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Exchange forecast for 2013: Nine months and counting



January 31, 2013
Area(s) of Interest: Health Care Reform 

In a little more than nine months, Covered California, the state’s health benefit exchange, is expected to begin pre-enrollment through its new online insurance marketplace, and, in doing so, launch the cornerstone of the state’s health care reform effort.


With deadlines approaching, however, just how close is California to its goal, and what still must be done before the state can begin enrolling consumers through its insurance exchange?


Before a marketplace can begin to take shape, Covered California’s Board of Directors must first decide which health insurers and plans will be eligible to offer qualified health plans (QHP), and exactly what these QHPs will look like.


This process, specifically the selection and design of QHPs, has been underway for several months, and will be nearing conclusion when Covered California’s Board of Directors finalizes their proposed model contract sometime in February.


With the contract finalized, the board will be able to move forward with what promises to be one of the most closely watched aspects of bringing the state’s exchange online – the selection of the QHPs that will be offered on the marketplace.


By opting to follow an “active purchaser” model, Covered California will be tasked with selecting a limited number of plans to be offered on the new marketplace for each of the state’s geographical regions. For months, Covered California’s Board of Directors has been working to finalize the QHP solicitation standards, and late last year finalized a list of requirements that plans must meet in order to bid on a spot in California’s exchange.


Judging by the initial reaction to these standards, interest in the exchange looks to be high.


In October, Covered California staff announced that more than 30 potential bidders had submitted an initial “letter of intent to bid,” with suitors vying for spots in each one of California’s geographic regions.


Recently, however, some major national plans have expressed trepidation at participating in the exchanges. Just last week, UnitedHealth announced that it currently only had plans to offer QHPs in 10 to 25 percent of exchanges nationwide, adding that it will avoid exchanges that it finds to be commercially unsustainable or that are unfair in their demands of QHPs.


Even if Covered California is able to assemble plans and products, there is still the considerable challenge of actually launching the new online marketplace and being ready for enrollment before October 2013.


Additionally, once the marketplace has gone live, Covered California staff will need to make sure that there are consumers ready and willing to purchase coverage if the project is to become a success. To this end, the board is expected to spend roughly $90 million on public outreach in 2013.


Californians can expect the already rapid pace of the Covered California to ramp up in coming months, and, if plans hold true, for the exchange to make quite a bit of news between now and the year’s end.

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