California: Hundreds of Thousands are NEWLY eligible for ACA subsidies but don't seem to realize it?

A couple of weeks ago, Covered California reported that as of December 7th, over 486,000 residents were taking advantage of their newly-expanded & enhanced state ACA subsidies:

...More than 486,000 individuals have been determined eligible for the new state subsidy, including about 23,000 in the 400 to 600 percent range of the federal poverty level, which could extend to an individual making up to $74,940 and family of four with a household income of up to $154,500. Of those in this income range who have signed up through Covered California, 44 percent have been found eligible for the state financial assistance.

...If I'm following correctly, the total breakout is:

  • 777,000 = either 138 - 200% FPL or not eligible for any subsidies
  • 463,000 = 200 - 400% FPL; receiving both federal & state subsidies
  • 23,000 = 400-600% FPL; receiving state subsidies only

The press release also broke out the household average for the new/expanded subsidies:

On average, consumers between 200 and 400 percent of the federal poverty level will be receiving $21 per household, per month on top of their federal tax credits. Consumers who earn between 400 and 600 percent of the federal poverty level will be receiving an average of $460 per month, per household.

At the time, I assumed the "average household" had 2.5 people, which is the national average...but the average household size on the individual health insurance market is smaller on the whole, and of course California's household demographics may vary a bit from the national average anyway. I've since confirmed that in past years, CoveredCA has averaged around 1.4 people per household.

In addition, they released updated numbers last week which increased the total number of state subsidy recipients:

More than 540,000 people have been determined eligible for the new state subsidy, including about 28,000 in the middle-income range of 400 to 600 percent of the federal poverty level, which could extend to an individual making up to $74,940 and a family of four with a household income of up to $154,500. Of those in this income range who have signed up through Covered California, 46 percent have been found eligible for the state subsidies.

I'm assuming the average amounts for the groups are still $21 and $460/month respectively. If so, if that 1.4/household ratio is still accurate for those populations, and if all 540,000 of them stay enrolled for the full 12 month period in 2020 (which of course won't happen...there's always some net attrition throughout the year), that adds up to roughly:

  • 512,000 / ~1.4 = ~365,000 households x $21 x 12 = ~$92 million
  • 28,000 / ~1.4 = ~20,000 households x $460 x 12 = ~$110 million
  • Total: Around $202 million in state subsidies so far

Of course, these numbers will increase as additonal enrollees sign up between 12/17 - 1/31, but this gives a baseline.

Why is this relevant? Well, back in May, the state budget provided a total of $295 million for the new state subsidies:

The May Revision includes General Fund expenditures of $295.3 million in 2019-20, $330.4 million in 2020-21, and $379.9 million in 2021-22 to provide these subsidies. These proposed expenditures are aligned with individual mandate penalty revenue projections of $317.2 million in 2020-21, $335.9 million in 2021-22, and $352.8 million in 2022-23.

To improve affordability for middle-class Californians who are ineligible for federal assistance, approximately 75 percent of subsidy expenditures would be allocated to qualified individuals with incomes between 400 percent and 600 percent of the federal poverty level. Subsidies for these individuals would average around $100 per month. Similar to the federal subsidies currently offered through Covered California, individual subsidy amounts will vary significantly depending upon an individual’s income, family size, age, region, and health care premium costs. Individuals with incomes between 200 percent and 400 percent of the federal poverty level would receive average state subsides of around $10 per month, in addition to federal subsidies of hundreds of dollars per month.

Again, the exact formula isn't laid out, but 75% of $295.3 million = $222 million. Assuming $1,200 apiece, that suggests they expect around 184,000 exchange enrollees in the 400-600% FPL range. The remaining $74 million would go to around 615,000 enrollees in the 200 - 400% FPL range at $120 apiece per year.

I suppose from a budgetary perspective this is a "good" thing, since subsidy spending is currently tracking to end up around $100 million lower than projected...but the whole point is to get as many eligible enrollees to sign up for the subsidies, so that's not exactly a great spin.

In fact, I believe the final subsidy funding ended up being higher than this; again, this at least gives a baseline about expectations vs. reality (so far):

  • Extra subsidies in the 200-400% FPL range: 615K expected, 512K actual (so far)
  • New subsidies in the 400-600% FPL range: 184K expected, 28K actual (so far)

Again, there's still another five full weeks of Open Enrollment in California (six, if you include the missing data from last week). As I've noted, they'll have to add at least 134,000 total enrollees to beat last year, or nearly 200,000 to beat their all-time high. From the looks of things, they're on track to hit that 615K figure in the 200-400% range, but the 400-600% range is gonna be a much steeper climb...which is ironic since that's the population which is eligible for the most dramatic price cuts.

So what's going on here? Well, my guess is that this is almost entirely a matter of awareness.

I'd be willing to bet that there are hundreds of thousands of middle-class Californians who did check out CoveredCA.com in the past, plugged in their income information, were disappointed to discover that they didn't qualify for financial help, haven't bothered checking again, and are now likely to tune out CoveredCA advertising, assuming that it doesn't apply to them.

This means that CoveredCA is going to have to make a concentrated effort (above and beyond what they're already doing) to get the word out to middle-class Californians that they ARE NOW ELIGIBLE for potentially MASSIVE subsidies...as much as $8,700 or more for single adults, or up to $18,000 or more for older couples.