Obamacare has largely been in effect for more than two years, but it wasn’t until Jan. 1 that employers with 50 to 99 employees were required to provide insurance. In 2015, the cutoff was 100 employees. This hits both farm labor contractors and smaller farmers who do their own hiring, who tend to have much less financial reserves than large agribusiness farms to fall back on to deal with additional costs and often smaller profit margins.

KQED looked at the issue last week:

Farm labor contractors who must now offer their workers health insurance are complaining loudly about the cost in their already low-margin business.

 

Some are also concerned that the forms they must file with the federal government under the Affordable Care Act will bring immigration problems to the fore: about half of the farm labor workforce in the U.S. is undocumented.

 

“There’s definitely going to be some repercussions to it,” says Jesse Sandoval, a farm labor contractor based in Stockton. “I think there’s going to be some things that cannot be ignored.”

 

Sandoval has about 100 workers on his payroll. When farmers need a crew to pick cherries or pumpkins or asparagus, they call him to send the workers. He needs to offer insurance this year, and he’s smarting at the price tag. At $300 a month per employee, he’s looking at a $30,000 monthly bill. …  “The numbers aren’t there. My margin is 10 percent. And I have to increase expenses 10 percent? Well, that doesn’t work.”

Workers struggle with their share of cost

But under Obamacare, the cost of health insurance isn’t entirely borne by employers. The 2010 federal law allows requiring workers to pay up to 9.5 percent of their income to cover the coast of health premiums.

As with small farmers, that’s a cut on the margins that makes life rough for low-paid agricultural workers. As KQED notes …

… for farmworkers who pick oranges or peaches for $10 an hour, [the premium cost is] still too much.

 

Agostin Garcia says the two contractors he works for near Fresno offered him insurance directly. But when he saw the price tag, he turned them both down.

 

“For me, I’m the only one in my house who works. There’s five of us in the family,” he says in Spanish. “It just wouldn’t work. Either I pay for health insurance, or I pay the rent and utilities.”

Grim quality of life for farmworkers

And that rent is often for housing that is in awful condition, according to a 2014 report by the California Rural Legal Assistance group. In These Times offered this summary:

Even today, however, surveys and field reports have revealed that a large portion of workers are squeezed into essentially unlivable spaces. Some dilapidated apartments and trailer parks lack plumbing or kitchen facilities, much less any modicum of privacy; others are exposed to toxic pesticide contamination or fetid waste dumps.

 

Workers can “live in a single-family dwelling with perhaps a dozen to 20 [people] crowding in,” [report author Don] Villarejo says. In some residences, “mattresses are lined up against the wall because during the daylight hours you could not be able to walk through the rooms owing to all the mattresses on the floor at that time.”

Though premium costs may strain the budget of impoverished farmworkers’ families, the Affordable Care Act retains the passionate support of the United Farmworkers Union as a huge improvement over previous health insurance programs for agriculture workers.

Former UFW Vice President Dolores Huerta has used 2016 Republican presidential candidates’ opposition to Obamacare to argue this shows they hate Latinos — to the annoyance of one of California’s most prominent Latino journalists, Carlsbad-based Ruben Navarrette Jr., an unpredictable moderate whose syndicated column is carried by the Washington Post Writers Group.

Two years later, the Kaiser Family Foundation has issued a report that suggests these warnings were more accurate than the upbeat predictions of Covered California Executive Director Peter Lee. A key finding:

“Among adults who say that they pay a monthly premium for their health coverage, nearly half of newly insured adults (47 percent) say it is somewhat or very difficult to afford this cost, compared to just 27 percent of adults who were insured before 2014. When looking specifically by type of coverage, 44 percent of Covered California enrollees (not all of whom are newly insured) report difficulty paying their monthly premium, versus a quarter of adults with other types of private coverage. Medi-Cal enrollees do not pay monthly premiums for their coverage.”

Cost, not glitches, slowing CA sign-ups

The Kaiser report, which was based on interviews with 4,555 Californians, says the cost factor is the biggest barrier to higher enrollments, not online technical snafus:

“Cost continues to prevent many uninsured adults from seeking coverage. While many people focused on website glitches and administrative barriers during 2014, uninsured adults say that the reason they still lack coverage is because it’s too expensive, with most not even trying to get ACA coverage, and many who did still saying they are ineligible or believe the coverage is too costly.”

The cost of premiums is also prompting Californians to quit Covered California, KCRA TV in Sacramento reported, citing documents showing that 150,000 people dropped their state coverage in 2014.

These developments come in a pivotal year for Covered California — the last year in which federal subsidies will help cover the subsidies provided by the state agency. By law, beginning in 2016, the agency cannot seek state subsidies and must rely only on revenue it generates from premiums. Its goal was to have 1.7 million residents enrolled by Feb. 15, but it fell far short, with 1.4 million signups.

