New Year’s Resolutions: Tasks for California’s Exchange in 2013

All the way back in August 2011, HHS awarded California more than $38 million to begin work on its health insurance exchange under the Affordable Care Act. Flash forward to 2013, and the exchange already has cleared the sale of certain health plans and adopted a new name: Covered California.

It even has a logo.

Earlier this month, California was one of seven states to receive conditional federal approval for its exchange plan, making it a leader in national implementation efforts.

New Year, New Approval

In a Jan. 3 letter to Gov. Jerry Brown (D), HHS Secretary Kathleen Sebelius wrote that she was granting conditional approval to California’s exchange because of the “substantial progress” the state has made on implementation. The approval is contingent upon California demonstrating that it can meet exchange requirements and comply with regulations and deadlines.

The exchange is set to open for registration in October 2013 and begin operations in 2014.

Between 150,000 and 430,000 individuals will have enrolled by next January, officials say, and by the end of 2016 the exchange will include about 4.4 million Californians. Set to cover more than half of the state’s 7.1 million uninsured under age 65, the exchange will be a crucial tool for a significant percentage of California residents.

2013 is a critical year for state health officials, who are hoping to sustain the momentum created by the federal approval and have the exchange online by 2014.

Lynn Quincy, a senior policy analyst at Consumers Union, told the Huffington Post that exchanges “will be the first concrete evidence of the [Affordable Care Act’s] impact for many, many consumers, and it’s also the one that affects them personally the most.” She continued, “Consumers are going to form an impression of the exchange based on the first year’s experience, and if you create a negative impression, it could take 10 years to overcome that.”

Here’s a look at what lies ahead for California’s exchange.

‘A Lot of Competition and Interest’

At the final exchange board meeting of 2012, held last month, staff members discussed a major task for this year: Qualified Health Plan contracting. To sell plans in the marketplace, insurers must meet certain standards approved by exchange officials.

As of Oct. 31, 2012, 33 insurers and other organizations had expressed nonbinding interest in offering plans in the exchange.

The state’s four largest insurers in the individual market — Anthem Blue Cross, Blue Shield of California, Health Net and Kaiser Permanente — all have indicated interest in selling plans through the exchange. And smaller insurers and large hospital systems might offer exchange plans in certain areas.

“There will be a lot of competition and interest, which will enable the exchange to be an active purchaser in every region and pick the best five or six plans,” Peter Lee, executive director of the exchange board, told the Los Angeles Times. Lee added, “The plans we will be offering in San Diego will be very different from the set of plans in Sacramento or Los Angeles.”

State officials are expected to select participating plans and negotiate rates by June.

Using Television Shows for Marketing and Outreach

The state plans to put significant effort into building the exchange’s infrastructure, but perhaps the true test of success is enrollment. Thus, the state in 2013 will devote time toward convincing uninsured individuals to join the exchange.

Officials plan to spend nearly $90 million in 2013 on a marketing and outreach plan. Ogilvy Public Relations Worldwide has won a $900,000 contract to coordinate outreach efforts.

One part of the plan — calling for “Modern Family,” “The Biggest Loser” and a number of other television programs to be pitched story lines or mentions of health care reform — already has generated controversy. The plan also calls for officials to explore the creation of a new reality television show about families living without health coverage.

Last fall, Sen. Chuck Grassley (R-Iowa) and Rep. Fred Upton (R-Mich.) sent a letter to Sebelius, arguing, “Americans’ hard-earned money should not be taken by government to subsidize Hollywood and insert propaganda into popular culture. It should be going toward ensuring the cost of health care is being lowered for all Americans.” They urged HHS to improve its oversight of health care reform grants to states.

Despite the dust-up, it remains to be seen whether the senators’ objections will affect California’s marketing efforts.

Besides conventional marketing strategies, California officials plan to increase grass-roots outreach efforts at churches, cultural events and schools.

Taking aim at particularly vulnerable populations — such as Hispanics, who make up about half of the state’s uninsured population — also is part of the plan. For instance, the state is considering sponsoring professional and recreational soccer leagues, as well as collaborating with bloggers who are popular with Hispanic women.

