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Rate Hikes Hidden in California’s Glowing Obamacare Reviews

Half those whose insurance is being canceled will pay more for plans meeting the Affordable Care Act requirements. 

Covered California Executive Director Peter Lee announces the number of new healthcare enrollees through the new California health insurance exchange on November 13, 2013. (Max Whittaker/Getty Images)

During a meeting last week, officials at Covered California, the state’s much-touted health insurance marketplace, made a pretty stark admission: Half of the approximately 1 million consumers whose health plans are being canceled will pay more under the Affordable Care Act.

The numbers, it seems, have been overshadowed by other, more positive headlines. First, the state signed up more consumers in October thanHealthCare.gov, the federal marketplace handling enrollments for 36 states. Second, the board governing Covered California voted last week not to allow insurers to offer their canceled policies for another year, rejecting President Obama’s recommendation earlier this month.

But the figures do call into question the sweeping plaudits California has received — including from New York Times columnist Paul Krugman in Monday’s newspaper — for signing up so many people (about 80,000, as of last week).

By way of background, many of these consumers’ plans are being canceled because they were “non-grandfathered,” meaning they were purchased after the Act was signed by President Obama in March 2010 and their benefits do not meet its requirements (some were pretty skimpy).

Although the federal law allowed these plans to be renewed for another year, Covered California’s contracts with health insurers require them to be canceled at the end of this year. Officials said the idea was to create stability in the new marketplace and provide consistency for all consumers.

As cancellation letters went out, supporters of the law contended that the canceled policies either had inferior coverage or would cost far less in the exchanges. California’s numbers show that is only half the story.

“It’s not a success story,” said Jamie Court, president of Consumer Watchdog, a group that supports a California ballot measure to regulate insurance rates. “It’s a success story only if you consider that the federal website didn’t work and ours did. It’s not a success story because people are in open revolt about how much they’re paying. The only people who are happy are people who have subsidized policies. The middle class is outraged.”

Let’s look at the numbers:

Covered California estimates that about 900,000 consumers will have their “non-grandfathered” policies canceled. Of those, 310,000 (or 35 percent) are eligible for a subsidy. Another 15 percent will see their rates decrease even though they won’t receive a subsidy. And the rest? About 25 percent will pay more for similar or perhaps inferior coverage, and the remaining 25 percent will pay more but will receive additional benefits, such as coverage for prescription drugs.

All told, fully half of the 900,000 will pay more. (I profiled one such couple, who will see their costs more than double, earlier this month.) Additionally, while those receiving the subsidy will pay less out of their own pockets, their plans could still cost more and much of the tab will be picked up by the government.

Some other policies are being canceled, too, because insurers are withdrawing from the market.

Ken Wood, a senior adviser with Covered California, told me that the initial estimate of consumers in non-grandfathered plans was lower than the actual number because turnover in the individual insurance market was underappreciated.

“I’m not sure people fully understood the impact of the law three years ago when it was just numbers,” he said. “Now it’s gotten very real that some people are going to have to pay more.”

At the same time, Wood said, this is the cost of moving to a new system, in which consumers with pre-existing conditions will be able to get coverage, those who got sick while enrolled in a plan won’t have to worry about having their policies canceled, and all plans will offer a minimum set of benefits.

“Yes, they’re paying more than they would have paid,” he said. “That also assumed that their risk pool remained healthy and nothing else upset the apple cart. Very few people who’ve been in it for five, eight, 10 years have had very smooth rate increases.”

The number of people affected is relatively small compared to the population of California, Wood noted. Some 32 million residents will keep the coverage they have through their employers, Medicare and the Medi-Cal public health program for the poor, he said, and millions more are uninsured and may be eligible for some type of support.

But consumer advocates say there’s more to the story, too. Canceled policyholders may lose their doctors and hospitals. That’s because some top California hospitals, including UCLA and Cedars-Sinai medical centers, are not participating in most of the new health plans.

“How good is it to buy a policy in the exchange if you can’t go to UCLA?” Court asked. “That’s certainly not as good as it was in the old plans. … In some cases, I think people do get better policies. But in a lot of cases, like in California, they’re getting comparable policies. There’s very little different, except that their networks of doctors and hospitals are smaller, so that makes them worse or that makes them feel worse.”

Health industry consultant Bob Laszewski pointed out another problem with California’s apparent success story. Covered California has a goal of enrolling about 500,000 to 700,000 people receiving subsidies by April 1, 2014, the end of the open-enrollment period. But Laszewski notes that this includes the canceled policyholders.

