CA State Insurance Exchange Covered California Announces Plans and Rates for 2014

SACRAMENTO, CA – Covered California™ today announced 13 diverse health insurance plans that will offer in 2014, affordable, quality health care coverage to millions of Californians. The plans reflect a mix of large non- profit and commercial plan leaders, along with well-known Medi-Cal and regional plans.

The tentative selection of health plans is subject to a rate review by state regulators. It is difficult to make a direct comparison of these rates to existing premiums in the commercial individual market because in 2014, there will be new standard benefit designs under the Affordable Care Act, and the actual change in an individual’s premium will depend on the person’s current insurance coverage. However, Covered California believes that a valuable frame of reference for its premiums, is comparing them to the small employer market in California. Both the small employer market and Covered California are competitive markets, and offer guaranteed issue – you cannot be denied for pre-existing condition.

The rates submitted to Covered California for the 2014 individual market ranged from two percent above to 29 percent below the 2013 average premium for small employer plans in California’s most populous regions. This is impressive since the 2014 products include doctor visits, prescriptions, hospital stays and more essential benefits; protecting consumers from the "gimmicks and gotchas" of many insurance policies.

“This is a home run for consumers in every region of California,” said Peter V. Lee, Executive Director of Covered California. “Our active negotiating will not only benefit potential enrollees to Covered California, but will benefit all Californians by making health care affordable.”

Additionally, there is financial protection like a maximum out-of-pocket cost of $6,350 which will dramatically reduce the chance of someone going bankrupt because of medical bills not covered by insurance.

“Californians should be proud of how not only health plans in this state, but doctors, medical groups and hospitals have stepped up – and creating a market that will allow millions of consumers to enroll in affordably priced products. Because of that, we will be able to deliver exceptional value, low rates, access to health care in every region of the state, and a solid platform to achieve the dream of providing quality health care for all Californians,” Lee said.

Covered California’s rigorous review and selection process resulted in a portfolio of plans that achieve three objectives: a robust choice of offerings throughout the state, affordable prices, and access to doctors and hospitals. The terms of Covered California’s relationship with its partnering health plans means they will collaboratively work to promote care improvements, foster prevention, and seek to reduce costs by promoting better care.

Once plan rates are approved by state regulators, Covered California looks forward to signing final contracts and beginning the work of enrolling millions of Californians in the following health plans:

• Alameda Alliance for Health
• Anthem Blue Cross of California
• Blue Shield of California
• Chinese Community Health Plan
• Contra Costa Health Services
• Health Net
• Kaiser Permanente
• L.A. Care Health Plan
• Molina Healthcare
• Sharp Health Plan
• Valley Health Plan
• Ventura County Health Care Plan
• Western Health Advantage

"Covered California plans include the largest current health insurers in the individual market, as well as new entrants, regional plans and local Medi-Cal plans that want to be part of making history," Lee said. On average, there will be five plans from which to choose.
Even in rural areas where choice has been historically sparse, there will be two or three health plans. Throughout the state consumers will have a choice of Health Maintenance Organizations (HMOs), Preferred Provider Organizations (PPOs) and Exclusive Provider Organizations (EPOs).

To get prices at such competitive points, winning health plans built their bids around the expectation of high enrollment, not high profit. Plans reduced profit margins down to two and three percent; embraced Affordable Care Act programs such as Accountable Care Organizations and Patient-Centered Medical Homes, that seek to improve care while lowering costs; found common ground with doctors, medical groups and hospitals on lower reimbursement rates to make care affordable.

Virtually every health plan designed a custom network for Covered California. Negotiations included a detailed review of each plan’s rates, their mix of hospitals, physicians and other providers, and their contingency plans for expanding networks in the event more consumers sign up than expected.

The current list of insurers is for individual policies only. Covered California will announce its options for small businesses to buy health insurance in June.

About Covered California

California was the first state to create a health benefit exchange following the passage of the federal health care law. Covered California is charged with creating a new insurance marketplace in which individuals and small businesses can get access to health insurance. With coverage starting in 2014, Covered California will help individuals compare and choose a health plan that works best for their health needs and budget. Financial help will be available from the federal government to help lower costs for people who qualify on a sliding scale. Small businesses will be able to purchase competitively priced health plans and offer their employees the ability to choose from an array of plans and may qualify for federal tax credits. Covered California is an independent part of state government whose job is to make the new market work for California’s consumers. It is overseen by a five-member board appointed by the Governor and Legislature. For more information on Covered California, please visit www.CoveredCA.com.

Must Read for all Californians re State Health Insurance Exchange

San Francisco Chronicle by Patrick Johnston -

May 5, 2013:

Over the next month, Californians will begin to get a clearer picture of the historic changes the Affordable Care Act will make in the state's insurance market for individual plans as it expands coverage to millions of the state's uninsured residents.

