Similar Data Analysis Is Underway for 2016 Negotiations
SACRAMENTO, Calif. — A new study in the journal Health
Services Research found that analyzing state data on health care usage by
Covered California enrollees helped demonstrate that many were healthier and
presented less risk to insurance companies than anticipated, helping drive down
the cost of health premiums offered through the exchange in 2015.
The study, “Sorting Out the Health Risk in California’s
State-Based Marketplace,” which was published online June 9, 2015, found that
giving health insurance companies the data needed to estimate the amount they
would pay or receive from a special risk-adjustment pool helped them know they
could reduce their rates in many cases.
“After receiving these findings as part of their
negotiations with Covered California, health plans covering the majority of
enrollees decreased their proposed 2015 rates, saving consumers tens of
millions of dollars in potential premiums,” the study stated.
Covered California Executive Director Peter V. Lee said
that studying health care usage by Covered California enrollees with chronic
health conditions can yield tremendous benefits for enrollees and potential
enrollees, because representatives of the exchange can use the data when
negotiating with health insurance companies every year.
“This represents the best of what a health insurance
exchange can do: develop our own information about the health of our consumers
so that we can come to the table as smart negotiators on their behalf,” Lee
said. “This is one of the ways active purchasing works to ensure quality
products at the best possible value.”
The study was conducted by a
team composed of researchers from the University of California, San Francisco,
the Department of Health Care Services and actuaries at Covered California.
Those researchers made use of the state’s Office of Statewide Health Planning
and Development (OSHPD) datasets to measure the health risk of individuals who
used acute care inpatient services or hospital emergency departments during
calendar year 2012. The California Department of Health Care Services (DHCS)
linked the OSHPD datasets with Covered California datasets and applied the
Chronic Illness and Disability Payment System algorithm developed by the
University of California, San Diego, to derive risk scores and create
demographic profiles. All of the data analysis and linkage was performed at
DHCS behind the state agency’s information firewall to protect the
confidentiality of personal health information.
“What was special about this effort is that we were able to
give insurance plans something they did not have access to before,” said
Covered California Chief Actuary John Bertko, one of the study’s authors. “It
gave them valuable information to better estimate their costs and offer more
appropriate rates for consumers.”
As an active purchaser, Covered California chooses which
plans and products to offer and negotiates rates in order to offer the best
value for consumers. In contrast, most other state exchanges and the federal
health care exchange accept all products that health insurance companies wish
to offer, at the rates they want to charge, provided that they meet basic
standards and have passed regulatory review.
Open enrollment for coverage starting Jan. 1, 2016, is
scheduled to begin Nov. 1. Special enrollment for health coverage if someone
has a change in life circumstances, such as moving or having a baby, continues
year-round. Medi-Cal enrollment also continues year-round.
About Covered California
Covered California is the state’s marketplace for the
federal Patient Protection and Affordable Care Act. Covered California, in
partnership with the California Department of Health Care Services, was charged
with creating a new health insurance marketplace in which individuals and small
businesses can get access to affordable health insurance plans. Covered
California helps individuals determine whether they are eligible for premium
assistance that is available on a sliding-scale basis to reduce insurance costs
or whether they are eligible for low-cost or no-cost Medi-Cal. Consumers can
then compare health insurance plans and choose the plan that works best for their
health needs and budget. Small businesses can purchase competitively priced
health insurance plans and offer their employees the ability to choose from an
array of plans and may qualify for federal tax credits.
Covered California is an independent part of the state
government whose job is to make the new market work for California’s consumers.
It is overseen by a five-member board appointed by the Governor and the
Legislature. For more information about Covered California, please visit www.CoveredCA.com.
