Tuesday, April 21, 2015

$1 billion in Federal Tax Dollars and a One Star Rating on Yelp––Quite an Expose––Behind the Scenes at Covered California

California's Obamacare Insurance Exchange Posts Poor Results and is the Subject of an Expose

What a difference a year makes.

Last year the California Obamacare insurance exchange, Covered California, was touted as the poster child for the Obamacare launch. Supporters said it worked well, enrolled lots of people, and was off to the kind of start that proved how successful Obamacare could be.

But after the second open enrollment new sign-ups have hit a wall, customer renewal rates are among the worst in the country, and consumer complaints are growing:
In a March 2013 post on this blog, I pointed out that Covered California was, at that time, getting $930 million in federal government money, including $250 million for marketing, to build and launch its services. Almost all of the other states building an exchange got less than a third of California's budget. Also by comparison, I pointed out that the privately funded national web insurance broker Esurance.com received a total of $40 million in the late 1990s to launch its insurance website enrollment business.

So, what's really been going on behind the scenes at Covered California?

Former CBS News Emmy winning investigative journalist, Sharyl Attkisson, has a two part expose, "Incompetence, Mismanagement Plague California's Obamacare Insurance Exchange" and "Insider's Detail Culture of Secrecy at California's Obamacare Exchange" on The Daily Signal, that fills in the details behind all of the high expense, poor consumer service, and now dismal enrollment results.

Among her findings:
  • Shortly after the October 2013 launch, Covered California's systems ran into trouble that took months to fix and cost another $155 million putting the total federal investment in Covered California at $1.06 billion.
  • Last fall, Covered California hoped to increase enrollment by 500,000 in the recent second open enrollment. But only an additional 7,098 selected a plan for 2015.
  • Only 65% of Covered California's 2014 customers reenrolled for 2015. The rest dropped off the rolls.
  • One leading Covered California insurance agent is quoted as saying, "I've got one family...their Covered California account shows three different effective dates." Attkisson goes on to quote him, "I've found out a woman's plan had been terminated, but they couldn't tell me why...I know their [Covered California's] enrollment numbers aren't right. They're marketing themselves [to generate] fees." Attkisson concluded, "[The agent's] once cheerful blog has turned into a consumer chronicle of Covered California's tribulations."
But in California, the spin continues. From Attkisson's report:
"New enrollment for 2015 coverage is strong and has brought in consumers who our marketing and outreach targeted,' said Covered California Executive Director Peter Lee, overlooking the fact that his organization's retention of last year's customers was among the lowest in the country."
Now, I want to reiterate something: $1 billion for a website and insurance marketing organization––and a one-star rating. Folks, you also need to see those Yelp reviews.

Attkisson's two part Series on Covered California:
Incompetence, Mismanagement Plague California's Obamacare Insurance Exchange 

Insider's Detail Culture of Secrecy at California's Obamacare Exchange
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