Lessons Learned from State Exchanges Can Help Build Long-Term National Success

SACRAMENTO, Calif. — Covered California Executive Director Peter V. Lee urged U.S. Secretary of Health and Human Services (HHS) Sylvia Mathews Burwell on Monday to consider specific strategies to build on the Patient Protection and Affordable Care Act’s success. Covered California shared some key insights and lessons learned with Burwell so that health exchanges nationwide can continue their success in 2017 and beyond.

In written comments submitted Monday in response to proposed federal regulations, Covered California weighed in on three key elements of the proposed regulations, related to standard benefit design, ensuring federal and state exchanges have resources to do effective marketing and the role of Web-based entities in enrollment. As Covered California, the federal marketplace and exchanges in other states enter the third historic year of operations, lessons learned in 2014 and 2015 can be applied to future years.

Standard Benefit Design — Proposed regulations related to the federal marketplace in 2017 contemplate the standardization of benefits under the Affordable Care Act. Covered California currently offers standardized benefits so that consumers can easily compare health insurance plans knowing that every plan within the same metal tier has the same cost-sharing amounts and benefits. With standardized benefits, consumers can also rest assured knowing that some services will always be affordable and accessible. For example, every health plan available through Covered California has primary care visits that are not subject to the deductible, which means primary care is affordable and accessible.

“Covered California developed the standard benefit designs with input from consumers and health care advocates, health plans and policy experts,” said Lee. “Our goal is always to promote consumer understanding and access to needed care as well as encourage consumers to get the right care at the right time.”

Lee applauded the secretary for taking important steps in the right direction to build on the Affordable Care Act’s essential health benefits by promoting standard benefit designs created for consumers. Encouraging health insurance companies to offer health plans with standardized benefits in the federally facilitated exchange could allow consumers to compare plans more easily, decrease the complexity of buying insurance and encourage the use of appropriate medical services.

Federal Assessment on Plans to Ensure Ongoing Enrollment — Recent reports from HHS, California and other states’ exchanges show that enrollment for the upcoming third coverage year of the Affordable Care Act is strong, which bodes well for continued improvement of the “risk mix” and for ensuring long-term affordability.

The proposed federal regulations, which would not take effect until 2017, present the assessment on health plans to support all marketplace functions, including a small portion for marketing and outreach costs. While California has no plans to use the federal enrollment platform, Covered California believes making investments in marketing and outreach is vital to promoting larger enrollment and retention, which have direct correlation to fostering a better risk mix that keeps premiums low for the entire market by encouraging healthier consumers to buy health insurance.

“Covered California believes strongly that strategic and adequate investments in marketing, outreach and sales are critical factors to ensuring that the marketplace grows and, more importantly, maintains a good risk mix,” Lee said.

Covered California believes robust marketing has been essential to attracting members who are healthy, young and cost less to serve, as well as patients who are sicker, higher-cost and often older, as demonstrated by California having the best risk mix in the nation as of the end of 2014. Lee said ongoing marketing in the years ahead will be essential to the long-term success of the health reform law.

“The importance of sales and marketing efforts will only increase in the coming years as the free, earned media garnered by the historic nature of the Affordable Care Act subsides and the efforts of foundation-supported enrollment and marketing efforts decrease,” he said. “While both the federal exchange and state exchange have been doing an effective job attracting members, success over the long haul will require continued, robust marketing.”

Web-Based Entities — Lee affirmed the important role that licensed insurance

agents have and continue to play in promoting enrollment, while he commented on proposed standards for the federal marketplace related to the role of those agents who sell online — referred to as “Web-based entities.” Covered California believes that having clear standards and expectations of Web-based entities’ “choice architecture” is of critical importance to making outreach work for consumers.

“In the absence of clear standards, consumers may experience confusing displays of health plan options, make less optimal plan and product choices, be routed to off-exchange products, or not get appropriate in-person support when it is needed,” Lee wrote. “Having poor or confusing plan choice display runs the risk of resulting in smaller enrollment and a worse risk pool.”

While it is unclear from the rules whether they would apply to state-based marketplaces, Covered California voiced specific concerns about the inappropriate nature of applying such rules to state-based marketplaces, and provided specific suggestions for how the federal marketplace could ensure Web-based entities serve consumers, and about the need for federally established standards for Web-based entities regarding how consumers choose plans and get support from these agents. Covered California strongly believes that Web-based entities and other direct enrollment vendors should have to support consumers in all aspects of the application, display available health plans with additional consumer tools such as filtering and sorting options, and meet other requirements.