The state is scheduled to start providing the details about the health plans that will be offered through Covered California, a new competitive marketplace for individual, families and small businesses purchasing coverage.

Through Covered California, these Californians can begin purchasing insurance plans on Oct. 1 that will more resemble employer-provided insurance than the bare-bones coverage they may have had in the past.

The plans will go into effect on Jan. 1, and will offer more comprehensive coverage and smaller out-of-pocket expenses for deductibles and co-pays. Pre-existing conditions will no longer be taken into consideration, lifetime limits are eliminated, and subsidies will be available for individuals earning up to $46,000 and for families with an income of up to $94,200.


This will mean that many individuals will pay less for coverage than they did before the new federal law, but some Californians will face higher health insurance premiums.

Those on the lowest end of the income scale could see their premiums decline by as much as 84 percent, according to a report commissioned by Covered California.

But middle- and upper-income Californians who buy their coverage in the individual market and who don't qualify for the subsidies could face premium increases of as much as 30 percent, the report said. This could be especially true in San Francisco, with its higher median income and growing ranks of self-employed entrepreneurs, who will be seeking insurance in the individual market.

Among the reasons for the higher premiums for these Californians is the shift of out-of-pocket costs into premiums - that is, Californians will have lower co-pays and deductibles because the premiums will absorb more of the underlying cost of care. This shift ultimately could save money for people who use medical services more frequently. Families earning less than $60,000 a year, for example, could save up to 76 percent on the cost of care.

Providing more comprehensive benefits also means Californians in the individual market may pay more than they have before because the plans contain additional benefits - including benefits they might never use, such as pediatric dental care for beneficiaries who have no children.
Younger people may also lose some of their price advantage because of changes in the ways health plans calculate benefits. Because they were considered to be healthier, younger beneficiaries previously paid less than older people. Under the new plan, they will still pay less than older Californians but they will pay more than before. The report estimated these changes would cause Californians under age 25 to face, on average, up to a 25 percent higher premium, while older people would see an increase of about 12 percent if they don't qualify for subsidies. The report suggested that on average, individual premiums in California would rise 9 percent.

While these subsidies will help reduce premiums for some 2.6 million Californians, they won't reduce the underlying cost of care, which continues to outpace inflation by almost 250 percent. These underlying costs often are outside health plans' control, including the rising cost of hospitalization, doctors' visits, medical tests, prescription drugs and other health care services.

Among the many reasons for the rising costs are unnecessary tests, procedures and drugs, which experts say consume about $1 of every $3 spent on health care. We are an aging population, and older people have more costly medical needs. Also, about 40 percent of adult Californians live with at least one chronic condition, and chronic conditions account for more than 75 percent of all heath care costs.

Health plans are working to reduce costs by providing wellness programs. They offer free counseling for depression, quitting smoking, losing weight, eating healthier and reducing alcohol use. They're also limiting their overhead to about 11 cents out of every $1 in premiums. Plans are also working collaboratively to more closely align quality and payment in medical treatment and to improve cost transparency for consumers.

The federal Affordable Care Act and state law place tight limits on profits by requiring health plans to spend 80 to 85 cents out of every $1 in premiums on doctors' and hospitals' bills, prescription drugs, tests and other health care services for their members.

If the plans fall short of that requirement, then they must provide a rebate. California commercial plans exceeded those requirements by spending, on average, 89 cents out of every $1 in premiums on medical care.

California health plans' net profit margins are far less than others in the industry, averaging just 3.6 percent annually. Other sectors of health care, such as the pharmaceutical industry, benefited from net profit margins of up to 16.7 percent, according to Yahoo Finance data.

While the federal health care law will expand coverage, increase benefits and make many other changes to help Californians, it does not do enough to address the rising cost of care that continues to drive up the price of premiums.

The prescription for curing our health care system calls for more cooperation among all of us - elected officials, hospitals, physicians, patients and insurers - to lower the underlying costs of care so that we can ensure coverage is affordable.

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Marcy Zwelling-Aamot: Obamacare's impact on choice | care, obamacare, insurance - Opinion - The Orange County Register

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Diverse Groups Forge Consensus on Curbing Health Care Spending While Improving Quality

Unlikely partnership releases five integrated recommendations to improve health care.

• Published: 4/11/2013

Washington, D.C.—Five national organizations representing diverse constituencies involved in the nation’s health care system joined together in presenting consensus recommendations today for improving health care quality while lowering costs nationwide.

