Tuesday, December 26, 2017

Ringing in a New Year – Perils Abound Along With Many Reasons for Optimism

This year was filled with uncertainty about the future of the Patient Protection and Affordable Care Act. We are ending the year with both a major change in the landscape, with the removal of the penalty for individuals who opt out of affordable coverage, but also with California and many other states showing how consumers can be protected in the face of uncertainty. Much of the debate from our nation’s capital this past year felt like the 1914 melodrama “Perils of Pauline” with its weekly twists and turns, one more surprising than the next. However, in this story, it was the health care of tens of millions of Americans that was put in peril, not just Pauline. As we wrap up the year, in many ways the big story is not that the penalty has been rolled back, but that the year was marked by a continued national evolution and demonstration that the health reforms launched under the Affordable Care Act are working well for millions and can serve as a foundation for the future. Here are some examples of this year’s big news:
  • There is growing bipartisan support for many of the fundamental elements of the Affordable Care Act, including the belief that as a nation we should not go back to the time when health insurers could turn away those with pre-existing conditions. There is also bipartisan support and understanding that federal support for coverage in the individual market is critically needed and that the expansion of Medicaid is important to millions of Americans and many states. The idea that these elements are too important rollback contributed to why full-repeal efforts did not succeed.
  • The core policies that are part of the law are viewed favorably by a majority of Americans, according to a November poll by the Kaiser Family Foundation. A Kaiser Family Foundation poll from August showed an even greater majority of Americans support critical parts of the law and want bipartisan efforts from Congress to improve the health care system.
  • A Kaiser Family Foundation analysis of insurer financial data from the first six months of 2017 showed the individual market was stabilizing and on the path to insurer profitability. At the same time, an S&P global market analysis found that 2016 was the first year since exchanges were first introduced that Blue Cross Blue Shield insurers nationally reported a gross profit (in aggregate) in the individual business line. 
  • The uncertainty caused by a federal policy that discontinued the direct funding of cost-sharing reduction subsidies ended up being addressed with “workarounds” in most of the nation. These workarounds protected consumers and assured that those who don’t get subsidies would not pay for the cost of these programs.
  • We saw the impact of these programs on millions of lives. State-based approaches are making a difference: State-based marketplaces and those states that expanded Medicaid had dramatically more positive impacts on their residents than states that have opted to rely on the federal government or have not expanded Medicaid. (A detailed look at how Covered California described the stark differences can be viewed here.) The effect in California, from both the efforts of Covered California and the expansion of the state’s Medicaid program, have been dramatic. According to the U.S. Centers for Disease Control and Prevention, in the first six months of 2017, the uninsured rate in California dropped to 6.8 percent, from 17 percent in 2013. And, this means that the “eligible uninsured” rate in California is about 3.4 percent. The winners from this reduction are both the millions who now have insurance, but also all Californians who are no longer paying the costs of uncompensated care in hospitals in the form of higher premiums.
  • Enrollment in Covered California and in marketplaces across the nation remains strong — a demonstration that Americans want, need and are signing up for coverage. Earlier this week we announced that the latest data shows that more than 220,000 new consumers have signed up for coverage through Dec. 15, which is about 10 percent more than last year. That’s in addition to approximately 1.2 million existing Covered California consumers who have had their coverage renewed for 2018. These numbers will continue to grow because a recent Covered California analysis found that the net monthly premiums for enrollees who receive financial help are on average 10 percent lower than what new and renewing consumers paid last year and because our open enrollment continues through Jan. 31, 2018.
Looking ahead to 2019, it is likely that the “Perils of Pauline” will continue. While it is unclear whether there will be full-throated “repeal and replace” efforts, it is absolutely clear that the individual market faces significant uncertainty in 2019. Among the causes of this uncertainty:
  • Repeal of the individual mandate: Repeal will take effect in 2019, and could threaten the individual market in many states. Health insurance companies rely on certainty when setting their rates, and may decide to exit their markets in the face of an uncertain market caused by a shrinking pool of consumers who are less healthy.
  • Lack of federal marketing: Health insurance needs to be sold, particularly to young and healthy individuals who are less likely to feel compelled to purchase coverage on their own. The administration recently rationalized this change in spending as a “cut in wasteful spending” and cut $90 million in marketing from the prior year. Because of reduced enrollment, however, even a small increase in enrollment would result in an improvement of the risk mix, causing a reduction in premiums that would likely save the federal government and consumers at least $500 million and potentially far more. In light of this, we continue to convey our knowledge and understanding of core market and marketing dynamics and the positive return on investment that comes from increased and healthier enrollment.
  • Enrollment in states in the federally facilitated marketplace was strong, but dropped from 2017: The preliminary estimates indicate that federal facilitated marketplace (FFM) states saw 2018 plan selections of 8.8 million, decreased by 400,000, or 4.5 percent, from last year’s total of 9.2 million, with the biggest portion of the decrease due to lower new enrollment. The strength of enrollment in the face of both a shorter open-enrollment period and cutbacks in marketing is a testament to the importance of subsidies, which increased in 2018 such that on average the cost of coverage for the 85 percent of FFM enrollees getting the tax credit went down.
  • Recent executive order: The president’s executive order called for regulations that would allow the sale of “association health plans” or “short-term plans.” Depending on how these regulations are structured, these plans could skim healthier individuals off the individual market and leave consumers without comprehensive coverage. Not only would these consumers be enrolled in “Swiss cheese” policies that were common prior to the Affordable Care Act, those left in the exchanges would see higher premiums because of a less healthy consumer pool.
Without federal action to offset the destabilizing effects of these issues, Covered California estimates that between 10 and 20 states could be left without any carriers in their exchanges in 2019. Consumers in the remaining exchanges could also face dramatically higher premiums, particularly those who do not receive any financial assistance.

