People dropping CO's health exchange

[Chris0nllyn]

Colorado's health-care exchange is expecting nearly twice as many people to drop or decline to pay for their policies, resulting in $1 million less in revenue this fiscal year.

In April, the staff projected 13 percent of people will drop or not pay for policies in fiscal 2015, but now they are expecting about 24 percent to drop their policies, according to the latest model.

Because Connect for Health Colorado collects a fee on every policy sold through the exchange, the new model expects revenue from that fee to drop from $7.9 million to $6.9 million this fiscal year.

And in fiscal 2016, the revised figures show dropped policies going from the 16 percent projected in April to nearly 22 percent, with a nearly $740,000 drop in revenue.

According to the revised estimates, Connect for Health expects 35,800 of its 152,200 individuals covered with exchange policies this fiscal year to drop coverage. Next year, it expects 37,400 of 175,000 to drop.

The exchange's new model, which was provided to the finance committee in June and used to calculate revenues in the fiscal 2015 budget by the full board approved last month, still has revenue exceeding expenses so a $1 million drop will mean less net income is added to the exchange's reserve funds. At the budget meeting, several board members expressed concerns that the exchange doesn't have enough money in reserves.

The exchange expects to have $13 million in operational reserve funds this year, according to the June financial report. Connect for Health expects total revenues of $48.9 million this year and net income of $7.2 million.

The exchange is moving from a heavy reliance on federal government grants to being self-funding. The board in June approved $13 million in new annual funding for the next two years that will be raised from a $1.25 monthly assessment on small group and individual health insurance policies in the state.

Connect for Health also collects a 1.4 percent administrative fee on its policies. The fee could rise to as high as 3 percent by fiscal 2017.

http://www.denverpost.com/news/ci_26106245/colorado-exchange-expects-more-drop-health-coverage

 

[SamSpade]

I can't find anything in the article that explains to me why so many would leave the exchange, unless it has anything to do with people getting their own healthcare through their workplace.

For example, there's nothing that says they just ditched the exchange and went with nothing, hoping to just pay the fine. That's certainly likely, but there's nothing to point to it.

 

[Chris0nllyn]

I can't find anything in the article that explains to me why so many would leave the exchange, unless it has anything to do with people getting their own healthcare through their workplace.

For example, there's nothing that says they just ditched the exchange and went with nothing, hoping to just pay the fine. That's certainly likely, but there's nothing to point to it.

Agreed. The article makes it seem like people wither didn't pay and lost coverage, or they got a job that offers it.

I'm sure that makes up the majority, but it should shed light on the idea that this thing really isn't as great as it seems.

 

[SamSpade]

Agreed. The article makes it seem like people wither didn't pay and lost coverage, or they got a job that offers it.

I'm sure that makes up the majority, but it should shed light on the idea that this thing really isn't as great as it seems.

My gut says most of them just quit once the bills arrived - you don't sign up for something and then go, oops, hey, I just got a job. I don't need this. Seems more likely they felt the sticker pinch and said "screw this". Remember that early on, there was some concern that many who signed on hadn't paid anything yet. I don't think it's possible that MANY people suddenly got employer-based healthcare and never had it before.

But of course, it doesn't say. I'll have to find another source.

 

[Tilted]

My gut says most of them just quit once the bills arrived - you don't sign up for something and then go, oops, hey, I just got a job. I don't need this. Seems more likely they felt the sticker pinch and said "screw this". Remember that early on, there was some concern that many who signed on hadn't paid anything yet. I don't think it's possible that MANY people suddenly got employer-based healthcare and never had it before.

But of course, it doesn't say. I'll have to find another source.

A couple of things:

(1) I think we'll likely get some more clarity, during this coming earnings season, on the issue of how many people never paid their premiums after having signed up for individual coverage through the new health care exchanges. I expect the health coverage providers to be asked about that issue during their conference calls if they don't address it in their quarterly filings, and I think the just ended second quarter is where the effect would have been most significant. Most of the people (i.e. representing those big health coverage providers) that I've seen speak about it so far have downplayed the impact / number of people that never paid. But who knows what the actual numbers are, hopefully we'll get a decent sense soon enough. With these kinds of services - where you sign up for them and only after being accepted for or accepting the policy do you get a bill - there's always going to be a portion of people that never pay and thus never actually get the service. Will that portion be especially high in this context? I don't know, but for various reasons I'd bet it's somewhat higher than what might otherwise be considered typical.

(2) With regard to what is being estimated here by Connect for Health Colorado - the subject of this thread - that's something different. They're estimating the effect of coverage churn over the course of a given year. They're saying, for instance, we expect a total of 200,000 people to be covered by insurance purchased through C4HCO for some part of FY2015. But because of the effect of churn that will equate to, for instance, 150,000 people being covered for a full year. Some of those 200,000 won't be covered at the beginning of the year, they'll add coverage later. Some of them will have coverage at the beginning of the year but then move to getting coverage a different way or not having coverage at all (e.g. because they stopped paying at some point).

As for why people's coverage might change over the course of a year, there are lots of reasons such as those you've referred to. Changes in people's circumstances will make them ineligible for exchange coverage (or ineligible for subsidies) or ineligible for another kind of coverage (such that they then need to get coverage through an exchange). These changes might be based on their employment or income (moving up or down in income will affect eligibility for various forms of coverage) or other circumstances of their lives. Anyway, this isn't about the number of people that never actually have coverage because they never pay their premium, it's about people's coverage changing over the course of the year - it's about how do you account for the average number of people covered (so to speak) over the course of a year as compared to counting the total number of people that are at some point covered.

I'd add that this kind of churn isn't really unexpected. A number of studies conducted in the wake of ObamaCare's passage raised this as a potential problem. Because there are now so many different ways that someone might be covered, and there are a number of moving parts when it comes to where someone might be eligible or otherwise able to get coverage, and a number of things can change someone's eligibility even within the course of a year, there was concern that we'd see very high churn when it comes to where and how people got coverage. That raises a number of issues relating to, e.g., continuity of coverage. How such problems might be mitigated will be interesting to see. It's yet another problematic dynamic that is likely to be exacerbated by ObamaCare.


EDIT: I guess I should link something that gets a little further into the dynamic / concern that I'm referring to. Here's one such thing from the Urban Institute, if you don't buy what it's selling you can probably do a google search and find other stuff discussing the issue and make your own assessment.