Calling itself the Partnership for Sustainable Health Care, the group includes nationally prominent advocates for employers, insurers, consumers, health care providers and others. Participants include America’s Health Insurance Plans, Ascension Health, Families USA, National Coalition on Health Care and Pacific Business Group on Health.
“No single organization working alone, and no single policy approach, will achieve the lower-cost, higher-quality imperative. Moderating health costs while improving quality of care must be an all-hands-on-deck commitment,” said Ron Pollack, executive director of Families USA. “It is high time for us to bend the cost curve and improve patient care by fully engaging the public and private sectors, rather than perpetuating cost shifts among sectors or to consumers.”
The organizations recommend a set of integrated, system-wide approaches involving both the public and private sector that they say will significantly curb the growth in health care spending and enhance the delivery of care. The organizations met regularly for more than a year to develop proposals and were supported in their work with a grant from the Robert Wood Johnson Foundation.
“We believe our health system will generate better value when consumers and providers face aligned incentives—based on evidence of what works—that reward quality care and efficient use of resources,” said David Lansky, president and CEO of the Pacific Business Group on Health. “Our work together shows that representatives of diverse interests can work in the public interest toward a common approach to improving health care.”
The group’s recommendations are five-fold:

1. Transform the way health care providers are paid, to emphasize value of services provided, rather than volume. Partnership members believe that private and public insurance programs must transition from the current ‘fee-for-service’ payment system to one that better rewards quality and value. They call on the public and private sectors to implement a range of alternative payment and delivery models over the next five years, in order to quantify results and spread successful models.
2. Pay for care that is proven to work. Partnership members recommend a tiered reimbursement strategy that links payment directly to effectiveness. They recommend that both public and private insurers reduce payment for services that prove to be less effective and to have weaker value than alternative therapies.
3. Encourage consumers to choose high-quality care. Partnership members recommend incentivizing consumers to select high-performing providers. They point to models like value-based insurance design, which offer financial incentives to consumers—such as reduced cost-sharing—when they opt for evidence-based treatments and obtain care from providers who deliver high-quality care. Traditional Medicare should be modified to allow tiered cost-sharing for beneficiaries who use high-quality providers, and drugs and services that are proven effective.  
4. Improve the nation’s health care infrastructure. Partnership members recommend reforms aimed at strengthening the foundational infrastructure of America’s health care system so that cost- and quality-related innovations can be implemented more effectively. They call for establishing a uniform and prudent set of quality and other performance measures to be used by both the public and private sectors to support provider payment reform, consumer incentives and healthy competition in health care markets.  
5. Incentivize states to improve care. Partnership members recommend establishing a gain-sharing program for states, which would encourage innovative approaches to controlling health care costs. States that participate would outline specific savings goals, with defined rewards for meeting them. States that slow the growth of total spending would be rewarded with a percentage of the savings. The recommendations include numerous ways to ensure that cost-reduction is accomplished responsibly and builds upon the access gains achieved through the Affordable Care Act. 

“These five ideas are game-changers that can place our health system on a sustainable path. Together, they can provide significant long-term relief for families and businesses facing rising costs and uneven quality,” said John Rother, president and CEO of the National Coalition on Health Care. “By encouraging new forms of health care delivery and spending our health care dollars more wisely, they can produce the real health-cost reform that our elected leaders in Washington have been searching for.”
Leaders of the Partnership believe their comprehensive approach to integrate public and private sector actions toward improving the health system will help stop the ‘silo effects’ of health care, including shifting costs from one partner or sector to another.
“High-value, affordable health care for individuals and families requires a sustained commitment by all stakeholders to actively engage and address the drivers of health costs throughout the system,” said Karen Ignagni, president and CEO of America’s Health Insurance Plans. “Today's report presents an actionable roadmap for reform.”
The leaders say they understand that change will not happen easily or quickly, but believe these recommendations create the opportunity for significant momentum in the immediate future, for system-wide transformation, toward which substantial progress can be achieved in just five years.
“To meet America’s health care needs, with special attention to the poor and vulnerable, we know that health care providers must fundamentally reconfigure delivery systems, care processes and cost structures. Moving to managing the health of defined populations demands recognition and acceptance of the magnitude of the transformational change required,” said Robert Henkel, FACHE, president and CEO of Ascension Health. “The consensus recommendations we present today provide a roadmap to move our country toward an achievable, high-performing, person-centered, coordinated system with lower costs.”
The Partnership organizations plan to continue their work by reaching out to and engaging many other health care stakeholder groups that are also interested in promoting health cost efficiencies while improving quality of care.
See the Partnership for Sustainable Health Care recommendations at www.rwjf.org.
Media Contact:
Alexis Levy | Robert Wood Johnson Foundation | media@rwjf.org | (609) 627-5702

About the Robert Wood Johnson Foundation

The Robert Wood Johnson Foundation focuses on the pressing health and health care issues facing our country. As the nation’s largest philanthropy devoted exclusively to health and health care, the Foundation works with a diverse group of organizations and individuals to identify solutions and achieve comprehensive, measurable, and timely change. For 40 years the Foundation has brought experience, commitment, and a rigorous, balanced approach to the problems that affect the health and health care of those it serves. When it comes to helping Americans lead healthier lives and get the care they need, the Foundation expects to make a difference in your lifetime. Follow the Foundation on Twitter www.rwjf.org/twitter or Facebook www.rwjf.org/facebook.

