High Enrollment Expected To Offset Covered Calif.’s Projected Deficit
Officials predict that Covered California will be self-sustaining in coming years because of high enrollment, despite a predicted deficit of nearly $80 million in fiscal year 2015-2016, AP/KPCC's "KPCC News" reports (Blood, "KPCC News," AP/KPCC, 2/9).
Beginning Jan. 1, 2015, the Affordable Care Act no longer will provide federal grants to fund state health exchanges. As a result, Covered California will face a $78 million deficit in fiscal year 2015-2016.
Exchange budget statements do not include a definitive plan for how Covered California will continue funding its operations. Meanwhile, California law prohibits using the state's general fund to pay for the exchange.
Insurers pay an administrative fee for each policy sold on the exchange, which could boost revenue if enrollment numbers are high. The fee is $13.95 per policy in 2014 and will increase or decrease in 2015 depending on the number of individuals who purchased plans (California Healthline, 1/2).
As of mid-January, a total of 625,000 Californians had enrolled in coverage through the exchange (Gorn, "Capitol Desk," California Healthline, 1/22).
Plans To Offset Deficit
According to "KPCC News," Covered California plans to set aside $184 million in federal grant money to enable the exchange to continue paying its operating expenses for three months in case enrollment stalls.
However, the Legislature also could approve a contingency plan in case it becomes "impossible to operate the exchange without the use of [the] general fund," which is supported by taxpayers.
State officials and experts say they do not expect Covered California to have to use the contingency plan because enrollment numbers have been so high.
In a statement, Covered California spokesperson Anne Gonzales said, "So far, our enrollment numbers are outpacing our projections, so we don't anticipate any shortfalls in our budget that might create a need for" using general fund money.
Dylan Roby of UCLA's Fielding School of Public Health predicted that the exchange will be able to fund itself in future years, as long as enrollment remains stable or increases through 2016 ("KPCC News," AP/KPCC News, 2/9).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.