Brown Plan to Eliminate Retiree Health Care Debt

Gov. Brown wants state workers to begin paying half the cost of their future retiree health care — a big change for workers making no payments for coverage that can pay 100 percent of the premium for a retiree and 90 percent for their dependents.

The governor also wants state workers to be given the option of a lower-cost health insurance plan with higher deductibles. The state would contribute to a tax-deferred savings account to help cover out-of-pocket costs not covered by the plan.

More funding and lower premium costs are key parts of a plan to eliminate a growing debt or “unfunded liability” for state worker retiree health care, now estimated to be $72 billion over the next 30 years.

As Brown proposed a new state budget last week, he pointed to a chart showing retiree health care debt at a crossroads. If no action is taken, the debt by 2047-48 grows to $300 billion. Under his plan, the debt by 2044-45 drops to zero.

“So these are our promises,” he said, “and if we don’t take any action you are looking at hundreds of billions of dollars that we owe. And that’s why I am going to negotiate during our upcoming collective bargaining talks for the best deal I can get for the workers and the taxpayers.”

State worker retiree health care is one of the fastest-growing costs in the state budget. Next fiscal year its cost is $1.9 billion (1.6 percent of the general fund), four times more than paid 15 years ago, $458 million (0.6 percent of the general fund).

Brown’s plan would save taxpayers money by switching from “pay-as-you-go” funding, which only pays the health insurance premiums each year, to pension-like “prefunding” that invests additional money to earn interest.

Prefunding is widely urged as a way to cut long-term costs. The No. 1 recommendation of a governor’s public employee retirement commission in 2008 was prefunding retiree health care.

The California Public Employees Retirement System expects investments to pay two-thirds of total pension costs. The governor’s retiree health care plan is expected to save nearly $200 billion over the next 50 years.

When fully phased in, Brown’s plan is estimated to cost the state $600 million a year in addition to the payment of premiums. The amount is half of the “normal” cost of future retiree health care earned by active workers during a year, excluding debt from previous years.

State workers would contribute the other half of the normal cost, bringing the total to $1.2 billion. With $1.9 billion for premiums, the total is still well short of the $5 billion a state controller’s report last month said is needed for full funding.

Brown’s finance department said its cost estimates were developed with the same actuaries used by the controller, but a different scenario. Though not included in the estimates, California State University also is expected to prefund retiree health care.

In an annual “fiscal outlook” last November, nonpartisan Legislative Analyst Mac Taylor urged the Legislature to consider using the new Proposition 2 debt payment fund to pay state worker retiree health care debt.

Brown’s proposal to have workers help pay for retiree health care follows some large cities, such as San Jose and San Francisco, and his earlier experience with the Legislature.

The governor’s first retiree health care proposal, part of a 12-point pension reform, was dropped from the final version of the pension reform, AB 340 in 2012. An Assembly analysis said unions have “shown a willingness to bargain over the issue.”

The California Highway Patrol, giving up pay raises for several years, contributes 3.9 percent of pay to the state retiree health care investment fund with a state match of 2 percent of pay. Physicians, dentists and podiatrists (bargaining unit 12) and craft and maintenance (bargaining unit 16) contribute 0.5 percent of pay with no state match.

The governor’s proposal last week does not say how much of a bite from state worker paychecks will be needed to yield a total of $600 million, half of the retiree health care normal cost.

Brown’s first proposal in the 12-point pension reform did not include prefunding state worker retiree health care. But the new plan last week has all three of the retiree health care proposals that were in the first plan.

Ten years of service is needed to be eligible for retiree health care, beginning at 50 percent coverage and increasing to 100 percent after 20 years of service. For new hires, the plan pushes back the thresholds for new hires to 15 and 25 years.

The state pays more of the health care premium for retirees (100 percent retirees, 90 percent dependents) than for active workers (80 to 85 percent workers, 80 percent dependents). For new hires, the plan prevents a higher subsidy in retirement than received on the job.

CalPERS is asked to “increase efforts to ensure” seniors eligible for Medicare are switching to lower-cost supplemental plans. For family members, the plan calls for eligibility monitoring, some lower-cost coverage, and surcharges if covered at work.

President Obama’s health care act imposes a “Cadillac tax” on full-coverage “platinum” health plans in 2018, a move to control costs by encouraging employers to move toward plans with higher deductibles and more out-of-pocket expenses.

Brown’s plan directs CalPERS to offer workers the option of a high-deductible health plan. The state would contribute to the tax-deferred Health Savings Account of employees who choose the option to “defray higher out-of-pocket expenses.”

It’s not clear whether state payments for retiree health insurance, which are based on the average of the four highest-enrolled health plans, would be reduced if large numbers of active workers, whose premiums doubled in the last 10 years, opt for lower-cost plans.

In bargaining, a standard response to a proposed cut is to ask for an offsetting increase. When the largest state worker union agreed to an increase in employee pension contributions in 2010, the agreement included a pay raise in following years.

Brown’s plan presumably benefits state workers by making their retiree health care more secure. Costs are said to be growing at an “unsustainable pace.” Worker contributions might strengthen the legal argument that retiree health care is a “vested right” protected by contract law.

Meanwhile, the contrast with other workers grows. The number of large private firms (200 or more employees) offering any level of retiree health care dropped from 66 percent in 1988 to 28 percent in 2013, a Kaiser report said. Many California teachers have no employer retiree health care.

For state workers who retire early, retiree health care can be a major benefit. With at least five years of service, state workers are eligible to retire at age 50, age 52 if hired after Brown’s pension reform took effect on Jan. 1, 2013.

“The plan preserves retiree health benefits when the private sector is scaling back, maintains health plans, and continues the state’s substantial support for employee health care,” the governor’s budget summary said last week.

mendel2Reporter Ed Mendel covered the Capitol in Sacramento for nearly three decades, most recently for the San Diego Union-Tribune. More stories are at

This article was originally published on Fox and Hounds Daily

San Bernardino Nurses “Blackmail” County Supervisors

Only one week after I was sworn in as the newest member of the Board of Supervisors, we were faced with a strike by 1,200 county nurses, demanding higher pay and work rule changes.

