Covered CA caught in Prop. 45 crossfire

Covered CA caught in Prop. 45 crossfire

Yes on 45

On Proposition 45, some Democrats are feeling as if they got a transfusion of the wrong blood type. The initiative would give the No on 45state 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.


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  1. LetitCollapse
    LetitCollapse 20 October, 2014, 18:43

    I am in favor of Prop 45. And I am no demonrat. An extra layer of protection against the greedy insurance companies is a good thing. It should operate just like car or home insurance. The insurance commissioner must approve those premium price hikes. Why not with health care? We get consistent 10% average hikes in premiums for health insurance. That’s the reason we spend 20% of our GDP on healthcare while most other industrialized nations only spend about 12%. We’ve been gouged by a healthcare industry that’s been given monopoly powers by the legislators who collect their bribes. ObamaCare did nothing but shift the costs to the middle class. Somebody has to pay for all the indigents receiving free health care. If you are a producer – you get screwed. If you are a non-producer you get rewarded. We know somebody on Medi-Cal. Great medical care! No co-pay, no deductible! Free hospitalization. Free ER care. Specialist referrals at the drop of a hat. The taxpayers pay for everything! What’s not to love about that? Now do you understand why California has 33% of the nation’s welfare recipients and only 12% of the nation’s population? Duh??? 😀

    Reply this comment
  2. Nancy
    Nancy 21 October, 2014, 11:35

    At least the Insurance Commissioner, or should I say “evil politician” can be voted out if they do not represent us. Not so much for the UN-elected and ambiguous “board” that is making the decisions.

    Reply this comment
  3. Dork
    Dork 21 October, 2014, 14:24

    Since the rates for those of us self employed more than doubled for an inferior policy, this probably is worthwhile to support. With that being said, ANYTHING Government does always leads to Higher Costs. Which is why when I got the renewal after the cancellation of my existing plan the rates had gone down using the “common-core” mathematical principles from $300 per month to $800 per month, with a $6000 deductible and a 40% Co-Pay. Obviously a much better deal than my previous plan at $300 per month, $10,000 deductible, then 100% of everything up to $10 Million. again using the “common-core” method of calculating.

    Needless to say we DO NOT have any health insurance as a result, but We are prepared to jump on a Plane immediately and stay in the finest Hotel we can find while getting “Non-Emergency” procedures at the Surgery Center of Oklahoma.

    For regular stuff, I have quite a few Doctor friends that will stitch me up, or set a broken bone in their living room over a cold beer.

    Emergency?? well my name is now Jose Smith and I am an Illegal Alien because I self Identify as One, just like “transgendered” people self identify.

    If you use the outdated, racist mathematical principles that I was taught in the 60’s you will see I am way ahead of the game by CANCELLING HEALTH INSURANCE.

    Don’t worry all you “Employees” will soon find out in November, right after the election when your policy PAID for by YOUR EMPLOYER is also Cancelled. That portion of the LAW was ILLEGALLY delayed until a couple weeks from now.

    Reply this comment
    • LetitCollapse
      LetitCollapse 21 October, 2014, 15:14

      Dork, you should just reduce your income so that you qualify for Medi-Cal. No premiums. No co-pays. No deductibles. Free hospitalization. Free ER treatment. And you can go to the ER in the wealthiest part of town. All the specialist referrals that your little heart desires. All FREE to you. The taxpayer pays ALL if it! Many illegals use fake ID to qualify for it. With Medi-Cal the illegal get their own US licensed doc and don’t have to go the the ER everytime they get sick. Anyone can buy fake ID for $50. The welfare rolls are full of people who used fake ID to get benefits. The media won’t tell you these things. But I will.

      Reply this comment
      • LetitCollapse
        LetitCollapse 21 October, 2014, 15:23

        Oh. btw, Dork. Under ObolaCare you can live in a $6M mansion and still get Medi-Cal if you reduce your income enough. Just be careful if you happen to be over 55 years old. Once you hit that magic age of 55 and go on Medi-Cal the state will come in and steal your assets from your kids after you die to pay for whatever treatment you got. If you’re only 50 or 45 or 40 years old you’re in the clear. Your assets are not recoverable for your Medi-Cal treatment. And Jerry Clown approves of this! He recently vetoed a bill that would have changed it. So Jerry Clown approves of discrimination against those older than 55. But, once again, the media won’t tell you about this. But I will! 😀

        Reply this comment
  4. Dork
    Dork 22 October, 2014, 06:21

    I understand the rules completely, which is why by the end of this year I will personally own Nothing, All my properties and assets will be put into an LLC andor Irrevocable Trust, I lowered my Taxable income by half last year and will do everything possible to lower it this year also. I am 54 and sick and damned tired of supporting everyone else. The State can kiss my ass.

    Reply this comment
    • LetitCollapse
      LetitCollapse 22 October, 2014, 07:02

      You’re a wise man, dork. You’d be surprised how many 54 year olds don’t have a fracken clue. One would think that after 5 decades on the planet people would smarten up. We have the most ignorant highly educated population on the planet. Tune in, turn on, drop out! 😀

      Reply this comment
    • SeeSaw
      SeeSaw 22 October, 2014, 21:10

      You should be careful with your words, Dork. You never know what condition your life is going to be in tomorrow or even five minutes from now. Many of us have experienced tragedy in our families, that wasn’t expected. You could find yourself being cared for by somebody else one day.

      Reply this comment
  5. Karl Sonne
    Karl Sonne 22 October, 2014, 16:45

    We have to put this in the context of California, the once-lauded land of new ideas and, above all, individuality.
    California has had an insurance commissioner for a long time. His job WAS to keep the private insurance companies in check. Fast forward to 2014, and now, with ObamaCare, the “progressives” want Washington DC bureaucrats to ram their cost increases up our you-know-whats without hindrance.
    EVERYONE with half a brain knows that, once ObamaCare is up and running, that the premuims and co-pays will rise every year in perpetuity.
    CA insurance commissioner WOULD protect us from this Iron Fist of DC corruption, but, no, the “progressives” want CA to bend over and…smile!

    Reply this comment
  6. Carol Nickerson
    Carol Nickerson 3 April, 2017, 02:24

    Before buying any kind insurance – UNDERSTAND WHY YOU NEED IT.

    Reply this comment

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Tags assigned to this article:
Covered CaliforniaObamacareJames PoulosProp. 45

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