More criticism from national media

Meanwhile, Covered California is again provoking comment from outside of California. A May 31 Columbia Journalism Review essay by Trudy Lieberman criticized coverage of the agency as misleading:

It’s not easy to figure out how to monitor the progress of Covered California, the country’s largest state-run health insurance exchange.

 

Is it the total number of people who have signed up for an insurance plan on the exchange during open enrollment? The rate at which people renew? The number of new sign-ups in a given year? The number of Latino sign-ups? The number of “covered lives”? The number of Californians who have had coverage through the exchange at any point? Or, simply, the overall rate of uninsured adults across the state?

 

“In recent months, Covered California has cited each of these measures to tout its success. And though outside analysts have raised some notes of caution, press coverage 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.”

Lieberman wrote that California journalists should spend more time talking to affected state residents about their experiences with the agency and be less inclined to accept Covered California’s characterizations of its record.

“More than half of the counties in 34 states using the federal health insurance exchange lack even a bronze plan that’s affordable — by the government’s own definition — for 40-year-old couples who make just a little too much for financial assistance, a USA TODAY analysis shows.

“Many of these counties are in rural, less populous areas that already had limited choice and pricey plans, but many others are heavily populated, such as Bergen County, N.J., and Philadelphia and Milwaukee counties.

“More than a third don’t offer an affordable plan in the four tiers of coverage known as bronze, silver, gold or platinum for people buying individual plans who are 50 or older and ineligible for subsidies.

“Those making more than 400% of the federal poverty limit — $47,780 for an individual or $61,496 for a couple — are ineligible for subsidies to buy insurance.”

No surprise to readers of conservative, libertarian websites

None of this comes to any surprise to readers of Cal Watchdog, Instapundit, Hit & Run, NRO’s The Corner or plenty more websites where critical thinking about the administration’s biggest initiative trumped partisanship. The Affordable Care Act really was a disaster. Right-wing racists really weren’t making that up.

But instead of seeing all the advance signs the ACA was going to be a debacle, the media either bought the idea that Obamacare critics were racists or took a wait-and-see attitude.

Not any more. Here’s more from USA Today:

“The USA TODAY analysis looked at whether premiums for the least expensive plan in any of the metal levels was more than 8% of household income. That’s similar to the affordability test used by the federal government to determine whether premiums are so expensive consumers aren’t required to buy plans under the Affordable Care Act.

“The number of people who earn close to the subsidy cutoff and are priced out of affordable coverage may be a small slice of the estimated 4.4 million people buying their own insurance and ineligible for subsidies. But the analysis clearly shows how the sticker shock hitting many in the middle class, including the self-employed and early retirees, isn’t just a perception problem. The lack of counties with affordable plans means many middle-class people will either opt out of insurance or pay too much to buy it.

“The prices of exchange plans have shocked many shoppers, especially those who had plans canceled because they did not meet the ACA coverage requirements. But experts are not surprised.

“‘The ACA was not designed to reduce costs or, the law’s name notwithstanding, to make health insurance coverage affordable for the vast majority of Americans,’ says health care consultant Kip Piper, a former government and insurance industry official. ‘The law uses taxpayer dollars to lower costs for the low-income uninsured but it also increases costs overall and shifts costs within the marketplace.’

“Along with underscoring how high rates are in many places, the analysis could portend more problems for the health law’s troubled rollout. The Congressional Budget Office projected 7 million people would sign up for the law by the end of 2014 and enrollment is already falling several million short of that goal. Insurers need a lot of relatively healthy people to sign up for insurance to make up for the higher cost of insuring the less healthy. Highly subsidized lower-income consumers who haven’t had insurance before often weren’t getting regular doctors’ visits. If many of those making about $50,000 for an individual or about $62,000 in household income for a couple opt out of the new health care system, it will deprive it of some of the counterbalancing effect needed.”

We need about 4,000 reverse Pulitzers

This isn’t just an indictment of Obama’s incompetence. It’s an indictment of the sycophancy of the national media.

Instead of giving out 20 Pulitzers this spring, the Pulitzer committee should give out 4,000 reverse Pulitzers to the reporters and pundits for newspapers, magazines and online sites covering Washington. The Obamacare debacle is mostly on the Democrats. But it is also on their de facto media allies.

On the biggest issue of his presidency, they gave their pal a pass. And then things went so bad that they couldn’t keep covering for him.

But in California, critics of the program insist the cancellations were not made by the insurers, but by Covered California, the state’s implementation of Obamacare. California compelled insurers participating in the Covered California health exchange to cancel noncompliant individual policies.

