State’s health insurance exchange gets $674-million federal grant

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Federal officials awarded California’s new health insurance exchange a $674-million grant, providing money for a crucial marketing campaign aimed at millions of uninsured consumers.

The state-run insurance exchange, Covered California, is seeking to fundamentally reshape the health insurance market by negotiating with insurers for the best rates and helping consumers choose a plan.

Enrollment in the program starts in October for policies going into effect Jan. 1, when much of the federal healthcare law kicks in.


Although some states have resisted President Obama’s massive insurance expansion, California has been forging ahead to set up its online marketplace.

One of the key challenges is getting the word out to an estimated 5 million Californians who will be eligible to buy coverage in the exchange. About half of those people are uninsured and will be eligible for federal premium subsidies, according to state officials.

Peter Lee, the exchange’s executive director, said the agency will draw on the
federal grant announced Thursday for a two-year, $250-million marketing campaign statewide.

At an exchange board meeting in Los Angeles on Thursday, consumer advocates and community activists urged officials to offer
information in multiple languages and to make online enrollment as simple as possible.

“Covered California is part of reinventing the healthcare system,” Lee said. “But we will get things wrong along the way.”

In addition to “top down” advertising, Lee said, the
exchange will be giving grants to religious groups and other community organizations for education at the grass-roots level.

The exchange also has the task of helping millions of Californians determine whether they qualify for an expansion of Medi-Cal, the state’s Medicaid program for the poor, or federally
subsidized private coverage. Families earning up to $93,000 annually may qualify for premium subsidies.


Next week, health insurers and other companies must submit their initial bids to sell coverage in the exchange. Bidders will provide proposed rates by the end of March, and the exchange expects to select health plans in June.

In addition to marketing, Covered California will use the federal grant money
to help fund operations through January 2015, when the online marketplace will rely on fees assessed on health policies sold through the exchange.

Separately Thursday, the California Endowment said it would spend $225 million over the next four years to help implement the federal healthcare law in the state.

Robert Ross, an exchange board member and chief executive of the healthcare foundation, said some of the money would be used on outreach to the uninsured as well as on improving the availability of primary care.