Covered Calif. Proposal Reduces Spending, Enrollment Projections

Covered California plans to cut spending and lower its 2016 enrollment projection, according to a proposed spending plan expected to be released Wednesday, the Los Angeles Times reports.

Background

The proposed changes follow an open enrollment period that fell short of the exchange's goal. Covered California aimed to sign up 1.7 million consumers by February but only enrolled 1.4 million.

According to the Times, state officials say it is necessary to keep costs in line after falling short of its goals, in part because the exchange's main source of revenue is a $13.95 monthly fee per policy.

Details of Proposed Budget

The exchange's board of directors is expected to hold a final vote next month on Covered California's proposed $332.9 million budget for the fiscal year beginning July 1.

According to the Times, the budget plan includes:

• Reducing spending by $58 million -- or 15% -- compared with the current fiscal year;
• Allotting the largest share of the budget -- $121.5 million -- to outreach, sales and marketing efforts, down by 33% from the current year; and
• Continuing the $13.95 monthly fee per policy, which would raise about $233.2 million in revenue.

Under the proposal, the exchange also would use money from its final $100 million in federal reserves. The funding is the last of its startup grant, and the exchange is not likely to receive any more money from the federal government, according to the Times.

Meanwhile, Covered California has lowered its 2016 enrollment projection to 1.48 million individuals who are expected to sign up and pay their premiums.

According to the Times, the exchange plans to enroll a total of nearly two million Californians by 2019.

Covered California Executive Director Peter Lee said, "This budget marks a turning point for Covered California of moving from a startup with federal support to demonstrating we can operate under our own steam for years to come."

Reaction

Some advocates have said they would support increased monthly fees on individual policies to support outreach services.

Anthony Wright, executive director of Health Access, said, "We don't want to short-shrift customer service or outreach."

However, insurers have been encouraging Covered California to keep costs down for consumers.

Nicole Evans, a spokesperson for the California Association of Health Plans, said, "Holding fees flat like they did is an important safeguard for the affordability of Covered California coverage" (Terhune, Los Angeles Times, 5/13).