Wednesday, April 16, 2014
FAIRFIELD-SUISUN, CALIFORNIA
99 CENTS

Health exchange planning for budget deficit

By
From page A1 | February 10, 2014 | 6 Comments

LOS ANGELES — Covered California, held up as a jewel in the nation’s up-and-down health care overhaul, is setting aside nearly $200 million to fight off projected budget shortfalls as it prepares for what it says is a challenging financial future without hundreds of millions of dollars in federal aid.

Officials brimmed with confidence after the agency tallied 625,000 individual or family health care enrollments through mid-January, the most of any state. They also say its survival is not assured, in part because of the uncertainty around sign-ups that are key to the exchange’s success.

The greatest vulnerabilities include the “long-term sustainability of the organization” after federal grants that have been its sole source of support, more than $1 billion so far, dry up this year, the agency’s executive director, Peter Lee, wrote in December to the California Department of Finance.

Lee outlined a list of potential risks that, along with the pace of enrollments, included safeguarding personal data, staff training and turnover, and protecting the agency from fraud and waste. To be self-sustaining, he said, the agency will make changes “to reflect . . . revenue realities.”

That followed a state audit last summer that labeled the agency “high-risk” because of the uncertainty around enrollments. The financial test comes as Minnesota and other states contend with meager sign-ups and questions about the potential for financial bailouts unless participation begins to surge.

The exchanges being operated by 14 states and the District of Columbia are supposed to be self-sustaining by next year, according to the Affordable Care Act. A monthly surcharge on insurance policies is intended as the main money-maker for Covered California.

In its short life, Covered California has grown to oversee a $400 million budget, more than 860 employees and offices throughout the state. The agency is in the process of hiring 350 additional call-center employees, mostly in Fresno.

If the agency fails to generate enough income to pay for its operations, it’s not clear whether California taxpayers would be on the hook.

The state law that created the California exchange requires it to operate with a balanced budget and a cash reserve. Additionally, it’s prevented from drawing dollars from state government’s main checkbook, the general fund, which is supported by taxpayers.

That is, unless there is a separate action by the Legislature, now dominated by Democratic lawmakers who generally support the ACA’s goals. The law contemplates the potential for a cash crisis and a “contingency plan should it be impossible to operate the exchange without the use of general fund moneys.”

Covered California considers the potential for a taxpayer bailout remote. “So far, our enrollment numbers are outpacing our projections, so we don’t anticipate any shortfalls in our budget that might create a need for this,” exchange spokeswoman Anne F. Gonzales said in a statement.

The pace of enrollment so far suggests the agency will be able to support its operations in 2015 and into future years, provided sign-ups continue to increase through 2016 and then at least remain stable, said Dylan H. Roby at the University of California, Los Angeles’ Fielding School of Public Health.

Roby said in an email that the agency’s goal is to maintain a reserve that could cover its expenses for a minimum of three months, even if its income stalls, and that monthly fees paid on policies could be raised if necessary to generate more money.

Agency documents show Covered California plans to put aside $184 million of the more than $1 billion in federal grant money it has received to date as a hedge against anticipated budget shortfalls.

The records show the exchange will need $78 million in reserves to plug a budget hole after July 2015, when expenses will outrun income, and another $34 million to cover a deficit the following year.

While agency officials say Covered California is on track to meet enrollment targets – nearly 2 million individuals by June 2016 – planning documents and government reports sketch out the danger if those numbers ebb.

The state auditor raised the possibility of a troubling cycle in which enrollment falls and fees are raised to fill the gap. The threat is that higher policy premiums would then push sign-ups even lower.

In one scenario, the auditor said that if enrollment dips sharply below projections, individual fees in the year that begins July 2015 could surpass $20 a month, up from $13.95, to keep the agency solvent while retaining a reserve.

Sluggish enrollment also could force cuts to service-center staffing and other expenses to keep the budget in line.

“Covered California’s financial sustainability is wholly dependent on enrollment,” the auditor concluded.

Enrollments were averaging about 100,000 a week in December, but they fell to an average of 58,000 in the first two weeks of January, according to agency figures. Agency officials hope enrollment will be robust so fees paid by individuals and small businesses can be lowered.

