CA health care to equalize the unequal

by CalWatchdog Staff | January 16, 2013 10:13 am

Jan. 16, 2013

By Katy Grimes

SACRAMENTO — Health care in California is about to get a makeover. But this makeover will not be improving the look of healthcare in the state, despite California’s state-of-the-art medical facilities and teaching hospitals.


The Assembly Committee on Health[2] has been hard at work under the tutelage of Committee Chairman, Assemblyman Dr. Richard Pan[3], D-Sacramento, to prepare the state to implement health reforms enacted by the federal government’s Affordable Care Act,[4] more commonly known as Obamacare[5].

The ACA requires states to launch online insurance marketplaces by 2014. California’s health exchange, “Covered California[6],” is “guided by six primary values[7],” and claims that health insurance costs will be lowered for all Californians.

But even at the hearing Tuesday, Marian Mulkey, Director of the California Healthcare Foundation[8], said costs will go up for young people — and down for older people. No one at the hearing made the case that, as the number of people covered under one California health insurance exchange dramatically increases, costs will go down — especially since 1.8 million Californians are eligible for subsidies[9], according to a recent U.C. Berkeley study[10].

Changes to California

“Risk Pools” and “Adverse Selection[11]” were on the agenda Tuesday at the health committee [12]hearing. This is where the free market and individual choice are completely removed from health care.

“Adverse selection is the tendency for individuals to select different health insurance products based on what is most cost effective to meet their anticipated short term health needs and expected use of health services,” the health committee [13]overview said.

Adverse selection occurs when people who anticipate they will need more health care purchase commensurate insurance coverage, and those who “consider themselves healthy” stay out of the market or purchase the minimal coverage.

None of this sounds unusual; that’s how the free market works when consumers have choices. But the health committee doesn’t approve of this and said that this free market approach “leads to an uneven distribution of risks and healthcare costs.”

This concept of “uneven distribution” is the crux of the entire Obamacare plan. “Many of those risk avoidance strategies will no longer be available because of the ACA,” the overview said.

Affordable Care Act

The largest piece of health policy legislation in more than 45 years, the ACA was passed in 2010 amid much national opposition. The ACA mandated health coverage for almost everyone in the country, and subsidized the costs for low-income or unemployed people. The ACA also will dramatically expand Medicaid, the nation’s largest health coverage program, serving both low-income individuals and families, and providing long-term care services for people with disabilities, as well as the low-income elderly.

Medi-Cal, the California Medicaid welfare program, serves low-income families, seniors, persons with disabilities, children in foster care, pregnant women and low-income adults.

According to the California Department of Health Care Services[14], 8.8 million residents were enrolled in Medi-Cal for at least 1 month in 2009-10, or about 23 percent of California’s entire population.

In 1996, Medicaid was separated from the welfare system, and increased dramatically in size to include people with disabilities, foster children, pregnant womenand low-income seniors.

California Health Insurance

In California, approximately 50 percent of the people have health coverage through an employer, 18 percent have health coverage through government programs such as Medi-Cal or Healthy Families, 12 percent purchase insurance directly from an insurance carrier or have federal veterans’ benefits and 20 percent are uninsured, according to the Legislative Analyst’s Office CalFacts 2013.[15]

“One last consequence of adverse selection is that it leads to an inefficient, often inappropriate distribution of health insurance across the population,” according to David M. Cutler, Richard J. Zeckhauser in a 1997 report[16]. The report was quoted by the Assembly Health Committee in its Jan. 15, 2013 overview paper, “Health Insurance Informational Hearing: What Policy Makers Need to Know About Risk Pools and Adverse Selection[17].”

The committee is using 2013 statistics on California’s population, but referencing a report from 1997 on uneven distribution of health coverage. Since 1997, not only has Obamacare been enacted, but in 2003, President Bush signed into law [18]a major expansion of Medicare drug provision to the elderly.

“One of the main reasons that adverse selection occurs is that there are so many insurance products available with varying levels of coverage and costs from which to choose,” the Assembly overview paper said. The health committee proposed to take care of this by standardizing insurance plans. “Thus, insurance companies will not be competing for enrollees primarily based on significant differences in the comprehensiveness of coverage,” the Affordable Care Act and California’s implementation “contemplates coverage among insurers based on price, quality and service instead of benefits or enrollee risk.” This is a model borrowed from the Kaiser health system, but implemented with the full powers of the state.

The federal government and the state of California are attempting to level the playing field and equalize health coverage. In doing so, they have to pass mandates on all insurance companies, preventing them from offering anything unique to Californians.

“As long as coverage is available outside the exchange, healthy individuals and groups may find cheaper policies, or employer-sponsored groups may self-insure, leaving only unhealthy groups in the exchange,” the overview paper said.

Critics pointed out that this is just what Obamacare would bring, leading to a degradation of the whole medical system in California, and eventually America.

  1. [Image]:
  2. The Assembly Committee on Health:
  3. Dr. Richard Pan:
  4. Affordable Care Act,:
  5. Obamacare:
  6. Covered California:
  7. guided by six primary values:
  8. California Healthcare Foundation:
  9. 1.8 million Californians are eligible for subsidies:
  10. study:
  11. Adverse Selection:
  12. health committee :
  13. health committee :
  14. California Department of Health Care Services:
  15. Legislative Analyst’s Office CalFacts 2013.:
  16. 1997 report:
  17. Health Insurance Informational Hearing: What Policy Makers Need to Know About Risk Pools and Adverse Selection:
  18. signed into law :,_Improvement,_and_Modernization_Act

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