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Legislature passes Medi-Cal expansion bills

Published: March 7, 2013 | No Comments

By Daniel Weintraub

The Legislature today took a major step toward approving a massive expansion of the state’s Medi-Cal program as part of the federal health reform known as the Affordable Care Act.

The Senate and Assembly each passed similar versions of legislation that would extend Medi-Cal benefits to more than 1 million low-income Californians, at least half of whom have no reliable coverage today.

Almost the entire cost of the expansion will at first be reimbursed by the federal government as part of the Affordable Care Act. Eventually, California will be required to pay 10 percent of the cost of the care, plus half the administrative costs of the program. By 2020, California would be paying about $600 million while its citizens would be getting an additional $6 billion in health care.

The two bills, though largely similar, will now be sent to the opposite houses for consideration. If there are conflicts, they will eventually be resolved by a conference committee made up of members of both houses.

But with Democrats in control of both houses and Democratic Gov. Jerry Brown in support, there is little doubt that California will embrace the expansion, which several other states, especially those with Republican governors, say they may turn down.

Under both bills, Medi-Cal eligibility would be extended to all citizens and some legal residents with earnings up to 138 percent of the federal poverty level, or about $31,000 for a family of four. The income threshold will be about $15,000 a year for individuals, which is important because childless adults will be the single largest category to benefit from the expansion.

About half the newly eligible are already receiving care provided by the counties under Low Income Health Plans created last year with federal money as part of a transition to the full federal reform. The others today have no regular source of care and are treated either at community clinics or in hospital emergency rooms.

The bills would also make former foster children eligible for Medi-Cal until age 26 and simplify the application process by ending the requirement that recipients provide documentation of their income levels and other background information. Instead, most of this information would be gathered through electronic records by eligibility workers.

The bills are ABX1 1 by Assembly Speaker John Perez and SBX1 1 by Sen. Ed Hernandez.

 

Court ruling opens door to big changes in health care

Published: July 1, 2012 | 1 Comment

By Daniel Weintraub

The Supreme Court decision last week upholding President Barack Obama’s health reform law clears the way for a transformation in the way millions of Californians will get their health insurance, and, ultimately, their care.

For the shrinking number of people who still receive insurance coverage as a benefit from their employers – mostly at big companies – the changes will be gradual at first, though still significant. And despite assurances from Obama, it is still not clear that most people will be able to keep the coverage they have today.

But for individuals who do not have insurance because they are unemployed, self-employed or working in places that do not offer health benefits, the change will be dramatic, fast and probably to their liking.

The easiest way to understand the coming change is this: The current business model of the health insurance industry consists of avoiding risk. The new model will instead force insurance companies to compete by offering the best service.

In today’s environment, insurance companies avoid risk by spending vast amounts of time, effort and money weeding out potential customers who might actually need to use their product.

That might sound crazy, but it’s true. Insurers make money only if they collect more in premiums than they pay out in medical costs and other expenses. They know that inevitably some people will get very sick or suffer grievous injuries that will cost the insurer more than the consumer paid in premiums. But the first job of the insurance executive is to avoid these circumstances whenever possible.

This kind of thinking gave rise to what is known as the pre-existing health condition. Insurance companies grill potential customers with dozens of questions about their health history, searching for anything suggesting that the person might become a burden to the bottom line. Anyone who has ever suffered more than the sniffles has a good chance of being declined, and if you do get coverage, you will pay a hefty price premium for it. If you have been seriously ill, forget about it. You will not find insurance in the private market at any price.

The Affordable Care Act will change all of that. It already has begun to do so.

Starting in 2014, insurance companies will no longer be able to exclude people based on their health condition. And the companies will no longer be able to charge higher rates to people who have been sick. Rates will be adjusted only for geography, age and whether or not a consumer uses tobacco.

Already, because of federal health reform, insurance companies are prohibited from denying coverage to children through the age of 18. Adults who have been excluded from coverage can apply to a state-run pool for high-risk consumers to cover them until they can move into private coverage when the law is fully implemented. About 9,000 Californians who were previously denied insurance have already been accepted for this transition coverage.

