Covered California is in a good position to survive the abolishment of the Affordable Care Act under a second Trump presidency. They are an independent agency, not funded by the taxpayer, and work closely with the various health plan carriers. In addition, the state of California has demonstrated a willingness to subsidize health insurance if federal money dries up.
Covered California’s Ability to Survive Trump
Covered California is the state’s marketplace exchange for determining if individuals and families are eligible for the Affordable Care Act health insurance subsidies. Once they determine if the applicant is eligible to participate, they calculate the monthly subsidies based on the estimated income of the applicant’s household. Covered California then distributes the subsidy amount to the consumer’s selected health plan to reduce the monthly premium.
Except for the initial funds from the federal government to establish Covered California back in 2011, they receive no federal or state money to fund their operations. While they do work under the Department of Managed Health Care, Covered California is an independent agency. They are funded by participation fees paid by the health plans.
Covered California Independent and Self-Sufficient
The operating revenue for Covered California comes from a 2.25 percent fee on the full premium amount of the health and dental plans sold. This fee has been reduced from 3.25 percent in previous years. Covered California also levies a fee on the premiums of health plans that participate in their small group exchange known as Covered California for Small Business.
As of November 2024, Covered California had approximately 1.7 million individuals enrolled in health plans, 300,000 people in their dental plans, and 77,000 individuals enrolled in small group plan.
Covered California Budget 2024 – 2025
From the Covered California fiscal year 2024 – 2025 budget, revenue from individual consumers is forecasted to generate $377 million. Fees from small group market will generate $33 million. The health plan participation fees plus other revenue such as interests generate $429 million.
For the fiscal year 2024 – 2025, Covered California estimates they will spend 12 percent of their budget on Administration, 7 percent on Plan Management, 25 percent on marketing, 29 percent on customer service, and 26 percent on technology. Total staff is estimated to be 1,494 employees. The backbone of Covered California is the combination of the customer service call center to assist with enrollments and the CalHEERS online program to determine eligibility and estimate the health insurance subsidy.
Covered California anticipates adding positions to their information technology unit to continue the implementation of artificial intelligence to increase their operational efficiencies. They are also investing in information security in what is already a very secure platform. People may dislike having to constantly change passwords, using multi-factor authentication, and other security restrictions and measures, but security has to be paramount when dealing with so much personally identifying information.
Many people do not realize that Covered California is deeply involved in the development of the standard benefit design plans offered by the carriers. They work with the health plans to make sure that plans incorporate all the ACA minimum essential benefits necessary to be eligible to be a subsidize health plan. In addition, there are many state laws and regulations that the plans must adhere to. Covered California, in coordination with the carriers, establish what the individual and family market health plans, on and off exchange, will look like each year.
The manifestation of the work is the Shop and Compare Tool on coveredca.com that displays the health plans available to each household, by zip code, with an estimated subsidy to reduce the health insurance premium. Integrated into the system is the ability of the consumer to include their preferred doctors and hospitals and see which of those providers are in-network with the plans offered. All of this information helps consumers compare plans. As a health insurance agent, Covered California has tremendously helped me work with individuals and families find the correct plan for their health care needs.
Efforts to Improve Health Care through Insurance
While not a mandate of the Affordable Care Act, Covered California has been working to improve how health plan deliver health care to consumers. They have implemented a Quality Transformation Initiative that rewards the health plans for improving the care of their plan members.
The 2024 – 2025 Covered California budget was drafted before Trump won the 2024 election. They were already forecasting a decrease in enrollment if the enhanced subsidies, approved under President Biden, expire at the end of 2025. Of course, with Trump, the decline in enrollment could be greater than anticipated. But this would not be first challenge Covered California faced.
When subsidies for the enhanced Silver plans (73, 87, 94) was eliminated under the first Trump administration, Covered California worked with the health plans to add a surcharge to Silver plans to fund the cost sharing reduction Silver plans for low income households. The State of California recognized that because the health insurance subsidies ended at 400 percent of the federal poverty income level, many moderate-income families in California were cut out from affordable health insurance.
California found money to fund subsidies for households whose income was between 401 – 700 percent of the federal poverty level. The California premium assistance was successfully implemented by Covered California to help families who did not receive any subsidy. The California premium assistance expired when, under President Biden’s American Rescue Plan, increased the subsidies for upper income households.
In conclusion, Covered California is an independent agency that is self-supporting. They have an established track record of developing and maintaining an online enrollment system that allows consumers to easily compare health plans, receive a subsidy to lower the premium, and enroll in health insurance. The State of California has shown a willingness to find solutions to make health insurance affordable to over 1 million individuals and families. Regardless of what happens to the Affordable Care Act under Trump, Covered California is positioned to meet the challenge and continue to assist consumers find affordable health insurance.
