New analysis shows Covered California’s risk mix improving and remaining stable and strong

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  • California’s risk score improved from 2016 to 2017, indicating a healthier mix of consumers who have enrolled in coverage.
  • Analysis shows what health insurance exchanges like Covered California can do when they work on behalf of consumers.
  • Covered California has shared data with health plans in advance of rate negotiations for the past three years, helping plans “price right” — but unprecedented federal policy uncertainty makes 2018 premiums potentially more variable than ever.

SACRAMENTO, Calif. — A new analysis shows that Covered California continues to attract a healthy mix of enrollees, and the overall health of its enrollees improved from 2016 to 2017. This data is key to Covered California’s stability and will be used to help shape and inform rate negotiations with its 11 qualified health plans for 2018.

“We continue to attract a healthy mix of enrollees, and this is further evidence that the individual market in California is stable and strong,” said Peter V. Lee, executive director of Covered California. “A healthy pool of consumers means lower premiums, resulting in lower costs to those who do not receive financial help and receive less federal spending.”

The study, titled “Amid ACA Uncertainty, Covered California’s Risk Profile Remains Stable,” was posted earlier this week on Health Affairs, a prominent website devoted to health policy and issues affecting health and health care. Covered California released an expanded description of the results of the analysis, “Covered California Continues to Attract Sufficient Enrollment and a Good Risk Mix Necessary for Marketplace Sustainability.”

According to the data, California’s risk score dropped from 1.11 in 2016 to 1.09 in 2017, indicating that the current population is healthier, with respect to chronic conditions, than it was a year ago.

In addition, new enrollees in 2017 have an approximately 16 percent lower mean risk score than renewing enrollees, which is an improvement of 4 percent between 2016 and 2017. This suggests that Covered California is successfully attracting healthy enrollees to stabilize the risk pool.

The analysis continues California’s trend of having a healthy pool of consumers. While it used a different methodology, the Centers for Medicare and Medicaid Services determined California had the lowest “average plan liability risk score” in the individual market in both 2014 and 2015. In 2016, California continued to have one of the lowest risk scores in the nation.

Lee pointed to four key reasons why California has been successful in attracting a healthy mix of consumers:

  • The expansion of coverage linked to providing financial help through federal tax credits is bringing a healthy mix of consumers into the individual market and keeping them there.
  • Covered California continues to invest significantly in marketing and outreach, recognizing that there is high turnover in the individual market.
  • Unlike many other states, California converted all health coverage in the individual market into “compliant” plans and created one common risk pool as of 2014.
  • Health plans through Covered California offer patient-centered benefit designs, which allow consumers to access a wide variety of care that is not subject to a deductible, meaning consumers get more value from their coverage.

“Doing early analysis of California’s risk mix is important because we can share this information with health insurance carriers during rate negotiations to get the best value for California’s consumers,” Lee said. “While we are doing what we can to provide health plans with the certainty they need to set their premiums as low as possible, there is still significant uncertainty among health plans because of the lack of clarity around whether there will be direct federal funding of cost-sharing reduction payments and continued enforcement of the individual mandate.”

Last month Covered California released an analysis that showed health plan premiums could rise up to 49 percent, and up to 340,000 Californians would drop from coverage, if cost-sharing reduction reimbursements were no longer directly made to carriers, and the individual shared responsibility payment were not enforced.

Health insurance carriers have begun the process of negotiation in California to develop rates for 2018.

“Health insurance carriers need certainty, and without confidence that the federal support for cost-sharing reduction payments will be made for 2018 as they have for the past four years, they will need to raise their rates and it will actually cost the federal government billions of dollars more,” Lee said. “There is still time to remove this specter of uncertainty and take the concrete steps necessary to keep the marketplaces stable, protect consumers and preserve coverage for millions of people.”

About Covered California
Covered California is the state’s health insurance marketplace, where Californians can find affordable, high-quality insurance from top insurance companies. Covered California is the only place where individuals who qualify can get financial assistance on a sliding scale to reduce premium costs. Consumers can then compare health insurance plans and choose the plan that works best for their health needs and budget. Depending on their income, some consumers may qualify for the low-cost or no-cost Medi-Cal program.

Covered California is an independent part of the state government whose job is to make the health insurance marketplace work for California’s consumers. It is overseen by a five-member board appointed by the governor and the legislature. For more information about Covered California, please visit www.CoveredCA.com.

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