Covered California is seeking stakeholder feedback on its efforts to promote accountability and support delivery system improvements. In a recently released request for information, Covered California solicits questions and suggestions in four key areas.
Yesterday, CHA submitted comments on Covered California’s draft Options to Improve Affordability in California’s Health Insurance Market. In the letter, CHA reiterates its readiness to partner with Covered California and the Legislature to build upon the Affordable Care Act by implementing premium and cost-sharing subsidies, an individual mandate and penalty, and reinsurance.
A new study by researchers at University of California, Berkeley and University of California, Los Angeles projects up to 4.4 million Californians could be uninsured in 2023 because of the federal law removing the Affordable care Act’s (ACA) individual mandate penalty beginning in 2019.
Following the release of its 2019 rate book, Covered California has released snapshots of plan offerings and sample rates, by county, for 2019. The snapshots are intended to help consumers better understand their enrollment options. They show premium rates for 25-year-old and 40-year-old single individuals and identify the lowest priced plan for each metal tier, as well as the second lowest priced silver plan. Consumers may also use Covered California’s “Shop and Compare” tool to see specific premium rates.
Last week, Covered California released the 2019 health plan choices and rates for small businesses and their employees. On average, premiums in 2019 will increase 4.6 percent over 2018, the smallest year-over-year increase since the marketplace’s inception in 2014. Plan offerings for 2019 include two preferred provider organization plans from Blue Shield of California and Health Net; two health maintenance organization plans (Kaiser Permanente and Blue Shield); Chinese Community Health Plan in San Francisco; and Sharp Health Plan in San Diego. Health Net will launch new offerings in the final quarter of 2018.
Currently, more than 47,000 individuals have insurance through Covered California for Small Business. Since last year, membership has grown 33 percent — by approximately 12,000 individuals. As a result of this growth, it is one of the largest small business health options programs in the nation.
CHA has developed a web page to help hospitals and their staff understand California’s health insurance marketplace. Resources include publications and other educational tools for hospitals, such as a summary of Covered California’s 2018 individual health insurance plans, fact sheets on Covered California and Medi-Cal expansion, and enrollment strategies for assisting patients who wish to obtain coverage in the Covered California marketplace. The page also provides links to regulations that govern the state-based exchange, as well as previously recorded CHA webinars that address delivery system reform, assisting individuals in obtaining coverage, employer benefits under the Affordable Care Act and the California Health Benefit Exchange.
Last week, Covered California released its 2019 rate book, which provides information on plans and rates for the upcoming year. Covered California has tentatively selected 11 health insurance companies that will be available for enrollment starting Oct. 15 for coverage that begins on Jan. 1, 2019. The overall weighted average rate change for existing consumers who renew coverage in the same plan will be 8.7 percent. Net premiums — the amount consumers pay out of pocket, after subsidies — will rise an average of 6 percent. Notably, elimination of the individual mandate penalty has prompted carriers to add between 2.5 and 6 percent to their rates, with an average of 3.5 percent, to account for a potentially less healthy and more costly consumer pool. Without elimination of the penalty, Covered California’s rate change would be closer to 5 percent.
Today, Covered California released information on rates and carrier participation for the 2019 plan year, announcing that the weighted average statewide rate will rise by 8.7 percent, lower than in previous years. The price of coverage will vary by health plan and region, as outlined in Table 2 of the attached press release. Additionally, all 11 health insurance carriers will return in 2019. The vast majority of consumers — 96 percent — will be able to choose from two or more health insurance companies, while 82 percent will be able to choose from three or more. Covered California notes that consumers who shop and switch to the lowest-priced plan in the same metal tier could see an average rate change of negative 0.7 percent.
Although the statewide rate change will be 8.7 percent, Covered California enrollees who receive federal financial assistance to pay their premiums — accounting for 88 percent of Covered California’s enrollment — will pay an average of only 6 percent more next year, because federal premium assistance rises along with rates.
Carriers added between 2.5 and 6 percent to their rates for 2019, for an average of 3.5 percent, in response to concerns that eliminating the individual mandate penalty would lead to a less healthy and costlier consumer risk pool. Covered California estimates the 3.5 percent average increase added to the rates will increase Californians’ spending on their health care coverage by more than $400 million in 2019. Subsidized consumers will be protected from this increase, and because the amount of financial help they receive will also increase, the federal government will pay an estimated $250 million more in higher tax credits. Unsubsidized consumers both on and off the exchange will bear the full brunt of the increase.