The federal reform also eliminated the lifetime caps on how much insurance companies will spend on an individual’s care, limits that used to end some people’s coverage just when they needed it most. The law is also phasing out similar caps on annual benefits.

Millions of Californians are also now getting preventive care with no out-of-pocket costs; adult children can get coverage on their parents’ policies through age 26 (and about 300,000 have done so); and seniors are getting a price break on their prescription drugs.

Essentially, the Affordable Care Act turns the insurance industry into a quasi-public utility. Insurers will still be private companies. But for a large swath of the market, the benefits insurance companies offer and the practices they follow will be tightly regulated by the government. Their rates won’t be directly controlled, but all of the reforms taken together are likely to amount to de facto rate regulation.

In return, the insurers will get millions of new customers in California alone. Many of these customers will be young, healthy people who will be compelled to buy insurance by the “individual mandate” that was at the center of the legal fight that ended in the Supreme Court last week. The premiums they pay will in most cases exceed the cost of their coverage, and the surplus will be used to help finance the provision of care to sicker people who until now were excluded from coverage.

In California, most of this transformation will be managed by a new agency known as the Health Benefit Exchange. The exchange will be an online marketplace at which insurance companies offer their products and consumers shop for the coverage that suits them best.

Anyone who applies for coverage through the exchange will get help obtaining insurance from whatever program they are eligible for. The poorest Californians will get their coverage through the state’s Medi-Cal program, and the state is expecting about 2.5 million more Californians to become eligible in 2014, mostly childless adults who until now have been excluded from the coverage. Through the end of this decade, the federal government will pay almost all of the cost of caring for these people.

Another 2 million Californians with greater means will be eligible for subsidies from the federal government for the first time. The Health Benefit Exchange will calculate these subsidies based on a family’s income and its size.

The subsidies, which will be in the form of tax credits paid to an insurance company on the consumer’s behalf, will limit the amount families must pay for coverage. Low-income families will pay no more than 2 percent of their income for insurance. Families earning four times the federal poverty rate, or about $93,000 for a family of four, will pay no more than 9.5 percent of their income. Many will pay far less.

The subsidies will be financed in part through more than 40 separate tax provisions expected to raise nearly $500 billion over 10 years. These include an increase in the Medicare tax, new fees on insurance companies, a new tax on medical device manufacturers, a tax on tanning salons and, of course, the tax on people who do not comply with the mandate to purchase insurance.

Peter Lee, the exchange’s executive director, said the marketplace will be open for business by Oct. 1, 2013, so individuals and small employers can begin buying coverage to take effect on the first day of 2014.

“We’re moving full speed ahead,” Lee said last week after the court issued its opinion.

That is no surprise. California has led the nation in implementing the Affordable Care Act. The state has been an early adopter, taking advantage of nearly every federal dollar, expanding access early to the populations targeted by the reform and, in some cases, adopting state-only provisions that go further than the federal law.

“No state in the nation had more at stake in this decision than California,” said Anthony Wright, executive director of Health Access, a consumer advocacy group.

Indeed, California had the most to lose if the court had stricken down the entire law. And in the years ahead, the state will have the most to gain from its implementation. If it works as planned, millions of Californians who have gone without coverage will now get it at an affordable price, and, just as importantly, they will be able to keep it when they need it most.

 

UnitedHealth pledges to keep some reforms in place

Published: June 11, 2012 | No Comments

For all the angst over the federal health reform that has come to be known as “ObamaCare,” many of its provisions are hardly controversial, and some are quite popular. The idea of federal intervention in health care scares people a lot more than the specifics that are in law.

Thus it should not be much of a surprise that UnitedHealth Group — the nation’s largest health insurer — announced today that it will keep several of those provisions in place even if the U.S. Supreme Court strikes down the law later this month. Taking them away from consumers who have them now would be a major public relations headache.

The company, for example, said it would continue to allow adult children up to age 26 to gain coverage through their parents’ policies, and it would continue the federally mandated policy that ended lifetime maximums on the amount of benefits insurers pay out on behalf of their customers. The firm also said it would continue to provide certain preventive care benefits with no out of pocket charges to consumers.