Since insurance policies purchased under the ACA took effect Jan. 1, the agency has faced criticism for lackluster sign-ups among Hispanics and younger people, as well as confusion over billing and paperwork problems that have left an unknown number of consumers in limbo.

There also are complaints about long wait times at the exchange’s three telephone call centers and problems with the online enrollment site – issues that could discourage enrollment.

A state lawmaker last week called for a probe of the agency’s balance sheet and advertising spending, which is on track to top $300 million for TV ads, billboards, door-to-door visits and other sales pitches intended to encourage sign-ups.

“I’m not sure the way it’s structured it’s actually going to contain costs, and I’m not sure what the costs are going to be,” said state Sen. Ted Gaines, a Republican who submitted the request to the Joint Legislative Audit Committee.

Taxpayer dollars, he predicted, “could be at risk at some point in the future.”

The Associated Press

The Associated Press

LEAVE A COMMENT

Discussion | 6 comments

The Daily Republic does not necessarily condone the comments here, nor does it review every post. Read our full policy

.

Solano News

 
 
 
Suisun police ID shooting victim

By Ian Thompson | From Page: A3, 6 Comments

 
Solano Jews gather for start of Passover

By Amy Maginnis-Honey | From Page: A3 | Gallery

 
 
County discusses consolidated dispatch

By Barry Eberling | From Page: A4

 
Miner Slough Bridge to see repairs

By Barry Eberling | From Page: A4

 
‘Heaven is for Real’ opens Wednesday

By Amy Maginnis-Honey | From Page: B5

 
Fiesta Days pageant organizers seek contestants

By Amy Maginnis-Honey | From Page: A5

 
Easter hunt set for Mare Island

By Barry Eberling | From Page: A5

 
Crews make quick work of vehicle fire

By Glen Faison | From Page: A6, 6 Comments | Gallery

 
Paper Clover Campaign supports Solano County 4-H

By Amy Maginnis-Honey | From Page: A6

Coakley joins Solano fair board

By Barry Eberling | From Page: A6

 
Hundreds flock to Krispy Kreme as it opens doors

By Susan Winlow | From Page: B9, 1 Comment | Gallery

 
County to honor Solano educators

By Barry Eberling | From Page: A14, 1 Comment

.

US / World

Officials: Huge San Francisco blaze was accidental

By The Associated Press | From Page: A10

 
‘Shrimp Boy’ pleads not guilty in corruption case

By The Associated Press | From Page: A10, 1 Comment

Solemn tributes mark Boston Marathon bombing

By The Associated Press | From Page: A10, 1 Comment | Gallery

 
Immigration activists urge Obama to act boldly

By The Associated Press | From Page: A11, 1 Comment

Supremacist faces murder charges in Kansas deaths

By The Associated Press | From Page: A14

 
Ukraine: Military secures airport from attack

By The Associated Press | From Page: A14

Democrats have outside money advantage – for now

By The Associated Press | From Page: A14, 3 Comments

 
First women move into Army platoon artillery jobs

By The Associated Press | From Page: A14

Final deadline arrives for health exchange sign-up

By The Associated Press | From Page: A14, 1 Comment

 
New LA newspaper embraces print in digital world

By The Associated Press | From Page: A14

Congress is giving states the transportation blues

By The Associated Press | From Page: A14, 2 Comments

 
Police: Suspects in killings wore GPS devices

By The Associated Press | From Page: A14, 1 Comment

DNA alternative to Pap smear sparks medical debate

By The Associated Press | From Page: A14

 
Robot sub returns to water after 1st try cut short

By The Associated Press | From Page: A14

Hamas praises deadly West Bank shooting

By The Associated Press | From Page: A15

 
2 dead after ferry sinks off SKorean coast

By The Associated Press | From Page: A15

.

Opinion

 
Oh, for the days of Dr. Welby

By Dan K. Thomasson | From Page: A13, 13 Comments

Poor Judgement in Flight 370 column

By Letter to the Editor | From Page: A13, 1 Comment

 
Senseless babble that hurts

By Letter to the Editor | From Page: A13, 2 Comments

 
Expand Red Top Road

By Letter to the Editor | From Page: A13, 2 Comments

Editorial cartoons for April 16, 2014

By Daily Republic Syndicated Content | From Page: A13

 
.