I’m all about protecting patients and ensuring our public employees have fair wages and good working conditions. But there is another group out there that I am determined to protect – the taxpayers who provide the money that funds all government operations. They deserve to be represented at the bargaining table and I will always be there for them.

Most things in life are about striking the right balance between competing interests. An accurate understanding of the facts is essential to finding the best solution to problems. So I researched the situation to find out whether the nurses union claims of being underpaid and overworked were based in fact.

Here’s what I found. The California Nurses Association contended that private hospitals nearby pay their nurses an average of 30 percent more than the county, thereby causing high turnover of experienced nurses, low morale and jeopardizing patient safety.

However, the fact is that the average RN II at Arrowhead Regional Medical Center makes more than the median salary of 21 Inland Empire hospitals surveyed, has over nine years of service, and receives much more generous benefits and retirement packages than those of private hospitals.

The turnover rate at Arrowhead is 5.75 percent, compared with a southern California average turnover rate of 9.5 percent, and the county has received 983 applications for nursing positions just since July 1 of this year.

The truth is that San Bernardino County nurses receive competitive wages, have good working conditions and far better benefits and retirement than their private sector counterparts. The sticking point in the over year long (so far) negotiations is the union’s rejection of the same reasonable terms already accepted by thousands of other county employees.

Restraining the spiraling cost of public employee pay and benefits is essential to maintaining the long term fiscal health of our county. We need look no farther than the city of San Bernardino to see what can happen when those costs get out of hand. My top priority is ensuring the long-term fiscal integrity of county government for the benefit of generations to come.

Bankruptcy is not an option for us. It would be bad for our employees, our patients – indeed, every single person we serve in this county. It would throw a monkey wrench into our economy and send a strong signal to private enterprise to invest somewhere else where the elected leaders can balance their checkbooks and run their government operations in a competent manner.

CNA resorted to the despicable action of abandoning hundreds of poor, mostly minority patients in a blackmail attempt called a “strike.” The Board of Supervisors was forced to spend over $4 million dollars to protect patients from not receiving essential medical care as the result of being deserted by their own nurses. That money was taken away from patients and taxpayers by a callous labor union focused only on lining their pockets.

I will never be blackmailed, and never forget that my first duty is to protect taxpayers and residents of the Fourth District and throughout San Bernardino County. The Board of Supervisors sent a clear message to the union leadership this month. It’s time to bargain in good faith, receive fair treatment from the county just like other county employees and join with the Board of Supervisors in always putting patient care first.

Curt Hagman is a  San Bernardino County Supervisor 

Report: Inaccuracies in Covered CA Doctor Lists

What good is medical insurance if you can’t find a doctor?

A recent investigation by the California Department of Managed Health Care found a quarter of the doctors listed in the provider directories for two of California’s top Affordable Care Act insurance plans either refuse to accept patients in the Covered California exchange, the state’s ACA implementation, or the doctors can’t be located.

“The inquiry was in response to numerous complaints the Department received from consumers who were having difficulty finding in-network physicians,” said the DMHC. “When contacted by the Department, a significant number of these physicians listed in the Plan’s network as participating providers indicated they did not accept Covered California enrollees.”

Nearly 13 percent of the physicians listed by Anthem Blue Cross as Covered California providers were not willing to accept patients enrolled in Anthem’s Covered California plans, according to a DMHC phone survey of 3,272 providers. Another 12.5 percent were not at the location listed in the provider directory.

Similar results were found with Blue Shield in another DMHC report: 8.8 percent of providers were unwilling to accept patients enrolled in Blue Shield’s Covered California products, despite being listed on the website as doing so. And 18.2 percent of the physicians were not at the directory’s listed location.

Some Californians have it worse than others. In 13 counties, fewer than half of Anthem Blue Cross’ Covered California providers said they accept Covered California patients, according to DMHC. That was the case for Blue Shield providers in 12 counties. The worst was Modoc County, where only 20 percent accept Blue Shield’s Covered California patients.

Making the situation even worse for those seeking affordable health care, 6 percent of the physicians who do participate in Anthem Blue Cross and Blue Shield Covered California plans are not accepting new patients, according to the DMHC.


The department accused the companies of violating California Health & Safety Code Section 1360. It states: “No plan, solicitor, solicitor firm, or representative shall use or permit the use of any advertising or solicitation which is untrue or misleading, or any form of evidence of coverage which is deceptive.”

The companies’ Covered California insurance plans were cited for four deficiencies of the Knox-Keene Health Care Service Plan Act, which regulates HMOs in California:

  • “The Plan operated at variance when its internet website and online Provider Directory informed enrollees that numerous physicians were participating in the Plan’s Covered California products, when they were not.
  • “When the Plan failed to correct inaccuracies in its online Provider Directory, the Plan used (or permitted the use of) written or printed statements or items of information that were either untrue or misleading and which were disseminated, at least in part, for the purpose of inducing persons to enroll in the Plan.
  • “The Plan failed to meet its statutory obligation to provide enrollees with accurate contracted provider lists, either upon request, or through provider listings set forth on the Plan’s internet website.
  • “The Plan failed to submit a required Amendment filing to inform the Department of a greater than 10 percent change in the list of providers and to resubmit its updated provider list for re-review and approval.”

The first three deficiencies remain uncorrected, according to the DMHC report, and “have been referred to the Office of Enforcement for additional corrective action and other remedies as needed.”


The companies filed responses with DMHC, arguing the findings are flawed, overblown and based on inaccurate phone surveys. Their contracted physicians are responsible for inaccuracies in the directory if they don’t notify that they’ve moved to another location. And the companies said that any problems have been corrected.