“Why should we be so impressed with Covered California because they have signed up 80,000 people so far?” he wrote. “Or, even that their goal is to sign up 500,000 to 700,000 of the state’s 6.4 million people –– half subsidy eligible –– who are uninsured or having their insurance canceled?”

Wood said the canceled plans were not taken into consideration when California set its enrollment goals. The exchange hopes to enroll upwards of 2 million people by Jan. 1, 2015. “We didn’t go back and re-project our number,” he said. “That did make our January [2014] number an easier target to hit.”

Editor’s Note: This post is adapted from Ornstein’s “Healthy buzz” blog. Has your insurance been canceled? Have you tried signing up for coverage through the new exchanges? Help us cover the Affordable Care Act by sharing your insurance story.

Well, duh.  The new contract is different from the old cancelled contract.  It provides more benefits and leaves the policyholder less exposed to losses.  The new risk pool that includes the policyholder is different from the old risk pool.  Both the new and the old contracts are complex.  So the premiums should be identical?

This chart shows, what everyone should already know, even the president. That 65% of us will be paying much higher prices, that we may not be able to afford.
Although the one thing that most of us don’t know, is how the government plans on paying the subsidies that 35% of us who are eligible for.
At the new overpriced, unregulated prices of health care rises, the amount of subsidies is going to be enormous. So, who is going to pay for that?
The same people over paying for their already overpriced health insurance.
This has to be stopped, most of us cannot afford $700 a month for health insurance. Maybe you can, but most of us cannot.

Diane Lindgren

Nov. 27, 2013, 9:53 a.m.

I believe there are about 7 million uninsured in California, compared to about half a million who have had their policies cancelled and will have to pay more. It is also my understanding that many of those, including the couple profiled, considering their age were paying an “artificially” low rate for their insurance. Given those factors wouldn’t a more positive spin on Covered California be in order.

Don’t take this as support of the ACA, but what’s the composition of the more expensive plans?  To minimize costs, I could go with a policy that covered nothing, reserved the right to cancel me the first time they need to pay out, and has an enormous deductible and co-pay.  In other words, I could drive down the price of insurance by paying someone to, essentially, NOT insure me.

One of the few very good things about the ACA is banning these worthless policies, and a decent policy is clearly going to be more expensive when the insurer needs to actually be responsible.

So, what’s the real part of the story?  Without that, it’s like complaining about the inconvenience of being forced to wear your seatbelt.

I also want to ask the obvious question:  Did anybody not think rates would rise?  That was the entire premise!  We pass a law to ban insurance companies from dropping people with pre-existing and chronic conditions and, so they don’t whine about falling profits, the rest of us pay more.  Why are all these people coming out of the woodwork now to point this out?

First question here is, does anyone here believe in freedom of choice?

I had an excellent catastrophic plan, that I started with at $186 per month.
It has a $1000 deductible and $15 copays. I have taken advantage of the many benefits of this plan, with no complaints. This is a BlueCross plan, and it fit my needs perfectly.

This plan has raised over the past two years to $340 per month. A hefty jump that I am sure the Republicans are at fault for. (JK)
This is pretty much at the limit of what I can afford.

However, thanks to the current Dictator in charge, a new policy will cost me and Millions of others, including yourselves over $700 per month for an individual plan and over $1200 to $1500 for a family plan.
Unless you qualify for subsidies or get thrown into Medicaid.

My last question here is, does anyone here know where the subsidies money is coming from? Anyone?

Francine Adkins

Nov. 27, 2013, 12:55 p.m.

Disappointing report from Pro Publica. Those whose policies are cancelled are a small percentage of policy holders. I am relying on the chart below, which seems to have been validated by most analysts looking objectively at the ACA.

http://talkingpointsmemo.com/livewire/chart-winners-and-losers-from-obamacare

Ernesto A. Sanchez

Nov. 27, 2013, 1:49 p.m.

Mr. Orstein’s use of numbers in misleading and used to paint a darker picture that the real facts.  There are approximately 38 million people in California and the 900,000 whose garbage coverage plans are being cancelled account for approximately 2.4% of the state’s population. According to his numbers 50% of the 2.4% or (1.2% of the state’s population) will pay more for full comprehensive benefits which will include preventive care which almost all their current policies lack.

Also, remember to not be eligible for the subsidy your income has to be more than 4 times the poverty level; a family of 4 with incomes below $94,000 a year still qualify for subsidies in Covered CA.  Doesn’t see unfair that upper middle class families who earn nearly $100,000 a year will be asked to pay a little more for real comprehensive coverage.  This coverage expansion of Medi-Cal and Covered CA is reaching out to most of 7.1 million who are currently uninsured in CA.

