“AB339 is designed to ensure consumer access to vital medications,” said the bill’s author, Assemblyman Rich Gordon, D-Menlo Park, on the Assembly floor June 3. “Californians with cancer, HIV/AIDS, hepatitis, multiple sclerosis, epilepsy, lupus and other serious and chronic conditions, need high-cost, specialty drugs. Today, consumers with these serious health conditions can be asked to pay as much as $6,600 for a month’s prescription for a single drug. AB339 limits what a consumer pays to $275 per 30-day prescription.”

The updated version of the bill reduces that to a $250 copay limit for a 30-day supply, with the exception of those with bronze insurance plans who would be liable to pay up to $500 for a 30-day drug supply.

“The California Health Benefits Review Program, which analyzed AB339, found that there’s a preponderance of evidence from studies that persons who face higher cost sharing for prescription drugs are less likely to maintain meaningful levels of adherence than persons who face lower cost sharing,” said Gordon. “And poor adherence to prescription drug therapy for chronic conditions is associated with higher rates of hospitalization and emergency department visits.”

Actual Effect of Cost Sharing

The actual effect of cost sharing may be more nuanced, according to the legislative analysis prepared for the Senate Health Committee’s July 15 hearing: “[T]here is some evidence that the effect of cost sharing may differ depending on the specific disease and specific specialty drug. There is a preponderance of evidence that cost sharing has stronger effects on use of health care services by low-income persons compared to high-income persons. However, this was not observed in a recent well-done observational study from Massachusetts.”

Gordon responded to the concern that his bill would increase insurance premiums by pointing out that CHBRP “found that premium increases are estimated to be only 0.3 percent for enrollees with group insurance and 0.7 percent for enrollees with individual market policies. As demonstrated by this data, the benefits of this bill increasing medication adherence far outweigh any negatives. Join me in supporting these important consumer protections, which ensure that Californians are better able to afford their prescription drugs and that drug benefit designs are not discriminatory.”

He was in fact joined by most of the Democrats in the Assembly where the bill passed, 48-30, with no other discussion. It also passed along party lines in the Senate Health Committee, 7-2, after witnesses testified to its pros and cons.

Advocacy Organizations Tout Effectiveness of Medicinal Improvements

“This is a bill about basic consumer protections,” said Sawait Seyoum, representing the advocacy organization Health Access California. “A recent study found that the average consumer has about $2,300 in liquid assets in their checking or savings account. Today we expect the average constituent to pay over half of what they have in their account for a single prescription in the first month.

Touting the effectiveness of medicinal improvements was Anne Donnelly, representing Project Inform, which advocates for those with HIV and hepatitis C.

“Over the years since we started working on HIV, people with HIV have started moving from a life expectancy of about 43 days to a normal life span, and we have ended the transmission of HIV from HIV-infected moms to their babies,” she said. “And that’s in large part due to the effectiveness of HIV drugs. Now we have an HIV drug that when used appropriately can stop new infections.

“So the hope of ending this epidemic really depends in large part on these drugs being accessible and affordable to Californians living with and at risk for HIV. We need AB339 to ensure that everybody with a serious health condition or at risk for one, not just people living with HIV but including people living with HIV, have access to the drugs they need at a price they can afford.”

Opposition to Bill Focused on Increased Premiums

But the bill might actually have the opposite effect, according to Nick Louizos, representing the California Association of Health Plans.

“Our opposition to this bill is fairly simple,” he said. “Legislatively designing health benefits increases premiums. We can legislatively create the best benefit packages in the world, but if no one can afford them, that’s pretty useless from our perspective. This has been demonstrated time and time again. The independent analysis of the introduced version of this bill does show premium increases of close to $400 million on individuals and employers.”

That analysis, which was done before the bill’s scope was reduced to include only prescription drugs providing essential health benefits, estimated it would result in a $162 million increase in employer-funded premiums in the private insurance market and a $216 million premium increase by individual purchasers.

But there may be big costs associated with the current version of the bill. The analysis states that it may include “unknown, potentially significant fiscal impact on the private health insurance market. By requiring coverage of single-tablet regimens and extended release prescription drugs, carriers lose negotiating power, leading to unknown higher drug costs.”

