CEO SUMMARY: California will operate one of the nation’s largest health insurance benefit exchanges, as defined by the Affordable Care Act. Officials recently unveiled details about the exchange, to be called Covered California. Based on bronze, silver, gold, or platinum plan coverage, beneficiaries will be required to pay a copay of between $6 and $45 per medical lab visit. Open enrollment begins this fall and Covered California will commence operations on January 1, 2014.
CALIFORNIA IS THE FIRST STATE in the nation to establish the coverage parameters for its health insurance benefit exchange, due to become operational on January 1, 2014. At least one policy may prove troublesome for clinical laboratories.
As mandated by the Affordable Care Act of 2010 (ACA), California is taking the steps needed to launch its state exchange. Called Covered California, it will enroll consumers this fall at www.CoveredCA.com.
Covered California will be a big deal. According to Dana Howard, a spokesman for the exchange, it will insure 2.6 million state residents who currently are uninsured and are eligible for subsidized coverage under the exchange. For this year and next, California will use $684 billion in federal funding to get the exchange running and provide subsidies. Beginning January 1, 2015, the exchange plans to be self-sustaining. This means it will operate without federal support, Howard explained.
What is of interest to pathologists, clinical laboratory executives, and other providers are the details of how Covered California will provide coverage and how the participating insurers will reimburse providers.
In fact, one of the policies made public recently is that Covered California will require the beneficiary to pay between $6 and as much as $45 out of pocket for each laboratory visit, depending on the level of the beneficiary’s coverage. This could create problems for clinical labs, since it may increase bad debt from patients and raise the cost to the lab to bill and collect these amounts.
Premium Costs Unknown
“Currently, we don’t know the insurance premium costs [for Covered California] because 33 health insurance companies have submitted bids that we are evaluating now,” Howard said. “Sometime in early summer we expect to select the insurers to participate in the exchange. We will then know the premiums and the dollar amount of financial assistance we will provide to consumers.
“In the meantime, we can show people what they will pay if they are eligible for a subsidy,” continued Howard. “We know how much an individual and a family will need to pay because it will be a percentage of their adjusted gross income as reported on their tax returns.
“For example, a family of four making less than $23,000 per year will pay $39 per month for family coverage under the standard benefit plans we are offering in the exchange,” he explained. “Subsidies will be available to any eligible family that chooses the silver plan from our list of four plans, which range from bronze on the low end, to silver in the middle, and gold and platinum on the high end.”
Households earning less than 250% of the federal poverty level can receive financial assistance by enrolling in a silver plan, per the details announced by Covered California. “The less income they earn, the more financial assistance they can receive. For example, individuals earning between 150% and 250% of the federal poverty level can expect to pay $20 to see a primary care physician, while those earning 100% to 150% percent would pay $4,” said the Covered California statement.
Price Comparison of Plans
“By offering a standard benefits plan, residents will be able to compare apples to apples when shopping for coverage,” Howard added. California residents choosing the standard benefit plans would have an out of pocket maximum to pay each year that ranges from $2,250 to $5,200 in the subsidized silver plans to $5,000 for the gold plan, and $6,400 for the platinum. In these standard benefit plans, copayments for lab tests range from a low of $6 in the bronze and silver plans to $45 in the gold and platinum plans.
Clinical labs would be expected to collect the $6 to $45 copay for each lab test from those patients enrolled in these plans. If some residents required many expensive tests, the laboratory may need to collect much more—up to the out-of- pocket annual maximum specified by the beneficiary’s plan.
The steady increase in health insurance premiums in California has been viewed as a serious problem. In a report in January, the California Health Care Foundation (CHCF) reported that the cost of health insurance premiums for California families rose 153% since 2002, more than five times the 29% increase in the rate of inflation.
Waiting for More Details
Those pathologists and lab executives in California who are following these developments can expect further details about lab test coverage guidelines to be announced in coming months.
For laboratory professionals in other states, the significance of Covered California is rooted in the fact that California is considered a bellwether state for political initiatives and cultural developments. For that reason, other states will closely study the design of Covered California as they take steps to develop their own state health insurance exchanges.
The Covered California exchange is one of 50 to be established in each state by January 1, 2015. Under the federal ACA, some states will run their own insurance exchanges, such as California and Massachusetts, which has operated the Commonwealth Connector exchange since 2006. Other states will let the federal government operate the exchanges for them.
Large Enrollment Expected
With an expected enrollment of 5.3 million residents, California’s health benefit exchange will be one of the largest in the nation. For comparison, approximately 11 million people are currently enrolled in Medi-Cal, the state’s Medicaid program.
Nationally, one goal of the Affordable Care Act is to provide health coverage to some 30 million Americans who currently lack health insurance.