Covered California responds to Trump’s Order, insurance reduction cuts in new Obamacare overhaul attempt

All the news coming out of Washington might lead to the conclusion that health insurance in California is in trouble. Not true.

If you are getting a subsidized policy through Covered California, be prepared to renew from Nov. 1 through Jan. 31. The system is trying to make sure you will not be priced out of coverage. Many–if not most–Californians who have gained coverage through the taste exchange will face premium costs similar to last year thanks to the escalator in federal tax credits built into the plan.

Recent developments created plenty of confusion among consumers. Even before the Trump announcements of last week, only 31 percent of the insured nationwide knew signups would begin Nov. 1 and nearly 60 percent of the uninsured believed the Affordable Care Act would be cancelled next year, according to a poll by Get America Covered.

Here is what has been going on in Washington after the Republican majority in Congress failed to repeal and replace the Affordable Care Act (ACA or Obamacare):

On Oct. 12, President Donald Trump signed two executive orders, both of which were seen as steps toward unraveling the ACA.

The first order instructed federal agencies to begin writing new regulations that would allow greater latitude for so-called association health plans. Under these plans small businesses in the same industry or trade can join up and offer insurance to members. The Trump Administration wants the associations to be able to offer insurance plans that do not meet the full scope of Obamacare coverage, thus resulting in cheaper premiums. Significantly, the associations would also be able to enroll individuals, even if they reside outside the state where the association is based.

The second order ended billions of dollars in payments to insurers to compensate them for Obamacare-ordered reductions in deductibles and other out of pocket costs faced by low income enrollees. Many saw this as a deliberate attempt to sabotage the insurance markets, by putting pressure on insurers’ bottom lines, forcing them to dramatically raise premiums and possibly leading them to abandon ACA exchanges.

By Tuesday a bipartisan agreement had been announced in a Senate committee to restore the payments, along with giving states more flexibility to work around parts of the ACA. Trump at first seemed to support the deal, then backed away from it.)

The Congressional Budget Office (CBO) had reported that discontinuing the payments could cause premiums to increase by about 20 percent next year and by 25 percent in 2020. It also said that federal tax credit subsidies, which are tied to the premiums that would go up, would increase the Federal deficit by about $194 billion over 10 years and an estimated one million could lose their insurance.

Health Access California Executive Director Anthony Wright had called the elimination of the insurance payments “wantonly destructive and de-stabilizing.”

He noted that “Covered California has anticipated this action and has taken steps to address it by working with insurers to focus on premium spikes that are the result of this action and focus on subsidized Silver Plans in the Exchange.” By putting a 12 percent surcharge on premiums in the benchmark Silver Plan, Covered California was able to guarantee insurers would be made whole and that consumers would not face higher costs because the silver plan hike would be fully subsidized.

Still, “We do fear, in the short term, that folks will be scared away by the double digit premium increases in the Silver product, not realizing that they are subsidized and so, may fall off coverage. And there may be others who are not subsidized who are finding that they can get a plan without the 12 percent surcharge outside the Exchange.”

It is understandable if people are confused, said independent ACA agent Neil Hamady. Even without the latest political machinations, enrolling in Covered California policies can be complicated. For example, to get covered by Jan. 1 you must be enrolled by Dec. 15.

“If you enroll any time between November 1 to December 15 your effective date will be January 1. But if you enroll one hour after December 15; it would be February 1.”

Application to Obamacare is on-line and hotline numbers with live support were set up to make the process easier.

If your family income is less than 400 percent of the federal poverty line it makes sense to seek that assistance, Hamady said. But above that you may as well go directly to a carrier or to an agent rather than enroll in a Covered California plan, since you will not get a subsidy.

These are the people who are truly suffering with higher premium costs and are helping drive the political debate over fixing or repealing Obamacare.

Hamady offers a reality check. “If you’re making $60,000 to $70,000 and if you have four, five members in your family you’re not getting any assistance. If you are in your early 50s and you have kids you’re going to be paying $2,000 to $3,000 a month.”

Low income folks on Medi-Cal, retirees and disabled people on Medicare, and undocumented immigrants face their own enrollment issues.

If your incomes is below 138 percent of the federal poverty line you qualify for Medi-Cal and can enroll anytime during the year.

If you are turning 65 years old, three months after your birthday you have seven months to enroll in Part A (for hospital expenses) and Part B (for doctor visit expenses) of Medicare. If you’re already enrolled in a Medicare advantage HMO plan you can switch plans or go back to traditional Medicare every year between October 15 and December 1. If you are disabled and under the age of 65, you can get Medicare after 24 to 35 months.

Hamady noted that adult undocumented immigrants can buy insurance outside of Covered California but will not qualify for any assistance.

Wright said that “the 200,000 undocumented children (qualified in Health4allkids by SB 75) who are covered since last May are state funded in Medi-Cal and are not impacted by these individual changes to the individual insurance market.”

Junk insurance

The executive order on Association health plans has longer term implications, said Betsy Imholz, Special Projects Director for Consumers Union.

“We believe this really heads toward splitting the market and siphoning off healthy people, leaving older and those less healthy consumers for the Exchanges,” she said. By allowing the associations to skimp on coverage, the risk increases that consumers will be buying “junk insurance,” she said.

“Before ACA we encountered people who thought they had full coverage. But it turned out, for example, that if they got cancer, they could not get chemotherapy for Outpatient (services). We’re very concerned that we’re going to see more confused consumers who can’t get insurance they thought they had and are paying more for it.”

Xiomara Pena, National Hispanic Outreach manager for the non-profit Small Business Majority, said “These multi-state plans will offer fewer consumer safeguards. In fact, the points covered by some association plans will not be actually protected in the state where (the insurance buyer) lives because the regulations created for these plans will supersede state laws like those we have here in California.”

The impact of Trump’s Executive Order also greatly impacts small businesses. According to the U.S. Treasury Department, one in five ACA market place participants in 2014 was self-employed or a small business owner. In California alone, nearly 500,000 ACA marketplace participants were either self-employed or small business owners.

“We know that prior to ACA, small businesses and their employees represented a disproportionate share of uninsured workers” Pena said. By 2015, those numbers have fallen dramatically thanks to ACA.

“All these data make clear we simply can’t return to the old days of doing business” she said. “We need to make it easier for small business owners, their employees and self-employed Americans. This means upholding ACA and strengthening the law rather than trying to repeal it or chipping away at it.”

As it is, California has the largest drop in uninsured rate of all the 50 states. This year, the State had several initiatives to strengthen ACA including: a full three-month open enrollment period beginning this year (AB 156–Wood); staying with a doctor when a switch is necessitated by an insurer abandoning the market (SB 113—Hernandez) like in a pregnancy, chemotherapy or a scheduled surgery; and required notice before an increase on prescription drugs (SB 17—Hernandez).

[This story was originally published by FilAm Star.]