Comparing the Gov’s plan with the unowned legislative language…

While the orphan “working draft” in unowned by any policymaker, it is remarkably similar to the Governor’s proposal, about which our opinion was mixed, liking many elements, but strongly objecting to other pieces—including the individual mandate without regard to whether coverage is available or affordable. Our preliminary analysis of the Governor’s proposal, available on our website still holds up.

This “working draft” would have been appropriate for release in March or April, rather than October. However, we appreciate seeing the draft, to better engage in the dialogue. Insurance agent Alan Katz has posted the full document(!) of the orphaned legislative language on his health reform blog, along with his own commentary.

So, like the Governor’s January proposal, we appreciate the focus on prevention and on encouraging information technology. We strongly support the significant expansion and streamlining of public programs, for children, parents, and adults without kids. However, it is hard to evaluate these components without seeing the financing needed to sustain these expansions. Other concepts of the Governor’s proposal that we liked, including the minimum employer contribution, are not included except for intent language, and we look forward to seeing that soon.

We continue to have significant concerns about the adequacy of the financing, the individual mandate without any conditions, the reliance on high-deductible plans as minimum coverage, and the impact on the viability of the safety net, including public hospitals.

MOVEMENT FORWARD: We acknowledge and appreciate that this draft has improved from the Governor’s proposal in key areas, most particularly in regard to public programs. We appreciate:

* the abandonment of the “bright line” proposal that would have thrown current Medi-Cal recipients off the program and into coverage with greater costs and fewer benefits;

* the expansion of no-cost Medi-Cal up to 150% of federal poverty level (FPL), or around $15K for an individual or $31K for a family of four;

* the acknowledgement that some over 250% of FPL will also need help with affordability, although we think the idea of a tax credit may not cover those who need help, and would be very troublesome to actually implement; and

* the provision allowing all Californians to join the purchasing pool, which would help organize the insurance market for consumer, making it easier to navigate and get the best deal.

MOVEMENT BACKWARD: However, there are significant areas where the proposal has gotten worse, at least from our understanding (or maybe hope) of where the Governor’s proposal was from the concept paper. In some of these cases, the concept is the same, but the legislative language is ineffective–or has a opposite impact–than what was advertised and represented in January. These additional issues include:

* The elimination of quarterly complaint and greivance reporting for HMOs, which seems to remove an important oversight over insurers.

* The apparent increase in the permissible premium, for those making 150-200%FPL, at a level that is still too high–5%, which does not include out-of-pocket costs.

* The lack of any standards for out-of-pocket costs in the subsidized pool. Given that one can drive the cost of a premium down by raising deductibles and cost-sharing, the limit of premiums provides small comfort.

* An exemption from the minimum level of coverage for any and all employer plans. The draft still has, as a placeholder, an unacceptable $5,000 deductible (and $10,000 out-of-pocket max) plan as a minimum level of coverage under the individual mandate… but that even that low minimum does not apply to individuals who take up employer-based coverage, meaning they could have coverage with very skimpy benefits, or no out-of-pocket maximum.

* A weak definition of the minimum Medical Loss Ratio (the amount spent on patient care rather than administration and profit), so that it applies to an insurers’ entire portfolio of business, meaning this rule would no longer provide assurance that any specific product is of good actuarial value. A limit that was product-by-product, or even market-by-market, would be more helpful to consumers.

* The Healthy Action benefit seems to be less than advertised as well, since it only requires an insurer to offer such a product, but does not include smoking cessation or obesity programs as a mandated benefit. With no requirement, the policy seems more likely to be a way for insurers to identify risk, rather than a viable new benefit for consumers. If this is truly a priority, it needs to be a mandated benefit.

* And most concerning, the guaranteed issue protections in the individual market seem hollow with the new details. Only a few high-deductible, low-benefit products will be guaranteed issue to begin with–so those with “pre-existing conditions” will only have access to the coverage in the market that is least suited to them. There would be little assurance that we would ever get to a second phase of having the full market guaranteed issue. Insurers will be able to use benefit design, marketing, and pricing to avoid those California customers that have health risks and needs. In particular, we believe older Californians will simply be priced out of the individual market, and the guaranteed access an illusion.

Even on the concepts we support, this “working draft” needs a lot of work.

Health Access California promotes quality, affordable health care for all Californians.
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