His use of numbers where not meant to illuminate they were used to obfuscate the real facts, ProPublica should exercise better editoral oversight of what they post!!!

Mr. Sanchez, do you think that you or anyone else should tell me or anyone else, what healthcare coverage is good for or not good for me and my family?

I just check the Coverage that was available for me on the CA Healthcare website.

I can get healthcare for about the same price as I am paying, except it is either a PPO or an HMO program and the deductible on all the healthcare options were $5000 and a total out of pocket of $6350.

In my opinion a $5000 deductible every year is way too much and means I will be paying for all of my own healthcare needs out of pocket yet still paying $340 a month for insurance.

By the way the 900,000 people who lost what you have decided are garbage coverage plans, is just the tip of the ice burg.

And when the 7.1 Million people who are currently uninsured get subsidized polices, where are all these subsidies going to come from?

Two plus two equals four???  OMG!!  Why didn’t someone warn me about this beforehand?!!

“It is also my understanding that many of those, including the couple profiled, considering their age were paying an “artificially” low rate for their insurance.”
Ms. Adkins, do you think insurance companies are in the habit of pricing policies ‘artificially’ low?
Further, your chart is guess-work; there is no knowledge yet of how many employer-provided plans will be canceled. The charts in article are from the people providing the insurance; they are fact.
Obama lied; people will suffer as a result, regardless of ‘talking points’.

I read the comments about all the increases but I am not sure where some of the numbers come from or what people are comparing.  First, I am not a resident of California and have health insurance from my employer.  My total premium for an individual is $616 split between employer and employee. The coverage is good with only $350 deductible and mostly 20-30% copay good prescription drug coverage.  There is no dental or vision coverage.
I went to the California “Get Covered” site, created an individual test subject Age 45, income $80k, Alameda county.  For each level there were either 3 or 4 plan choices.  The prices from lowest $294 to highest $568. Here are the averages: Bronze avg= $301,  Silver avg =$395,  Gold avg. = $474, Platinum ave= $533. I noted all of the policies were less than the one I currently have.  The Bronze and Silver both have significant deductibles while most of the Gold and Platinum have no deductible. The Gold and Platinum both had better coverage than my current plan.

Deborah lockard

Dec. 4, 2013, 4:14 a.m.

Now from a real consumer, Hey we need to
See the numbers! We are not informed consumers. And I hate buyers remorse!
Where are the price lists for what Doctors
Charge and hospitals, pharmacies?? Dentist?
How can we compare one outfit from the other?
Wake up people! We are being served up to
The insurance companies and healthcare
System with our Goverments Blessings. Another example of organized fraud . Too many hands in the cookie jar! He’ll no I will not join!

What load of nonsense Jamie Court just spouted.
I DO NOT get a subsidy, I DID sign up to the Platinum 90 Blue shield plan through Covered CA (which is the equivalent (actually slightly better) to what I have this year) and the Premium for my family of 3 will be $1002/month starting Jan 1st, a whole lot better than the premium $1430 /month that we currently pay.
President of Consumer Watchdog is talking out of her elbow

“It’s not a success story,” said Jamie Court, president of Consumer Watchdog, a group that supports a California ballot measure to regulate insurance rates. . It’s not a success story because people are in open revolt about how much they’re paying. The only people who are happy are people who have subsidized policies. The middle class is outraged.

So less than 1% of Californians are affected? I certainly feel for those who are and not an unimportant story but this article needs better emphasis of context if it’s thrust is population focused. The lead should be 225,000 people out of 32 Million will pay more…

I’m a part of the “small group” seeing their rates skyrocket. I’m getting tired of hearing that because we are small in numbers it is OK for us to carry this burden. My wife and I are self employed and will see our premium go from $452. with a $3300. deductible now to $863. with a $5,000 deductible. This is for the cheapest Bronze plan available and all three providers are basically identical in cost. We do not currently have a junk plan. Our coverage is fairly comprehensive. We expected an increase in our premiums but 100% is extreme and unfair.

The burden of ACA is falling on the self employed middle class and people who must purchase individual plans (the average deductible in employer-sponsored health plans is $1,135. Why do they get such good rates?). The self employed already have a heavy tax burden. Self-employed individuals must pay all Social Security and Medicare taxes themselves, (about 15.30%) as opposed to employed people who have half of these federal employment taxes paid by there employer.

This new burden on the self employed middle class is really unfair and needs to be addressed.