Joel Hay: We can't afford Affordable Care Act

The Orange County Register

Published: March 29, 2013 Update

 

Obamacare's biggest selling point is that beginning next year all Americans will have a path to health care coverage. In fact, as Chief Justice Roberts upheld in a 5-4 vote at the Supreme Court last summer, after 2013, it will be illegal for any of us not to carry health insurance. Obamacare's biggest flaw is how expensive and wasteful it will be in accomplishing this expanded health care access.

 

The Affordable Care Act will add about 27 million Americans to the insured population and will likely increase government health care spending by more than $2.5 trillion over the next decade. Even the Congressional Budget Office estimates the 10-year Obamacare costs at $1.9 trillion through 2023, and this doesn't include any of the $300 billion annual health insurance premium tax exemptions that are crucial to ensuring that most private employers don't push all of their workers into the Obamacare Health Insurance Exchanges in 2014. It also doesn't include the $716 billion that was taken out of Medicare to help fund Obamacare without raising federal deficits.

 

This means that each newly added Obamacare beneficiary will cost the federal government about $100,000 to insure over the next 10 years. Only in Washington, D.C. could this even begin to sound logical or financially responsible. I'll bet that at least 95 percent of those who will get Obamacare coverage would rather just take the $100,000 than the Medicaid or Health Insurance Exchange health plans that federal and state bureaucrats are busily designing for them. For $100k, they'd gladly take their chances with the free care already provided by USC medical professors and residents at L.A. County Medical Center or other similar existing facilities.

 

Obamacare does nothing to deal with the 800-lb. health care gorilla – government programs cost too much. Medicare already has a $60 trillion unfunded liability for promises to future retirees. Just the spending for Obamacare, Medicaid and Medicare will raise deficits for the next 60 years to a level that will absorb over 20 percent of the entire economy, as much as the federal government spends on all its programs today. Actually, Obamacare does pay lip service to cost containment with a whole slew of new gobbledy-speak acronyms like ACOs (Accountable Care Organizations), PCMHs (Patient-Centered Medical Homes), EHRs (Electronic Health Records) and PCORI (Patient-Centered Outcomes Research Institute).

 

The problem is, while adding substantial administrative overhead costs, there is no evidence that any of these new bureaucratic contraptions will save any money.

 

The Obama stimulus spending pumped $30 billion into expanding electronic health records over the past four years and the consensus is that this has increased health care costs, not reduced them. As Stephen Soumerai from Harvard Medical School and Ross Koppel from the University of Pennsylvania wrote, "... The most rigorous studies to date contradict the widely broadcast claims that the national investment in health IT – some $1 trillion will be spent, by our estimate – will pay off in reducing medical costs."

 

All of the Patient-Centered Medical Home demonstrations done thus far have found that they significantly increase health care costs. Accountable Care Organizations, which are supposed to give physicians financial incentives to manage their patients better, have no mechanism to keep patients returning to them for care, and are thus as loophole-free as Swiss cheese. Even ACO proponents claim that in ideal circumstances ACOs will only slow the rate of growth of health care spending, not actually reduce it. And PCORI? PCORI is now spending billions of dollars to analyze health care services. This money is provided by a new Obamacare head tax on every health plan beneficiary. But there is a slight catch. Under Obamacare, it is illegal for PCORI to actually evaluate medical costs.

 

It could all have been done so much more simply by guaranteeing every American a catastrophic coverage health insurance plan that kicks in once their existing health benefit costs or annual out-of-pocket medical expenditures exceeded 15 percent of family income. By using existing health insurance premium tax expenditure loopholes to pay for it, taxes increases would have been unnecessary.

 

The Congressional Budget Office projects that at least 30 million people will still be uninsured in 2022, more than the 27 million that Obamacare adds to the covered roles.

 

But by then Democrats will be looking to pass Obamacare Part Deux, which will almost surely be single-payer health care for all. And when health care is free, you'll get what you pay for.

 

Joel W. Hay is a professor at the USC Schaeffer Center for Health Policy and Economics.