“In California, insurers did not ‘choose’ to eliminate individual plans for the efficiency of one health-reform compliant platform, California forced it on them,” Craig Gottwals told me; he is a health care policy attorney and Obamacare expert with BB&T-Liberty Benefit Insurance.

He said Covered California didn’t want to leave to chance forcing people into the insurance exchanges. The San Francisco Business Times detailed how Anthem Blue Cross, Kaiser Permanente, Health Net and Blue Shield of California finally admitted their Covered California contracts required the cancellations. Other plans on the exchange are subject to the same contract language.

Covered California out-maneuvered insurers

Gottwals provided the specific Covered California contract language:

“Contractor agrees that effective no later than December 31, 2013, except as otherwise provided in State Law, it shall terminate or arrange for the termination of all of its non-grandfathered individual health insurance plan contracts or policies which are not compliant with the applicable provisions of the Affordable Care Act. Contractor agrees to promote ways to offer, market and sell or otherwise transition its current members into plans or policies which meet the applicable Affordable Care Act requirements. This obligation applies to all non-grandfathered individual insurance products in force or for sale by Contractor whether or not the individuals covered by such products are eligible for subsidies in the Exchange” (bold-face added).

Darrel Ng, a spokesman for Anthem Blue Cross, explained to the Times what this meant for “quality health plan” insurers. “All QHPs (of which we are one) had to sign that contract,” he explained.

Added Blue Shield spokesman Steve Shivinsky, “In order to participate in Covered California as a qualified health plan, the contract required us to cancel non-ACA-compliant plans on December 31. Blue Shield supports this policy because it assures a large and balanced risk pool of individual and family plan subscribers.”

Reimbursement

Gottwals said the singular insurance issue with medical providers is reimbursement — getting paid for the treatment they give. Mandated coverage is the only way to save money in the system and cut reimbursement costs.

“It’s a race to the bottom,” Gottwals said. “Doctors will opt out of [accepting] insurance because of low reimbursements. It’s not philosophical. The only leverage the government has is, ‘We’ll cut reimbursements.’ There’s no other way to to save money in health reform because of the mandated benefits.”

Interestingly, Gottwals said the average age of persons enrolled in Obamacare is 51-54. By contrast, in 2013 the average age of someone enrolled in pre-Obamacare insurance was 41, which is close to the U.S. median age of 37 years.

“This is significantly going to blow costs up, and taxpayers will be on the hook to pay for the difference,” said Gottwals. That’s because older people require more health care.

He said there is a bailout plan already written into the Affordable Care Act, which requires U.S. taxpayers to pay the difference between what care is covered and what is not. “It is going to go way over budget, and taxpayers are on the hook for 80 cents on every dollar,” said Gottwals. “It’s a bad deal, and bad for taxpayers.”

However, Obama continued to insist this week that the ACA still will help Californians and other Americans:

“But to finish the job, now what we’ve got to do is sign up those folks who don’t have health insurance and improve insurance for those who are under-insured, who don’t have very good insurance, and have been subject to the whims of the insurance company.  And that’s what this is all about.  And that’s the challenge that we’ve got over the next month, three months, six months, next year.  And if we get that done — when we get that done — then we will have created a stable system in which there’s no reason why people shouldn’t be getting health care in this country.”

Obamacare has been live since only Oct. 1, and already working people are receiving notices of cancellation of their private health insurance plans.

I got one. And everyone I know who works in the private sector has received a notice of cancellation of their private health insurance.

Kaiser Health News has a new story about all of the health plans now sending hundreds of thousands of cancellation letters to people who buy their own coverage. This will force consumers who want to keep plans they currently have to buy more costly policies.

Kaiser reports an estimated 14 million people purchase their own coverage because they don’t get it through their jobs.

“'The arithmetic is inescapable,' said Patrick Johnston, chief executive officer of the California Association of Health Plans,” Kaiser reported. “Costs must be spread, so while some consumers will see their premiums drop, others will pay more — “no matter what people in Washington say.”

Obamacare exemptions

And there are all of the Obamacare exemptions, which I’ve written extensively about.

It is important to note that the Congressional Budget Office projects only 2 percent of Americans will actually pay the “mandatory” fine for non-participation.

According to the IRS, “Certain individuals who are not required to file an income tax return but who technically fall outside the statutory exemption for those with household income below the filing threshold.”

“HHS regulations also provide that the hardship exemption will be available on a case-by-case basis for individuals who face other unexpected personal or financial circumstances that prevent them from obtaining coverage.”

“The shared responsibility payment (IRS penalty) should not apply to any taxpayer for whom coverage is unaffordable, who has other good cause for going without coverage, or who goes without coverage for only a short time.”

