Covered CA Facing 2015 Adjustments

January 21, 2015 By James Poulos Leave a Comment

After posting some of the biggest numbers in the Obamacare firmament, Covered California is putting the squeeze on Golden Staters. Amid concerns that bureaucratic and administrative rules will reverse initial gains, the statewide exchange is stressing the substantial increase in tax penalties facing Californians who don’t get insurance.

Meanwhile, choices for coverage are shrinking, not expanding.

In order to hold down spikes in the cost of care, Obamacare included insurance subsides calculated according to a family’s expected yearly income. In keeping with federal tax practices, if a family’s actual income exceeds the estimated amount, their subsidy shrinks accordingly — regardless of whether it leaves them in the hole.

According to the Los Angeles Times, analysts now predict that as many as half of all families enrolled and subsidized under Covered CA could face a bill this tax year.

The implications are so serious that Covered CA executives are on edge. They’ve had to pivot swiftly from public relations mode — pushing a traveling awareness campaign designed to boost enrollments — to public warning mode.

“As the health law’s second open enrollment period draws to a close, Covered CA , the largest of the state-run health insurance exchanges set up under Obamacare, is about to start emphasizing the tax penalties one can incur by not getting covered,” Reason’s Peter Suderman observes.

“As the penalty increases,” Covered CA Executive Director Peter Lee said in a statement, “it makes more and more sense for those who have been waiting on the sidelines to get in and get coverage.”

Toby Douglas, director of the Medi-Cal management organization DHCS, put it more bluntly. “This is an important message that should be heard by Californians of all income levels,” he said. “Applying for coverage not only gives you an opportunity to get comprehensive health care; it can help you avoid a penalty that could hurt you and your family.”

A snowball effect

The federal picture is not the only one that matters in California. It turns out that Medi-Cal faces a simultaneous reduction in state reimbursement rates. As David Gorn notes at California Healthline:

“The 10 percent rate cut, approved by the California Legislature in 2011, was held up while the matter was thrashed out in court. Last year, the courts upheld the state’s right to reduce provider reimbursement and health care officials decided to implement the cutbacks in phases. The last phase, which includes primary care providers, went into effect Jan. 1.”

That puts pressure on legislators to pour more state tax dollars into funding Medi-Cal. “More than 11 million Californians are on Medi-Cal — more than 30 percent of the state’s population. Raising rates by any amount, given that huge pool of recipients, would be an expensive proposition,” writes Gorn.

The result is a snowballing budgetary problem, not just for families seeking health coverage but for the state of California. It’s bad timing for Gov. Jerry Brown in particular.

Brown has just come off of a fragile but significant political success — debuting an eye-popping budget plan that’s nevertheless been greeted as relatively well-disciplined, if only by California’s profligate standards. Brown has had to carefully balance competing demands for more cash for statewide interests, from environmentalists to the universal pre-K lobby.

Too hard a push for additional health care funding could foster a political crisis that cuts strongly against Brown’s agenda, which is heavy on infrastructure and fiscal management.

Pressure on the left

Adding more wrinkles to the challenge facing Brown, important constituencies on the political left have imposed increasing burdens on the scope of coverage promised under Obamacare. USA Today reports that perhaps half-a-million unlawful immigrants residing in California will soon become eligible for Medi-Cal, while Sacramento Democrats are working “to extend state-subsidized health insurance to everyone, including those barred from getting covered through the Affordable Care Act.”

Meanwhile, some 280,000 Northern and Central California customers have been put on notice that their coverage may collapse or cost more, thanks to a contract dispute that has Blue Shield of California squaring off against the Sutter Health network. Sutter, earning the sympathy of liberals, insists Blue Shield is to blame for slashing reimbursements and expecting Sutter to somehow absorb the costs.

But the controversy is poised to remind Californians of the intra-party divisions that had Democrats at odds in November over Proposition 45, which would have given the state insurance commission the power to negotiate rates with insurers, including Covered CA itself. Voters rejected it, 59 percent to 41 percent.

Prop. 45 was backed by Insurance Commissioner Dave Jones, who was re-elected to his job, and billionaire hedge-fund investor Thomas Steyer, who is contemplating a bid for the U.S. Senate.

Opposition included Diana Dooley, the head of the state’s Health and Human Services Agency and chair of Covered California, a Brown appointee, and the Service Employees International Union, a key Democratic power center.