Louizos said that the state health benefit exchange, Covered California, has estimated “that over a three-year period, prices could increase by 3 percent. And that’s a pretty significant percentage from our perspective, considering all the cost drivers in the health care system.”

John Caldwell, representing Pharmaceutical Care Management Association, is also opposed:

“[It} appears to require the brand pharmaceuticals that have been on the market the longest, and thus most often prescribed, would get favored status,” he said. “In some cases this would be the most expensive, in some cases it may not be. So we don’t see the reasoning behind that. We think it’s just going to require redoing the [cost] tiers on an annual basis based on what is the most popular drug.

 

“Another issue: AB339 essentially forces coverage of more expensive brand HIV pharmaceuticals that are in single-tablet form when less expensive brands or generics in multi-tablet form are available. As the Assembly Appropriations Committee analysis noted, the burden of proof to refuse coverage of these drugs, according to the bill’s provisions, appears very high, essentially meaning they would have to be covered. This provision would completely eliminate any incentive for the manufacturers to negotiate on plan formularies.”

Further Discussion Encouraged

The only committee comment came from the chairman, Sen. Ed Hernandez, D-West Covina:

“I agree that there are conditions that need to be dealt with, especially very expensive ones. I believe that we need to make sure that the consumer doesn’t have to go bankrupt.

 

“But there’s something that I think we really need to really have a discussion. There’s an underlying problem, and it still deals with overall controlling costs to the health care system – and that’s the increasing cost of prescription medications. At the end of the day what’s going to happen is that you’re going to have lower payments to the consumer, but yet if you have escalating drug costs, guess what, all of those costs are going to be passed onto the consumer in the form of premium increases throughout the entire system.”

AB339 will next be considered by the Senate Appropriations Committee.

The Kaiser Family Foundation poll, taken in December of last year, added another piece of discouraging data to an increasingly daunting pile. “Forty-four percent of exchange policyholders surveyed said it’s somewhat or very difficult to afford their premiums,” the Los Angeles Times reported, “compared with 25 percent of adults who had employer-based or other private health insurance.”

Analysts paid close attention to the figures for two reasons. First, they contributed to the growing perception that Covered California — one of the nation’s biggest, most important and most successful exchanges — is now on a path toward underperformance.

Second, as the Times noted, the numbers will foster an intensified debate between the exchange and the insurance companies on premium rates for the new year. “Many analysts are predicting bigger premium increases for 2016 in California and across the country. Insurers have more details on the medical costs of enrollees, and some federal programs that help protect health plans from unpredictable claims will be winding down.”

Calling audibles

As California’s struggles have reflected the even greater challenges faced by other failed or failing exchanges, policymakers and regulators have turned to consider how to sidestep disaster. One notion that has attracted attention — possibly in Gov. Jerry Brown’s office — is an exchange merger.

“The idea is still only in the infancy stage,” reported The Hill. “It’s unclear whether a California-Oregon or New York-Connecticut health exchange is on the horizon. But a shared marketplace — an option buried in a little-known clause of the Affordable Care Act — has become an increasingly attractive option for states desperate to slash costs. If state exchanges are not financially self-sufficient by 2016, they will be forced to join the federal system, HealthCare.gov.”

The idea would be that a state with a failed marketplace could offer a surge of enrollees and revenue to a state with a struggling marketplace. Intuitively, the arrangement would tend to cluster smaller states around larger ones, effectively extending the insurance regimes of the former to the latter.

In part, The Hill observed, states have turned to the merger idea because federal law requires their exchanges to be financially self-sustaining if they wish to avoid joining the federal exchange. But states have also been pressured by the King v. Burwell case currently pending at the Supreme Court, where the legality of federal subsidies for states without their own exchanges is on the line.

“Most Republican state leaders have avoided talking about how they would respond to a decision against the use of subsidies on the federal exchange,” according to The Hill. “Behind the scenes, however, many are anxiously contacting states that run their own exchanges.”

Expanding coverage

Perhaps paradoxically, legislators in Sacramento have responded to the climate of uncertainty surrounding California’s exchange and the broader exchange system by pushing for expanded coverage, including to unlawful immigrants.

