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Covered California reboots its small-group division

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Managers of the Covered California public exchange are unhappy with 2014 sales and are hoping to do better this year and next year.

The managers talk about the performance of the Small Business Health Options Program (SHOP) division in a 2015-2016 budget proposal, meeting minutes and a public comment collection included in a board meeting packet.

Covered California has enrolled 16,885 people in SHOP coverage and about 1.3 million people in individual qualified health plan (QHP) coverage. SHOP enrollment accounts for only about 1.3 percent of its total enrollment.

See also: PPACA exchange update: Distribution is hard

Sen. Barbara Boxer, D-Calif., and a group of U.S. representatives from California have written to Covered California to ask managers to do more to support the SHOP division, and tell them about exchange efforts to increase SHOP division enrollment.

The Patient Protection and Affordable Care Act (PPACA) “made new benefits available to employers,” the U.S. reps write in their later. “However, significant outreach work remains to educate the small business community about health care options.”

See also: One PPACA group exchange can fit members in a minivan

Peter Lee, the exchange executive director, told Boxer and the U.S. representatives that one part of a SHOP reboot has been to rebrand the SHOP division as “Covered California for Small Business.”

For a look at what else exchange managers are saying about the effort to get the SHOP division working better, read on.

Peter Lee

1. Lee is not promising anyone a rose garden.

In the letter to Boxer, Lee acknowledges, “We continue to discuss the future of Covered California for Small Business with our stakeholders.”

See also: PPACA small-group exchange program fights for life

Image: Peter Lee (AP Photo/Nick Ut)

Sales guy trying to outrun the competition

2. The exchange already is making serious efforts to reach out to small employers and to improve SHOP operations.

Exchange managers say in the budget proposal that PPACA itself should put wind in SHOP sales in 2016, by letting employers with 51 to 100 employees buy coverage coverage. Today, only employers with 50 or fewer employees can use the public exchange program.

Lee told Boxer and the lawmakers that Covered California is making serious efforts to promote small-group coverage.

He says the exchange has budgeted $2 million for 2015-2016 small-group marketing efforts, and that the small-group division has a distribution effort that includes:

  • 1,100 agents who have sold at least one small-group exchange plan.

  • 20 field sales representatives.

  • Contracts with four general agencies, with a total of 81 field sales reps.

  • More than 100 insurer field reps.

The exchange will start a small-group marketing and outreach campaign in June, when small employers are shopping for 2016 health benefits, Lee says.

The recent shift to a new small-group administration system should also help increase enrollment, Lee says.

The new administration system gives the exchange the ability to enroll 98 percent of new groups in three days or less, and the new system is improving exchange efforts to bill small employers and pay agents, general agents and insurers, Lee says.

So far, for example, the exchange has infuriated agents by failing to pay commissions promptly. The new systems should help the exchange get the commissions owed for the period from January 2014 through September 2014 paid by the end of May, and the commissions owed for the period from October 2014 through December 2014 by the end of June, Lee says.

He says the exchange should be able to pay commissions owed for the period from January through March by July.

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3. Managers are hoping small-group enrollment will be about three times as high as it is today by the end of 2017.

Improved agent support, program expansion, improved operations and better renewal rates could increase to about 38,000 by the end of 2016, and 59,000 by the end of 2017, exchange managers say.

In 2014, the SHOP policy cancellation rate was 2.6 percent. If improved operations reduce the cancellation rate to the industry average of 2 percent, that by itself could help improve enrollment, managers say.

Similarly, the nonrenewal rate was 9.1 percent. Getting the nonrenewal rate down to 8 percent could increase enrollment, managers say.

See also: managers post small-group payment guide


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