“The Final Report drew several inaccurate conclusions based on unsupported assumptions and a fundamentally flawed research methodology,” argued Blue Cross in its response. “Most concerning is that even after being advised of the obvious problems with the survey’s findings, DMHC forged ahead with publishing its Final report.

“The unfortunate result is that the final report is likely to confuse and mislead consumers at a time when they are in need of accurate information in making their health care decisions.”

The company argued phone surveys have a “penchant for inaccuracy.” To ensure accuracy, the surveyor must first test a small sample and make adjustments before launching the full campaign. And it should include a subsample interviewed by a different interviewer to double-check the responses.

“Importantly, the interviewer should make every effort to speak with the person most likely to have the information sought, and record the title or role of the person interviewed,” Blue Cross said. “There is no indication in the Final Report that any of these basic protocols were followed.”

The company said it followed up with the physicians contacted by DMHC. Nearly half had “no recollection of any call from DMHC or its surveyors, with many saying such a call would have been referred to the individual with whom Anthem spoke, and that the provider’s office fully understands it is an Anthem provider.”

Blue Cross also charged the DMHC report is misleading because it assumed  physicians who had not updated their address information or did not respond to the survey or were uncertain whether they were in the Anthem plan “were by implication not Anthem providers. … [I]t appears the Final Report was written to confirm DMHC’s erroneous initial bias that Anthem’s Provider Directory had significant inaccuracies.”


Blue Shield’s response, while not as confrontational, made similar arguments in its defense:

“Blue Shield of California acknowledges and shares the Department of Managed Health Care’s concern about the network confusion that Individual and Family Plan members and our network providers experienced in 2014, due in large part to the implementation of the Affordable Care Act.

“We have worked hard over the last year to ensure that all of our members have an improved and positive experience in 2015. We are committed to continuing to work with the Department on our shared mission of serving Covered California members across the state.

“At the same time, we believe that the Department’s Final Report is misleading and has the potential to further confuse members by significantly overstating the severity of the issues. The vast majority of the issues raised in the Department’s report have either been corrected by Blue Shield or were never caused by Blue Shield in the first place.”

Blue Shield said it has more than 27,000 primary care providers under contract, with 96 percent “confirming they are accepting new Covered California patients.”

DMHC response

DMHC responded to Blue Cross’ criticisms:

“While the Department understands these concerns, they do not change the fact that the significant inaccuracies contained in the Plan’s online Provider Directory resulted in a highly unacceptable consumer experience, nor do they change the fact that California consumers could not reach or did not have access to providers who were represented as being part of the Plan’s network.”

The department acknowledged that Blue Shield is making corrections, but also defended the accuracy of its report’s findings:

“[T]he disconnect between the information provided to members and the actual status of providers within the Plan’s network has real potential for creating barriers to care. The divergence between the Plan’s online directory and the survey responses by provider offices listed in the directory creates confusion and access difficulties for enrollees.”

The DMHC was backed up by the California Medical Association, which represents more than 40,000 medical professionals. In a Dec. 8 letter to Covered California, CMA Associate Director Brett Johnson said the DMHC’s findings “unfortunately were consistent with our own findings.

“We have long been concerned with the state of provider directories in some of California’s largest health plans, and have conducted numerous internal surveys and analyses to this effect, some of which involved direct testing (e.g., calling practices to verify participation status) similar to that employed by DMHC.

“Despite criticism of DMHC in the plan responses for using telephone contact as the primary means of assessing a physician’s participation status, both directories audited in the report used directory disclaimers that instructed the enrollee to call or otherwise contact the listed provider to verify participation status.

“We believe, furthermore, this emphasis on point-of-service access appropriately places the responsibility for clear communication, comprehensible administrative policies, user-friendly information updating processes, and unambiguous contracting, among other things, in the hands of those best equipped to do something about it, the health plans, as opposed to relying primarily on DMHC to have the capacity required to effectively police the vast documentation this entails.”

However, the CMA did agree with the companies “that miscommunications and misunderstandings were the likely cause of a significant percentage of DMHC’s reported inaccuracies and failures to verify participation, and we further agree that, in such instances, physicians have a role in confirming participation status and ensuring that demographic data remains current.”


Johnson’s letter submitted three recommendations for Covered California’s consideration:

  • “Foster improved collaboration among providers and health plans to improve communication, the contracting process, and the means by which demographic information is verified and updated.
  • “Using Covered California’s authority as an active purchaser, require that providers’ participation in reduced networks be only obtained via a separate, affirmative assent.
  • “To achieve greater network transparency and improved directory reliability, continue encouraging and pursuing consumer-friendly technological improvements, such as creating an interface between health plan network management systems and a Covered California cross-plan directory.”

At the Dec. 15 Covered California board meeting, Executive Director Peter Lee said, “I applaud and appreciate CMA’s approach and recommendations. Getting directories right is a problem and challenge for both doctors and health plans. We will address that issue.”

This article was originally published by

Prepared for Ebola? CA Health Officials Discuss

The Ebola virus has yet to hit California, but it’s likely coming, according to state health officials. They say the state is prepared, but nurses on the health care front lines aren’t so sure.

“Given the spread of Ebola in West Africa and world travel, we should not be surprised if sometime in the near future a person in California is suspected of Ebola. And California needs to be prepared,” Assemblyman Richard Pan said in his opening remarks as chairman of a Nov. 18 Assembly Health Committee informational hearing on Ebola.

“Certainly the public is concerned about this disease,” said Pan, who is also a pediatrician at a Sacramento clinic. “In the past months I personally have been asked about Ebola while walking in the community, at meetings and in my clinic. People want reassurance that California is ready, that we will contain the disease and keep their families safe.”

State health officials are monitoring people in California who have traveled to the four main Ebola-infected countries: Liberia, Sierra Leone, Guinea and Mali.