“The protections we are voluntarily extending are good for people’s health, promote broader access to quality care and contribute to helping control rising health care costs. These provisions make sense for the people we serve, and it is important to ensure they know these provisions will continue,” said Stephen J. Hemsley, president and CEO of UnitedHealth Group, in a statement. “These provisions are compatible with our mission and continue our operating practices.”

The company did not say whether it would continue to phase out annual limits on coverage and offer coverage to children without regard to pre-existing conditions.

To see the company’s announcement, go here.

To see a Wall Street Journal story on the announcement, go here.

http://online.wsj.com/article/SB10001424052702303768104577460011857583738.html?mod=WSJ_article_LatestHeadlines

--Daniel Weintraub

 

Clinics Prepare for Onslaught of Patients

Published: June 6, 2012 | No Comments

Dr. Rekha Reddy discusses health care reform in an exam room at MayView Community Health Center in Palo Alto.

Numbers are expected to skyrocket when more are insured

By Genevieve Bookwalter
California Health Report

As federal health care reform promises insurance for tens of thousands of Santa Clara County residents, local health clinics are scrambling to prepare for the expected onslaught in demand.

For the soon-to-be-insured poor, health care reform is an opportunity to take care of aches and pains many have ignored for years, doctors said. As a result, demand for primary care doctors is expected to surge around Santa Clara County. These family physicians are the first stop for most patients, to help them identify the roots of their problems.

However, the pool of these doctors is shrinking as medical students pursue more lucrative or prestigious careers as specialists, clinic officials say. In addition, the ongoing economic downturn leaves them little extra money to hire the few primary care doctors left in high demand.

As a result, the county’s medical clinics — especially those that serve the poor — are looking for ways to streamline their services without spending more money.

“All of this stuff is going to require more than the traditional methods of care,” said Kent Imai, medical director of Community Health Partnership. The partnership is a nonprofit that advocates for affordable medical care in Santa Clara and San Mateo counties, and represents health clinics in the South Bay and on the San Francisco Peninsula.

How clinics respond to this demand, Imai said, will “represent a sea change in the way we see patients.”

More than 250,000 Santa Clara County adults lack health care insurance, according to the county’s health department. Between 2000 and 2009—the most recent numbers available—the percentage of uninsured residents jumped from 8 to 18 percent.

Of those, not all will be covered when federal health care reform mandates insurance coverage for U.S. citizens and legal residents in 2014. Coverage does not include those who are in the United States illegally, although clinic doctors say they will continue to treat those patients — with or without insurance. County officials said they do not have an estimate of how many will not be covered.

To accommodate the increased demand, some medical clinics are expanding facilities, while others are lengthening hours. Some are hiring more doctors, while others are looking to nurses and assistants to fill in the gaps.

“It will be a challenge,” said Reymundo Espinoza, CEO of Gardner Family Health Network, a group of seven Santa Clara County clinics that serve about 50,000 low-income residents.

His clinics are offering internships and considering student-loan repayment, “so people get an idea of what it’s like and are committed to the type of service we provide,” Espinoza said.

At MayView Community Health Center, with clinics in Palo Alto, Mountain View and Sunnyvale, physician Rekha Reddy and CEO Shamima Hasan said they are adding more hours, doctors and a mental health team in preparation for 2014. They’re also digitizing health records and working through partnerships with Stanford University and Quest Diagnostics labs, among others, to get patients the care they need.

Of the clinic’s nearly 6,300 patients, 93 percent earn less than 200 percent of the federal poverty level, or $46,402 each year for a family of four, according to clinic statistics.

Right now, about 40 percent of MayView’s patients have some sort of insurance coverage, according to clinic statistics. About 1,500 patients have no insurance at all.

“Half the time (patients) feel bad to go to community clinics,” Reddy said. She anticipates seeing those patients more often, she said, once they have insurance and finally pursue treatment for bothersome symptoms.

“They do wait, because they waited for years,” Reddy said.

To deal with the onslaught, Imai predicts clinics will adopt a team approach.

