Dan Walters: Is California's new health plan really ready?

dwalters@sacbee.comAugust 5, 2013 

California is more heavily invested in the federal Affordable Care Act than any other state because it has, by far, the nation's largest number of medically uninsured residents and has embraced the law more fully than any other state.

We are, in brief, the test subjects to determine whether the sweeping act can work nationally or is fatally flawed.

Gov. Jerry Brown and the Legislature have expanded eligibility for Medi-Cal, the state's program of health care for the poor, to a million or more additional enrollees on the promise of heavy federal subsidies.

Meanwhile, "Covered California," the state's new health insurance exchange, will soon begin offering coverage to, potentially, several million more Californians and eventually to employers.

The stated aim is to reduce the state's estimated 7 million medically uninsured residents by half or more with the assumption that federal subsidies and premiums from newly insured Californians will make the finances pencil out without tapping state taxpayers.

But will they? The state's auditor has given a qualified stamp of approval to Covered California's structure, assuring everyone that the new agency has done pretty much what it needs to begin enrollment.

There are, however, two huge unknowns – whether there will be enough healthy young people enrolled to hold the financial structure together, and whether there will be enough capacity in the medical system to handle the hoped-for influx.

The latter is the subject of much political jostling in the Legislature as non-doctor medical providers, such as nurses and optometrists, seek expansion of their "scopes of practice" into areas formerly exclusive to doctors, arguing that they can pick up some of the new patient load.

The enrollment question is also unanswered. Covered California bases its financial calculations on three potential scenarios.

The middle one has 628,000 enrollees in this fiscal year, growing to 1.6 million in three years. An "enhanced" scenario ranges from nearly 900,000 this year to 2.3 million by 2016, while a "low" one begins at just 264,000 and reaches just 1.3 million.

The biggest unknown factor is what those healthy young uninsured adults will do, particularly those earning too much to qualify for subsidies.

Individual policies will run from about $140 per month for a 25-year-old to well over $200, depending on the extent of coverage and the region. But the penalty for not purchasing is a fraction of the premiums – $95 per year or 1 percent of income, whichever is greater.

That has advocates worried, which explains why states and the federal government are rolling out lavish promotional campaigns aimed at the healthy young, whose premiums are needed to pay for older and/or sicker enrollees who need more services.

Call The Bee's Dan Walters, (916) 321-1195. Back columns, www.sacbee.com/walters. Follow him on Twitter @WaltersBee.

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