California health insurance exchange awards operational contract


California’s new health insurance exchange awarded a contract worth nearly $360 million to create a website and enrollment system to help Californians shop for health coverage and determine whether they are eligible for subsidies under the federal healthcare law starting late next year.

The California Health Benefit Exchange said it would start enrollment Oct. 1, 2013, for coverage that would take effect in January 2014. The exchange said it planned to pay a unit of Accenture, a Dublin, Ireland-based consulting firm, $183 million to build the system plus $176 million for operations and development over the next four years. The contract is subject to federal government approval.

The California exchange, like others across the country, will negotiate with insurers for the best rates and assist consumers and small businesses in choosing a plan by separating them into five categories based on cost and the level of benefits.


The exchange is responsible for enrolling an estimated 1.7 million new people in Medi-Cal, the state’s Medicaid program for the poor, and distributing federal premium subsidies to an estimated 2 million consumers to help them afford private coverage. Families with incomes up to $80,000 annually will be eligible for subsidies, according to the exchange.

“We want the consumer experience of enrolling in health insurance and getting the subsidies you are eligible for to be as easy as buying shoes on Zappos or getting a book on Amazon,” said Peter V. Lee, the exchange’s executive director and a former healthcare official in the Obama administration.

Strong participation in the exchange is crucial, experts say, so there’s a mix of healthy and sick policyholders to keep premiums affordable. Premiums would continue to escalate without a diverse pool of customers, turning off new applicants and undermining a key aspect of the healthcare law.

“The way to lower costs for all Californians is to have everyone participating,” Lee said.

Under the federal law, California stands to receive as much as $55 billion in federal funds for the Medi-Cal expansion from 2014 to 2019, according to the Kaiser Commission on Medicaid and the Uninsured, and a similar amount for subsidies for people buying private coverage. However, that money may not be available if the U.S. Supreme Court overturns the Affordable Care Act. A ruling is expected this month.

The exchange is crafting an advertising campaign and working with community groups to educate consumers about their new insurance options starting in 2014.

“This is a big undertaking to get reliable information out to millions of people,” said Lucien Wulsin, executive director of the Insure the Uninsured Project, a nonprofit research group in Santa Monica. “The information technology is key.”