CHA News Article

Covered California Unveils Proposed Budget for FY 2015-16
Includes updated enrollment and revenue projections

Covered California released its proposed budget for fiscal year (FY) 2015-16 yesterday. The proposed budget, which will be reviewed and revised before being finalized by the Covered California Board of Directors in June, calls for Covered California to start the new fiscal year with nearly $194 million in unrestricted reserves and the ability to use $100 million in federal establishment funds to complete its initial launch. Spending will be in accordance with federal guidance, which, after Jan. 1, 2015, allows marketplaces to use grant funds for establishment costs that include design, development and implementation, but not to support ongoing operations. In FY 2015-16, Covered California will transition to relying solely on the fees it collects from health insurance companies and the extensive reserves it has saved while using federal funds. It expects to collect an estimated $6.5 billion in health insurance premiums during the 2015 plan year and projects more than $150 million in reserves at the beginning of FY 2017-18.

Covered California reports that its current enrollment of 1.4 million consumers is in the range of the low and medium projections (1.3 million and 1.7 million) prepared in early 2014, and reports that lessons from real-world experience are informing projections going forward. For example, the new enrollment achieved during the second open-enrollment period — more than 495,000 new enrollees — was almost exactly the forecast “medium” figure of 500,000. Lessons learned relating to the percentage of those who select a plan and then pay their premium, and the rate at which individuals renew and maintain their coverage, informed the updated enrollment projections used in the budgeting process. The most important adjustment to the enrollment forecasts is based on low, medium and high projections for the portions of subsidy-eligible consumers Covered California will successfully enroll by the end of the 2018 enrollment cycle (respectively, 70 percent, 75 percent and 80 percent). Based on experience from the first two open enrollment periods, Covered California reports that:

  • Approximately 80 percent of all Covered California consumers pay their premiums after enrolling in a plan;
  • While Covered California initially estimated that 85 percent of enrollees would renew from December 2014 to January 2015, a higher percentage of consumers (92 percent) actually renewed through plan selection;
  • Every month, 1.5 percent of consumers dis-enroll from Covered California. This rate is lower than the 2.5 percent Covered California originally projected.

The full proposed FY 2015-16 budget is available at http://hbex.CoveredCA.com/financial-reports.

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