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Covered California CEO Pans Proposed Fee Cut

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The head of the largest state-based Affordable Care Act (ACA) public health insurance exchange says a move by the Trump administration to cut insurance companies’ user fees will hurt efforts to get people covered.

Peter Lee, CEO of Covered California, said managers of should focus on using the user fee revenue to spread consumer awareness of the ACA exchange system.

“Proclaiming that a reduction of user fees leads to a reduction of premiums flies in the face of the reality that well-spent marketing dollars by this administration would have had a five-to-one return on lowering health care costs for Americans,” Lee said in a statement.

Lee put out the statement in response to new draft regulations that affect how and other ACA programs will operate in 2022.

(Related: Web Brokers Might Get to Run Some States’ ACA Exchange Enrollment)

In most states, health insurers now pay a user fee that amounts to 3% of premium revenue for coverage they sell through

Several federal agencies are calling for in the new draft regulations for reducing the user fee to 2.25% of premiums in states, and to 1.75% of premiums in states that use systems to support state-run ACA public exchange programs. The agencies include the Centers for Medicare and Medicaid Services, the U.S. Department of Health and Human Services and the U.S. Treasury Department.

ACA Public Exchange Basics

The ACA public exchange system is supposed to provide a web-based supermarket for health insurance. Consumers can use the system to shop for coverage, sign up for coverage, and get ACA premium tax credit subsidies. managers have slashed spending on nonprofit ombudsmen, or “navigators,” since Donald Trump became president, and they also have reduced spending on print and broadcast advertising.

Program managers have argued that using low-cost email and social media campaigns brings in almost as many applicants as the higher-cost advertising campaigns did, and that insurance agents and brokers have been much more effective than nonprofit assisters at bringing in applicants, without getting any cash directly from

Lee’s Perspective

Covered California has tried to build strong relationships with agents and brokers as well as with nonprofit assisters, and it has reported getting about half of its applicants through agents and brokers.

Lee did not mention agents and brokers in the statement.

He said Trump administration predictions that cuts in user fees will lead to insurers passing on premium savings to consumers conflict with the reality that the administration has taken many actions that have increased the cost of ACA exchange plan coverage.

“The proposed rule builds on years of actions by the outgoing administration to undercut the Affordable Care Act,” Lee said. “Instead of marketing and promoting coverage options for millions of Americans, as they should during a pandemic, this proposed rule undermines efforts to get insurance coverage to those most in need.” should be using user fee revenue to make sure health insurers are delivering high-quality care and addressing health disparities, Lee said.

The new user fee cut proposal “serves to reduce resources for ensuring more Americans know about and secure more affordable health coverage options for themselves and their families,” Lee said.

Lee said he looks forward to the administration of President-elect Joe Biden having a chance to weigh in on the proposal.

— Read Agents Keep Health Rates Down: California Exchange Chief to Congresson ThinkAdvisor.

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