“As of Nov. 17 there are 26 returning travelers being monitored in 12 counties across California, including two returning health care workers,” said Gil Chavez, the California Department of Public Health chief epidemiologist. A total of 58 people have been monitored since the early detection effort began several weeks earlier. “We have reached a steady state where the number of new returning travelers is roughly equal to the number passing the 21-day monitoring period,” he said. “The great majority of returning travelers continue to be in the low-risk category.”

‘Largest in history’

Department of Public Health Director Ron Chapman said “the outbreak we are seeing now is the largest in history.” But he assured the committee that state officials “are working very hard” with both local and national public health agencies to keep tabs on suspected Ebola patients. “We are receiving very, very small numbers of travelers compared to states on the East Coast,” he said. “There’s no suspected or confirmed cases to this point in California.”

But it may be only a matter of time before that changes, according to Bela Matyas, representing the Health Officers Association of California.

“From a strictly pragmatic standpoint, given the size and duration of this outbreak in Africa, the risk of Ebola virus disease in California is real,” he said. “Ebola can be imported to California through a visitor from one of the impacted countries, a returning health care worker, or a person infected by Ebola elsewhere in the U.S. If a case of Ebola occurs in California, limited local transmission is possible. Although, obviously, we would do everything we can to prevent that. But sustained transmission of Ebola in California is highly unlikely.”

When those Ebola patients do arrive, hospitals will be ready, according to Cheri Hummel, vice president of disaster preparedness for the California Hospital Association, which represents 400 hospitals in the state. “I can attest to them being prepared and ready for an Ebola case,” she said. “California hospitals are required on an ongoing basis to prepare for a variety of emergencies, including infectious diseases. They have well established plans for infectious disease control.”

The primary care facilities for Ebola patients in California are the five UC medical centers in Davis, Irvine, Los Angeles, San Diego and San Francisco.

“[The] medical centers have been engaged in probably one of the most extraordinary planning and training endeavors that I’ve been involved in 41 years in health care,” said Carol Robinson, chief patient care services officer for the UC Davis Medical Center. “To date we have conducted more than 1,200 hours of training … for safely donning and doffing PPE [personal protective equipment]. And it’s being conducted in 90-minute sessions, eight hours a day, five days per week.

“We have been listening to our nursing staff as they have participated in the selection and training of our equipment. We are also consulting with our infectious disease experts for recommendations to provide a safe, sufficient protection; and it’s based on science and evidence. Nurses, for example, provided crucial insights in this protective equipment as they have practiced putting it on and taking it off. Our donning and doffing process is probably the most critical. And the nurses have to be expert at it.”

Kaiser ready

Earlene Person, a nurse at Kaiser Permanente in Oakland, believes her hospital is ready.

“In all my years as a health care provider, I haven’t seen the public as concerned about a health issue since the outbreak of AIDS in the 1980s,” she said. “I share their concern. I want to be safe. I want my family to be safe. And I want my patients in my community to be safe. And as health care workers we have the right to get the training and the equipment we need to protect ourselves from Ebola.

“The good news is that there have been no reported cases of Ebola in California. We hope it remains that way. We are the largest state in the nation, and a case of Ebola could arrive on our doorstep any day. So we have to be ready. I am happy to report that if an Ebola patient were to arrive at my hospital tomorrow, we have the proper training, equipment and procedures in place to keep everyone safe. That means patients, workers in the community. At Kaiser we consistently receive updates on new information and safety preparation.”

But not all nurses are so confident. Ten of them spoke during the public comments period at the end of the meeting to voice their concerns. Many were grateful for Cal-OSHA’s new guidelines for protecting hospital workers’ safety when dealing with Ebola patients. Those guidelines were issued, they said, in response to their complaints about inadequate safeguards.

“Upon seeing the lack of optimal personal protective equipment and lack of response from our facilities, we went to the governor demanding action,” said Kathy Donahue. “He listened intently, heard the nurses’ reports of how deeply unprepared and resistant hospitals were. And he moved to protect the public, the nurses and other health care workers. Absent scientific consensus that a particular risk is not harmful, especially one that can have catastrophic consequences, the highest level of safeguards must be adopted. That’s a sharp contrast to the profit principle that has guided the response of most hospitals.”


Malinda Markowitz, a co-president with the California Nurses Association, is not confident adequate protections are in place to monitor potential Ebola patients in the community. “Isn’t it true that we are not always keeping track of patients that have tuberculosis and they fall out of contact?” she asked. “So how are we to assume and be assured that an Ebola patient would be any different than patients that have tuberculosis? How can they assure that an Ebola patient won’t be the same, and we would lose the contact and they would be out in the public possibly infecting the community?”

Zenei Cortez, another CNA co-president, noted how easily Ebola can be spread. “All it takes is just one drop or one splash of vomit to infect the health-care worker or the nurse,” she said. “I urge you not to allow the industry to water down the mandated regulations so that our hospitals, our employers, would be responsible for all the workers. They can very well afford the personal protective equipment that we need to take care of our patients. The nurses are relentless, and we will make sure that all patients, the public and all workers are safe. And not one more life will be wasted and not one nurse will be infected.”

Katy Romer, a nurse at Kaiser Permanente in Oakland, doesn’t believe hospitals are ready. “It is crucial that you listen to the people on the front lines that actually know what’s happening in the hospitals,” she said. “Kaiser Oakland is saying they are completely prepared right now. The reality is that they are not completely prepared right now. There is tremendous variability from facility to facility. But even within my facility there is tremendous variability within department.

“If you’re not training with the highest level of equipment, you’re not prepared to deal with this disease. You’re going to be putting yourself, the patients and the community at risk. If you go in the hospital and you’ve had an exposure and then you have a nurse that’s not prepared to care for you, you’re in danger. And your whole community and your family is in danger. We don’t want that to happen to anyone.”


