Red ink could kill Covered California

By ORANGE COUNTY REGISTER EDITORIAL

http://www.ocregister.com/articles/california-658869-covered-state.html

After two previous extensions, the open enrollment period for Covered California ends April 30. That deadline just might prove to be the tipping point for the state’s two-year-old health insurance exchange.That’s because this is the year Covered California is supposed to become completely self-sustaining.Indeed, there’s no more money coming from Washington after the state exhausts the $1.1 billion it received from the federal government to get the Obamacare exchange up and running. And state law prohibits Sacramento from spending any money to keep the exchange afloat.

That presents an existential crisis for Covered California, which is facing a nearly $80 budget deficit for its 2015-16 fiscal year. Although the exchange is setting aside $200 million to cover its near-term deficit, Covered California Executive Director Peter Lee acknowledged in December that there are questions about the “long-term sustainability of the organization.”Mr. Lee’s disquieting assessment actually jibed with a 2013 report by the state auditor, which stated that, until the state’s health insurance exchange actually started enrolling Californians in health plans, its “future solvency” was ”uncertain.” Thus, Covered California was listed as a “high-risk” issue for the state.

The state auditor’s warning appeared prescient as of Feb. 15, which was supposed to be the close of open enrollment for 2015: Covered California had fallen 300,000 enrollees short of the goal set by Mr. Lee and the agency’s board of directors.Indeed, Covered California’s enrollment growth for 2015 was a mere 1 percent, according to a study this month by Avalere Health. That was worst than all but two other state exchanges. Meanwhile, California’s Obamacare exchange managed to retain only 65 percent of previous enrollees, the nation’s fourth-lowest re-enrollment rate.

We look forward to next week’s enrollment numbers from Covered California; to see if there is another near-miraculous, 11th-hour spike in enrollments enabling Mr. Lee to claim a successful enrollment period (and for opinion writers around the country to once again hail California as prima facie evidence that Obamacare is working.

But there’s no getting around Covered California’s balance sheet. If it continues to run yearly operating deficits, it will not long survive.

Last edited by Common Sense (4/25/2015 7:19 pm)