Living

Community Calendar: April 16, 2014

By Susan Hiland | From Page: A2

 
What love gives you

By Barton Goldsmith | From Page: A2

Today in History for April 16, 2014

By The Associated Press | From Page: A2

 
A matzo ball soup fit for a weeknight dinner

By The Associated Press | From Page: B6

Saving carrots from their usual sugary Easter fate

By Sara Moulton | From Page: B6

 
Sweet pairings for grown-up Easter treats

By The Associated Press | From Page: B6

My husband still pays his 45-year-old unemployed son’s bills

By Kathy Mitchell and Marcy Sugar | From Page: B7

 
Horoscopes for April 16, 2014

By Holiday Mathis | From Page: B7

.

Entertainment

Boston Globe wins Pulitzer for bombing coverage

By The Associated Press | From Page: B5

 
Lindsay Lohan’s mom pleads guilty to DWI in NY

By The Associated Press | From Page: B5

Strahan’s ‘GMA’ side job confirmed with his visit

By The Associated Press | From Page: B5

 
TVGrid

By Daily Republic Syndicated Content | From Page: A11

.

Sports

Cal hires Tennessee’s Cuonzo Martin as coach

By The Associated Press | From Page: B1

 
Warriors trying to move on without Andrew Bogut

By The Associated Press | From Page: B1

Sharks’ Torres uncertain for playoff opener

By The Associated Press | From Page: B1

 
Indians shut out Mustangs

By Marcus Lomtong | From Page: B1, 1 Comment | Gallery

Ex-Minnesota State, Mankato coach returning to job

By The Associated Press | From Page: B2

 
Panthers jump Sabres to win NHL draft lottery

By The Associated Press | From Page: B2

More former players sue NHL regarding concussions

By The Associated Press | From Page: B2

 
49ers sign WR Brandon Lloyd to 1-year deal

By The Associated Press | From Page: B2

MLB marks 67th anniversary of Jackie Robinson’s debut

By The Associated Press | From Page: B2

 
.

Business

Twitter buys data analytics partner Gnip

By The Associated Press | From Page: A14

 
Yellen signals more aggressive stance toward banks

By The Associated Press | From Page: A14

.

Obituaries

Carolyn McClelland

By Nancy Green | From Page: A4

 
Evonne Medina

By Nancy Green | From Page: A4, 1 Comment

.

Comics

Blondie

By Daily Republic Syndicated Content | From Page: B6

 
Garfield

By Daily Republic Syndicated Content | From Page: B6

Peanuts

By Daily Republic Syndicated Content | From Page: B6

 
Pickles

By Daily Republic Syndicated Content | From Page: B6

Wizard of Id

By Daily Republic Syndicated Content | From Page: B6

 
For Better or Worse

By Daily Republic Syndicated Content | From Page: B6

Beetle Bailey

By Daily Republic Syndicated Content | From Page: B6

 
Zits

By Daily Republic Syndicated Content | From Page: B6

Rose is Rose

By Daily Republic Syndicated Content | From Page: B6

 
Sally Forth

By Daily Republic Syndicated Content | From Page: B6

B.C.

By Daily Republic Syndicated Content | From Page: B6

 
Baldo

By Daily Republic Syndicated Content | From Page: B6

Baby Blues

By Daily Republic Syndicated Content | From Page: B6

 
Dilbert

By Daily Republic Syndicated Content | From Page: B6

Frank and Ernest

By Daily Republic Syndicated Content | From Page: B6

 
Get Fuzzy

By Daily Republic Syndicated Content | From Page: B6

Sudoku

By Daily Republic Syndicated Content | From Page: B7

 
Bridge

By Daily Republic Syndicated Content | From Page: B7

Cryptoquote

By Daily Republic Syndicated Content | From Page: B7

 
Word Sleuth

By Daily Republic Syndicated Content | From Page: B7

Crossword

By Daily Republic Syndicated Content | From Page: B7