April 26, 2019
New Covered California sign-ups plunge 24 percent
SACRAMENTO--The number of new enrollees in Covered California health plans plunged by nearly a quarter this year, largely because of the elimination of the federal tax penalty for people without insurance, officials announced Wednesday.

The decrease was steeper than expected, and larger than the drop in new enrollment in the federal marketplace, healthcare.gov. It occurred even as Covered California, the state health insurance exchange, spent millions on advertising to entice people to sign up for coverage during the open-enrollment period that ended Jan. 15.

Overall, about 1.5 million Californians selected a health plan for 2019 coverage, a figure similar to last year’s, the agency said. But new enrollment fell by 23.7 percent, with 295,980 sign-ups, compared with 388,344 last year. Meanwhile, plan renewals remained strong, posting a 7.5 percent increase.

“Recent actions at the federal level appear to be causing large drops in enrollment that will lead to more uninsured and higher premiums for all Californians,” said Covered California Executive Director Peter Lee.

“The federal removal of the individual mandate penalty appears to have had a substantial impact on the number of new consumers signing up for coverage,” he said.

New enrollment in the federal health insurance exchange, healthcare.gov, which serves 39 states, fell to 2.1 million, down 15.8 percent from the previous year, according to preliminary data from the Centers for Medicare & Medicaid Services.

Total enrollment dropped to 8.4 million from roughly 8.7 million in 2018.

The drop in enrollment, especially if fewer healthy people are signing up, could lead to higher premiums, explained David Panush, president of California Health Policy Strategies, a Sacramento-based consulting firm, and former external affairs director for Covered California.

“When you have fewer healthy people enrolling, that has an effect on the risk pool. And when you have a sicker pool that means premiums go up, although so do subsidies,” Panush said. “But for people on the non-subsidized side, that’s a big deal.”

In fact, premium rates have already increased because of the elimination of the penalty for not having health coverage, which took effect this year. Covered California said the average rate increase for 2019 would have been closer to 5 percent, instead of 8.7 percent, if the individual mandate penalty hadn’t been axed as part of the 2017 Republican tax bill.

On his first day in office, California Democratic Gov. Gavin Newsom called for a state-based mandate, which would require all Californians to have health coverage. The legislature would have to approve it, which isn’t guaranteed even with a Democratic majority because the mandate was one of the least popular provisions of the Affordable Care Act.

Penalizing uninsured Californians in this way could raise roughly $500 million a year, Newsom said when he unveiled his proposed budget earlier this month. That money, he suggested, could be used to create state subsidies for Californians who struggle to afford health insurance.

New enrollment fell even though Covered California spent $40 million on ads during the latest open-enrollment period, out of a monster $107 million marketing budget. By comparison, the federal government spent $10 million on advertising. (Source: Los Angeles Daily News)
Story Date: February 12, 2019
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