Pan concluded the two-hour hearing by acknowledging the nurses’ concerns. “I do take to heart that we do need to surely know what’s really going on on the front lines that can be a little different than what the policy makers think,” he said. “I’ve experienced that already in this position as a front-line doctor. So I think that’s an admonition well taken.”

In his opening remarks, Pan noted Ebola is not the only contagious disease worthy of increased attention and precautions.

“The influenza pandemic of 1918 actually killed more people worldwide than all the soldiers and sailors that died in World War I, just to give you some context here,” he said. “But infectious diseases are not a problem of the past; they are problem in the very present. In fact, here in California this year we are going through another pertussis epidemic.

“We have faced record numbers of measles and West Nile Virus infections. Valley Fever continues to be a significant problem in the Central Valley. And last flu season, as we are about to approach another flu season, 404 people died of the flu who were under 65 years of age of influenza. We actually don’t track people who are over 65.”

At the same time, however, California’s health care spending has not kept up, he said.

“Last February this committee held a hearing on California’s public-health infrastructure and our state’s preparedness to halt the growing threat of contagious diseases,” said Pan. “That hearing revealed the local public health departments and state laboratories had suffered significant cuts during the economic downturn. In Sacramento County alone, 135 public health positions were eliminated between 2005 and 2010. And support for identification surveillance and emergency response were particularly vulnerable because they depend primarily on discretionary funding in government budgets.”

This article was originally published by

Open-enrollment headache again strikes Covered CA

If you thought the rollout of Obamacare was problematic last year, this year could be worse — including its implementation here, called Covered California.

State officials are still struggling to clear a huge backlog of Medi-Cal applications from the past year, while legislators field numerous complaints from frustrated constituents, insurance premiums are increasing and Medi-Cal renewals are down. The open enrollment period for 2015 begins Nov. 15.

“As much as the first year of enrollment was big and rocky, on some levels the second year is going to be harder,” said Covered California Executive Director Peter Lee at a recent Senate Health Committee informational hearing.

Both Lee and Department of Health Care Services Director Toby Douglas are proud of their progress in implementing Obamacare in California.

“We reduced the number of uninsured by 3.4 million people in this state, from 22 to 11 percent,” said Lee. “That’s the largest reduction by percentage in the entire nation. We can feel proud of California serving as an example for the nation how to do this right.”

“[We] have had tremendous success with the implementation of the Affordable Care Act,” agreed Douglas. “We have within our Medi-Cal program dramatically changed the perception. The perception overall is positive and it gets high marks.

“That being said, we’ve had challenges, many challenges with the process. We know our implementation has not been without problems. We have to continue to learn from those challenges, continue to improve it and make it a better experience for all of those, whether applying for Covered California or enrolling into our Medi-Cal program.”


One of DHCS’s biggest challenges has been clearing the Medi-Cal application backlog. It had reached 487,000 pending applications in July, which were whittled down to 171,681 by Oct. 15. Nearly 1,400 applicants have been waiting a year to find out whether they’ll receive coverage.

This has not only been an embarrassment for state health officials, but it’s also illegal. State law requires that health insurance applications either be accepted or denied within 90 days. Several social advocacy organizations have filed a lawsuit to get the state to abide by its own law.

“There has been an increase recently,” acknowledged Douglas. “Covered California has been going through administrative renewals, and that has pushed populations over to Medi-Cal. And we know that there’s at least 40,000 that are duplicates that need to be denied within the system of 171,000. And there’s 20,000 where we’re looking at our administrative strategies that are eligible.

“We have been going through a lot of different enhancements to try to reduce the pending cases and bring it down. Our ultimate goal is we want all applications determined eligible in the required time frame. And we might still always have pending cases, because counties might be waiting for verification information. But we want to make sure that there is no one out there stuck and pending because of system problems.”


Another challenge for Douglas is getting Medi-Cal recipients to renew their coverage. The renewal rate in 2013 was 60-70 percent in many of the state’s larger counties. But that range has dropped to 50-70 percent in 2014, with some counties below 50 percent.

That decrease concerns Sen. Holly Mitchell, D-Los Angeles. “This is deeply troubling,” she said. “We spend all this energy talking about congratulating ourselves about our enrollment numbers and that number will be a moment in time because we get to re-enrollment and we lose them.

“And the Legislature will have kneejerk reactions like, ‘Get rid of the status reports, get rid of this, get rid of that’ to try to fix that number. That’s why I ask what the problem is so we can be a partner rather than kneejerk to try to plug this hemorrhage – because that’s huge and a problem.”

Douglas responded, “We’re not sure. We delayed the actual disenrollments to get more outreach. We would have thought it would be the same. This is not what we wanted. We think it’s because it’s a new process. There’s been concern from community groups that … thought it was confusing. It’s going to take a lot of grass roots work to break down and understand this new process and why it’s different.”

Mitchell said the confusion is inherent in the way government does things.

“Government does a horrible job in communicating,” she said. “At first I thought it’s because we really don’t want to enroll people. And I don’t think that’s the case. We are bitten by the IRS bug. Every form we create we have to make it as complicated, use as many words and make it look as academic and unfriendly as possible. It’s not just you, it’s government across the board. I’m not sure why that is. We have a bad habit of making the process as difficult and complicated unnecessarily as possible.”

Lee disagreed: “We certainly don’t, as either a matter of habit or purpose, try to make things complex, as you know.”

That prompted Mitchell to laugh, saying, “It’s government – we can’t help ourselves.”


She also criticized the state’s education and outreach efforts to blacks.

“The effort in the first go around was lackluster,” she said. “And we need to have a clear conversation and commitment around who is engaged and contracted to do the advertising and outreach to this very specific and targeted community.

“I sponsored a [Covered California] storefront [in the Crenshaw mall] because I happened to think it was a great idea when I was approached by community-based organizations. But I have to say, I was quite disappointed at the outcome. We had five kazillion touches, but our enrollment numbers were nowhere near what I anticipated.”

