look at total private plan enrollment at the end of the 2014 open enrollment period (1,405,102) versus total private plan enrollment at the end of the 2015 open enrollment period (1,412,200), Covered California increased their private plan enrollment by about 7,000 people in 2015.
What happens if you don’t sign up?
The Affordable Care Act now requires most people to have health insurance. Those who don’t have insurance — and don’t qualify for an exemption — have to pay a penalty when they file their income tax return.
Penalties are increasing again for 2016: 2.5 percent of your household income or $695 per adult ($347.50 per child under 18), whichever is more. Use this calculator to see how much you may owe.
California’s SHOP exchange
California’s Small Business Health Options Program (SHOP) exchange lets small employers sign up and offer coverage to their employees year round. Six insurers are offering medical plans through the SHOP: Blue Shield of California, Chinese Community Health Plan, Health Net, Kaiser Permanente, Sharp Health Plan, and Western Health Advantage. As of October 2015, Covered CA’s SHOP exchange has 2,865 participating employers, and provides coverage for 19,465 people.
Small businesses must submit a completed application and the first month’s premium at least five business days before the end of the month to have coverage starting the first day of the following month. Employers determine the amount they’re willing to pay for health insurance, and employees can then select from among all the plan options available in the SHOP exchange; the employer gets one bill each month, but employees have a wide range of plan choices.
In 2015, Covered CA’s SHOP exchange is open to businesses with one to 50 employees. That is set to change in 2016 however, when businesses with up to 100 employees will be able to purchase coverage. That was supposed to be the case nationwide, but in October 2015, President Obama signed HR1624 into law, keeping the definition of “small group” at businesses with up to 50 employees (the ACA had called for expanding “small group” to include businesses with up to 100 employees starting in 2016). States are still allowed to expand their definitions of small businesses, and California had already aligned their laws with the ACA. California businesses with up to 100 employees will fall under the category of small groups starting in 2016, barring a special legislative session before the end of the year to make changes.
Covered California and the state’s private exchange, California Choice, have both confirmed their intention to open up their exchanges to businesses with up to 100 employees starting in 2016.
The U.S. Department of Health and Human Service’s final 2014 enrollment report showed that 1,405,102 Californians signed up for commercial health insurance between Oct. 15, 2013, and April 19, 2014.
About 800,000 Californian households received premium subsidies to help pay for 2014 coverage. On average, each household received $5,200 in subsidy assistance. About 480,000 of the households also received cost-sharing assistance valued at about $1,200.
The Gallup-Healthways Well-Being Index found that California’s uninsured rate dropped 6.3 points, from 21.6 percent to 15.3 percent, from 2013 to 2014. By mid-2015, it had dropped to 11.8 percent – nearly half of what it had been in 2013.
History of California marketplace
California was the first state to authorize an exchange under the Affordable Care Act, with former Gov. Arnold Schwarzenegger signing legislation in 2010.
While Covered California had the nation’s most successful 2014 open enrollment period in terms of the number of signups (and continues to lead the country in effectuated enrollments in 2015), it has faced some persistent criticisms and issues.
Enrollment by minorities was low in 2014. To address the issue, Covered California boosted funding and resources to better reach minority communities. According to a Covered California press release, the exchange spent more on advertising that targets Latinos, launched a Spanish-language enrollment website, added more than 200 bilingual customer service representatives, and partnered with several organizations for improved outreach. The exchange is continuing their outreach and enrollment efforts in minority communities for 2016.
Limited physician networks and inaccurate physician directories have been an issue for Covered California and for individual health plans. A Health Affairs study found that although Covered California plans do have relatively narrow networks, geographical access to care is not impaired, and providers are not lower-quality than those found in commercial insurance networks outside the exchange.
But in term of the provider directory issues, Covered California and the individual health insurance carriers in the state have faced significant criticism. Covered California removed its online physician directory due to errors for several weeks in October 2013 and again in February 2014; it has not yet been restored.
Class-action lawsuits were filed against several insurers in July and September 2014 alleging that the companies provided incomplete or inaccurate information about networks or provided network information too late to allow consumers to switch to other plans. In November 2014, the California Department of Managed Health Care (DMHC), the state agency that regulates health plans, ruled that Anthem Blue Cross and Blue Shield of California misled consumers about the size of their physician networks. Both companies disputed the findings.
In August 2014, the California Legislature passed SB 964, which authorized the DMHC to scrutinize the networks for plans sold on Covered California as well the networks of Medi-Cal plans. Gov. Brown signed the bill in October 2014, despite opposition from the California Department of Finance as well as the California Association of Health Plans, a trade association. A 2015 audit of the provider directories maintained by each health insurer found multiple errors in directories for several carriers.
In January 2015, the California Department of Insurance issued emergency regulations to address network access. The regulations specify standard wait times for various medical procedures, require insurers to provide information about physicians, and mandate that provider directories be updated weekly and that directories be available online and in hard copy. The regulations also require insurers to arrange out-of-network care if an in-network provider isn’t accessible.
Legislation was introduced in response to the criticisms of provider directory accuracy, and in October 2015, Governor Brown signed SB137 into law. SB137 will take effect in July 2016 and will require health insurance carriers to maintain accurate and updated provider directories.
California health insurance exchange links
California Health Benefit Exchange
Information about exchange planning and development
State Exchange Profile: California
The Henry J. Kaiser Family Foundation overview of California’s progress toward creating a state health insurance exchange.