Open enrollment for 2018 individual coverage through California’s ACA exchange, Covered California, (and in the non-exchange individual market) began November 1, 2017 and extends through January 31, 2018.
This open enrollment period comes at a time of uncertainty about the future of the ACA, and ACA exchanges. President Trump and Congressional Republicans remain committed to federal legislation that repeals or rollbacks the ACA, or in the absence of successful legislation, executive orders and administrative action that will fundamentally undermine the ACA.
What is most striking about open enrollment in California, however, is that success here in implementing the ACA means that California consumers will have better options, and fewer negative consequences, than consumers seeking coverage through the federal exchange and many other state exchanges.
Federal Actions Undermine the ACA Federal Marketplace and Many State Exchanges
Since taking office, the Trump Administration has taken several administrative actions aimed at undermining the ACA, and the federal marketplace, including:
- Reduced funding for federal marketing and outreach by 90 percent and funding for the navigators who help consumers enroll by 40 percent;
- Shortened the open enrollment period from 12 weeks to six weeks;
- Scheduled regular offline periods for the federal marketplace website most Sundays throughout the open enrollment period; and
- Abruptly ended health plan reimbursements for cost-sharing reductions (CSRs) which support reduced copayments and deductibles for low-income exchange enrollees (138-250 percent of the Federal Poverty Level (FPL)). Insurers must still offer the discounts to consumers but will not be reimbursed by the federal government. (See earlier ITUP blog for more detail on the CSRs.)
California Softens the Blow
California policymakers, and Covered California, anticipated federal actions and responded early to address the potential impacts in California.
State marketing and outreach. Since its inception, Covered California has actively supported robust marketing and outreach efforts, one key ingredient in the successful enrollment of more than 1.4 million in the exchange. Covered California partnered with, and funded, enrollment assisters, navigators, brokers and enrollment centers to help consumers find and enroll in coverage. Covered California broadcast its messages across the varied media markets and channels of the state, social media, and in collaboration with community-based and faith-based organizations, providers, schools, colleges, and universities, including organizations with expertise in reaching specific target populations. As originally approved, the 2017-18 approved marketing and outreach budget for Covered California was just over $100 million. In part to address confusion created by the Trump Administration surrounding whether federal CSR payments would continue, in August the Covered California Board approved an additional $5 million for marketing within California.
Enrollment window. In April 2017, the federal Centers for Medicare and Medicaid Services (CMS) adopted a “Market Stabilization Rule” requiring all ACA exchanges to adopt a shorter open enrollment period – 45 days instead of the 90 day period (three months) in prior years – to run from November 1-December 15. Open enrollment periods allow individuals to sign up for, renew, or change health coverage on a guaranteed availability basis so that insurers must accept all applicants. ACA special enrollment periods offer guaranteed coverage to individuals with specific life circumstances requiring them to apply for or change coverage, such as loss of job-based coverage, marriage, divorce, change of address, etc.
The April CMS rule allowed states operating independent exchanges to supplement the open enrollment period with special enrollment periods. For 2018, Covered California established concurrent open and special enrollment periods that allow a longer enrollment period of November 1, 2017 to January 31, 2018. For 2019 and beyond, the California Legislature adopted AB 156 (Wood), Chapter 468, Statutes of 2017, to establish the combined open and supplemental special enrollment period from October 15 to January 15 of each year. This change was important because Covered California reported that nearly 50,000 consumers signed up for coverage in the last two days of the 2017 open enrollment period, which ended on January 31, 2017.
CSR Payments. Early in the process of preparing for the 2018 coverage year, Covered California required participating health plans to develop contingent rates in case the Trump Administration halted CSR payments. Following the President’s announcement that he would discontinue the CSR payments, and just in time for open enrollment, Covered California implemented the contingency plan. Covered California required participating health plans to add any premium increase related to the loss of CSR payments as a “CSR surcharge” only on silver-level coverage The surcharge averaged 12.4 percent above the overall weighted average 2018 premium rate increases of 12.5 percent.
Under current law, federal premium tax credits that subsidize exchange coverage for eligible low-income individuals increase as premiums rise. This means that for the approximately 1.2 million exchange enrollees eligible for premium assistance, approximately 86 percent of Covered California enrollees, higher premium tax credits will cover most if not all the increase in silver-level premiums from the CSR surcharge. According to Covered California, the average cost of subsidized coverage will go down in 2018, and for those who do see an increase, many will be able to switch to a lower priced plan in their area. For those who see higher premiums, about half will see increases of less than $25 a month.
For individuals who are not subsidy eligible, approximately 65,000 Covered California enrollees, the best option might be to switch health plans or switch to similar coverage available outside of the exchange. Working with Covered California, exchange health plans developed “near-mirrored silver plans,” without the CSR premium adjustment, to be offered outside the exchange. This means that non-subsidized individuals can purchase silver-level coverage outside the exchange without paying the CSR surcharge. Under California law, health plans participating in the exchange and selling individual coverage outside the exchange have to offer the same products (commonly referred to as mirrored products) to non-exchange individuals.
California’s Individual Market
As open enrollment begins, the individual market in most areas of California is relatively healthy compared to other states. According to Covered California, as part of developing rates for 2018 both inside and outside the exchange, health plans adjusted premiums lower by approximately $115 per month on average because of improvements in the risk mix of enrollees. Covered California reports that the individual market in California is 20 percent healthier when compared to other states or the federal marketplace.
At the same time, despite the relative health of California’s individual market compared to many other states, provider shortages, less competitive markets and other regional factors result in premiums that vary dramatically depending on where in California a consumer lives and receives care. This regional variation in cost is significant, for example, between Northern and Southern California, with premiums up to 78 percent higher (comparing the San Francisco region to the Los Angeles region).
In many rural regions of the state consumers continue to have fewer plan choices, as was the case pre-ACA, and experience significantly higher premium rate increases. For example, a 45-year-old in Region 1, composed of 22 primarily rural Northern California counties, will see bronze plans increase 15 percent, gold plans 17 percent and platinum plans 27 percent. Silver plans in Region 1 for this age group will increase by 28 percent, with nearly half of the increase attributable to the CSR surcharge. While 88 percent of Covered California consumers will have three or more health insurers to choose from, the remaining consumers will only have one or two insurer options. This regional variation is not unique to Covered California; it is also evident with other large purchasers of health care, such as the California Public Employees Retirement System (CalPERS).
California has an Important (and Unique) Story to Tell
The federal debate over the future of the ACA and other federally-supported programs that provide health coverage to low- and moderate-income families has sown confusion and doubt. Media coverage often focuses on the national data and experience with less attention to the specifics of the California market and exchange. Even in these early days of open enrollment, well-meaning organizations and local media in the state have publicized the shorter open enrollment period rather than the longer period for California – November 1-January 31.
We are at a critical juncture. It is essential that advocates, community organizations, providers, and the media continue to get the word out that California is moving forward. Consumers need to know that California has been working to mitigate the impacts of federal efforts to undermine the ACA. We cannot let the background noise of the continuing political debate threaten California’s progress on expanding access and improving health in the state.