ObamaCare Disaster in California

Arnold Ahlert is a former NY Post op-ed columnist currently contributing to JewishWorldReview.com, HumanEvents.com and CanadaFreePress.com. He may be reached at atahlert@comcast.net.


la-fi-obamacare-california-exchange-complaints-20140522California’s experience with ObamaCare portends a dubious future for the nation. “The rate increase from 2013 to 2014, on average, was significantly higher than rate increases in the past,” said Insurance Commissioner Dave Jones at a news conference Tuesday. Jones admitted that Californians endured premium rate increases ranging from 22 percent to 88 percent from last year to this year. “The rate increase from 2013 to 2014, on average, was significantly higher than rate increases in the past,” Jones added.

Unsurprisingly, younger Californians bore the brunt. Jones cites one region of Los Angeles County, where people age 25 paid 52 percent more for a silver plan than they had for something similar in 2013. Yet Jones was also forced to note someone age 55 saw a 38 percent increase in their premiums.

Jones, a partisan Democrat, isn’t sounding the alarm because of altruistic concerns for the residents of his state. Instead he’s pushing voters to embrace Proposition 45, a ballot measure that would give him considerable control over the the pricing of insurance in the Golden State, allowing him and other government officials to reject price increases deemed “excessive.” “Unless Proposition 45 is passed or some other law is enacted to provide health-insurance rate regulation and the requirement that health insurers and HMOs justify their rates, we are going to continue to see dramatic year-over-year increases,” he warned.

Californians Against Higher Health Care Costs, a collation of businesses, healthcare groups, unions and civil rights organizations, adamantly oppose Prop 45. “The insurance commissioner is using this misleading report to promote a ballot measure that would give him vast new powers over health care decisions,” said Robin Swanson, a spokeswoman for the group. “Our coalition of doctors, nurses, labor unions and health care providers opposing the measure thinks that giving one politician the power to override decisions made by the state’s successful health exchange is the wrong approach to controlling costs.”

One wonders if they feel the same way about a politician named Obama, who unilaterally over-rode healthcare decisions enacted by Congress.

Charles Bacchi, the group’s executive vice president, echoed Swanson’s sentiment. “Health plans are focused on working with Covered California to provide affordable premiums during the upcoming open enrollment period, while Commissioner Jones is looking backward,” he said. “His analysis doesn’t take into account subsidies, enrollees who are benefiting from the ACA, or acknowledge how the ACA has substantially expanded coverage and benefits while also changing the way premiums are priced.”

Jones believes otherwise. “We’re going to continue to see rates go up simply because … no one has the ability to stop excessive rates,” he said, further insisting the 2015 rate increases proposed by insurers will be lower than they might ordinarily be because the providers won’t want to offend the voting public prior to the 2014 election. “There would be a huge public outcry, and the public would respond at the ballot box,” Jones warned. “I have no question that what we’re going to see … will be much lower than would otherwise occur.”

Unfortunately California, much like other states, can’t postpone reality indefinitely, even if they attempt to do so by fiat. As the Wall Street Journaexplains, those enrolled in new healthcare plans “are showing higher rates of serious health conditions than other insurance customers, according to an early analysis of medical claims, putting pressure on insurers around the country as they prepare to propose rates for next year.”

The numbers are daunting, as 27 percent of enrollees who have seen doctors or other healthcare providers in the first quarter of this year are dealing with serious health issues including diabetes, psychiatric conditions, asthma, heart problems or cancer. That percentage represents an 11 percent increase over last year’s individual consumer market covering the same time frame—and more than double the 12 percent rate of those who were able to keep their former policies.

“The findings provide the clearest picture so far of the health status of those who bought plans under the Affordable Care Act, and show a sharply bifurcated consumer insurance market—with sicker, and costlier, people in health-law plans and healthier people sticking with previous coverage,” the Journal adds.

Hoover Institution research fellow Lanhee Chen states the obvious reasons why. “The law’s one-size-fits-all regulatory regime, which requires insurers to offer coverage to all comers and prohibits pricing of coverage based on an applicant’s health status, was bound to increase the number of relatively sicker people purchasing insurance through the exchanges,” he writes, adding that healthcare exchanges “remain a haven for those who may consume more medical services than others.” Thus as Chet Burrell, chief executive officer of CareFirst BlueCross BlueShield, concludes, “Over a period of time, the rates have to go up to catch up with the reality of who enrolled.”

Proposition 45 apparently ignores that reality, along with a far simpler one: if a state makes it too onerous for an insurance provider, it will simply stop providing insurance for the people of that state.

