How California's Health Exchange Fares Will Test the Affordable Care Act

If the state doesn't enroll enough people in the exchange, it could lose billions in federal dollars and insurance premiums could soar.
by | November 19, 2012

Nearly every day, worried Californians call a Pacoima hotline asking what lies ahead in healthcare reform: Do I have to get private insurance? Will I lose my Medi-Cal? How much will it cost? When does it start?

"There's mass confusion already," said Katie Murphy, managing attorney at Neighborhood Legal Services of Los Angeles County, which runs the call line.

With the presidential election over and the nation's healthcare overhaul moving forward, California officials have less than a year to clear up widespread uncertainty about future medical coverage options.

"We are in our countdown period," said Peter Lee, executive director of Covered California, the state's new health insurance marketplace that opens in October 2013.

Under the federal law, the state-run exchange aims to fundamentally reshape the health insurance market by negotiating with insurers for the best rates and assisting consumers in choosing a plan. The exchange must also help millions of Californians figure out whether they qualify for an expansion of Medicaid, the government insurance for the poor, or federally subsidized private coverage.

Federal officials have a lot riding on the California effort. How the state's insurance exchange fares will be an important test of President Obama's healthcare law at a time when many Republican-led states are resisting implementation. California leaders also hope they can harness the purchasing power of the exchange to improve patient care and make healthcare more affordable.

All of that, however, depends on getting enough people -- healthy and unhealthy, uninsured and insured -- to enroll. If that doesn't happen, the state could lose billions in federal dollars and insurance premiums could soar. The task is daunting, given the size and diversity of California's population, said Paul Fearer, an exchange board member. "It's critical to get it right," he said.

But the exchange faces a fundamental communication dilemma, said Samuel Chu, board president of OneLA, an organization of churches, synagogues and nonprofit organizations. "They are trying to pitch a program that is not ready to enroll people."

Watching focus groups of consumers recently in San Diego and Sacramento underscored some of the challenges, Lee said. Only about 20% of those people had even heard of the exchange.

The state expects to enroll about 2 million additional residents in Medi-Cal, the state's version of Medicaid, and sign up another 2 million for subsidized private insurance.

Medi-Cal would be offered to people earning up to 138% of the federal poverty level, or nearly $32,000 for a family of four. Separately, federal insurance subsidies will be available to privately insured families earning up to about $93,000. Enrollment will begin in October 2013.

One of those who may be eligible for the help is Denise Robinson, 62, a former teacher and breast cancer survivor who has diabetes and severe back pain. Robinson, of Panorama City, lost her Kaiser Permanente coverage two years ago when she left teaching after 17 years because of an injury. Now, she can't afford to buy a policy on her own, she said.

She thinks the insurance exchange might help, but she isn't sure how. "I don't really understand it," she said. "I need this program."

Ann Miller, a small-business owner in Diamond Bar who provides insurance to her 15 employees, said she needs the program too. She hopes the exchange can offer some relief from rising premiums. She said her rates from Anthem Blue Cross jumped 21% earlier this year, and she and her husband pay $2,900 a month just for their family coverage. "These rate increases are outrageous," Miller said.

Like individuals, small businesses will be able to shop for coverage via the exchange, but whether they'll be able to get a better deal remains unclear. Some experts warn that average premiums in the exchange could rise because the health reform law requires improved benefits. But consumers could pay less in out-of-pocket medical costs because of the new requirements.

Historically, statewide public insurance programs have started slow. But under the Obama administration's reform plan state officials don't have the luxury of much time.

California officials plan to spend nearly $90 million next year on marketing and raising public awareness about the exchange. The proposed campaign calls for conventional advertising and grass-roots efforts at churches, schools and cultural events.

About half of California's 7 million uninsured are Latinos, according to the exchange. To reach those who are eligible for coverage, the state may sponsor professional and recreational soccer leagues and court bloggers popular with Latino mothers.

Officials also may hit up Hollywood to get TV shows such as "Modern Family" or "Grey's Anatomy" to weave the health insurance expansion into their scripts.

Californians who are sick are expected to quickly sign up for subsidized private insurance through the state exchange. But to keep premiums down, the state also needs large numbers of healthy people to sign up.

"It is vital to the success of the exchange that we have mass enrollment on Day One," said Anthony Wright, executive director of the consumer group Health Access California.

On the Medi-Cal side, the federal government will cover the entire cost of care for newly eligible enrollees for the first three years, starting Jan. 1, 2014. That means the state will lose money for any patient it treats who could have been covered.

California got a head start on expanding Medi-Cal coverage by signing up more than 550,000 low-income people in a temporary program. Those patients are expected to automatically transition into Medi-Cal in 2014.

Antonia Santana, a self-employed housekeeper, is covered by the interim program, Healthy Way L.A. Santana, 50, said she has high blood pressure and relies on the coverage for her medication and doctors' visits. She hopes to receive Medi-Cal coverage when the healthcare overhaul takes effect. "I won't have to be thinking, 'If I get sick, where am I going to go? How am I going to pay for that?' " she said.

In addition to marketing, state health officials are investing millions of dollars in a website and enrollment system intended to present consumers their options and costs.

However, up to 75% of applicants are expected to need face-to-face help navigating the enrollment process. They could include poor families, middle-income working residents, homeless people and small-business owners. That will mean that an estimated 25,000 paid and unpaid representatives speaking as many as 13 languages will need to be recruited, trained and dispatched.

"The state has to figure out how to reach all of these groups, and they all require a different strategy," said Larry Levitt, senior vice president of the Kaiser Family Foundation. "Boring federal government public service announcements airing at 2 in the morning are not going to work."

Community, religious and health advocacy organizations are expected to play a critical role. Chu of OneLA said the best outreach strategy is inviting people to sit down with someone they trust. "This isn't a model of let's build it and they will come," he said. "They have got to go to where the customers are."

For patients who fall though the cracks or get tangled up in the new bureaucracy, organizations like the Pacoima-based Neighborhood Legal Services hope to help. The group is already dealing with billing problems and lack of access to care in Healthy Way L.A. As the healthcare overhaul ramps up, the group's hotline is likely to get many more calls.

"It's going to be a very bumpy road," said Cori Racela, a staff attorney. "And things are not that smooth already."

(c)2012 the Los Angeles Times

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