Obamacare remains the law of the land, for now, perhaps nowhere more securely than in California.
But health insurance experts said Friday that despite Congressional failure to repeal any part of the Affordable Care Act, the law’s future remains uncertain. And, they add, lingering uncertainty could cause premiums to become more expensive. Consumers will find out Tuesday, Aug. 1, when Covered California, the state’s Obamacare exchange, releases rates for next year.
“In many respects, California is likely the best case because of how successful the roll out has been here,” said Larry Levitt, a senior vice president at the Kaiser Family Foundation, a nonprofit health care research group in Menlo Park. “Consumers can certainly breathe a lot easier now that the debate is, at a minimum, stalled.”
For one thing, Southern California residents will have a wide range of Covered California plans to choose from, and federal subsidies to help pay for coverage remain unchanged. Additionally, expanded Medi-Cal will continue to cover about 1.9 million low-income residents of Los Angeles, Orange, Riverside and San Bernardino counties.
Other protections that are hallmarks of the law also figure to stay in place, including the rule that prevents insurance companies from banning patients with pre-existing conditions, or charging them more.
But Levitt noted that while the legislative push to end Obamacare has lifted, President Donald Trump’s antipathy toward the law could lead to disruptions in the individual marketplace.
“Everyone will be looking now as to whether the Trump administration runs the marketplaces as intended or instead seeks to undermine them,” Levitt said.
A big unknown for insurers selling through Covered California is whether the federal government will continue to directly pay them to help reduce deductibles and co-pays for low-income consumers, as called for under Obamacare.
“The real issue that could really blow up rates for the individual market would be if the Trump administration doesn’t fund the cost-sharing subsidies,” said David Duker, chief strategic officer for CHOICE Administrators, an Orange-based health insurance exchange company. “They’ve been doing it on a month-to-month basis without the surety this will be ongoing. Health plans will be very squeamish about coming out with their best pricing.”
Another concern, Duker said, is if the IRS stops collecting the tax penalty levied on people who choose to skip insurance entirely.
“If the penalty is not enforced, you’re going to see more and more healthy individuals dropping coverage, while at the same time people with a medical condition will of course maintain their coverage,” he said. “Instead of insuring nearly everybody in the market, the insurers are insuring the ones who will have the most medical expenses and the highest claims.”
Kendrick Kim, 39, an adjunct community college professor from Cerritos, has remained uninsured since college because of concern about the time and money required to enroll. He had hoped for an end of the individual mandate in the failed so-called “skinny repeal.”
“I’ve been so busy with life, honestly I’d rather just pay the penalty,” Kim said. “Right now, I’m not thinking of the future. I’m thinking of today.”
Duker said the group insurance market has been insulated from the turmoil in Washington, and he expects rates for Southern California employer plans next year to increase by 3 percent to 5 percent.
Mike Betts, 33, of Anaheim, plans to take advantage of his Covered California plan while he has affordable premiums. He works in sales and pays about $150 a month for a $350 Blue Shield plan.
“It’s a safety net,” he said. “I don’t want to spend $350 a month for something I might not use for years. I do want a plan if an emergency happens.”
Betts said he’s in good health but plans to have a physical and other preventative care before the end of the year in case premiums go too high or Republicans find a way to repeal the law.
“It’s life-changing,” Betts said of the subsidy. “Without it, I’m either on Medi-Cal or I have no insurance.”
Levitt said while premiums are expected to rise, subsidies will too.
“Consumers are expected to pay a certain percentage of their income and the subsidies cover all the rest,” he said. “Generally, the subsidies cushion the effect of premium increases for consumers that are eligible for them.”
However, to get the best rate, it might be necessary to shop during open enrollment, instead of auto-enrolling in the same Covered California plan. Open enrollment starts Nov. 1.
“It may be that for consumers to protect themselves from premium increases, they may need to switch plans,” Levitt said. “You may be in a low-cost plan now but there’s no assurance it will still be one of the lowest-cost plans next year.”
Vincent Hennerty, 27, of Chino Hills, who has coverage through expanded Medi-Cal, described the week as a roller coaster, and that repeal effort is a “zombie that never dies.”
“A lot of people don’t realize how lucky we are to be here in comparison to other states where a lot of people are having a lot more difficulty when it comes to health care,” said Hennerty, who works full-time recruiting volunteers.
“We are privileged.”