Sorting Out the Health Risk in California's State-Based Marketplace

To characterize the health risk of enrollees in California's state-based insurance marketplace (Covered California) by metal tier, region, month of enrollment, and plan.

2014 Open-enrollment data from Covered California linked with 2012 hospitalization and emergency department (ED) visit records from statewide all-payer administrative databases.

Chronic Illness and Disability Payment System (CDPS) health risk scores derived from an individual's age and sex from the enrollment file and the diagnoses captured in the hospitalization and ED records. CDPS scores were standardized by setting the average to 1.00.

Among the 1,286,089 enrollees, 120,573 (9.4 percent) had at least one ED visit and/or a hospitalization in 2012. Higher risk enrollees chose plans with greater actuarial value. The standardized CDPS health risk score was 11 percent higher in the first month of enrollment (1.08; 99 percent CI: 1.07-1.09) than the last month (0.97; 99 percent CI: 0.97-0.97). Four of the 12 plans enrolled 91 percent of individuals; their average health risk scores were each within 3 percent of the marketplace's statewide average.

Providing health plans with a means to assess the health risk of their year 1 enrollees allowed them to anticipate whether they would receive or contribute payments to a risk-adjustment pool. After receiving these findings as a part of their negotiations with Covered California, health plans covering the majority of enrollees decreased their initially proposed 2015 rates, saving consumers tens of millions of dollars in potential premiums.