This piece was originally published on CalWatchdog.com

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CA Dems Battle on Key Issues

October 31, 2014 By James Poulos 3 Comments

 

 

Democrats fighting logoAlthough Democrats in California are eager to celebrate major victories next Tuesday, political fault lines lie under their party.

From anti-rape legislation, to education reform, to health costs and beyond, an anticipated left-leaning consensus has failed to materialize in the Golden State. The resulting controversies, disagreements and difficulties in politicking have thrown a suprising degree of doubt on Democrats’ broader election-year routine.

National Democrats had grown accustomed to a clear, reliable dividing line between identity politics and more general issues. The distinction helped strategists protest the status quo for allies with powerful institutional interests — while microtargeting voters based on criteria like race or ethnicity, sex or gender, age, immigrant status and sexual orientation.

But the new cleavages among California liberals have upset that carefully calibrated approach, leading to close scrutiny and, in some cases, close state elections.

Yes means yes

The phenomenon became hard to ignore when the national political media picked up on sharp disagreements over California’s new “yes means yes” legislation, which requires affirmative sexual consent at universities receiving state funding. Initially, the controversial bill seemed poised to become law without incident.

Outside the state, however, commentators influential among establishment liberals and progressives found themselves at loggerheads over the implications of its strict, invasive rules. As the Los Angeles Times observed, the scuffle — which drew in figures at publications ranging from Vox to The Nation to New York magazine — escalated into “a clash between those who believe the law is too intrusive and those who believe intrusiveness is the entire point.”

For Democrats, the political point has become clear: rather than helping cement a consensus among liberal voters about how to advance legislation concerning sex, “yes means yes” has given voters a stark reason to reassess what they want out of Democrats in that regard.

Given the significance Democrats have placed on the women’s vote in recent years, and the hope they have placed in rising generations of younger voters, the news is especially unwelcome.

Teachers unions

California also gave Democrats a preview of even broader and more fundamental divides on the left.

When Judge Rolf Treu handed down the Vergara ruling, which held public teacher tenure protections to unconstitutionally infringe students’ rights, Democrats split immediately. Some, like Gov. Jerry Brown, went to bat for the teachers unions.

Others, like U.S. Secretary of Education Arne Duncan, presented the ruling as a clarion call to improve educational opportunities for all students. Because many underperforming schools and teachers have been found in districts with substantial (or majority) minority populations, some Democrats recognized they could be forced into an uncomfortable choice.

On the one hand, Democrats wished to stand publicly for the interests of minority children and families. On the other, they wanted to defend teachers unions, which have long played a decisive role in Democrats’ political success, especially in California.

These broad political challenges quickly crystallized into a pitched battle over the tenure of one man: California Superintendent of Public Instruction Tom Torlakson, a dedicated ally of the teachers unions. Torlakson’s incumbency has become a referendum on his staunch opposition to the Vergara decision.

His challenger, former charter schools executive Marshall Tuck, also is a Democrat — creating an intra-party race as close and bitter as any in recent memory, even though officially the post is non-partisan.

If Tuck wins, an even bigger confrontation will arise, pitting him against Brown and Attorney General Kamala Harris, his fellow Democrats, assuming both are re-elected. Brown handily is leading Republican challenger Neel Kashkari, who applauded the Vergara decision.

Harris filed the state’s appeal of Vergara on behalf of Brown. Her opponent is Republican Ronald Gold, who urged her not to appeal Vergara. He asked, “Is she with students, particularly inner city and economically disadvantaged ones, or is she with the teachers unions that support her campaign?”

Even after their expected victories next Tuesday, that’s the kind of headache California Democrats can do without.

Health insurance costs

Finally, the remarkable divides among California Democrats on Proposition 45 could establish another pattern of disagreement for liberals nationwide. It would give the California insurance commissioner the power of approval over changes in health-insurance rates — including over Covered California, the state’s implementation of Obamacare.

Prop. 45 is sponsored by the left-leaning Consumer Watchdog organization.

It comes down to this: Will Covered Care rates be set as part of the federal legislation, or by the state insurance commissioner because of Prop. 45?

The official Ballot Pamphlet from the California Secretary of State features the dueling liberal visions.

The Pro side insists: “Proposition 45 will lower healthcare costs by preventing health insurance companies from jacking up rates and passing on unreasonable costs to consumers.”

The Anti side retorts: “Prop. 45 creates even more expensive state bureaucracy, duplicating two other bureaucracies that oversee health insurance rates, causing costly confusion with other regulations and adding more red tape to the health care system.”

