Covered California Facing Administrative Collapse

Irfan Khan/Los Angeles Times via Getty Images

The Health Consumer Alliance filed a blistering letter just before Covered California’s Board meeting on Thursday accusing the state’s Obamacare exchange of failing to resolve member issues promptly, including blocked access to care and the inability for individual members to finalize their tax returns.

Despite Covered California plowing through $1.06 billion in federal dollars, HCA warns the program is near administrative collapse.

Earlier this year, California’s health insurance exchange, established under the Patient Protection and Affordable Care Act, was touted as a model for other states to follow. But the program has since been under a barrage of attacks for a myriad of failures, including abysmal enrollment performance and sending out over 100,000 inaccurate tax forms.

HCA’s letter to the Board warns, “We are concerned that public support for the (Affordable Care Act) will erode as more and more consumers encounter these types of tax problems and face exposure to IRS debts and penalties.” The group also alleges that Covered California’s failure to correct subsidy forms has caused some consumers to not be able to receive tax credits or amend their tax returns.

Many of Covered California problems began when it awarded $360 million to Accenture in 2012 to design as a supposedly automated exchange and enrollment system. But the Health Consumer Alliance claims that after two years, staff still have only limited ability to update the computer program used to determine consumers’ eligibility for exchange coverage under Medi-Cal, the state’s Medicaid program.

When first launched in September 2013, there were major usability problems, including: 1) lack of login link on the landing page; 2) five different sets of security questions; 3) demanding tax returns for young children; 4) inability to go back and forward through the application without being closed out; and 5) demands to verify income without a way to file proof, according to Chilmark Research.

With only about 1.2 million people signing up for Covered California in 2014, versus a 2 million enrollee expectation, the exchange responded to its system failures by obtaining an additional $155 million in federal dollars to use mostly humans to process enrollments.

But the health plans on the Covered California exchange, like Anthem Blue Cross and Blue Shield of California, had also overstated the size of their provider networks. Over a quarter of the physicians listed as in-network were not taking Covered California patients, or were no longer at their supposed network location, according to state reports. As a result, errors led to big unforeseen medical bills charged to patients when they unwittingly ventured to out-of-network doctors for surgery or medical tests.

After a year of pain for consumers, only 65 percent of Covered California’s 2014 customers re-enrolled in 2015. The rest bailed out, despite state penalties for not carrying health insurance. Although Covered California claimed it would add 500,000 more members, only 7,098 additional members “selected a plan” in 2015.

During a raucous board meeting on Thursday, Covered California Executive Director Peter Lee promised that the exchange has re-committed to resolving the issues quickly by adding staff. He also noted that “a very small percentage” of consumers file appeals when rejected.

“The challenges with big IT, it does not necessarily mean nimble IT,” Lee said. “We’re working to speed those up. But the issue of having effective and as prompt as possible resolution to appeals is something we take very seriously.”

Despite all the administrative failures and network disasters, Breitbart News reported last month that Covered California would increase its rates by 4 percent next year–at least three times the rate of inflation.

Obamacare was sold to the American public as an opportunity to save $2,500 a year for a family of four. But family members enrolled in Covered California will each be paying another $384 in Northern California and $296 in Southern California in 2016.


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