What California Can Teach the Nation About Obamacare

Source: Covered California.

Regardless of whether you're a fan of the Affordable Care Act, the sweeping healthcare reform law better known as Obamacare, or a critic of it, the fact remains that fewer people are uninsured today than were uninsured one year ago because of its existence.

According to the official figures, more than 8.1 million people signed up on either state or federally run Obamacare health exchanges during the previous enrollment period. Combined with consumers that obtained insurance privately or signed up for Medicaid, research firms Gallup and Healthways determined that the U.S. uninsured rate in the second-quarter dropped to 13.4% from 15.6% in the sequential first quarter and 17.1% in the second quarter last year. It also marked a low point since Gallup-Healthways began keeping records on the U.S. uninsured rate in 2008.

California is leading the charge
The state that's arguably the most paramount to these figures dropping is California. I say "paramount" because state officials in April proclaimed that 3.3 million Californians had enrolled in either private plans or the state's version of Medicaid, known as Medi-Cal. The official breakdown, per officials, was just shy of 1.4 million Covered California enrollees and approximately 1.9 million Medi-Cal enrollees. In other words, California was responsible for 17% of all Obamacare exchange enrollment.

Source:Covered California.

Considering California's diverse population, and the fact that it supplied a good chunk of enrollments last year, it's the perfect state to examine to get a bead on the successes and shortcomings of the Affordable Care Act.

As a recent survey by the Kaiser Family Foundation released in late July notes, the expansion of California's Medicaid platform – California was one of 26 states that chose to take federal funds and expand Medicaid to include persons earnings up to 138% of the federal poverty level – coupled with its marketplace enrollees, ultimately reduced its statewide uninsured rate by 58%!

Obamacare's next major challenge
However, its survey also uncovered perhaps the next big challenge for the Affordable Care Act: getting the remaining uninsured enrolled.

For those who obtained health insurance in California the process went smoothly. A majority (73%) felt they received a good value for the plan they purchased, and 80% responded that finding information was easy.

But, a number of challenges still remain for the 42% which are still uninsured. Kaiser's survey points out that 37% of those who remain uninsured have never had health insurance. Perhaps more worrisome, 34% of still uninsured respondents said that "cost remains a barrier to getting coverage" despite 71% exclaiming that health insurance is something they need. 

How will officials tackle this problem?
This leaves regulators with a tough problem. In essence, the easier enrollees have already signed up, but the remaining uninsured are going to be a difficult crowd to reel in given a number of factors, including the disassociation between what insurance is expected to cost and what the remaining uninsured are actually having to pay (sometimes even with subsidies), and in some cases even a consumers' citizenship status.

How will California tackle this dilemma?

As noted by the Washington Times and the AP, with The Washington Post, Covered California spokesman James Scullary noted that it'll be ramping up spending and implementing a range of initiatives in order to educate those who remain uninsured.

Source: Covered California.

The state's plan, according to Scullary, is to spend $168 million over the first three months of 2015's open enrollment period, which begins shortly after mid-term elections on Nov. 15. In context, California spent less than that during the six-month open enrollment period for 2014.

What's unique about California's approach is that it's decisively low-tech. It'll be focusing on refining its direct-mailing message, sending out more enrollment counselors, and hiring more bilingual call center workers. Having call center workers who speak other languages should also make the enrollment easier for California's diverse population.

This would be an extension of what California tried during the latter-half of last year's enrollment period, whereby Covered California officials set up in-store enrollment events at communities throughout the state and began the process of hiring more bilingual enrollment counselors.

An interesting takeaway
The initial takeaway here, based on California's grassroots approach, is that technology may not be the answer for a majority of the uninsured. Although young adults who feel they're healthy enough not to need health insurance would likely respond better to social media-based advertising, the majority of California's uninsured, and perhaps the case with a number of other states in the country, would do best with making the enrollment process more personal.

This is precisely what we saw when we looked at the J.D. Power Health Insurance Marketplace Shopper Survey, released last month. We often think of technology making our lives easier, but respondents in J.D. Power's study showed a clear favoritism toward enrolling in person, with a score of 719 on a scale of 1 to 1,000, compared to enrolling online, which came in with a score of just 597. It's possible the early glitches in the federally run Healthcare.gov or a few select state-run exchanges contributed to this 122-point gap, but it's also quite possible that people prefer human-to-human interaction when making potentially critical decisions like choosing a healthcare provider. 

What might this mean for insurers?
With the initial year of enrollments in the books, it means health insurers are certainly going to have to work harder than last year to bring in additional members. But, that doesn't mean insurers can't consider implementing similar low-tech approaches to reach uninsured consumers.

If you recall, in July of last year WellPoint (ELV 1.11%) and Walgreen (NYSE: WAG) formed a joint venture that resulted in the creation of LearnAboutReform.com, a portal that explained the nuances of the Affordable Care Act to consumers in a way they could understand. But, buried within their joint-venture was the act that Walgreen also had a majority of its 8,000 stores stocked with informational brochures. Though there aren't any specific figures that analyzed how much these brochures cost or what the direct effect on enrollment was for WellPoint based on its joint venture, WellPoint's sector-leading enrollment last year would imply that it's obviously doing something right.

But, that wasn't all. WellPoint also partnered with Univision to deliver radio and TV ads that featured full-length media broadcasts, as well as 70 town hall meetings meant to raise awareness of the health reform law.

Molina Healthcare (MOH -4.11%), a primarily Medicaid-based insurer, has taken a similar approach with its efforts to improve the personalization of its advertising to a variety of populations in California, as well as New Mexico, Washington state, and Wisconsin. Specifically, Molina has been placing ads in stores that are frequently shopped by cost-conscious consumers, such as Kmart and Family Dollar, and offering public presentations in English as a second language classes.  

This upcoming enrollment period is really shaping up to be defining year for insurers in terms of whether or not they can create a more personal connection with the remaining uninsured consumers. If they can, as Molina and WellPoint have shown, the rewards could be bountiful. If, however, insurers fail to understand the objections of the remaining uninsured and meet their objections on a comfortable and level playing field, it could mean tough times ahead for new member enrollment.