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Covered California: The Foundation of Obamacare, Success, Challenges, And The Road Ahead



March 13th, 2014

As the end of the open enrollment period on March 31 draws near, the Covered California state health insurance exchange is engaged in a final push for enrollees that will bring it beyond its baseline enrollment goals, launching a new advertising campaign and resolving application issues caused by a software glitch in February.

Throughout the open enrollment period, salient points and concerns have been raised about enrollment numbers, access to care, plan affordability, and benefit design in marketplace plans. These issues are being closely monitored and evaluated in California – the state which has the largest pool of subsidy-eligible individuals and accounted for 23 percent of national enrollments in 2013 – and are being discussed in forums nationwide.

A recent Kaiser Family Foundation briefing and panel discussion, “Affordable Care Act: A Spotlight on California,” discussed the importance of Covered California as a barometer of the success of the Affordable Care Act, and released a snapshot of California coverage at the outset of health reform implementation.

“California is a giant state with a big and diverse uninsured population that has embraced the law, has political will, has money for outreach, … and has been out front implementing the Affordable Care Act,” said Drew Altman, president and CEO of the Kaiser Family Foundation in the briefing.  “So both its successes and its challenges, they really matter for other states, and they really matter for the country.”

Approach To Low Latino Enrollment

So, what have been some of the biggest successes and challenges for California during this open enrollment period?

One challenge has undoubtedly been reaching the state’s incredibly diverse population. Enrollment gaps between racial and ethnic groups are large but narrowing. Only 18.7 percent of enrollees at the end of 2013 were Hispanic, Latino or of Spanish origin, even though Latinos make up about 46 percent of subsidy-eligible Californians and more than half of the state’s uninsured. However, the state has launched efforts to address this issue, ramping up outreach to Spanish-speaking individuals, sending out 1 million mailings, and increasing advertising aimed at Latinos. By the end of January, these efforts began to show results as Latino enrollment reached 28 percent.

Figure 1

Scheffler-Figure1

Source: “The Uninsured at the Starting Line in California: California findings from the 2013 Kaiser Survey of Low-Income Americans and the ACA.” Rachel Garfield, Kaiser Family Foundation. 2/19/14.

In February, Covered California announced its “I’m In” series of television, print and billboard advertisements in multiple languages (in Spanish, “Tengo un Plan”). The television ads, followed by short testimonials from people who have purchased coverage, are intended to show the benefits of enrolling, represent the diversity of California’s population, and motivate people to sign up for coverage.

Figure 2

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Source: Covered California

Solutions To Technology Issues

Another challenge, as in other states, has been ensuring that the technical capabilities of the online portal allow people to apply for subsidies and enroll. In this regard, Covered California has done well but has also had its share of difficulties. The website experienced a major hiccup and was down for about five days in February. A software glitch affected about 6,500 completed applications eligible for exchange coverage; 16,000 eligible for Medi-Cal; and 14,500 partially completed or updated applications. Covered California had to restore the data from applications submitted during that time, and those with partially completed applications were asked to resubmit their information. The website has also had issues with its online provider directory which led some enrollees to join plans based on false information about doctor networks, and the directory was ultimately removed from the site.

Latest Enrollment Numbers

All told, however, many would agree that the launch of the Covered California marketplace has been relatively smooth despite its challenges. Enrollment as of the end of 2013 met and even exceeded the goal of 580,000 enrollees by March 31 (baseline projection). The latest enrollment figures from mid-February show that total enrollment has reached 828,638, the majority of whom are eligible for subsidies. A full 80 percent have paid their first month’s premium.

Additionally, more than 1.5 million people are in the process of being newly enrolled in the state Medicaid program as a result of the expansion. Many of these new beneficiaries were transitioned from the state’s Low Income Health Program, created in 2010 as a bridge to reform under a Section 1115 Medicaid waiver.

Figure 3

Scheffler-Figure3

Source: Covered California

The Most Popular Plans

What are exchange enrollees getting for their premium dollars (or, for taxpayer premium dollars paid through subsidies)? Most enrollees are signing up for silver plans. About 62 percent of those subsidy-eligible signed up for a Silver plan in California, the second lowest cost of the four metal plan tiers – bronze, silver, gold and platinum – designed to cover 70 percent of health care costs across the plan. Silver plan out-of-pocket costs are structured on a sliding scale, with deductibles ranging from $0 to $2,000 per year.

Plans in exchanges nationwide, including California, have been criticized for making use of “narrow networks” that are small and restrictive. Covered California’s senior medical adviser has said that, among insurers who are participating, some are creating new networks for their Exchange enrollees and some are using their existing networks, but he emphasized that 80 percent of the state’s doctors and hospitals are included in at least one of the plans.  However, a Los Angeles Times analysis found that provider networks in Health Net’s Exchange plans in L.A. County are about a third of the size of its employer policies on the large group market, and similarly that Blue Shield’s exchange enrollees statewide would have access to about half of its regular physician network.  Some suggest, however, that this is one piece of a broader trend toward more narrow provider networks, both on and off the Exchange, and that many cost-conscious enrollees prefer narrower networks if it means lower premiums.

Young Adults In California

Also important in gauging success is the demographic mix of enrollees, particularly for insurers looking to spread financial risk and control costs. There are still many in the “young invincibles” demographic who would rather pay a penalty for not having coverage than sign up for a plan, especially if they don’t feel the exchange offerings will meet their needs. In California, younger adults are under-represented relative to the proportion eligible for exchange coverage:  About 25.9 percent of enrollees are age 18 to 34, though this age group makes up 25 percent of the general population and 36 percent of those eligible for subsidies.  The age distribution and, most importantly, the health status of enrollees will be critical to the long term success of the exchange.

Still, as open enrollment draws to a close, it’s clear that California has a solid foundation of enrollees and has made significant progress in reaching the state’s uninsured population. The enrollment mix, affordability, access, and choice in California are sure to be carefully watched throughout 2014 as these and other health reform policies continue to unfold.

For a full report on the rollout in California, see “Covered California: A Progress Report” from the Nicholas C. Petris Center on Health Care Markets and Consumer Welfare at University of California, Berkeley.

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1 Response to “Covered California: The Foundation of Obamacare, Success, Challenges, And The Road Ahead”

  1. leetocchi Says:

    Thanks for help with about 10% of the uninsured in the state, and at just under $ 1 million for each enrollee the cost was worth it. (sarc)

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