Cloud technology emerges as a transformative force for the health insurance marketplace

When California's health insurance marketplace transitioned to the cloud, it achieved cost reductions, enhanced the consumer experience, and acquired the capability to scale according to demand.

After the passage of the Affordable Care Act in 2010, California established a state-based health insurance exchange to enable its 39 million residents to compare plans and enroll in coverage.

The exchange, Covered California, initially employed an on-premises system known as the California Healthcare Eligibility, Enrollment, and Retention System, or CalHEERS. CalHEERS served as the portal for Californians to determine plan eligibility, find certified insurance agents, and complete health care enrollment.

Originally hosted on two aging in-state data centers, CalHEERS, a complex system supporting 14 million enrollments, now operates in the cloud. This migration has resulted in reduced costs, an enhanced consumer experience, and the ability to scale to meet demand, as stated by Karen Johnson, Chief Deputy Executive Director of Covered California.

I wanted to avoid the impending capital expenditures on hardware and software that would have been necessary to sustain CalHEERS on data centers, remarked Johnson during her presentation at Amazon Web Services' re:Invent in Las Vegas. "Also, with the legacy system, you’re incurring more technical debt."

With the marketplace now in the cloud, she highlighted the advantages of scalability, efficiency, and speed. CalHEERS successfully managed spikes of up to 400,000 simultaneous users during the COVID-19 pandemic and after the signing of the American Rescue Plan Act. This level of scalability was unattainable with the on-premises system, which had to operate at full capacity—incurred high costs—continuously to meet the substantial traffic demands during open enrollment.

With CalHEERS in the cloud, “we were able to handle 100 million transactions in a given day without any serious or critical issues”' stated Johnson. She added that the portal's performance improved “by 200%' in its first year in the cloud, despite a 20% increase in total enrollments.”

Having completed the cloud migration, Johnson mentioned that Covered California is now transitioning to “more of a cloud modernization,” leveraging the infrastructure developed in collaboration with its commercial partners. The portal now offers a consistent user experience, and Johnson indicated that cost savings from the cloud migration will be used to incorporate additional features.

“We're refining the digital infrastructure, and we're going to be better prepared and capable of [managing] what's coming next, whatever next might be,” said Johnson. “Without these technical strides, we would not be able to meet the demands and deliver efficiently our services.”