While there is the real potential of markets having huge challenges in 2019, there is also reason for optimism. There are both federal and state policy options to address these headwinds, which we reviewed at a recent Covered California board meeting (you can see the full presentation addressing these issues from the board meeting here.)

In particular, we outlined several federal policies that could make a significant difference in stabilizing individual markets across the country by protecting consumers and lowering premiums. These policies — all of which have bipartisan support — include:
  • Reinsurance or high-risk pools: Implementing state-based risk stabilization programs such as reinsurance or invisible high-risk pools is the focus of bipartisan legislation proposed by Senators Susan Collins (R-ME) and Bill Nelson (D-FL). If appropriately structured and funded, it could reduce premiums by between 10 and 12 percent in 2019, while providing the certainty health carriers need to remain in markets.
  • Federal marketing commitment: Other bipartisan legislation proposed by Senators Lamar Alexander (R-TN) and Patty Murray (D-WA) includes provisions that would require the federal government to spend $100 million annually to promote enrollment. While Covered California relies on its own funding to invest more than $100 million in marketing and outreach, federal proposals like this would inject stability into states that rely on the federally facilitated marketplace.
  • Restore cost-sharing reduction (CSR) funding: While many states developed a workaround to compensate for the cancellation of reimbursement payments to carriers that provide low-cost services to low-income consumers, it is an imperfect solution that is less effective and actually costs the federal government more through increased tax credit spending. The Alexander-Murray proposal would restore this funding.
  • Removing the health insurance tax: The removal of this tax, which is included in the Patient Protection and Affordable Care Act, would lead directly to lower premiums.
As we look forward to the coming year, we remain focused on doing the work of fostering a competitive market that works for California’s consumers. We will be nimble and proactive in the face of potential changes to federal or state policy, while seeking to continue to share the lessons and experience of a market that is working with policy-makers in California and nationally. We close the year giving thanks for the tens of thousands of Californians and people across the nation who are involved in this effort: staff at marketplaces like Covered California, those operating Medicaid programs such as Medi-Cal, health plans, insurance agents, doctors, hospitals and other providers, and a wide range of community-based advocates. In line with our “Covered in Art” bus tour that traveled the state sponsoring murals and local engagement, at Covered California offices in various communities of the state we shared a “jump” celebrating our work. I share with all of you a picture of one of those jumps — from our Service Center in Rancho Cordova — that comes with the best wishes from the team at Covered California to you for 2018.

All my best,

Tuesday, November 7, 2017

Peter's Blog: Bus Tour, Day Six

It’s the end of the road for the “Covered in Art” kick-off bus tour, but not for Covered California and our partners across the state. Today we ended this first leg of the open-enrollment bus tour. We finished on a high note with stops in Santa Cruz, Salinas, San Jose and Oakland.

Monday, November 6, 2017

Peter's Blog: Bus Tour, Day Five

This has been a wild year, with politics in Washington being something of a rollercoaster ride. But here in California, we’ve been working with our partners to make sure consumers are not on a rollercoaster. Consumers can be confident that with Covered California, they’ll never be taken for a ride. Instead they’ll find improvements, stability, security and access to affordable coverage.
La Familia Counseling Center

Saturday, November 4, 2017

Peter's Blog: Bus Tour, Day Four

Health care is local. That sentiment is reflected in each of the murals artists are creating as part of the “Covered in Art” bus tour. Each of the more than a dozen murals will be painted by a local artist. During today’s sojourn through Bakersfield, Visalia, Fresno and Modesto, we met two artists who are bringing the importance of health care to light through their creativity.
Ruben Espinoza

Friday, November 3, 2017

Peter's Blog: Bus Tour, Day Three

The Covered California bus cut across the Central Coast today, stopping to say hello and thanks to our partners in Santa Barbara, San Luis Obispo and Bakersfield. We are traveling the state on this bus tour, visiting city after city, to make sure Californians know that despite the headlines and controversy, financial help is still available.

Thursday, November 2, 2017

Peter's Blog: Bus Tour, Day Two

We are on the second day of the open-enrollment bus tour, part of a 22-stop tour making clear to Californians that we are here to stay and that they can get and keep affordable coverage that is changing lives. Today, we visited San Diego, Huntington Beach and Wilmington.

Wednesday, November 1, 2017

Covered California’s Open-Enrollment Period Kicks Off Nov. 1

Today, Nov. 1, marks the official start of open enrollment in Covered California. This year’s open-enrollment period is more crucial than ever before. Back and forth in Congress has left many people confused about the future of health insurance marketplaces.