Lee responded, “The Crenshaw mall enrolled not as many people as you thought it would and we thought it would. But a lot of people came and asked questions. And one of the things we learned is that it’s not a one-touch-and-done enrollment process. So the fact of having a storefront where people can come in, ask questions, take material home, come in again and then maybe go enroll with an insurance agent at that storefront we say, ‘Hallelujah, wherever you are enrolling is OK.’”


Committee Chairman Sen. Ed Hernandez, D-West Covina, voiced a complaint made by legislators at an Assembly Health Committee hearing on Obamacare in September.

“My office on a regular basis is getting calls,” he said. “They get funneled up to Sacramento. These are people who are in support of the Affordable Care Act. And they are just really upset. It can be anything from [a lack of] network adequacy to call time to wait time to length of time in Medi-Cal to get enrolled.

“So I want to make sure that not only California continues to be the leader, but absolutely most important that we address as many if not all of the concerns that the consumers of the state of California have.”

Sen. Bill Monning, D-Monterey, has also received numerous complaints from constituents.

“I represent rural areas where in much of my district there is no competition” among health insurance providers, he said. “Our phones are ringing off the hook with people who have coverage and can’t find a [health care] provider who will accept that coverage. So, coverage without access is not real coverage.

“We have a health care plan in Monterey County advising providers at a local hospital that diabetes prevention is not covered. It’s wrong. They are giving disinformation, turning people away. A major health plan that is our only health plan in the region of Monterey County is advising providers it will not cover preventing for diabetes.”

Lee said preventive care is covered, and insurance companies are reviewed annually to make sure they are providing adequate coverage.

“When we sit down with health plans, we don’t say the first question is: What’s the cost?” he said. “The first question is: Are there adequate networks of doctors, hospitals to make sure people get the necessary care? Not all, but in a number of cases there were areas where we specifically said there appear to be shortfalls in networks. And part of what plans came in with was expanded networks of hospitals or of doctors.”

Lee and Douglas assured the committee that they are working to fix the problems and improve service, but acknowledged that will take time.

This article was originally posted on

Veterans Affairs Keeps Buying Bogus And Counterfeit Medical Equipment

Internal correspondence between the Department of Veterans Affairs (VA) and a major supplier of medical devices reveals that the VA has been buying bogus and counterfeit medical equipment, The Washington Times reports.

The equipment comes from the so-called gray market and threatens to endanger patient’s lives. Johnson & Johnson brought the matter to the VA’s attention and placed the blame on procurement rules.

“The product being sold may not have been stored properly (high temperature, high humidity, no pest control, etc.), which could create patient risk,” Paul B. Smith, government account director for the company, told the VA.

“We do not believe that the VA intended for its efforts to utilize new procurement tools such as reverse auctions to result in these outcomes,” a company official added, according to The Washington Times. Johnson & Johnson’s concerns date two years previous, stemming from a corporate investigation in which they found that sellers would steal devices from hospitals and attempt to pawn them off into the gray market, only for agencies like the VA to purchase them. More attention has been given to the issue only in September of this year after an inspector general report was released.

However, the issue has been raised before not just externally to the agency, but internally, as well. Back in 2012, a VA advisory group stated that the agency should not be using reverse auctions to purchase “clinically oriented products.” Acquisition officials apparently declined to take their recommendations seriously. But there may be some indications of a change as of now. The VA has said that it promises it will look into modifying the procurement process so as to exclude gray market purchases.

In the meantime, at least seven surgical supply purchases have been made by the agency across the U.S. One example highlighted by Johnson & Johnson was a distributor delivering the VA a surgical device without a box and wrapped in rubber bands. Concerns are being raised that these products are actually used in medical rooms to treat patients.

This article was originally published on the Daily Caller News Foundation.

One Year Later, Glitches Still Plague Covered CA

“Here we go again with the same nightmare as a year ago. [I’m] truly fed up with Covered California’s technical incompetency.” So complained Igal Koiman, a health insurance broker, in remarks published this week in the Sacramento Business Journal.

His frustrations echo those of many other brokers throughout the state who fear the Covered California website will be no less glitch-ridden on Nov. 15, when open enrollment begins this year, than it was 19 months ago, when the state’s online Obamacare health exchange stumbled out of the starting gate.

Koiman related that, for the past two weeks, he has been unable to update plans for his established clients. When he contacted Covered California for help, he received an email reply informing him, “We do not currently have an ETA as to when this enrollment error will be corrected.”

These are the kind of system failures that have persistently plagued since its rollout. Indeed, the website has crashed numerous times, not just for hours, but for several days.

The Covered California website was developed by the consulting firm Accenture, which in 2012 received a $359 million state contract to not only build the site, but to operate it during its first three-and-a-half years. Meanwhile, Accenture brought on CGI Federal as a subcontractor for

Both firms have recent troubling track records.

Accenture in 2011 paid $63.6 million to settle a U.S. Justice Department lawsuit charging the firm received kickbacks for its recommendations of specific hardware and software to the federal government, fraudulently inflated prices and rigged bids on federal IT contracts.

Tony West, assistant attorney general for the Justice Department’s Civil Division, said of the lawsuit:

“Kickbacks and bid rigging undermine the integrity of the federal procurement process. At a time when we’re looking for ways to reduce our public spending, it is especially important to ensure that government contractors play by the rules and don’t waste precious taxpayer dollars.”

And Christopher R. Thyer, U.S. attorney for the Eastern District of Arkansas, said:

“We strive each and every day to bring justice to the citizens of the Eastern District of Arkansas. … Fraudulent business practices that steal hard earned and much needed tax dollars from appropriate use will not be tolerated. The United States Attorney’s Office is committed to pursuing these cases to the full extent of the law.”


CGI Federal is a subsidiary of the Montreal-based CGI Group, which in 2012 was fired by the provincial government in Ontario after the IT firm failed to fulfill its contract to build an online medical registry for the province’s diabetes patients.

