Covered California demonstrates the administrative complexity in renewing exchange plans

California spends $13.4 million to fix Obamacare service woes

By Chad Terhune
Los Angeles Times, October 17, 2014

California's health insurance exchange hired two outside firms for $13.4 million to address long wait times for consumers calling about their Obamacare coverage.

"We had call response times that were far too long," said Peter Lee, the exchange's executive director. "We were swamped."

Lee said the exchange is nearly doubling its service-center staff to 1,300 to help more than 1 million Californians renew their health-law policies by Jan. 1. The first batch of renewal notices for 2015 went out this week.

Covered California said more than 200,000 people have signed up for Obamacare coverage since regular enrollment ended in April under the Affordable Care Act.

But in a sign of the churn in the individual insurance market, an additional 150,000 people dropped out of the exchange after getting health benefits at work or failing to pay their premium.

People who move, lose their employer coverage or have some other qualifying event in their life can enroll outside the normal sign-up period.

Overall, Covered California said it has 1.1 million people enrolled now, down from its previous tally of 1.2 million.

Part of that was because the exchange said 81% of enrollees paid their initial premium compared with its earlier estimate of 85%.


By Don McCanne, M.D.

When the Affordable Care Act (ACA) was being crafted, it was almost as if the designers thought that they were developing a relatively static system. They would simply cover the lowest-income individuals with Medicaid, make available subsidized private plans for moderately-low-income individuals, and then use individual and employer mandates, under threat of penalty, to force the rest of the uninsured into private plans. Although a limited amount of churning in and out of various plans and programs was expected, what they did not seem to understand was how unstable these categories actually are. The churning is massive.

California’s health insurance exchange - Covered California - provides an example of only one part of the churning - that within the exchanges. Just look at some of the numbers:

*  The 1.2 million enrolled in Covered California dropped to 1.1 million, though the instability is much more than the 100,000 difference

*  After open enrollment ended, 200,000 more enrolled in the several months following, allowable only because they had some qualifying event that changed their eligibility status

*  Only 81 percent of enrollees paid their initial premium, so the other 19 percent were dropped

*  150,000 dropped out of the exchange for reasons such as gaining health benefits at work, or failing to pay the premium for the exchange plans

*  1,300 Covered California staff members are required to help about 1 million Californians renew their coverage

Although this amount of churning did not seem to be expected by the designers of ACA, it was thought that at least those remaining in the exchanges would have stable coverage - a static situation for them. No, not really. Because of the variable bids of the private insurers, the benchmark plan - the second lowest cost silver plan - is changing for many exchange participants. Since most premiums are going up, not down, the change in the benchmark plans will change the portion  of the premium for which most of the exchange enrollees will be responsible. To keep their share of the premium lower, many will have to change plans. That means that they will have to shop not only the premiums but also shop the amount of the deductibles, and, as if that weren’t enough, they will have to shop the provider network lists which have been notorious for their inaccuracies, if you can even find a list. Even if the provider lists were accurate, they too are not a static as these lists continue to change as well, with providers moving onto and off of the lists.

If nothing changes, enrollees can accept automatic renewal. That means that nothing could have happened that would change eligibility - no change in employment, income, residence, family size, etc. Also it means that the insurer must be offering the same plan, and yet we know that plan designs change frequently. Nevertheless, everyone enrolled through the exchange plans should enquire as to their options for next year if for no other reason than that the benchmark plan will likely have changed, changing the amount of the premium they will have to pay. Some patients may be dismayed that shopping for premiums may cause them to lose their established health care providers.

There are about 1.7 million Californians who are eligible for coverage but who remain uninsured. This does not count the undocumented. For both logistical and administrative reasons, this will be a more difficult group to insure. Combine this with the fact that perhaps 1 million people already enrolled in Covered California will have to revisit their options means that the task will inevitably necessitate extensive administrative services.

And next year? This static system is not so static after all. And remember that here we are discussing only the administrative hassles of the exchanges. This does not count all of the hassles with Medicaid, employer-sponsored plans, private plans purchased outside of the exchanges, and the administrative nightmare of determining which of the uninsured must pay penalties, how much they must pay, and how the penalties are to be collected when they are linked to income tax refunds.

Suppose we had a single payer national health program. This annual renewal, with all of the administrative costs, hassle, and especially the grief, disappears. Why is nobody in power seriously considering an improved Medicare for all?