Under the terms of a new bill, SB4, successfully advanced through committee by state Sen. Ricardo Lara, D-Bell Gardens, “the undocumented will be able to buy health insurance on the Covered California exchange, always providing that the federal government authorizes it, but they will not automatically benefit from Medi-Cal, the state medical subsidy, however low their annual incomes,” according to Fox News Latino.

Questioning assessment

As the policy shifts play out, at least some news analysts have raised a key side issue: just how experts and lay readers are supposed to confidently assess just how well or poorly Covered California is doing.

In a recent essay, Trudy Lieberman at the Columbia Journalism Review noted that the exchange has frequently put forth different measures and metrics by which its success might be judged. Sometimes, the standard has been total enrollees or new yearly enrollees. Sometimes, it has been the renewal rate, the number of Californians covered through the exchange itself, or, “simply, the overall rate of uninsured adults across the state[.]”

Coverage of the exchange’s fortunes, Lieberman observed, “has largely followed the lead set by the exchange. The result is coverage that has too often been reactive, short on enterprise, and with missed opportunities to ask some necessary questions. Covered California may ultimately have a success story to tell — but it will need to face some sharper skepticism before we can be sure.”

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.”

“Helping You Navigate Federal Health Care Changes,” the website home page headline says.

The site, launched last August, provides information and an overview of the Affordable Care Act, and Covered California, the state’s Obamacare health exchange. It has links to information for people who already have health insurance, and for those who don’t. There is information provided for employers, and there is a link directly to Covered California.

The website has a very interesting list of the 18 separate tax increases under Obamacare,  and has information for younger adults, as well as a page dedicated to seniors.

And that’s it.

The website doesn’t look like Covered California, and does not purport to be the state health insurance exchange.

So what’s the problem? Assembly Minority Leader Connie Conway, R-Tulare, said Democrats in Congress have been ginning up negative press on the website. “This was started by Congresswoman Janice Hahn because she’s embarrassed by her vote on Obamacare,” Conway said in a Dec. 4 interview with Fresno radio talk show host Ray Appleton. “Our website links to Covered California, and answers questions for our constituents.”

Conway added, “They’ve driven a lot of people to our website.”

The ‘unhelpful website’

Congresswoman Janice Hahn, D-CA, even sent out a press release earlier this week about the Assembly website: “I am appalled by the so-called civil servants who have stooped to confusing and misleading Californians who are trying to get health insurance,” she said.

“The unhelpful website seems to be little more than an attempt by Affordable Care Act opponents to undermine the law’s success and prevent people who need health coverage from getting it,” Hahn said in the press statement.

Those are strong words and accusations. So I called Republican Assembly communications director Sabrina Lockhart, and asked if anyone from Hahn’s office had called to discuss their concerns with the health care website. “They never once called us to find out more about it,” Lockhard told me.

Next, I called Congresswoman Hahn’s office and asked why they haven’t called Assembly Minority Leader Conway to discuss concerns about the website.  Spokeswoman Breelyn Pete said “I don’t know if a call has been made. I don’t know if our Chief of Staff or the member called.”

“Last month, Attorney General Kamala Harris shut down 10 fake ‘private health insurance websites that misled Californians by imitating Covered California,’” the San Francisco Chronicle Politics Blog reported. “The GOP website was not among those listed among the ‘imitation’ websites.”

Media blitz

But it’s far worse than just a little negative press; some of the press has been misleading. And some of the messages in social media are vile.

The Sacramento Bee reported, “California Democrats up pressure on Republican health care site.”

The Daily Kos reported, “California GOP creates fake health care website to discourage constituents from obtaining insurance.”

ABC News said, “California Republicans Defend Fake Obamacare Site.

MSNBC reported, “A bogus health care website, courtesy of the GOP.”

The Los Angeles Times wrote, “Rep. Janice Hahn calls on state GOP to take down ‘fake’ Obamacare site.”

Examiner.com said, “California GOP creates phony health care website to confuse residents.”

California Democratic Party Chairman John Burton said, “Republicans in California have no qualms about following their national party’s lead when it comes to spreading misinformation about the Affordable Care Act.”

