Covered CA hits familiar rough patch

covered+californiaAs a number of state exchanges across the country struggle and fold, Covered California — by far one of the most successful — has begun to experience similar challenges.

Dramatic cuts

Covered California officials portrayed a slate of new budget cuts as evidence that the exchange was prepared to thrive in the absence of federal funding. But as the Los Angeles Times reported, Covered California has fallen some 300,000 enrollments short of its second-year goal. With the exchange charging $13.95 per individual enrolled, the lower figure translates into over $4 million in lost revenue.

According to the Times, officials have settled on a plan that cuts 15 percent from last fiscal year’s budget. Although the budget for marketing, outreach and sales will drop by a full third, it will remain the largest single expenditure, at over $121 million. “The state also would draw on $100 million in federal money in reserves,” noted the Times — “the last of the start-up grant. No further federal funding is expected.”

The exchange also announced an additional enticement for would-be enrollees: a first-of-its-kind cap on payments for so-called specialty drugs. According to the new regime, taking effect in 2016, the typical customer “will pay a maximum of $250 per month for high-end specialty drugs that cost as much as $1,000 a pill on the retail market,” the Sacramento Business Journal reported.

Critics quickly took note of a counterintuitive detail, however. “A group with silver-level plans will pay $150, but those with bronze plans will pay as much as $500 per month until they hit their maximum annual out-of-pocket of $6,500,” according to the Business Journal.

But as Medicare and Medi-Cal participation has expanded separately under Obamacare, the cost of new prescription drugs has become a systemwide burden. “Programs such as Medi-Care and Medi-Cal have struggled with burgeoning health costs in recent years from drugs such as Harvoni, a potential cure for many patients with hepatitis C,” as the Sacramento Bee observed. “The drug has a shelf price of $1,125 a pill, with a typical treatment cost that approaches $95,000.”

Enrollment rates fall

In anticipation of a heavy budgetary lift during the first year of Obamacare, the Affordable Care Act provided generous subsidies to states setting up their own exchanges. Even though an end to the cash was foreseen since the beginning, California and other states have had to scramble to make up the difference.

One bellwether came in the form of decreasing signups during the latest round of availability. The federal exchange set up under Obamacare has seen the same kind of dropoff as the state exchanges, CNBC reported:

“ signed up 147,000 people in 36 states during a special tax season enrollment period, officials revealed Tuesday. That relatively light level of sign-ups was similar to what was seen in 11 other states and the District of Columbia during their own grace periods. […] The federal exchange’s special enrollment period was open to people who learned they were subject to a tax penalty for failing to have health insurance coverage last year when they were preparing their tax returns.”

Hard choices

Covered California has wound up in perhaps the best position to weather the tough transition to self-sufficiency. Other states haven’t been so lucky. In Hawaii, the state Health Connector exchange has collapsed, unable to attract enough signups by the January 1 deadline this year. A proposed infusion of cash from the state’s general fund couldn’t measure up to projected costs. Yet staying out of compliance risked “about $1 billion in Medicaid funds to serve 330,000 Hawaii residents,” KTIV Channel 4 reported.

As Health Connector Executive Director Jeff Kissel explained, the choices states face in Hawaii’s position can be daunting. “If we use the federal technology, the federal government requires everyone to sign up again,” he told KTIV. “We are scheduled to meet as a board again next Wednesday to consider how we’re going to move forward and face the challenges and overcome[.]”


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  1. Queeg
    Queeg 26 May, 2015, 09:37

    The government cheese getting expensive? No thought on cutting plutocrats salaries, jobs and benefits streamlining something so monstrous and verbose no one can administer it…Covered California.

    Reply this comment
  2. Will
    Will 26 May, 2015, 23:45

    Covered California (and the ACA as a whole) was initially set-up to fail from its very inception. You can’t give the private, for profit, health insurance industry a HUGE windfall. A windfall paid to them by the public. A windfall that the insurance companies take a 30-40% skim right off the top and then expect this monstrocity to actually work.

    Medicare has approximately 4-6% overhead. Mainly because it is NOT FOR PROFIT. The only way to fix this total mess, get our healthcare back on track, get health outcomes/wellness/preventative where it should be and control the ballooning costs is to institute Medicare FOR ALL. Yes….a single-payer model.

    I really can not understand why folks have such a difficult time understanding this….providing they stay away from the dis-information and the for profit propaganda.

    Reply this comment
  3. Dork
    Dork 27 May, 2015, 06:33

    The only way to fix this total mess, get our healthcare back on track, get health outcomes/wellness/preventative where it should be and control the ballooning costs is to institute Medicare FOR ALL. Yes….a single-payer model.

    Medicare is the Problem, you should read this if you think your solution is anything but lunacy.

    Here is a hint of what you might learn:
    But between Medicare and Medicaid last year $1,187 BILLION was spent, resulting in a deficit between spending and tax receipts of nearly a trillion dollars. In fact last fiscal year the US Federal Debt increased by $1,085 billion which means that essentially all of the actual deficit was due to this disparity.

    Dare to believe the truth!

    Reply this comment
    • Tom in SoCal
      Tom in SoCal 27 May, 2015, 08:54

      Single payer would be a disaster. Look at Europe, they are slowly moving away from Single Payer or running a dual system, because of the problems.

      If you want to see what a Single Payer system would look like in the US, look no further than the VA. That has been a Single Payer system for years and is absolutely terrible and a disgrace.

      I for one would opt out of Single Payer if it is implemented here and will vote against ANY policitican who advocates it.

      Reply this comment
      • Will
        Will 27 May, 2015, 16:19

        You are completely missing the much bigger picture. You are focusing on the hole in the barn door without seeing the entire door itself.

        Ask yourself the reasons WHY those expenditures are what they are. Ask yourself the how also. You were more concerned of attacking “single-payer” than you were looking at my initial point.

        And…gain a better understanding of those expenditures in RELATION and CONTRAST to our overall economy, GDP, NDP…etc.

        I will dare to believe “your truth” only if you examine ALL the FACTS. Not just the ones that support your narratives.

        Reply this comment
        • Will
          Will 27 May, 2015, 17:41

          I also have an addendum to add what I posted above.

          In my world, the government is not a “them.” The government is “US.” Until we stop challenging one another on this phony, fake left/right paradigm, we will never get anything accomplished much less have a legitimate, rational discussion on the semantics.

          This is (1) of the many reasons why this country is falling apart.

          Reply this comment

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