Back in June, Anthem Blue Cross President Mark Morgan predicted the 2015 increase in premium rates for Californians would be less than 10 percent on average. “We will not have double-digit increases in our Covered California operations,” Morgan said in a speech. “That’s a good indication of how we feel about the success of our early work, because there are other parts of the country where we are hearing 20% and higher.”

The tradeoff? The narrowing of networks that limit enrollees’ choices of doctors and other healthcare providers that cannot be avoided. “These narrow networks are making a huge difference on affordability,” Morgan contended. “People value price above all else…. These narrow networks are really here to stay.”

A Kaiser Health Tracking Poll taken in February belies the notion that people prefer cheaper insurance and narrower networks. Once again bifurcation is the order of the day: at 51 percent, the public in general prefers broader networks to cheaper insurance. On the other hand, people who have been either uninsured or purchasing their own coverage and are most attracted to ObamaCare, prefer narrower networks and cheaper premiums.

What is being lost in the overall argument is the fact that, no matter which side the public is on with regard Prop 45, California premiums are still going up. Jones added a little scaremongering to the equation in support of the measure, noting that after 2015, the “sky’s the limit” with regard to premium increases.

Yet what neither side is apparently willing to tell the public is that controlling the cost of insurance in any meaningful way may only last until the end of 2016. That’s when ObamaCare’s “risk corridor” provision, limiting losses incurred by insurance providers, expires. The risk corridor provision is the mechanism whereby insurance companies that made a profit would compensate those who didn’t. The premise behind the system was that an equivalent number of both would make the program revenue neutral and self-sustaining.

Unfortunately, if there are more “losers” than “winners,” the same Obama administration that has already played it fast and loose with the law claims they can appropriate billions of dollars of funds from other sources (read taxpayers) to maintain the program, despite the nonpartisan Congressional Research Service making it clear such a “diversion” of funds is impermissible. Earlier this year Congressional Republicans proposed repealing the risk corridor provision they characterized as an insurance company “bailout,” and the issue may still become an integral part of the 2014 mid-term campaign.

For example, Sen. Mary Landrieu (D-LA) who is already vulnerable, is going to have to explain why 45,000 policy-holders in her state are facing premium increases between 10 and 20 percent next year, courtesy of Blue Cross and Blue Shield of Louisiana, the state’s largest insurer. That would be the same Mary Landrieu who cast the deciding vote for ObamaCare and claimed that predictions of higher costs were a “pathetic lie” in a 2009 speech on the Senate floor prior to the bill’s passage.

Again it must be emphasized that such increases are occurring in California, Louisiana and elsewhere while the government backstop of risk corridors remains in place. Furthermore Americans should be clear on what they, as well as Prop 45, really represent: a government effort to control prices, irrespective of costs. Costs that were also imposed by government fiat, as any man in possession of an ObamaCare policy that requires coverage for maternity care can attest. Costs that have been transferred to the public in general, as the more than one million Californians who qualified for subsidized insurance can attest. A full 88 percent of Californians enrolled in Covered California are eligible for such taxpayer-underwritten subsidies.

One suspects fans of ObamaCare should cheer while they can. In addition to the expiration of the risk corridors, the imposition of the twice-delayed business mandate that forces companies to pay for their employees insurance or face fines for failing to do so, remains on its revised schedule. Businesses with 100 or more employees will have to cover those employees beginning in 2015, while businesses with 50-99 employees have until 2016 before they must comply with the law.

Assuming the lawsuit initiated by the House challenging Obama’s unilateral re-scheduling goes nowhere. Assuming the more potentially disruptive ObamaCare lawsuits challenging the IRS’s right to provide subsidies on federally-run exchanges, in direct contradiction to the law’s wording that subsidies can only be provided on exchanges “Established by the state,” also go nowhere. And assuming the necessary demographic of younger healthier Americans offsetting the costs of older, sicker Americans isn’t as out of whack as is currently reported.

That’s a lot of assumptions.

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  • CaoMoo

    DOn’t worry it’s all part of the show and the show I assure you is quite grisly indeed.

  • CapitalistPig

    So they already have Proposition 45 to assist in lowering cost increases & “fix” a bill that was supposed to lower premiums & bend the cost curve that hasn’t even been fully implemented yet.
    What could possibly wrong?

    • JDinSTL

      The cure for liberalism is always “more liberalism”

      • CapitalistPig

        Until “you run out of other people’s money”……….Margaret Thatcher. .

