Amid Uncertainty Over Health Care, Covered California Appeals to Insurers' Bottom Lines

Peter Lee, executive director of Covered California. (Max Whitaker/Getty Images)

With ongoing uncertainty around the Affordable Care Act (ACA), the board that oversees California's health care marketplace took action to stabilize the exchange on Thursday. Their goal was to convince insurance companies to continue offering health plans through Covered California.

Covered California Executive Director Peter V. Lee praised California's overall success as a health care marketplace, but cautioned that the exchange faces significant challenges.

"We think this open enrollment’s going to be the most challenging since year one," Lee said. "We’re dealing with the most federal uncertainty we’ve ever had."

Lee is referring to Congress's attempts to repeal the ACA, and the Trump administration's threats not to pay subsidies to insurance companies, as required under the health care law.

In the meeting, the board unanimously adopted two new resolutions they believe will maintain market stability. The first updates contracts between Covered California and insurance companies, allowing insurers who lose money in 2018 to increase profit margins in the following three years in order to recoup losses. Alternatively, if companies make unforeseen profits because of national uncertainty, those profits would go to reducing premiums in the future.

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In an email, a spokesperson for Blue Shield of California, one of the exchange's providers, said the company "supports Covered California’s program to address the pricing uncertainty and will participate to add stability in the market."

The second resolution increases Covered California's marketing and outreach budget by over $5 million. Marketing helps convince consumers, especially healthy ones, to sign up for plans. A mix of healthy and sick participants allows health care marketplaces to maintain lower premiums.

Finally, the board announced it would delay a decision about whether to further increase 2018 premiums until Sept. 30.

Those increases could be necessary to make up for the insurance companies' financial losses, if the federal government withholds subsidies designed to decrease costs for low-income consumers.

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The board hopes that by the end of September it will better understand what will happen to the Affordable Care Act and how that will impact California.

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