Instead of patients calling a doctor in response to a mysterious or painful symptom, Imai said, a team of doctors, nurses and others would reach out to those with diabetes, asthma and other chronic diseases. These teams would teach patients how best to handle their illnesses and prevent major problems before they start.

This team strategy — which Imai referred to as a “medical home” — should keep patients healthier and save both patients and clinics time and money, he said. Not everyone on the team would earn a physician’s salary, and patients would avoid costly procedures often necessary without preventative care.

“It replaces the episodic, symptom-driven way of taking care of patients,” Imai said.

However, Imai said, most clinics are “just barely getting started” in preparing for the increased demand.

Fortunately for local health clinics, health care reform is not all happening at once.

Valley Care is Santa Clara County’s effort to launch federal health care reform early. It now covers those who make less than $699 per month for a single person, or 75 percent of the federal poverty line.

Those signing up for Valley Care will move into Medicaid in 2014, when that program expands as part of federal health care reform. Medicaid, known as Medi-Cal in California, is a federal program run by the states to provide medical insurance for low-income U.S. citizens and legal permanent residents.

County officials hope to enroll 12,000 residents in Valley Care by June 30. By county estimates, about 23,500 residents qualify.

With the U.S. Supreme Court considering the legality of health care reform,
Valley Care probably would not be immediately affected, officials said. But the 2014 Medicaid expansion could be. That decision is expected in June.

Meanwhile, Reddy said she often sees sick parents without health insurance bring their children — who are covered by public programs — in for doctors’ visits. She looks forward to treating the entire family.

“The mom’s health affects the kids,” Reddy said. “The whole family goes down with one sick person.”

 

Little Clinic, Huge Heart

Published: May 10, 2012 | No Comments

By Jessica Portner
California Health Report

Dr. Dimitri Sirakoff, the founder and medical director of Serve the People Health Center, rushed around his small, bright clinic tucked into an office complex in Santa Ana one recent afternoon. In one of the nine exam rooms, a man was suffering from back pain. In another, a woman was diagnosed with high blood pressure, and in another, a patient complained of dizziness. Dr. Sirakoff, a board certified general medicine doctor, opened the clinic in 2009*. He offers the gamut of clinic services from pap smears to diabetes screening to mammograms — all for about $15.

Whipping around in his white-coat and clutching charts in hand, the doctor has the demeanor of a man on a mission. Sirakoff started this clinic with a skeleton staff because he saw in his own private practice a great need to serve the community of poor, low-income, and primarily Latino patients in Santa Ana who could not afford health care. He set up the clinic in the modest building he owns and where he also maintains his regular practice.

He works for free, relying on grants to pay for his small clinic staff.

On one recent Saturday more than 40 women came in to get mammograms. In the cheery waiting room, an educational video broadcast a health message about the importance of regular screenings. There were refreshments and educational materials, and the staff gave each patient a pink polka dot makeup bag as a goodbye gift. Women of Mexican descent have higher incidence of late stage breast cancer, according to the Susan G. Komen Foundation, which gave Serve the People Health Center a small grant for the screening program.

As an evangelical Christian, Dr. Sirakoff sees serving this most vulnerable community as his moral obligation. “Most doctors don’t want to treat them because it’s not a moneymaker,” said Sirakoff, who serves 6, 000 patients annually. “We are pretty much trying to do what we can in the community.”

The clinic isn’t all that Serve the People does. The center also has a food pantry that serves 1,600 families a month, a legal aid service for those who can’t afford representation, and even parenting classes.

Serve the People Health Center is gearing up to do a lot more. The Orange County Community Clinic Coalition recently chose the center as one of five clinics in Orange County to receive support under a pilot program to help clinics become Patient Centered Medical Homes — a term for doctor’s offices that track all of a patient’s health issues and needs.

Under the Affordable Care Act, which seeks to improve the standard of care for patients, clinics who win certification as Patient Centered Medical Homes would be in line to receive more patients once health care reform is implemented. California supports setting up models for more comprehensive and coordinated care for some of state’s most vulnerable residents in order to prep for the higher numbers of people who will have access to expanded services once health care reform is fully implemented.