According to the Washington Examiner:

“In Canada, eHealth, the Ontario provincial agency, scrapped its high-profile online medical registry for diabetes sufferers and treatment providers, and canceled CGI Group’s $46.2 million contract, on Sept. 5, 2012. The company was 14 months behind schedule when it was given notice of termination by the Ontario government agency.

“In the meantime, a group of other Ontario IT companies successfully replicated the registry, rendering CGI’s project obsolete.

“Because the contract terms stipulated payment only upon delivery of a satisfactory final product, the province has refused to pay CGI.

“CGI has not publicly discussed the eHealth failure, but has taken legal action, including filing a defamation suit against eHealth and the Toronto Star newspaper.

“CGI has received bipartisan condemnation from Ontario government officials for its failure on the registry.

“’They did not meet the requirements of their contract which was faced with many layers of delays, which caused great angst among the health care providers who are trying to do their best,’ Frances Gélinas, a member of Ontario’s provincial parliament, told the Washington Examiner.

“’They basically said, “This is not working.” CGI is not delivering what we need,’ Gélinas said. Gélinas also serves as a health policy spokeswoman for the NDP, an opposition Canadian political party.”


In January, CGI’s U.S. contract to build and maintain, the federal Obamacare website, was terminated in the wake of the site’s disastrous rollout. The firm the Obama administration chose to pick up where CGI Federal left off was none other than Accenture.

The partnership of Accenture and CGI Federal on the Covered California website does not inspire confidence that the online portal will be good to go a mere two weeks from now.

The more likely scenario is that the persistent glitches that afflicted during its first year of operation, that caused repeated shutdowns of the state-run Obamacare exchange, will continue apace in year two.

This piece was originally published on


Covered CA caught in Prop. 45 crossfire

On Proposition 45, some Democrats are feeling as if they got a transfusion of the wrong blood type. The initiative would give the state insurance commissioner the power to approve changes in health-insurance policies, including those by Covered California, this state’s implementation of Obamacare.

Normally Democrats back more regulation, and plenty support Prop. 45. But it would affect not only private health insurance companies, but Covered California as well. Yet Covered California’s smooth success, unimpeded by state second opinions, is crucial to Obamacare’s national success.

Few have admitted it, but the roots of the conflict ultimately stretched back to the very nature of Covered California’s successful establishment. At a time when other state exchanges, such as Oregon’s, were failing in a way that imperiled Obamacare’s implementation, the success of Covered California had become all-important. Without enough signups, insurers whose products were mandated for purchase under Obamacare couldn’t deliver rates the public would accept.

As a result, Covered California became a crash effort to tap California’s substantial population for exchange signups. Enrollees without adequate paperwork or identification were provisionally allowed into the program. No-bid contracts went out to close associates of Covered California officials, who knew how to leap regulatory hurdles quietly and quickly. Once the publishable number of signups rose high enough, and Obamacare stabilized, the administrative cleanup could begin. A central part of that effort would include revisiting rates negotiated with insurers.

A political curveball

But if passed, Prop. 45 would scramble such planning. Incumbent Insurance Commissioner Dave Jones holds a strong interest in supporting Prop. 45, which would give him new powers if he’s re-elected. He’s running against Republican Ted Gaines, a state senator from Roseville. Gaines opposes Prop. 45 and has challenged Jones to a debate on it.

Embracing Prop. 45 was an apparently safe bet for Jones, who had powerful Democrats in his corner, including both of California’s Democratic U.S. senators, Dianne Feinstein and Barbara Boxer.

Insurance companies, to no one’s surprise, were opposed. The dynamic had all the makings of a predictable election-season matchup if there had been no Covered California.

The current train wreck could have been predicted by observers thinking a few steps ahead. The unsettled scope of Covered California’s regulatory authority teed up a classic bureaucratic turf war of the kind routinely on display in Washington, D.C.

For Covered California officials, it was essential to ensure  they could pursue their organization’s agenda unimpeded. That meant establishing direct negotiations with insurance companies themselves — without interference by state-level bureaucrats.

Adding to the administrative jockeying were the implications of the state health exchange itself. Though nominally a market in health care merely established by California through federal law, the exchange inherently politicized the cost of health insurance.

In a free market, for insurance, rates are set by company calculations. In a state-supervised exchange, by contrast, rates become subject to price manipulation based on the imperatives of keeping the exchange economically viable and politically palatable.

Shifting battle lines

From the outset, Prop. 45 threatened to complicate the ability of Covered California officials to independently pursue those imperatives. As the Sacramento Bee reported this summer, at least some influential exchange officials explicitly argued against Prop. 45 on the basis of politics. Diana Dooley, an HHS official who also chairs the board of Covered California, warned against the measure’s provision allowing challenges to rates Covered California negotiated.

For Dooley and her allies, the nightmare scenario involved activist conservatives using the challenge system to undermine trust in Covered California and reduce its efficacy.

But objections to rate-setting without adequate insurance commission oversight have been raised most frequently by Consumer Watchdog, the frequent opponent of large corporations that sponsored Prop. 45 to begin with. Because Covered California officials failed to imagine that anti-corporate sentiment would turn Californians against their plans, they walked into an election-year morass.

The predicament has left opponents of Prop. 45 falling back on a familiar strategy: advocating for additional time before Obamacare is judged wanting. In an editorial dismissing Prop. 45, the Los Angeles Times argued, “Covered California should be given the chance to fulfill its mission to the best of its ability before the state adds another layer of complexity to an already complex process.”

For his part, Jones is remaining adamant in favoring an initiative that would increase his office’s powers. He wrote on his Facebook page, “Vote YES on Prop 45 and make health insurers justify their rates!”

But the split within his own party, combined with plentiful insurance-company ads against the measure, could thwart his wishes.