IRS allowable exemptions

These exemptions leave only the working middle class, and those who pay income tax to pick up the tab:

* Individuals who cannot afford coverage;

* Taxpayers with income below the federal filing threshold;

* Hardship;

* Individuals who experience short coverage gaps;

* Religious conscience;

* Members of a health-care sharing ministry;

* Incarcerated individuals;

* Individuals who are not lawfully present;

* Native American Indians.

Who doesn’t pay?

The half of Americans who do not pay federal income taxes will not be required to pay the “mandatory” IRS fine if they do not buy government health insurance.

Illegal aliens will not be fined.

And just in case anyone else was missed in the exemption list, the last paragraph was added to cover any other vulnerable group:

“The HHS regulations also provide that the hardship exemption will be available on a case-by-case basis for individuals who face other unexpected personal or financial circumstances that prevent them from obtaining coverage.”

SB 639, by Sen. Ed Hernandez, D-West Covina, is one of several bills making their way through the Legislature that are designed to implement in California the federal Patient Protection and Affordable Care Act. It is scheduled for consideration by the Assembly Health Committee on Tuesday. SB 639 would:

—Limit annual out-of-pocket expenses to $6,050 for single coverage, according to the bill’s legislative analysis (Hernandez says it’s $6,250), and approximately $13,000 for a family.

—Limit deductibles for small group plans to $2,000 for an individual and $4,000 for a family.

—Require coverage to include the four “metal” tiers in Obamacare: bronze (covering 60 percent of medical costs), silver (70 percent), gold (80 percent) and platinum (90 percent).

—Prohibit insurers from offering anything other than a standardized insurance plan in the individual market.

The California Chamber of Commerce opposes SB 639, asserting on its bill priority list that it “[e]liminates lower-priced plans, inhibits competition and innovation, and leads to less affordable coverage for California businesses and their employees.”

The legislation is also opposed by the insurance industry. Although Covered California, which is running the insurance exchanges, announced on Wednesday that 12 insurance companies have signed up to provide coverage in the individual market and six companies will provide insurance for small businesses.

“Covered California and the insurance companies participating in our marketplace have worked hard to secure these contracts, which will mean affordable health insurance plans for millions of people who currently have no coverage or whose coverage is too expensive,” said Covered California Executive Director Peter Lee in a press release. “We are proud of the product mix, the robust provider network and the lower-than-expected premiums.”

Limiting out-of-pocket costs

The main debate on SB 639 took place at the Senate Health Committee hearing on April 17. Hernandez, who was an optometrist before becoming a senator, led it off by touting the benefits of the Affordable Care Act, starting with the limit on out-of-pocket costs.

“For families with health insurance this ends medical bankruptcy,” he said. “No longer will we hear stories about families who lose their houses because of the cost of medical care. It also means that someone with a chronic condition like MS or a serious condition like cancer can budget for the cost of care, knowing that they will never owe more than $6,250 per year.”

Hernandez also praised the standardization of insurance coverage.

“Californians purchasing health care coverage in the individual market face a vast array of products to choose from with different benefit design,” he said. “It makes price comparisons very, very difficult. This bill would require that individual market products sold outside Covered California be standardized to mirror the products sold inside. This will allow consumers to make apple-to-apple comparisons when selecting a product. Standardized products make comparison shopping much simpler for consumers.

“It forces carriers to compete on cost and quality rather than a difficult-to-understand benefit design. It limits the ability for health plans to cherry pick healthy lives. And it ensures that all products offered to consumers in individual markets have undergone a level of public scrutiny before being marketed to them. Keep in mind that a plan can add to it and make it even more robust, but they have to absolutely abide by the absolute minimum requirements.”

Hernandez countered the argument that placing limits on insurers will reduce consumer options in selecting coverage.

“Consumers will still have plenty of options with five tiers of coverage and at least two standards of benefits in each tier and a multiple of insurers in every geographical region in California,” he said. “Consumers will have 50 to 80 different insurance products to choose from within that market.”

The goal: ‘standardizing’ insurance

SB 639 was sponsored by Health Access California, which calls itself “the leading voice for health care consumers in California.” HAC legislative director Beth Capell echoed Hernandez in her remarks to the committee.

“There will be literally dozens of choices that consumers will face when they go to shop on the exchange,” she said. “There will be considerable choice. But what there will not be under this bill is the opportunity for insurers to design products that are intended to attract healthier lives and to avoid those people who have serious conditions. So this is a further effort to help standardize the insurance market.”

Betsy Imholz, with Consumers Union, the policy and advocacy division of Consumer Reports, explained why that is so important.

“Our research of consumers has found what we all instinctively know, which is that shopping for health insurance is among the most dreaded consumer tasks,” she said. “To date the wild west insurance market has led consumers to feel confused by the jargon and suspicious that the fine print contains ‘gotchas’ and exclusions that they don’t fully understand. Our research has also shown that the more choices people have, if it’s too much it’s overwhelming, it undermines sound consumer decision making.