“Once we are certified, we are going to see how feasible it is to get up to speed,” Dr. Sirakoff said. “It’s a whole different ballgame.”

Certification will put the clinic ahead of the curve, but the requirements are substantial. The clinic, for example, has to invest in electronic medical records because every medical treatment, lab test, and procedure has to be measured and tracked to ensure efficiency and quality.

With such a large caseload and limited time with patients, Dr. Sirakoff has to glean information and diagnose ailments quickly. On a recent day, one woman, an assembly line worker at an electronics company that serves the local aerospace industry, had come in complaining of back pain. Her work involves repetitive motion and Dr. Sirakoff had given her non-steroidal medication. Now, she says she is feeling better. But, Dr. Sirakoff doesn’t let her leave without giving her a little nutritional take-away. More fruit, more fish, and continue on those Omega 3 supplements, too, he told her.

Sometimes, his patient’s ailments can’t be gleaned from tests, though, because the cause of the discomfort is hidden.

Magdelena Ortuno sits hunched over on a table in another exam room. The 44-year-old had complained of dizziness and bronchitis and was at the clinic as a follow up to get her lab results back. Dr. Sirakoff told the woman in Spanish that the labs were normal. He has ruled out lupus, an autoimmune disorder, which he’d suspected. But, now he thinks her symptoms are stress-related.

“She is out of job, has pain, and no insurance,” Dr. Sirakoff. “She is stressing herself out and that is manifesting in physical symptoms.” He has seen cases of rashes, swelling, and itching — all from stress.

Ortuno, after Dr. Sirakoff leaves the exam room, said she likes her doctor’s demeanor.

“The doctor is amiable and fast and answers you quickly,” Ortuno said. “He really does care about his patients and asks them how they are doing, and make the person feel comfortable.”

A few minutes later, Dr. Sirakoff went into an adjacent exam room to see Arturo Galindo, 52. The man said he is still losing his hair even though Dr. Sirakoff gave him a gel to apply to his scalp. It might take a while, Dr. Sirakoff said, and Galindo promised to be patient. “And no more hats,” said the doctor, “because you don’t want your scalp to sweat so much.”

Then, Dr. Sirakoff pivots to another of Galindo’s problem: blood sugar that’s a little too high. For that, the man is told to reduce his intake of starches and go easy on the pastas, and breads. “Oh, I eat a lot of rice. Oh, my goodness and breads,” said Galindo. “Just a little bit less,” Dr. Sirakoff gently, “because you are right on the border line of diabetes so we want to make sure you don’t develop that.”

Melissa Marchand, a 21-year-old college student who wants to become a doctor, volunteers at the clinic Thursdays and Saturdays. She takes patients’ vital signs (weight, height, blood pressure, blood sugar, and urine tests) and says the hours fly by.

“We see tons of patients, we’re always packed, and so many patients are so grateful,” she said, noting that the legal assistance and twice-a-month food drives are another reason for that. “This is the most profound organization I have ever seen.”

*This story has been updated. An earlier version of the story said the clinic opened in 2010.

 

Low-income Californians fear health reform won’t deliver for them

Published: August 16, 2011 | Comments (5)

By Anandi van Diepen

As President Barack Obama struggles to implement — and defend — the health care reform he signed last year, he is finding that the public does not understand how the program is supposed to work, and based on what they do know, many voters doubt the overhaul will help them in the end.

It turns out this is true not only for middle class voters who already have insurance but, at least in California, also for low-income, uninsured people for whom the new law holds the most promise. Many of them are confused about the law’s details and fear it could make their ability to access care, often portrayed as desperate, even worse.

And the centerpiece of the law — the so-called “individual mandate” requiring everyone to obtain insurance coverage, seems to be no less controversial among the poor than it is among middle-income and affluent people.

Those findings and more emerge from a recent study by sociologist Helen Lee, who has said that the new law seeks to create a “culture of coverage,” in which insurance is expected, maintained, and ultimately valued.

Lee is a fellow at the Public Policy Institute of California. She and a colleague, Shannon McConville, recently researched the group of Californians who will become newly eligible for Medi-Cal, the state health insurance for people at or near poverty, when the federal law is fully in place in 2014.