State officials face a number of other tasks — including work on the exchange’s information technology system, the launch of service centers to facilitate enrollment and staffing for the exchange.

Will the Exchange Be Online by 2014?

Despite the breakneck pace California and other states will adopt in 2013 to set up their exchanges, some industry analysts believe that the online marketplaces won’t be ready to launch by 2014.

“I think we should absolutely expect a delay,” Scott Lundstrom, vice president of the IDC Health Insights market research group, told Nextgov. Further, he said, “As someone [who] watches large organizations deploy large systems every day, I don’t see any of the telltales that I would look for in a deployment here.”

Government officials are understandably more optimistic in their predictions for the exchanges’ operational date. Gary Cohen, the leader of the federal implementation effort at HHS, predicted that all exchanges will be up and running one year from now.

For her part, Sebelius has expressed confidence in the Golden State, saying earlier this month, “California has made significant progress, and will be ready in 10 months for open enrollment.”

“Road to Reform” will continue to keep an eye on all exchange developments. In the meantime, here’s a look at what else is happening in health reform.

Administration Actions

  • On Thursday, HHS granted conditional approval to seven more states that intend to operate their own health insurance exchanges under the Affordable Care Act, while Arkansas received conditional approval to partner with the federal government for its exchange (Viebeck, “Healthwatch,” The Hill, 1/3). The seven states are California, Hawaii, Idaho, Nevada, New Mexico, Utah and Vermont (Morgan, Reuters, 1/3).

Eye on the Courts

Inside the Industry

  • A growing number of employers are weighing their options in preparation for ACA requirements that might require them to assume higher costs to provide health coverage to workers. Some companies are considering whether to provide employees with a pre-determined amount of money and selection of health plans, while others might direct more workers toward state health exchanges, the penalty for which could be less than the cost of providing benefits (Wilde Mathews, Wall Street Journal, 1/1).

In the States

  • On Friday, Montana Gov.-elect Steve Bullock (D) announced several changes to outgoing Gov. Brian Schweitzer’s (D) two-year budget recommendations, but retained a proposal to expand Medicaid under the ACA. Bullock took office on Monday (Johnson, Billings Gazette, 1/4). The Medicaid expansion proposal would cost Montana about $5 million over two years and extend coverage to about 80,000 more low-income residents (AP/Modern Healthcare, 1/5).
  • On Thursday, Colorado Gov. John Hickenlooper (D) announced a plan in which his state will participate in the ACA’s Medicaid expansion (Wyatt, AP/Denver Post, 1/3). Under the plan, Medicaid coverage would be extended to an additional 161,000 residents and the state will not be forced to spend any additional money to participate in the expansion, Hickenlooper said (Whitney, “Capsules,” Kaiser Health News, 1/3).

Rolling Out Reform

  • On Monday, Florida Gov. Rick Scott (R) — a prominent opponent of the ACA — met with HHS Secretary Kathleen Sebelius in Washington, D.C., to discuss his concerns and his state’s implementation of the law (Saunders, Kaiser Health News, 1/7). Scott described the meeting as “productive” (Millman/Cheney, Politico, 1/7) However, reiterated his concerns about the state’s costs to operate an exchange and expand Medicaid (Peltier, Reuters, 1/7).
  • CMS missed its own deadline to issue a final rule on implementation of the Physician Payment Sunshine Act, which likely will push back the date on which data collected under the act is made publicly available. The Sunshine Act — which was established under the ACA — requires medical industry companies to disclose all consulting fees, travel reimbursements, research grants and other gifts with values higher $10 that they give to physicians and teaching hospitals (Lee, Modern Physician, 1/3).
  • Last month, the Internal Revenue Service released a proposed regulation that effectively implements the ACA’s employer mandate (Baker, “Healthwatch,” The Hill, 12/28/12). The regulation clarifies that employers must extend coverage to workers’ children who are under age 26, but not to workers’ spouses (Barr, Modern Healthcare, 12/28/12). Employers also will not be required to subsidize health plans for dependents to the same extent they will for workers (Adamy, Wall Street Journal, 12/28/12).

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