Covered CA facing 2015 adjustments

Covered CA facing 2015 adjustments

covered CA open enrollmentAfter 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.


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  1. Sean
    Sean 20 January, 2015, 16:00

    Anyone with any kind of health insurance needs to be very concerned about low federal and state reimbursement rates. Healthcare providers and insurance companies have become transfer payment agents to subsidize underfunded promises made by politicians. The discounts demanded by MediCal or Medicaid will be made up through billings to those with private insurance coverage.

    Reply this comment
  2. Tesla_x
    Tesla_x 20 January, 2015, 17:14

    Bait n switch.

    Pure and simple.

    Better to pay the fine/tax than to have another mortgage payment and double the deductible you had 2 years ago.

    And what of the low income or no income types?

    Then they get dinged for a small single digit percentage of their income.
    Still cheaper to opt out of a criminal scam (with magically legalized kickbacks to the bozos who wrote the ‘law’) masquerading as a health plan.

    So what happens if your reportable income is ZERO and you opt out? You don’t file.

    What are they gonna do?

    Reply this comment
  3. Queeg
    Queeg 20 January, 2015, 19:49


    What’s fair?

    1/3 of state residents on MediCal!


    Reply this comment
  4. Bill Gore
    Bill Gore 20 January, 2015, 21:02

    Yep-CLASSIC bait and switch (gracias a Tesla). Nuthin ‘affordable’ about this care act. My advice remains: if you don’t have full ride insurance thru work then simply effing blow it off or get on medicaid and blow it off. Do not pay premiums, screw the penalty. Do as the sin documentos do: show up sick at the ER and demand full treatment. You will get it. This scam is so absurd it HAS to be designed to fail. And yes, we really should have a full soviet single payer plan for everyone. Take away DARPA and the NSA budget, cut the carlysle group’s budget (er, I mean ‘defense’)by some small percentage, saving trillions, and use it to treat the millions of morbidly obese depressed americans who are always running to the f**ing doctor. This country has degenerated beyond recognition.

    Reply this comment
  5. Itachee
    Itachee 22 January, 2015, 08:10

    On a related front, last week the Fresno Bee ran a lengthy article about how OCare has lead to MediCal patients flooding the ERs at local hospitals. Why? The reimbursement rate to doctors is already so low most doctors won’t see MediCal recipients and those few that do have weeks long waiting lists. So just imagine what happens when the reimbursement rates goes down evern more. The major increase in Medicare patients going to the ER is compounded by the fact that many of those people are going there for non emergency issues more appropriately dealt with at a doctor office or clinic. In short the ERs are seriously overloaded with one person interviewed stating she had a 10 hour wait to see someone about a worsening infection.

    Reply this comment

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Covered CaliforniaMedi-CalObamacareJames Poulos

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