In addition to describing the demographics—age, ethnicity, health status, etc.—of the newly-eligible pool, Lee and McConville also asked participants to share their understandings of current and future scenarios of state health insurance. Lee and McConville drew from two broad groups: 1) parents whose children are enrolled in state health insurance, and 2) uninsured childless adults.

Medicaid, the nation’s subsidized health insurance for the indigent, in California is known as Medi-Cal. With the Affordable Care Act’s state health insurance expansion, 1.7 million to 3 million additional Californians will become eligible for Medi-Cal, beginning in 2014. That would add around 17 million more people to the nationwide Medicaid roster.

According to Lee and McConville’s study, “roughly half of the reduction in the uninsured is projected to come from increased Medicaid participation.”

With the expansion authorized in the Affordable Care Act, Medicaid could cover people whose annual income is less than or equal to 139 percent of federal poverty level. Previously, Medicaid was unavailable to people making more than 133 percent of federal poverty level.

In California, families of three with incomes less than $18,530 are considered poor under federal poverty guidelines.

Using statistics on obesity, smoking, and chronic health conditions, Lee and McConville showed that poor uninsured adults are no less healthy than current non-disabled Medi-Cal subscribers. Marginalized people of color comprise a significant portion of California’s uninsured: Latinos and African-Americans together account for 55 percent of uninsured adults in California.

Through focus group interviews of potential new users of expanded Medi-Cal, Lee and McConville observed people’s thoughts and feelings regarding changes to public insurance, as well as their understanding and opinion about the individual mandate—widely regarded as the hallmark of the plan.

The researchers witnessed great concern from the participants who had experienced current Medi-Cal through their children. Participants highlighted a few key difficulties with current coverage: long, over-busy providers and insufficient provider-patient interaction. Focus group participants worried that Medi-Cal expansion would burden providers and agency staff, further distancing low-income patients from adequate care.

Uninsured participants reported strategies of self-care that they employ in order to avoid health care costs beyond their reach. A diabetic, Krista continually finds her treatment prohibitively expensive:

“I…choose what’s more important, my insulin or testing my blood sugar,” she said. “I’m taking half care of myself because I can’t afford it. It’s dangerous.”

Part of the challenge of promoting a culture of coverage is for providers and health administrators to reorient newly-insured people to preventative medicine, while maintaining respect for their individual judgment and self-determination.

Participants—mostly childless—who had not experienced Medi-Cal worried that their new eligibility may not be reliable. For example, even a moderate income fluctuation could disrupt enrollment. In general, participants were unsure about whether and how the reforms would affect them.

Kelly, a single and childless non-disabled adult from the Bay Area, tended to assume that government health programs would not apply to her.

“First of all, right now, if you are poor and have kids, you have a better chance of getting some medical attention,” she said. “With being single, no kids, like myself, the hell that I go through basically any time I want to go anywhere to get help, it’s got to be an emergency, like going to County [hospital] or some sort. They don’t have different programs for me.”

Vigorous outreach may be necessary to reach currently ineligible people not privy to the reform. Indeed, many of the study’s participants felt confused about the particulars of present and future coverage.

Some participants were unhappy with the individual mandate—the ACA’s provision requiring most citizens purchase health insurance or be fined a tax penalty.

Opposition seems to spring from two types of reservations: some respondents found the requirement financially untenable, and others were ideologically opposed to the role of the government

In some cases, though, the participants likened the individual mandate to the law requiring drivers to have auto insurance. Already there exists a widely accepted cultural norm of auto insurance. The analogy may be useful for messaging the value of health insurance.

 

3.4 million Californians would get coverage through federal reform

Published: January 5, 2011 | No Comments

By Daniel Weintraub

About 3.4 million Californians who would otherwise be without health insurance will have coverage by 2016 if the federal health reform approved last year is implemented on schedule, according to new research published in the journal Health Affairs.

The boost in coverage would mean that 96 percent of Californians under age 65 who are legal residents in the U.S. would have some form of private or public health insurance, according to the article, by Peter Long, president and chief executive officer of the Blue Shield of California Foundation, and Jonathan Gruber, a health economics expert and professor at the Massachusetts Institute of Technology.