These political fault lines are just opening up, and are likely to get even larger.

This article was originally published on CalWatchdog.com

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Covered CA caught in Prop. 45 crossfire

October 21, 2014 By James Poulos 4 Comments

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 CalWatchdog.com.

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Covered CA Dissects Prop. 45, Doesn’t Oppose It

October 16, 2014 By Dave Roberts Leave a Comment

Officials at the Covered California insurance exchange, the state’s implementation of Obamacare, worry passage of Prop. 45 could damage its operations, potentially affecting insurance coverage for millions of Californians. But the board has chosen not to notify California voters of their concerns by formally opposing Prop. 45.

“The initiative could seriously undermine the work that we have underway, our operations, and could compromise the terrific movement and progress that we are making with implementing health reform in California,” said Covered California Board Member Kimberley Belshé at the board’s recent meeting (webcast here).

Board Member Diana Dooley agreed. “I personally have very serious concerns about the interaction of the plain language of this initiative and the work that we’ve invested in making the Affordable Care Act real in California and to some considerable degree somewhat successful,” she said.

Those concerns were confirmed in a report by Executive Director Peter Lee, which found, “Proposition 45 could have a significant detrimental impact on Covered California’s operations….”

Prop. 45

Known as the Insurance Rate Public Justification and Accountability Act, Prop. 45 would require health insurance rates to be approved by the state insurance commissioner, similar to the car insurance rate approval mandated by Proposition 103 in 1988.

Lee’s Prop. 45 analysis cited several concerns:

  • “Covered California’s role as an active [insurance] purchaser could be significantly undermined if health plans negotiating with Covered California are reluctant to consider or negotiate on factors other than price because of uncertainty about the subsequent price that will be approved (or ordered) by CDI [California Department of Insurance].
  • “If for any reason a new rate were not approved in time for open enrollment, plans would ‘default’ to the old rate for the entire next year.
  • “Current timelines under Proposition 103 [if applied to medical care under Prop. 45] would provide significant disruption to the offering of plans for the annual open enrollment.
  • “One risk that Covered California needs to be concerned about is the potential of health plans withdrawing in advance of or during the rate regulation process. To the extent a mandatory intervenor hearing process is unresolved in time to meet the open enrollment deadline, a plan’s proposed rate could not go forward.
  • “Almost 90% of Covered California’s consumers receive federal subsidies to reduce their net premiums…. [I]f the rate change sets a new ‘second lowest silver’ plan, some consumers could see their costs increase due to the adjustment of the prices used for the tax credit calculation and the potential reduction of the purchasing power of the tax credits.”

Warn voters?

The Covered California board members could have laid out their concerns in a resolution opposing Prop. 45 to help voters make a better informed decision ahead of the Nov. 4 election. But they unanimously declined to do so.

“I think the beauty and the right kind of influence of this board is to remain as apolitical as possible,” said Board Member Robert Ross. “I’m philosophically opposed to taking any formal position on this ballot measure or any other. I think there’s plenty of politics to go around. Let it go on and let’s try to keep it out of the deliberations of this body.”

The board’s decision to remain neutral on Prop. 45 was welcomed by more than a dozen Prop. 45 supporters who spoke at the meeting.

“People will differ in their analysis of whether Prop. 45 will make the world better for consumers or not better,” said Betsy Imholz, representing Consumers Union. “But one thing is indisputable, that the insurance industry is unanimously and vociferously opposed to it. Were you to align with that position, I think it would create a bad public image.

“And were it to pass, I think the public would be watching closely and questioning your implementation of the act. You don’t need that. None of us needs that. We just want to move forward with the very successful work that you’ve been doing over the past several years.”

Elizabeth Pataki, a retired intensive care nurse representing the California Alliance for Retired Americans, agreed.

“Since Covered California is prohibited under California and federal law from spending taxpayer money to campaign for the ballot initiatives, and since you negotiate with the powerful health care industry to ensure Californians must buy health care and have access to that care, as such it’s very important that you avoid taking sides and getting involved in a political fight with consumer advocates on one side and the health care industry on the other,” she said.

“We need Proposition 45 because there have been 185 percent increases in rates, which have caused severe difficulties. Those severe difficulties include working people and retired people going bankrupt. Proposition 45 will apply the same rates as car coverage. It does not undermine the Affordable Care Act. And it’s public, it’s transparent, it’s open. The public can see what’s happening.”

