The increased revenue is also in light of reducing health plan assessment from 4% of the gross premiums down to 3.75% for the individual and family plan market. The proposed operating budget for FY 2018-19 is $340.2 million. This represents a 6.55 increase over the FY 2017-18 budget or an increase of $20,686,242.
In a certain sense, Covered California is no different than any other agent trying to enroll consumers and earn a monthly commission. I suppose there are other industries that must spend 1/3 of their forecasted revenue on marketing just to maintain their sales, but the percentage seems excessive on the face of it. You have to wonder how sustainable a business model is if spending 33% of the budget on marketing is necessary for survival. It also raises the question of if the exchange based model is the most efficient means of qualifying consumers for the Premium Tax Credit and distributing the subsidy.