California’s individual market risk score is about 20 percent lower than the other states’ average risk score from 2015 through 2017.
Covered California’s risk scores are lower than the national average across every metal tier for each of the three years examined.
California’s off-exchange enrollment remained relatively constant from 2015 to 2017, while the rest of the nation’s off-exchange enrollment decreased substantially during the same period. This enrollment represents consumers who enroll outside of state-based exchanges but generally get the same products at the same prices, but without the benefit of a federal subsidy. Because off-exchange enrollees tend to be healthier than average and do not have the federal tax credit to make coverage more affordable, the stability of this enrollment in California is beneficial.
Last week, Covered California released its proposed fiscal year 2018-19 budget, setting an operating budget of $350.2 million and a capital projects reserve of $10 million, with strong investments in marketing and outreach, as well as funding for a new Consumer Experience Division. The proposed budget also lowers, from 4 percent to 3.75 percent, the assessment fees on health plan premiums that provide the entirety of its funding. According to Covered California, the proposal demonstrates ongoing financial stability and invests in key areas that will maintain a stable market.
Along with the budget proposal, Covered California released a PriceWaterhouseCoopers impact analysis of key market factors, including the elimination of the individual mandate penalty, on coverage nationally and statewide. According to the report, which helped to inform Covered California’s planning, eliminating the individual mandate penalty could result in a 5 to 10 percent rise in premiums and a 7 to 26 percent drop in enrollment nationally. Using that analysis, Covered California projects a 7 to 18 percent decrease in enrollment in California, with the “best estimate” being a 12 percent enrollment reduction. The proposed budget also estimates that premiums will grow by 6 percent in 2019. When combined with projected increases in medical cost trend in 2019 and the moratorium of the health insurance provider fee, Covered California’s budget forecasts as its best estimate an overall premium growth rate of 11 percent.
The budget must be approved by Covered California’s governing board and will be voted on at the next board meeting in June.
A new report from the Kaiser Family Foundation examines financial data from 2017 to determine whether recent premium increases were sufficient to bring insurer performance back to pre-Affordable Care Act (ACA) levels. Several insurers’ exits from exchange markets in 2017 led to concerns about individual insurance market stability, compounded by federal debate over the ACA’s repeal. According to the report, the 2017 data offer further evidence that insurers in the individual market are regaining profitability — even as future expectations are clouded by political and policy uncertainty, repeal of the individual mandate penalty as part of tax reform legislation, and proposed regulations to expand loosely regulated short-term insurance plans.
The report examines average premiums, claims, medical loss ratios, gross margins, and enrollee utilization from 2011-17 in the individual insurance market, including coverage purchased through the ACA’s exchange marketplaces and ACA-compliant plans purchased directly from insurers outside the marketplaces, as well as individual plans originally purchased before the ACA went into effect. Generally, insurers saw better financial results in 2017 than in earlier years of the ACA. Absent any policy changes, it is likely that insurers would generally have required only modest premium increases in 2018 and 2019.
Covered California has released a new analysis of enrollment in the federally facilitated marketplace. According to the report, enrollment in the federal marketplace has dropped 9 percent over the past two years, with a nearly 40 percent drop in new enrollment, while enrollment in state-based marketplaces has generally held steady over the same period. An additional 1.6 million unsubsidized Americans also left the off-exchange market over the past two years. The decrease in enrollment coincides with reductions in funding for marketing and outreach for federal marketplace states, which would likely lead to a less healthy risk pool of consumers and higher premiums.
Health Affairs last week published a Harvard Medical School study measuring the potential impact of the federal government’s elimination of the individual mandate penalty. The Congressional Budget Office and the Joint Committee on Taxation estimated that, within one year, its elimination will leave 4 million fewer individuals insured nationwide. However, proponents of the repeal suggested the methodology used to arrive at that estimate overstates the importance of the mandate for coverage.
In its study, Harvard researchers asked a random sample of adult enrollees in the 2017 California individual insurance market about the extent to which eliminating the mandate penalties might have altered their decision to purchase insurance. Key findings include:
18 percent of the enrollees said they would not have purchased insurance in 2017 if the penalty had not existed, indicating a potential result of 378,000 fewer Californians with coverage in the individual market.
Enrollees with the lowest levels of predictable medical spending (healthier individuals) were more likely to say they would not have purchased insurance in 2017 in the absence of a penalty.
Harvard Medical School estimates that, due to elimination of the individual mandate penalty, premiums could increase by an additional 7 percent in California.