Concerns

Only one person argued that the board should make its concerns public about Prop. 45.

“We have substantial experience with Prop. 103,” said Steve Young, representing the Independent Insurance Agents and Brokers of California. “From our position, Prop. 45 was a sham. What it is represented to be is not in fact what it would be. We believe and are sure that there is no empirical evidence to suggest that the Prop. 103 rating law, or especially the public intervention process, has done anything to lower insurance costs in property casualty insurance.

“Our view is Covered California itself already has done and will continue to do more to temper and lower insurance costs for California consumers than Prop. 45 ever could. So our view, while we certainly understand your position, is that it would be appropriate for you to call a pig a pig, and take a position against Prop. 45.”

Although the Covered California board has sought to stay above the political fray, it has found itself mired in it anyway.  Consumer Watchdog, which is leading the campaign for Prop. 45, on Monday sent a letter to Attorney General Kamala Harris seeking an investigation of the agency’s no-bid contracts and suggesting Covered California is in collusion with insurance companies against Prop. 45:

“Covered California has refused for months to release information requested by Consumer Watchdog under the Public Records Act concerning the agency’s communications with insurance industry executives about Prop. 45 …. Californians deserve to know the truth about hundreds of millions of dollars in no-bid contracts and industry influence at Covered California before they vote November 4th.”

Dooley responded to criticism at the September Covered California meeting. “I … am deeply troubled by the politicization of the work that we’ve done and the suggestions that necessarily come up in a political campaign,” she said. “And the characterizations that have been made and may continue to be made that we are not a sufficient steward of consumers.

“I kind of take personal offense at that because I’m here because of my consumer commitment. And I think we have established a reputation of openness and evidence of consumer protection.”

Covered CA problems

In other action at the meeting, Lee told the board that many Californians who called Covered California in the previous month were put on hold for as long as 40 minutes while those whose citizenship was in question were moved to the front of the call line.

The number of suspected illegal residents, who were in danger of losing their insurance eligibility, had grown to 148,000. Prioritizing their cases reduced that to just 10,474 clients whose legal residency is still in question, according to a press release.

Lee told the board that, although the law requires illegal residents be dropped from coverage after 90 days, Covered California has extended their coverage “well beyond that.”

This article was originally published on CalWatchdog.com.

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Three Ballot Initiatives, Not Quite As Awful As Usual

October 10, 2014 By Joe Mathews 2 Comments

You gotta take your good news where you can get it when it comes to California’s dangerously inflexible system of initiative and referendum. So this year’s three ballot initiative – Propositions 45, 46, and 47 – qualify as good news.

It might be more precise to say: those three initiatives are less awful than usual.

I’m not talking about the policy substance of the initiatives – which involve health insurance rate regulation (45), liability for medical errors and some other things (46) or criminal charges and sentencing (47). One can make arguments for and against those policies. But the issues and the policies aren’t the first question you should ask about California ballot initiatives. The correct first question is, instead: is it possible to fix the errors in these things?

The default for California initiatives is to not permit fixing – or amendment – by the legislative body at all. We’re the only place on earth where this inflexibility is standard on initiative statutes. And it’s the fundamental problem of the process; once you do something by initiative, there’s little you can do to undo it.

Which brings us to the good – well, the not-so-awful news. All three of these measures depart from the norm by permitting legislative amendment. For that, their sponsors should be praised.

The praise shouldn’t be all that strong. Because the initiatives don’t make legislative amendment easy. All three require a super-majority vote of 2/3 – thus creating new supermajorities in supermajority-mad California – to amend the measure, and require such amendments meet the spirit of the initiative. Prop 47 also permits the legislature to use a majority vote to further reduce sentences of the crimes mentioned in the act.

These three initiatives also don’t include a reckless provision that has become a new standard of sorts for initiatives – provisions giving legal standing and a black check to the initiative’s own sponsors to defend their own measure in court. Effectively such provisions turn initiative sponsors into mini-attorneys general. Fortunately, none of the three initiatives on the ballot has any such provision.

Yes, this is a low bar – permitting fixes and not writing legal blank checks – but when it comes to California initiatives, you must lower your expectations.

This article was originally published on Fox and Hounds Daily

Joe Mathews is a Connecting California Columnist and Editor, Zócalo Public Square, Fellow at the Center for Social Cohesion at Arizona State University and co-author of California Crackup: How Reform Broke the Golden State and How We Can Fix It (UC Press, 2010)

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