Why Some Don’t Pay Their Obamacare Premium: It’s Not What You Think

By Lisa Aliferis, KQED

April 2nd, 2014, 12:51 PM - Kaiser Health News

A new analysis finds that many people who signed up for a Covered California health insurance exchange plan are likely to drop the coverage for a good reason: They found insurance elsewhere.

Researchers at the U.C. Berkeley Labor Center released estimates Wednesday showing that about 20 percent of Covered California enrollees are expected to leave the program because they found a job that offers health insurance. Another 20 percent will see their incomes fall and become eligible for Medi-Cal, the state’s insurance program for people who are low income.

In addition to the 40 percent of enrollees who move to Medi-Cal or job-based insurance, between 2 and 8 percent of those who sign up for Covered California are estimated to become uninsured, the analysis noted.

This process — “churn” to those who study health insurance — is well-known in the Medi-Cal and individual insurance market.

According to the report between 53 and 58 percent of Covered California enrollees are expected to stay in a Covered California plan for 12 months. This analysis is consistent with a Kaiser Family Foundation study published earlier this year. It found that of people who enrolled in an individual insurance plan in 2010, years before the health law fully kicked in, only about 48 percent were still in the individual market two years later. (Kaiser Health News is an editorially independent program of the foundation.)

The question of how many people have paid their premium has become a political issue, with questions being raised about the true enrollment in an ACA plan. But Ken Jacobs, chair of the Labor Center and an author of the new study, said that even 15 percent non-payment of premiums “was not a surprising number.”

He said that according to the analysis, in any 3-month period, an estimated 10 percent of enrollees could be expected to leave Covered California, although he says that indeed some may leave the exchange “because the cost was too high.”

On Monday, Peter Lee, executive director of Covered California said 87 percent of enrollees had paid their premium.

Jacobs’ team also estimated churn in the Medi-Cal program. They predict nearly 75 percent of enrollees will stay in Medi-Cal for a 12-month period; about 16 percent will become eligible for Covered California due to an increase in income; and about 10 percent will land jobs that offer health insurance.

Prior to the Affordable Care Act, the study showed, 55 percent of Medi-Cal enrollees stayed in the program for 12 months. The authors noted that the Medi-Cal population was expected to be more stable because, under the ACA, re-enrollment in the program happens every 12 months instead of every 6, and the process is more automated.

In calculating their estimates, the researchers relied upon data from the Survey of Income Program and Participation from the U.S. Census Bureau. “This policy brief predicts a significant level of churn out of Medi-Cal and Covered California each year,” the authors noted. “Enrollment in Medi-Cal and Covered California will be dynamic as Californians move in and out of coverage.”

In addition to the 40 percent of enrollees who move to Medi-Cal or job-based insurance, between 2 and 8 percent of those who sign up for Covered California will become uninsured, the analysis noted.

Yet just as people will move out of Covered California and Medi-Cal, other people will move in. While open enrollment in Covered California ended on Monday (with a grace period until April 15 for people who had tried to enroll, but could not for technical reasons), many people are expected to sign up if they experience a life event that triggers a “special enrollment period.” These events include divorce, marriage, birth of a baby or loss of job-based insurance.

“Consequently, it will be vital for the enrollment infrastructure—from outreach, to the web-site, to in-person and call-center assistance—to be available and active even outside of open enrollment periods,” the authors said.

Medi-Cal does not have enrollment periods. Sign ups can happen at any time during the year.