Vile social media posts

Some of the really nasty Twitter comments aimed at Assembly Communications Director Sabrina Lockhart are below:

	Jim Sumstine (@CopyJim)
12/4/13, 5:15 AM Sabrina Lockhart and Zimmerman are GOP heroes, one just wants minorities to die and the other actually kills them

	Tim (@jefsauce)
12/5/13, 11:32 AM @SDLockhart Hope you’re having fun making it harder for people to get insured, you sick weirdo.

	Kate (@AKRNHSNC)
12/4/13, 4:46 AM @SDLockhart What a POS you are with your taxpayer-paid-for-benefits, trying to deprive others of getting healthcare that they will pay for!

	Seth Pierson (@mfpseth)
12/3/13, 5:20 PM .@SDLockhart How many ppl will die because of the faked health exchange site set up in YOUR name, Sabrina Lockhart? flickr.com/photos/drumsnw… David Valenzuela (@Yecora51) 12/3/13, 7:48 PM politicususa.com/2013/12/03/cal… if you want yo contact the bitch.Sabrina.lockhart@ams.ca.gov

Instead, I was angry.

I have a really good PPO plan. My annual out-of-pocket is high, but my coverage is good. It makes doctors smile when they see I have a PPO. Cha-ching $$.

I like my insurance plan. I like my family doctor — we have a 23 year relationship. Skin cancer and San Joaquin Valley allergies have plagued me for years, so my two favorite docs are my dermatologist of 25 years, and my ear, nose, throat doctor of nearly 28 years.

The cancellation of my plan means Anthem Blue Cross agreed to what Covered California forced on them, to cancel all employer plans by December 31, 2013.

Yesterday Anthem Blue Cross of California announced it has agreed to a two-month extension of more than 100,000 individual policies. This was supposedly after they failed to give the required 90-day cancellation notice, state Insurance Commissioner Dave Jones announced Tuesday.

The policies had been set to expire on Dec. 31 but will be extended until Feb. 28 for those who choose to re-enroll. Notices informing customers of the extension will be sent out this week, Anthem said.

“Due to a computer glitch 104,000 policyholders had not received 90 days’ notice of cancellation as required by law, the commissioner asked Anthem Blue Cross to send out new notices to those policyholders and give them the option to extend their current policies, with their current doctors and hospitals at their current rates until February 28,” Jones’ website said. “Anthem will mail out new notices by November 15. If all 104,000 of these policyholders elected to keep their existing coverage through February 28th, they would save an estimated $23 million from Anthem’s 2014 rates.”

But here’s where it gets sketchy. The Insurance Commissioner’s website goes on to start promoting California’s Obamacare, Covered California: “Anthem policyholders should evaluate carefully whether keeping their existing policy into 2014 is beneficial. They should shop and compare all health insurance available to them.”

The Insurance Commission website even suggests looking into a Covered CA subsidy:

“Policyholders should contact Covered California at www.coveredca.com to see if they are eligible for a premium subsidy. If they are eligible for a subsidy, it will probably be better for them to sign up for new coverage through Covered California by December 15 in order to start receiving the premium subsidy in January. This is the second extension of policies required by Commissioner Jones. Last week Blue Shield was required to extend policies for 115,000 policyholders after failing to comply with notice requirements.

My letter from Anthem was dated September 2013, plenty of time to meet the 90-day notice requirement.

Covered CA party

It is interesting to note, Covered California will not release how many Californian’s have actually signed up for the subsidized insurance. The agency is having to hold special events to attract people to sign up for the insurance. Tuesday, The California Endowment, the Service Employees International Union-Unite Healthcare Workers West (SEIU-UHW) and Covered California, invited 1,500 Sacramento region residents and SEIU members attended an enrollment event to sign people up for  Covered California and Medi-Cal, the state’s medical plan for welfare recipients.

“The event was part of the Endowment’s ‘Get Covered’ or ‘Asegúrate’ initiative, which seeks to educate Californians about Obamacare and the expanded opportunities for coverage created by the new health care law,” the Covered CA story said. “It is part of a series of events across targeted counties that represent more than 90 percent of those who are eligible but uninsured, and supports the Endowment’s Building Healthy Communities 10-year initiative.”

The state is spending millions of dollars trying to get people to sign up for the health care plans… while the state government has run up a $127 billion deficit.