Part of Early Exchange Success Due to Insuring the Already Insured

by David Gorn, California Healthline Sacramento Bureau

RELATED TOPICS:

No one knows yet exactly how many of the 1.2 million people enrolled so far in Covered California were previously uninsured -- but one person has a pretty good guess.

Ken Jacobs, chair of the Labor Center at UC-Berkeley, projects about 39% of enrollees were previously uninsured.

That means it's likely that 61% of Covered California enrollees already had health insurance.

"One reason is you have to look at who was expected to enroll in the exchange, and there were two large groups," Jacobs said. "One of those groups is the people in the individual market."

Jacobs helped put together CalSIM -- the California Simulation of Insurance Markets -- used by Covered California to make enrollment and coverage decisions.

'The Lower-Hanging Fruit'

CalSIM projected that about 570,000 people with insurance through the individual market would migrate to coverage under the exchange, looking for better coverage and better prices. That number is relatively small compared with the roughly 2.6 million who are eligible for subsidies under the exchange -- but it's a motivated bunch, Jacobs said.

"They've shown a desire for coverage, so we would expect them to enroll first," he said.

"It's sort of the lower-hanging fruit of the exchange," said John Connolly, associate director at the Insure the Uninsured Project. "It made sense for them to transfer into this environment."

Connolly added that because Covered California exceeded is initial enrollment targets, the number of enrollees who were previously uninsured could be higher. "It'll be interesting to see the numbers when the final results are released," he said.

"Over the next few years at the exchange, we expect to see much higher numbers of the previously uninsured," Jacobs said.

"Again, this result [for this particular first enrollment period] is largely because of the overall high take-up rate for this group," Jacobs said, with an estimated 94% take-up rate by those in the individual market.

'All of Us at Some Point' Are Uninsured

According to CalSIM, there were roughly 5.4 million uninsured people in California last year. That's a bit of a fungible statistic, Jacobs said, because it's those people who were uninsured at some point during the year -- but not the entire year.

There was likely a high rate of uninsured enrolling in Medi-Cal, California's Medicaid program, through the ACA's expansion, Jacobs said. The state reported that 1.9 million Californians signed up for Medi-Cal through the end of March when the exchange's open enrollment period ended.

In contrast with the exchanges, "we would expect 75% of newly eligible Medi-Cal enrollees to have been previously uninsured," Jacobs said.

"When you ask most people to explain health care reform, it would be to insure the uninsured, but that's not really who the exchange is enrolling," said Micah Weinberg, a senior policy advisor for the Bay Area Council.  He said the exchange is more likely to enroll people who are "frictionally uninsured" -- people who have cycled in and out of coverage because of fluctuations in income or employment, a phenomenon known as churning.

"So they're people who had COBRA (Consolidated Omnibus Budget Reconciliation Act) coverage, but it ran out before they got a new job. Or they had Medicaid and got job-based coverage, or they lost their job and applied for Medicaid but never got it. Or they're young and had health insurance through their parents."

The point is, he said, "The uninsured are not some 50 million Americans who are living at the margins of society," Weinberg said. "Really, it's all of us at some point in time."

"[The individual market] has always been a place where you have lots of people coming in and out," Jacobs said. "What this does is create a much stronger safety net, so people have a place to land if they have changes."

"It's about creating economic security for those moments when people go through transitions," Weinberg said.

Weinberg said the way the exchange will be successful is by helping to establish a "culture of coverage" popularized by exchange board member Kim Belshé.

That's why it doesn't much matter how steep a percentage there is of the previously insured in the exchange because the idea is that people will still have continuity of care whenever they move among Medi-Cal, the exchange and employer-based insurance, he said.

"It is a constant process," Weinberg said. "We need to be engaging people to realize they have coverage options and to take advantage of them."

Some Projections Nailed, Some Missed

About 85% of the 1.2 million people in Covered California so far are expected to pay the premiums and get coverage. That's close to the enhanced scenario projected by CalSIM of 1.2 million Californians who would pay for coverage in 2014. A second, shorter enrollment period begins in November.

The projection nailed the number of subsidy-eligible participants, as well, which it pegged at about 85% of enrollees.

The Latino enrollment and "young invincibles" numbers were also close, while enrollment among the Asian and African-American populations were way off. African-Americans enrolled in much lower numbers than projected, and the Asian community enrolled at a much higher rate than expected.

"People respond to financial incentives in predictable ways, and these were economic simulations," Weinberg said. One of the reasons the projections "were so spot-on is that this was not a political exercise," Weinberg said. "It was a modeling exercise. It was a planning document, not a political document. So they had a lot invested in the accuracy of the numbers."

Connolly said the next step is to get the actual numbers and figure out where resources and effort need to be spent.

"Let's wait and see for the enrollment data, and see how many remaining uninsured there are, that's the first thing," he said. "We all feel this is the first step, and this is a multi-year project. It's going to take some time before we see the culture of coverage."

"It's important to remember," Jacobs said, "there has been a significant reform of the [individual] non-group market, which has always been marked by significant volatility, where rates were continually going up, where products were continually dropped. If they have coverage that's more comprehensive, more affordable and they don't face the same barriers as in the past, the whole dynamic of that market is changing."

It will take a few months to see how it all settles out, Jacobs said.

But one thing is clear, he said: "Even in year one, it's already made a serious impact among the uninsured, and we expect that to increase over time."

"The important thing right now is to evaluate carefully and see where resources need to be spent," he said. "Clearly the Latino community is where work will need to be done."

"This is actually causing me to take a moment and celebrate. A short moment," Weinberg said. "That's the thing about California, everyone has been working really hard on this, and lo and behold, we've been the Shabazz Napier of health care," he said, referring to the star of the University of Connecticut college basketball team.

"We're in the Final Four, but we haven't won the championship," Weinberg said. "Everyone deserves to be happy for a moment, but there's a game next week."

Frank Apgar
Regarding "The concept of coverage":Let's look at the details why people who had an individual policy would migrate to the exchange. It is likely as previously discussed elsewhere that the TOTAL premiums of the product offered at the exchange is higher than what the people paid on the individual market-especially older individuals. It is the subsidies provided by the federal government that resulted in the premiums paid by the enrollees to be lower than what they paid before and therefore make the product more affordable. Be constantly aware of where the costs come from in order to pay for these subsidies. These costs are spread in many ways through out our economy, some of which are seen in higher premiums for those buying insurance that is not part of the exchange. So is this "fair"-a term where I cringe whenever I hear a politician or advocate let it pass their lips? It could be. People who have insurance from their employer have the premium subsidized thu business tax deductions.

to share your thoughts on this article.