CA Sees 41% New Enrollment Spike in State Health Insurance Market

Covered California, California’s state health insurance market, saw an increase in enrollment since instituting the individual mandate statewide and offering state subsidies on top of the Affordable Care Act’s subsidies.

The state-based exchange welcomed over 418,000 new enrollees during the 2020 open-enrollment period.

This is an increase of 41 percent over last year’s new enrollment of almost 296,000.

“The new enrollment that occurs during each year’s open-enrollment period is vital to getting more people covered and keeping costs down by enrolling a healthy risk mix,” said Peter Lee, Covered California’s executive director. “This dramatic rebound in new enrollment shows how effective state policies can make quality coverage more affordable and encourage people to get covered.”

This upswing in new enrollments brings California’s overall state health insurance marketplace enrollment to almost 1.4 million, a full 1.6 percent increase over last year’s total enrollment. The increase comes after a decline of 0.5 percent in 2019.

“This open enrollment period shows what can be done when you work together to bring health care coverage within reach for more people,” said California Governor Gavin Newsom.

Under Governor Newsom’s leadership, California has developed one of the most expansive Medicaid and state-based exchange programs in all 50 states. Some outlets have characterized California’s public payer functions as even more extensive than the Affordable Care Act’s original efforts. 

Most notably, California was the first state to extend Medicaid coverage to undocumented immigrants under its Medi-Cal program.

“California is leading the way when it comes to putting policies in place that make health care more affordable for all,” Newsom said.

The current state health insurance marketplace enrollment increase is due to the state’s latest healthcare expansion efforts.

First, like the Affordable Care Act’s nationwide individual mandate, which was ruled unconstitutional in December 2019, Californians are now required to have health insurance or accrue a fine that could exceed $2,000 for a family of four. This only applies to individuals who could afford health insurance but choose not to purchase it.

Also, for those who cannot afford to purchase health insurance, the state also instituted a subsidy program which can be utilized in addition to the Affordable Care Act’s subsidies to handle premium costs.

This is the first program in the US to extend such subsidies to middle class individuals with an income of up to $74,940, or middle-class families with a household income of up to $154,500.

Lastly, California’s open-enrollment period closed on January 31, 2020. That is over two weeks longer than California’s 2019 enrollment period and almost a full month-and-a-half longer than the federal open-enrollment period for 2020.

“Californians are seeing that by building on—instead of undercutting—the Affordable Care Act, they are directly benefiting from lower health care costs and more people being insured,” Lee stressed.

The state spent $121 million on ensuring that California residents were aware of the changes, launching a massive marketing and outreach effort that included phone banks in four languages and partnerships with social media influencers.

The state’s subsidies for families at 200 to 400 percent of the federal poverty level (FPL) together with federal subsidies cut down household premiums by, on average, 70 percent. The typical monthly household premium averaged at $881 but the state and federal subsidies bring this down to around $272.

California’s health spending plan allots $429 million of its General Fund dollars on Covered California from 2019 to 2020, according to the Legislative Analyst’s Office (LAO)'s October 2019 Health and Human Services (HHS) Spending Plan. California will use the individual mandate to offset the new subsidy costs. LAO estimates that the individual mandate will bring in $317 million in revenues from 2020 to 2021.

Additionally, much of the state’s funding for its public healthcare programs comes from personal income taxes, which contributed approximately 70 percent of the General Fund revenues in 2016.

As the nation debates its healthcare future, California’s experience, as well as smaller scale efforts in other states, may serve as a pilot to see how the more progressive options on the table could play out.

The subsidies will be available through the end of 2022, according to the LAO, at which time they will be repealed.