Monday, October 20, 2014

Covered California demonstrates the administrative complexity in renewing exchange plans

Los Angeles Times
October 17, 2014
California spends $13.4 million to fix Obamacare service woes
By Chad Terhune

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%.


Comment by Don McCanne

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

* 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?

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