CA hits roadblocks in Obamacare implementation

It’s a bumpy road for the implementation of Obamacare through the Covered California exchange.

Thanks to the cumbersome and convoluted nature of the process, state regulators are grappling with bad provider lists, limited plan acceptance and a host of complaints from Californians caught in the mix. Patients, doctors and even whole hospitals have fallen into confusion over whether they are “in” with a particular carrier’s health care plan.

According to the Sacramento Bee, the impact of the regulatory bewilderment is widespread. Some customers haven’t received ID cards or enrollment packets. Some insurers, meanwhile, have found themselves under new legal scrutiny. California state law puts the onus on them to make sure they accurately list doctors participating in plans — and to have enough providers on those lists to meet demand.

Behind the numbers

Part of the chaos has been caused by a spike in new customers. A new Kaiser Family Foundation survey indicates that some 3.4 million adults gained coverage in California over the last year. But most surveyed who did gain coverage had to rely on an “outreach worker” or “enrollment agent” capable of navigating customers through the tangled web of rules, regulations and forms. And about half of the increase in total covered came through California’s expansion of Medicaid, not through the Covered California exchange set up under Obamacare.

What’s more, the rise in insured has come with an even more startling increase in health care premiums. Critics of the Obamacare legislation had warned premiums would skyrocket. Advocates of the health care law, on the other hand, conceded that some increases were necessary to pay for the costs of wider coverage.

As John Sexton put it, “Obamacare intentionally created higher premiums for younger people and those not eligible for subsidies on the individual market. Those increases were not only predicted, they were considered a feature, a way to offset the costs of expanding insurance to millions of lower income people who did not have coverage.”

Regulatory struggles

But as Sexton also reports that the leap in premiums — which have risen as much as 88 percent — has led California Insurance Commissioner Dave Jones to throw his support behind a new initiative that would allow state regulators to control increases in insurance rates. The power of Jones’ office currently allows him to deem increases “excessive,” but not to halt them.

Proposition 45, which will appear on November’s ballot, is opposed by insurers, who have put some $25 million dollars into an effort to turn public opinion against the measure.

The politics of Prop. 45 are unusual: U.S. Sens. Dianne Feinstein and Barbara Boxer, both Democrats, support the initiative. But Covered California officials worry that its increased role for regulators would complicate the rate-setting process and undercut their own authority to negotiate rates with insurers.

One such critic is Diana Dooley, the Health and Human Services Agency secretary who chairs the exchange board. Dooley is officially neutral on Prop. 45, but has argued that Covered California should have an opportunity to negotiate premiums downward without putting the “advantages” of Obamacare at risk.

As the Bee reports, Dooley perceives at least some of those advantages to be political, while “the ‘intervention’ process works for other types of insurance, it could encourage critics of the controversial law to challenge rates to the detriment of the exchange.”

She told the Bee “there are people who are opposed to Obamacare without regard to any of the facts, and anybody could throw a monkey wrench in this. That gives me quite a bit of pause.”

Jones, however, identified a more fundamental policy problem created by the politics of Obamacare. “We’ve given them a legal monopoly,” he told the Bee of the insurance companies. “Now, by law, everyone has to buy their product.”

For Obamacare advocates like New York Times columnist Paul Krugman, the outsized role of Medicaid expansion in California’s increased coverage amounts to “stealth single payer.”

Prop. 45 indicates that Obamacare may drift toward single payer in another way as well. Economics strongly suggest that if regulators mandate a monopoly for a handful of large firms, prices will rise significantly. Such a substantial government intervention in the market could well require a second, more serious round of government intervention to cap such increases.