Revised Senate bill would allow ‘noncompliant’ health plans and could threaten future of Covered California

A revised Senate health care bill released Thursday could make sweeping changes to the individual insurance market in California and would roll back the Medicaid expansion under the Affordable Care Act that provided Medi-Cal benefits to 65,000 childless adults in Stanislaus County.

As with the repeal-and-replace bill approved in the House of Representatives in May, Republicans want to eliminate the individual mandate that requires most people to have health insurance.

If there are enough votes to approve the bill in the Senate, where the GOP has a slim majority, it could jeopardize the ability of the Covered California exchange to offer affordable insurance to 1.5 million low- to middle-income consumers in the Golden State, health advocates said. Starting in 2014, more than 18,000 residents of Stanislaus County enrolled in health coverage on the Covered California exchange.

Because of weaker subsidies provided in the bill, people would pay more for far less coverage, said Anthony Wright, executive director of Health Access California, a proponent of the ACA.

Under an amendment proposed by Sen. Ted Cruz, the bill also would allow insurers to offer individual-market health plans that don’t comply with Affordable Care Act standards. Consumers could also use balances in health savings accounts to pay for premiums. That could provide other options for moderate-income folks who are not eligible for the subsidized health plans on the Covered California exchange.

Kaiser Permanente, Anthem Blue Cross, Blue Shield and HealthNet have offered the Obamacare insurance plans in Stanislaus and San Joaquin counties. Individuals earning between $16,400 and $47,520 a year, and a four-member family with annual income between $33,600 and $97,200, are eligible for tax credits to lower their premiums under the ACA.

Obamacare supporters said the bill would reverse the gains of the health law signed by former President Barack Obama in 2010. “It’s hard to overstate the devastating impacts of the Senate GOP proposal to the health system on which we all rely and to understate how these tweaks don’t make the bill any better,” Wright said.

California Sen. Dianne Feinstein has opposed the Senate legislation, citing a Congressional Budget Office report predicting that 22 million Americans would lose coverage by 2026, including 3 to 4 million in the Golden State. A CBO analysis on the revised bill is expected next week.

The revised Senate proposal still has per-capita limits on federal Medicaid funding to the states, but the spending limit could be relaxed for states dealing with public health emergencies. Democrats have strongly opposed the caps on Medicaid funding. With the end of the Medi-Cal expansion and program growth, California would see a $30 billion reduction in Medicaid funding in 2027 when compared with the current funding method, state officials have said.

The revised Senate bill would not eliminate all of the Obamacare taxes on higher-income Americans, but would maintain a 4 percent tax on investment income and the extra Medicare payroll tax for the wealthy.

With the recent amendments, the federal government would provide $170 billion to the states to help with reducing insurance premiums.

About 3.7 million residents in California could lose Medi-Cal benefits. Federal dollars for the optional Medicaid expansion would be cut off in 2024, forcing 31 states, including California, to decide whether to continue funding the benefits for single adults.

It is not known whether Covered California could continue as a viable insurance exchange under the repeal and replacement bill.

“Covered California has been a tremendous benefit for the marketplace,” said Betsy Imholz, special projects director for Consumers Union. “They have been creative in finding ways to stay afloat. I would hope they would find a way to continue to do that.”

Covered California spokesman James Scullary wrote in an email Thursday: “We’re still analyzing the updated bill and do not have a comment as of yet.”

Because of the less generous subsidies, many people with Covered California insurance plans would be shifted into more costly plans with $7,000 annual deductibles, Health Access said.

Peter Lee, executive director of Covered California, responded with an opinion piece to Wednesday’s Modesto Bee article on Bruce Pardini, a Modesto resident who has wanted to see other insurance options because he’s not eligible for subsidized coverage through the exchange.

Lee wrote that the Senate health care bill won’t address the Pardini family’s challenges, partly because it will allow insurers to charge higher premiums to older adults. A Bronze insurance plan covering Pardini and his wife costs almost $1,000 a month, has a $6,500 deductible and provides 60 percent coverage for medical bills. Lee wrote that the new law would raise his deductible even higher and increase the premium to $1,200 a month.

Pardini, 58, said he wants to see other options beside Covered California that might lower his costs and provide a better network of physicians. He disagreed with statements that insurers will lure consumers with “junk” health insurance plans if the bill is approved with the Cruz amendment.

The Modesto resident said his current plan, with the $6,500 deductible and a limited network of doctors, can hardly be called premium insurance.

Other residents, like Gary Duncan of Modesto, hope that more than two Republicans will vote against the repeal bill in the Senate, where the GOP holds 52 seats. Duncan, who has now reached the shelter of Medicare, said his Obamacare insurance protected him against a $1.5 million bill after spending five months in the hospital battling a life-threatening condition.

His 61-year-old wife, who has been hospitalized three times with a chronic leg infection, still relies on insurance through Covered California.

“They should be working on improving the Affordable Care Act,” Duncan said.

This story was originally published July 13, 2017 at 6:12 PM with the headline "Revised Senate bill would allow ‘noncompliant’ health plans and could threaten future of Covered California."