“One of the favorite parts of the Affordable Care Act for consumers has been the idea that we would finally at last simplify the individual market and the shopping for insurance policies and make it simple to make those comparisons. And to really understand what’s covered, what’s not and exactly how much it costs. This bill goes a long way to doing that by standardizing the products outside the exchange as well as inside so people can see what’s the best value for their needs.”

Speeding down the road to hell?

But several SB 639 opponents warned that the road to insurance hell is paved with good intentions.

“We appreciate the sponsor and author’s intent to create a healthy and strong marketplace where insurers compete on price and quality,” said Steffanie Watkins, representing the Association of California Life & Health Insurance Companies. “We fundamentally disagree that SB 639 will achieve that goal. On the contrary, we believe that this measure will have a very chilling effect on the market. And it will specifically limit consumer access to new and innovative quality health care options that might better suit their needs.

“Our members have demonstrated a strong commitment toward serving the needs of consumers by offering a multitude of competitive and unique products that cater to the individual consumer. We believe SB 639 will severely impede an insurer’s ability to offer these types of unique benefit options to consumers in the individual market. And make it nearly impossible for insurers to respond to the changing needs and preferences of consumers. And instead grant the exchange sole authority over product design, a role they have had very little comparative experience with.”

Watkins argued that AB 1602, which was approved in 2010, addressed many of the concerns about the difficulty in comparing insurance projects. It required insurers to offer at least one standardized coverage product in each of the four metal tiers.

“We believe the requirements set forth in AB 1602 strike the perfect balance by protecting consumers and providing flexibility in the market, so that individuals obtain the coverage that best suits their needs,” she said. “We believe it is critical at this juncture to put our resources toward implementing the ACA in a seamless way. And in a way that helps all individuals make a very seamless transition into having affordable health care come 2014. We are firmly concerned that [SB 639] places additional and unnecessary limitations on insurers without any commensurate benefits to consumers.”

Nick Louizos, representing the California Association of Health Plans, agreed that SB 639 is unnecessary because current law already provides standardization in the insurance market.

“Taking that extra step in terms of eliminating products outside of the exchange and essentially allowing the exchange board to control the outside market is a big policy question that deserves some debate,” he said.

Julianne Broyles, California Association of Health Underwriters, shares the concern about reducing consumer choice in California.

“We certainly do not believe that there was ever an intention with the federal law to take away all choice outside of the exchange with plans that only mirror exactly what’s inside the exchange,” she said. “We think that’s not what is fair to the consumer and takes away choice and competition, and stops the ability to test innovative new products here in California that might lead to better savings down the line. As ACA goes into effect and we head into open enrollment in October just a few months away, the market should be calming down. It should not be churned up further with legislation such as this.”

Sen. Anderson sees specter of ‘single payer’

The only committee member to comment on SB 639 was Sen. Joel Anderson, R-San Diego, who voted against the bill based on several concerns. The main one was that it appears to be leading toward government-run health care, also known as socialized medicine or single-payer care.

“If we limit what the private sector can offer, then aren’t effectively we making this single payer?” Anderson asked. “I mean, part of the private sector participating in this is their ability to address risk. If they are offering the same product in and out of the exchange, wouldn’t the cost be identical? And therefore why would we need the private products? Why wouldn’t everything just be solely with the exchange with single payer?”

Hernandez responded, “It’s not even close or wouldn’t even mirror any type of single-payer system. [Insurers] still have the ability to have other kinds of products above and beyond products that aren’t in the ten [required benefit] essentials that they can compete to try to bring in those individuals, whether it’s acupuncture, chiropractic services. In the exchange right now there are numerous insurance companies bidding for that new business. So it is not one system paying. It is the free market system that will be within that system.”

Anderson wasn’t convinced.

“By limiting those choices to consumers, we are artificially trying to force people into the exchange that may not want to be there at all,” he said. “And if you didn’t artificially limit it, then people have more choice. At some point if we continue to limit that choice, you’re going to have everybody in the insurance industry going to the PUC and requesting that they be regulated like the PUC. Because we have no longer turned them into insurance companies, we have turned them into payment plans.

“The final point is, I find it somewhat insulting that we are saying that our consumers can’t make choices for themselves and we want to limit their choices, as opposed to giving them a broad opportunity. I want to see the exchange work. But I’m worried that we’re weighing down the exchange and making judgments when I just want to get it to work. We have people in October [when enrollment begins] and the first of the year [when insurance plans go into effect] that are going to be counting on us. And I fear that we are trying to predict too much.”

Despite Anderson’s concerns, the committee voted 6-2 along party lines to pass SB 639.