This piece was originally published on

Covered CA blames cronyism on Obamacare scramble

In an embarrassing new black eye for Covered California, the state’s implementation of Obamacare, the health exchange, has admitted it violated accepted practice by awarding $184 million in so-called “no-bid” contracts, according to a new report by the Associated Press.

State governments routinely consider competing bids for work. It’s a process designed to prevent corruption and the appearance of impropriety.

In the past, government contracting that skirts the process has been a target of prominent Democrats. During Republican President George W. Bush’s 2004 run for re-election, Democratic rivals Sen. John Kerry and Sen. John Edwards campaigned against the energy company Halliburton’s no-bid government contracts in Iraq. Republican Vice President Dick Cheney had been the head of Halliburton.

Now officials with close ties to the Obama administration have come under scrutiny for the practice.

During the Halliburton controversy, the Bush administration’s defenders appealed to one of the few established excuses for no-bid contracts, arguing that no other company was capable of doing the necessary work in the time available. Similarly, Covered California has responded to the current revelations by invoking a state of emergency.

In a statement, executive director Peter Lee explained Covered California “needed experienced individuals who could go toe-to-toe with health plans and bring to our consumers the best possible insurance value.”

Cozy ties

Among those individuals, it turned out, were members of The Tori Group, a contractor whose founder, Leesa Tori, had worked closely with Lee in the early 2000s. Amid the scramble to get Covered California up and running, the exchange’s board approved a grant increasing The Tori Group’s contract to $4.2 million.

“Contractors like The Tori Group,” Lee continued in his statement, “possess unique and deep health care experience to help make that happen and get the job done on a tight deadline.”

Covered California’s relationship with The Tori Group, however, was not a one-time affair. Leesa Tori became Covered California’s director of plan management — one of nine Tori Group personnel with current positions at Covered California.

Lee’s close relations with Tori mirrored those he has maintained with the White House. In the Obama administration, he was a deputy director at the Centers for Medicare and Medicaid Services, after working on national policy with HHS Secretary Kathleen Sebelius.

A case of emergency

Although Covered California has not necessarily broken any laws in its no-bid contracting, the impropriety of Lee’s intimate professional ties with The Tori Group underscored the risk the exchange was willing to run to succeed in their race to establish viability. Without moving quickly enough to implement the health-care system made possible under Obamacare, officials worried Covered California would befall the same fate as such failed state exchanges as neighboring Oregon’s.

In addition to the political humiliation visited on officials whose state exchanges failed, policymakers feared an excess of failures and a shortfall in enrollments would cause the state exchange system itself to collapse. That, in turn, would place a burden on the federal government which could make Obamacare implementation prohibitively costly and complex.

Through Lee’s efforts, however, Covered California survived. Those efforts, as the no-bid revelations have confirmed, blurred the line between appropriate and inappropriate action.

‘Death spiral’

To stave off a so-called “death spiral” of under-enrollment, for instance, Lee oversaw the inclusion of hundreds of thousands of Covered California applicants with missing or suspect identification. Those numbers helped give Obamacare the critical mass of enrollees it needed for political and policy purposes.

Alone, Covered California was responsible for over one-eighth of individual enrollments in Obamacare, even though California has only one-twelfth of America’s population.

In sum, the story that has emerged about Covered California’s success has captured the weakness of Obamacare implementation. While supporters of the health care law insisted it faced only a few bureaucratic bumps in the road, the reality was different.

Without a successful state exchange in California, the future of the Affordable Care Act would be in doubt. The stakes were high for Peter Lee, and he delivered — netting him a five-figure bonus this year.

This article was originally published on


Prop. 46 Will Increase Abusive Medical Lawsuits

Lawsuit abuse penetrates every level of society, perhaps nowhere more so than in the medical profession. The upcoming November election in California presents voters with a clear choice if they want to keep a tenuous lid on an explosion of costs associated with medical lawsuit abuse – vote NO on Proposition 46.  Voting down this highly-partisan proposition will allow us to continue a longstanding bi-partisan approach to reducing frivolous lawsuits defined in the Medical Injury Compensation Reform Act.

Proposition 46, on the other hand, was written by and for personal injury lawyers, ostensibly to make it easier for patients to seek compensation and in an effort to increase the payouts they receive when they file lawsuits against doctors.  This even includes when my medical professional colleagues and I work in community clinics and health centers. Proposition 46 seeks to change the law to make it more lucrative for these lawyers to file lawsuits against doctors.

There are many avenues in place for aggrieved patients to seek compensation and justice, including filing State Licensing Board complaints, seeking peer review or mediation.  These avenues are likely easier, faster and far less costly, but rarely involve trial lawyers.  Shouldn’t we be promoting more efficient, fair and less costly means to compensation and justice?  Proposition 46 would likely not result in any of the above.

In case there was any doubt about who would benefit if Proposition 46 passes, look at the list of funders. The most recent data available show that more than 97 percent of the money in support of this initiative has come from attorneys and law firms. These lawyers are showing that they are willing to pay millions of dollars in order to manipulate our legal system in hopes of receive a bigger paycheck in the future.

If it passes, Prop. 46 will have disastrous consequences. It will raise costs, driving doctors and other health care practitioners out of the state and reducing access to health care for patients. Worse, the increased costs will fall squarely on the shoulders of California working families. A study by the former Legislative Analyst in California found that Prop. 46 will increase health costs in the state across all sectors by $9.9 billion – that’s billion, with a “b.”  Translation: a family of four will end up paying $1,000 per year more in higher health costs.

At this time every year, other supporters of California Citizens Against Lawsuit Abuse (CALA) and I recognize Lawsuit Abuse Awareness Week, a week dedicated to raising awareness about the impact lawsuit abuse has on our society.

I can’t think of anything better to recognize this week than to send in my absentee ballot with a vote AGAINST Proposition 46.

Fellow at the Unruh Institute of Politics, University of Southern California

This article was originally posted on Fox and Hounds Daily.