That would cut the rate of uninsured in the state by more than 50 percent.

The change is expected to mean a major expansion of Medi-Cal, the state’s program for the poor, with 1.7 million additional people enrolling in the program, most of them paid for by the federal government. Another 4 million people are expected to get coverage through a new health exchange that the state will manage as a clearinghouse for private insurance companies offering standardized plans to individuals who can’t get coverage elsewhere.

Another big change anticipated by the authors: employers, especially small employers, will cover fewer people. The paper estimates that about 870,000 fewer people would have their coverage through an employer after the plan is fully implemented. This is the net result of several different factors, including about 1.5 million employees losing their coverage once their employers see that their workers would get a better deal using subsidies to buy insurance through the state-run exchange, while about 900,000 people who had previously turned down coverage from their workplace would now accept it, because of a federal mandate requiring nearly everyone to have insurance.

The authors’ model estimates that about 330,000 Californians who had insurance at the time the law was implemented would lose it, mostly because their employers stopped offering coverage and the individuals could not afford to buy it on their own, even with subsidies from the federal government.

Of those who remain uninsured in 2016, the largest group, about 40 percent, would be undocumented immigrants, who are not eligible for the subsidies under the new law.

Of the rest, about 60 percent would not be subject to the mandate requiring individuals to have coverage, because the costs would exceed 8 percent of their income or their income would be below the threshold triggering a penalty for failure to buy coverage.

Looking at the roll-out of the plan from a regional perspective, Long and Gruber estimated that Los Angeles County would account for about half of the reduction in the number of uninsured in the state. San Diego would see the largest decline in the percentage of its residents without insurance, and would be the only area of the state to see an increase in employer-sponsored coverage.

The authors estimate that the plan would have a $12.6 billion positive impact on California households. This includes $4.8 billion in higher wages that employers would pay instead of health premiums, $4.4 billion in subsidies to people buying coverage through the exchange, and a $3.4 billion increase in state and federal spending on public programs for the poor.

That benefit would be targeted most at low-income households, and in fact, people with very high incomes would see an increase in their costs, according to the paper.

Families with incomes below 133 percent of the federal poverty level would see a benefit averaging about $1,086, thanks to paying lower taxes as part of the law. People with incomes between 133 percent and 199 percent of the federal poverty level would see a gain of about $2,000 per year.

Most middle-income families would see little change in their costs due to the plan. Only families with incomes of 10 times the federal poverty level, or about $220,000 for a family of four, would experience an increase in costs, losing about $3,000 a year because of the higher Medicare payroll tax.

The authors note that $3,000 for a family earning 15 times the poverty level would amount to less than 1 percent of their income, while the $1,086 benefit for a family of four at the poverty level would represent an increase of 5 percent of their annual income.

Note: Access to the full article is restricted on the Health Affairs web site. A link will be provided today through the Blue Shield of California Foundation web site here.

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New rules require insurers to justify rate increases

Published: December 21, 2010 | No Comments

The Obama Administration has rolled out new rules requiring health insurers to justify any annual rate increases of more than 10 percent.

The proposed regulations, unveiled Tuesday by Health and Human Services Secretary Kathleen Sebelius, represent an escalation of federal involvement in a field historically left to the states.

But the White House said only 26 states have the power to block unreasonable rate increases, and many states lack the resources to effectively police the insurance industry. The new federal rules will come with $250 million set aside in the health reform bill to beef up state regulatory bodies, which will implement the 10 percent rule and examine the insurers’ justification. In states that still cannot handle the increased workload, the federal government will perform the review.

States that don’t now have the power to block rate increases, including California, won’t get that power under the new federal regulations. But they will have the ability to force companies to publicly defend their rates. In theory, that increased level of transparency will lead to smaller increases.

California Gov. Arnold Schwarzenegger signed legislation in October that requires insurance companies to give 60 days public notice before raising rates and to provide more information justifying their rate increases to state regulators.

Here is an HHS statement on the regulation.

–Daniel Weintraub

 
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