By Chris Reed

We’ve been talking seriously in California since the middle of Arnold Schwarzenegger’s second term as governor about the need to rein in insanely costly public employee benefits, and not just pensions. This has led to progress in cities like San Diego and San Jose and to modest reforms for almost all public employees approved by Gov. Jerry Brown in September 2012.

But every now and then, a labor fight comes along to remind you of just how ridiculous the situation has gotten and remains in much of California. We’re in the middle of one right now with the strike of the Bay Area Rapid Transit System. The San Jose Mercury-News offers the key details:

“BART employees — including management and nonunion workers — earn an average of about $83,000 annually in gross pay, contribute nothing toward their retirement and $92 monthly to health insurance. Their pay and total compensation are both the highest in the Bay Area among transit agencies.

“BART has offered an 8 percent pay hike over four years and wants workers to pay more toward their medical and pension benefits. The local Service Employees International Union and Amalgamated Transit Union, which represent more than 2,300 train operators, maintenance employees and other blue-collar workers, are looking for a 23 percent pay bump and are willing to contribute more toward benefits, just not as much as management wants.”

All this with a transit system that already is heavily subsidized by taxpayers.

Given that these workers “contribute nothing toward their retirement and $92 monthly to health insurance,” their total annual compensation has to be worth upward of $130,000 a year. (Take a look at all BART pension options here; 60 percent of final pay is just the start for a veteran BART worker who retires.)

Boy, with that extremely generous pay, BART must be a well-managed jewel of a public transit system.

Well, no.

Highest-paid 2012 employee? She didn’t work a day

“With a gross salary of more than $333,000, BART’s highest-paid employee last year wasn’t its general manager, police chief or a worker who racked up gobs of overtime scrubbing grime from filthy train seats.

“It was someone who did no work at all for BART in 2012: Dorothy Dugger, the agency’s former general manager who resigned under pressure more than two years ago.

“Under a lucrative retirement scheme, Dugger, 57, quietly stayed on the books, burning off nearly 80 weeks of unused vacation time, drawing paychecks and full benefits for more than 19 months after she agreed to quit in May 2011, according to an analysis by this newspaper. By remaining on BART’s payroll, she accrued almost two extra months of vacation, while sitting at home drawing a six-figure salary for unused time off.

“The months of extra pay were on top of the $920,000 that BART paid Dugger to leave after the agency’s board botched an effort to fire her by violating public meetings laws.”

That’s also from the Mercury-News.

When governance resembles looting

Wait, the Merc-News has more.

“It turns out that Dugger and other management employees can collect ‘terminal leave benefits.’ When managers are hired, they earn three weeks’ vacation each year, gradually increasing to six weeks after 19 years on the job. They also have 13 holidays. Naturally they don’t use it all, so they’re allowed to save unused vacation and holidays without limits. Many can even add some unused sick leave.

“In San Jose, top management and some unions can accrue time like this for a huge payoff when they retire. BART’s system is even more outrageous. When managers leave, they can use that accrued time to actually stay on the payroll — to continue receiving full salary, incentive pay and health benefits, and to accrue work credit that boosts their subsequent pensions. They even — get this — receive holiday pay and accrue more vacation time that they can use to further extend their time on the payroll.”

The same sort of scam has happened in many other agencies, starting with the Metropolitan Water District of Southern California. The bosses don’t care if the rank-and-file get absurd salaries and benefits — because they’re getting even more absurd salaries and benefits. Who looks out for taxpayers inside BART? Nobody.

How insane. How California.

By Chris Reed

As I noted in a CalWatchdog post last week, the California media are covering the state government’s aggressive attempts to lead the nation in the early implemenation of Obamacare without bringing up its immense fundamental problems.

“Beginning next Jan. 1, most companies with at least 50 full-time employees have to offer health insurance. But if they don’t, the fine is a pittance -– $2,000 per employee per year –- compared with the cost of providing health insurance. This creates a gigantic incentive for businesses to drop health coverage and push their employees toward getting insurance though government-run exchanges set up by Obamacare. If a struggling company could swiftly become a prosperous one by offloading 70 percent or more of the cost of providing health coverage, many thousands are going to do it. Some might face shareholder suits if they don’t.

“Also beginning next January, individuals without employer-provided health insurance will face fines under an income-based formula that mandates a penalty of less than $1,000 for those making under $40,000 a year. That $40,000 is significantly higher than the median household income for adults younger than 35, a subset that’s much healthier than older adults. All adults will have an incentive to only buy health insurance when they get sick; under Obamacare, they can no longer be rejected for pre-existing conditions. But these young, healthy adults will have a gigantic incentive.”

Now the fact that this law is the worst piece of legislation since the Indiana legislature voted unanimously for a bill to change the numerical value of pi is beginning to sink in with a Democratic interest group that was one of its hugest supporters: labor unions. This is karma on many fronts, and vindication for the many who said the law was larded with regulations that would have unanticipated negative implications.