  • JBTascam

    Yes, because a government bureaucrat is so much better qualified to figure out if a rate increase represents sound fiduciary action by the insurance company or a “gouging” of the consumer – based on political contributions to the regime in power, of course.

  • gnubi

    If one pays any attention to government performance, it wasn’t hard to predict what would happen to the quality-service-price model. I remember when my coworkers were complaining about 5-6% annual increases in company sponsored insurance………the joke is always on us. Why do more than half of the electorate always fall for this nonsense?

    • zoomie

      because they were ” educated ” in a system that has a higher calling

  • dgala

    Why not repeal the whole dang thing; get rid of welfare; if a person is not a verifiable disabled person (being just FAT does not count) then you either work or starve.

    • Victor Cachat

      No, no, no…we’ll “fix” it.
      Just pile on thousands more pages of gobbledygook and it will be “better”.(sarc)

    • Griff

      Sad truth is, people who put on shows for psychiatrists (after studying up on things like OCD) get disability while people who have legitimate, crippling physical problems get denied. It’s a joke, really.

  • Disappointed Citizen

    My daughter just turned 26 and has to get her own insurance. She got a quote for $450 per month – premium! How can a full time student afford this? I just cannot believe this is the America, we came to live in – land of peace, prosperity – now it seems like it is the prosperity of people who don’t work hard and want freebies. I am really disappointed in the current state this country is in.

    • bob smith

      Be very honest, who did your daughter vote for in the last two presidential elections?

      The unfortunate truth is that it is her age group and everything with a leftist bent that created “…the current state this country is in.”

  • redc1c4

    #Failifornia leads the way again!

    #Forward to our glorious green future!!!

    • acetech

      Not Green, Brown we don’t have the water.

      • redc1c4

        Green Energy, silly, don’t you listen to Moonbeam the Magnificent?

        solar power, wind mills, high speed fail netw*rks, all made possible by pixie dust & unicorn farts.

        besides, we have all the water we need for the Delta smelt: nothing else matters.

  • fpm

    Leftists won’t let any opportunity caused by their orchestrated disasters go wasted, they will just push more regulations and decrees to the people they “care”, which will for certain create new calamity. This is a vicious self-destruction cycle till it implodes.

  • Pericles

    “Unless Proposition 45 is passed or some other law is enacted to provide
    health-insurance rate regulation and the requirement that health
    insurers and HMOs justify their rates, we are going to continue to see
    dramatic year-over-year increases,” he warned.”

    Yes, typical of progressive legislation and unintended consequences, instead of admitting that Obamacare was a mistake and repealing it, progressives move to phase II. In this phase they seek more power and control to regulate prices and outcomes to their liking.

    You see, to liberals and progressives, adverse impacts on individuals and companies don’t matter. What matters is that they get to keep their beloved programs and to impose them at their will, regardless of consequences.

  • Pete

    Mr. Arnold Ahlert,

    A link to your essay was posted in Junk Science, which is a very good blog.
    :)

    http://junkscience.com/2014/08/01/obamacare-comes-a-cropper-in-ca/

  • Amused

    “Unless Proposition 45 is passed or some other law is enacted to provide
    health-insurance rate regulation and the requirement that health
    insurers and HMOs justify their rates, we are going to continue to see
    dramatic year-over-year increases,” he warned.”

    That is probably true.

    Of course, if it does pass, there will be fewer insurers offering coverage which will eventually lead to much higher rates.

    (I enjoy the on-going debate with liberals. It may not be fair, but their complete lack of understanding of math, economics, and science is just an advantage that is too good not to be embraced.)

    • zoomie

      no, they will exist the market and de facto you get single payer at the collapse of the system

  • zoomie

    Cloward – Piven , collapse the system. a very effective strategy. prop 45 , make them scream for more government.

  • SoCalMike

    Parasites never rest.
    The wreck an industry creating higher prices then turn around a try passing price ceiling laws.
    The only way the government can reduce the cost of medicine is by reducing the quality and output. When it becomes obvious people are dying faster than they otherwise would have, don’t expect the fascists to roll back the programs they forced on everyone or accept responsibility for the fatalities they cause.
    They will simply point a finger at the rich. MSM false prophets will repeat “the Rich” and masses of mentally conformed mind numbed robots will start parroting “the rich, the rich…”

  • meanpeoplesuck

    If we had gotten the government as single payer instead of continuing with Corporations Run Wild, then this would not be happening.

  • dennis x

    Interesting, I live in California and my health care cost actually went down. Now for you rednecks thinking that I must be on welfare, no I pay my cost and I’m with Blue Shield. Sorry things aren’t working out for you, not!