It will ‘make union workers less competitive’

This is from the Wall Street Journal:

“Union leaders say many of the law’s requirements will drive up the costs for their health-care plans and make unionized workers less competitive. Among other things, the law eliminates the caps on medical benefits and prescription drugs used as cost-containment measures in many health-care plans. It also allows children to stay on their parents’ plans until they turn 26.

“To offset that, the nation’s largest labor groups want their lower-paid members to be able to get federal insurance subsidies while remaining on their plans. In the law, these subsidies were designed only for low-income workers without employer coverage as a way to help them buy private insurance. …

“Contacted for this article, Obama administration officials said the issue is subject to regulations still being written … .

“Top officers at the International Brotherhood of Teamsters, the AFL-CIO and other large labor groups plan to keep pressing the Obama administration to expand the federal subsidies to these jointly run plans, warning that unionized employers may otherwise drop coverage. A handful of unions say they already have examined whether it makes sense to shift workers off their current plans and onto private coverage subsidized by the government. But dropping insurance altogether would undermine a central point of joining a union, labor leaders say. …

“The Teamsters’ Mr. Hall said his union has no plans to eliminate workers’ insurance. Instead, he worries employers will have an incentive to drop coverage in collective bargaining if they can’t tap the subsidies.”

Some of the policies that unions object to may actually be defensible for forcing an acknowledgment of how the heavy cost of health care escapes compensation taxation, which encourages higher spending on health care. But the larger gripe of unions, the idea that they had no idea how sweeping this would be and how it would rock their world, is hilarious in context. Obamacare’s critics weren’t just ideologues. They were serious policy people. And on nearly every front, their warnings are being validated. But supporters aren’t being held to account for their willing blindness.

When will the ideologues who pretend to be neutral Sacramento journalists point this out?

The over-under is May 1, 2018.

When George Skelton sets the agenda, the real world is ignored.

By Chris Reed

Gov. Jerry Brown’s eagerness for California to be the first state to implement the federal Affordable Care Act is being reported matter-of-factly by state newspapers. Completely absent is any big-picture explanation of what this will mean for health providers, companies and individuals in the Golden State. We’re less than a year away from the state implementing policies that give employers a financial incentive to stop providing health coverage and that give individuals, especially the young, an incentive to not buy health insurance. I wrote about these enormous looming headaches last week for the U-T San Diego editorial page:

• Beginning next Jan. 1, most companies with at least 50 full-time employees have to offer health insurance. But if they don’t, the fine is a pittance -– $2,000 per employee per year –- compared with the cost of providing health insurance. This creates a gigantic incentive for businesses to drop health coverage and push their employees toward getting insurance though government-run exchanges set up by Obamacare. If a struggling company could swiftly become a prosperous one by offloading 70 percent or more of the cost of providing health coverage, many thousands are going to do it. Some might face shareholder suits if they don’t.

• Also beginning next January, individuals without employer-provided health insurance will face fines under an income-based formula that mandates a penalty of less than $1,000 for those making under $40,000 a year. That $40,000 is significantly higher than the median household income for adults younger than 35, a subset that’s much healthier than older adults. All adults will have an incentive to only buy health insurance when they get sick; under Obamacare, they can no longer be rejected for pre-existing conditions. But these young, healthy adults will have a gigantic incentive.

Aren’t these angles, yunno, news? Not to most of the media in the Golden State, which focus on the logistical headaches of setting up the state health exchange in which people shop online for insurance. Why not focus on the larger problems with the Affordable Care Act? No idea, but my working theory is that not just sheep but incompetent sheep follow the herd.

Want an appointment? Tough luck

How bad is this refusal to say a discouraging word about Obamacare? Consider this angle, which should be a front-page story and which invariably surprises people when I mention it to them:

“California already has both shortages of family doctors in most regions and the nation’s oldest cohort of family doctors, with nearly 30 percent older than 60. If you add 2 million people to those being treated by these family physicians –- the minimum California increase expected in 2014 because of Obamacare -– what happens? It becomes far harder to get an appointment, and the headache gets progressively worse as more aging family doctors retire.”

This has gotten some coverage from the Golden State’s media. But given the importance of health care in everyone’s lives, one would think it would get far, far more coverage. We already have a shortage of family doctors in most parts of the state — and it’s a shortage that’s about to get far worse because of physician retirements and Obamacare.

Huge news? Of course.

But not to the sheep in the herd.

By Katy Grimes

As the Legislature crammed to clear their plates this week so they could take their summer break, one atrocity after another oozed from the committees in the form of legislation.

One of the worst was SB 1431, which will add to the already heavily regulated health insurance market by prohibiting the sale of stop-loss policies to employers with fewer than 50 employees.

It sounds like a lot of inside baseball, but this group of small employers is already the easy target of heavy regulations and insane California laws. SB 1431 will further penalize this group of innovators, risk takers, and entrepreneurs. Lawmakers have deluded themselves into believing that it’s a good thing.

SB 1431, by Sen. Kevin de Leon, D-Los Angeles, would establish a minimum number of health claims for stop-loss policies issued to employers in the small group health insurance market. And it requires guarantee issue for all employees and dependents, and guarantee renewability of the policy for the small employer.

According to the bill analysis, de Leon said, “SB 1431 will protect consumers in California’s small group market as the Affordable Care Act is implemented.” Beware.

Obamacare

The Affordable Care Act, more commonly known as Obamacare, “puts in motion a number of significant small group market reforms and creates a competitive marketplace through the Exchange,” the bill analysis states. “However, as federal health care reform goes into full effect, there will be incentives for some small employers to self-insure and to purchase stop-loss coverage. The author states this situation could lead to a significant exodus of small employers from the small group market, specifically those employers with young and healthy employees. If this situation occurs, adverse selection could leave in its wake a majority of the state’s small businesses in an insurance pool increasingly subject to skyrocketing premiums, both inside and outside of the Exchange. The author states that even those that self-insure and buy a stop-loss product may soon end up in this pool if the stop-loss carrier decides to drop them.”

But the devil is always in the details. The concern de Leon appears to be showing for small employers should have been blown out of the water by the facts during the Assembly Health Committee hearing on Tuesday. But with State Insurance Commissioner Dave Jones at the hearing, it appeared that no one was willing to challenge the facts.

According to Craig Gottwals, an attorney and insurance expert with BB&T–Liberty Benefit Insurancces Services, Inc., if SB 1431 is passed, the sale of stop-loss policies to employers with fewer than 50 employees will be prohibited by the state if those policies do any of the following:

* Contain a specific attachment point that is lower than $95,000 (an absurdly high amount to mandate for a small employer);

* Contains an aggregate attachment point that is lower than the greater of one of the following:

1. $19,000 times the total number of covered employees and dependents;

2. 120 percent of expected claims;

3. $95,000

“This legislation also erroneously contains language referring to stop-loss carriers as providing ‘coverage’ to individual employees and dependents,” Gottwals said.  But that is not what stop loss does.  “Stop loss provides a reimbursement agreement for an employer who has undertaken the task of self-insuring his population.  The politicians wanting to further dismantle freedom and play the harp stings of victimhood undoubtedly used such Orwellian sounding terminology on purpose,” Gottwals said.

This law prohibitively restricts the most innovative and diligent of California’s smaller entrepreneurial businesses by taking away their ability to use creativity and customization to do what is best for their employees, by ramming an over-priced, one-size-fits-all Obamacare-esque approach to health coverage, all the way down to a 2-person company.

Limited choices

Gottwals said what’s left for small employers is limited. “So now a California employer who is intelligent, willing to take some risk, and be creative, will be further penalized and presented with three choices:

1) Stop offering healthcare altogether, which will already be rather enticing in 2014 when the state exchange is set up and the employer has the political cover of “encouraging” use of Obama’s governmental exchanges.

Also, remember, employers under 50 employees will not pay the employer mandate fines under Obamacare.  Hence, an employer can cease offering benefits, and encourage its employees to take advantage of the subsidies available to those making up to four times the federal poverty limit, approximately $90,000 for a family of four.

2) Move out of state to a jurisdiction that does not detest small business and entrepreneurship.

3) Buy an overpriced, first dollar benefit HMO or PPO.  But note, if the employer could afford this option, they would have almost certainly done so already as self-funding is much more difficult, takes more time and has more risk involved. So which employers are self-funding under 50-lives now — those in rural areas with no simple access to an HMO.  Those employers will be particularly harmed.”

What is really going on here?  

California already controls and highly regulates the under 50-employee insurance market for all fully insured products.

The federal government has now taken large control over the over-50 market with Obamacare.

Self-insuring is the only remaining frontier where an employer can extract itself from the myriad of state-regulation as well as some of the dictates of Obamacare (such as the medical loss ratio mandates, possible avoidance of the future Cadillac Tax, and allowance for medical underwriting).

Self-insuring in the under-50 market permits an employer to operate under one, reasonable set of federal laws, the Employee Retirement Income Security Act of 1964 (ERISA), without having to also navigate state mandates, and many of the disastrous dictates of Obamacare.

Gottwals said that it is apparent that California wants to take away the few remaining options small employers still have.  “This law will almost certainly push small employers to a place where they have to stop offering any health care plan, ultimately bringing California one step closer to a single-payer healthcare plan in our state exchange.”