California reveals details of health-law insurance plans

Consumers are getting their first glimpse at what health insurance will look like in California as the state prepares to implement the federal healthcare law. On Wednesday, state officials will spell out the details on policies available next year to people buying their own coverage. In January 2014, most Americans will be required to have health insurance or face a penalty.

Federal law established four broad plans of coverage — Platinum, Gold, Silver and Bronze — whose benefits vary based on the level of out-of-pocket expenses that consumers are required to pay. A Platinum plan, the most expensive, would require policyholders to pay about 10% of the cost of care, while the Bronze plan, the least expensive, pegs the patient share at 40%.

Now for the first time, California is laying out the specific co-pays and deductibles that many policyholders will face when going to see a doctor, get a lab test or visit an emergency room.

Nationwide, President Obama's Affordable Care Act requires insurers to cover certain services, such as maternity care and prescription drugs, and they must accept all applicants regardless of preexisting medical conditions. But the federal law allows states to go beyond those minimum standards and set stricter rules.

State officials said they took this extra step to help Californians get the best deal when they shop for insurance. Consumers will be able to buy these policies through Covered California, the state-run marketplace for health insurance.

"For the first time, all Californians will be able to make an apples-to-apples comparison of their health plan choices in 2014," said Peter Lee, executive director of Covered California. "Today's health insurance market is a shell game where insurers are trying to avoid paying for expensive care and consumers don't know what's covered or not covered."

Consumer advocates applauded California's move. But some healthcare experts warned that policyholders will still have to navigate a lot of jargon. And the ultimate cost of this coverage won't be known until the state negotiates rates with health insurers later this year.

To help Californians get some idea of what they might pay, officials are launching a website Wednesday to provide estimates of monthly premiums. The federal law grants premium subsidies to families earning up to about $93,000 a year to make coverage more affordable. It also expands Medi-Cal coverage to lower-income people. California estimates take those subsidies into account.

For example, the state says that a family of four earning $35,000 would pay less than $120 a month for health insurance with the help of federal subsidies. At $47,000 a year, a family's monthly premiums would be $247 a month.

Premiums are just one factor in the health insurance cost equation. Patients must also pay out of pocket for a wide range of medical care.

Under the state requirements to be issued Wednesday, for example, a Silver plan would have a $2,000 annual deductible and a $45 co-pay for a primary-care visit. A more expensive Platinum plan would have no deductible and a $25 co-pay for a regular doctor's visit. Lower-income policyholders would pay substantially less because of federal aid.

via The LA Times

As Healthy Families Deficit Rises, Tax Pressure Rises With It

The Healthy Families program has run out of money, according to state health officials. The deficit currently stands at almost $100 million and will keep rising every month, accordding to Janette Casillas, executive director of the Managed Risk Medical Insurance Board, which oversees Healthy Families.

Gov. Jerry Brown's administration is pursuing two ideas for refilling the coffers: reinstitution of a recently expired tax on managed care organizations and an appropriation bill if the MCO tax isn't revived.

"The Healthy Families Program budget shortfall [is currently estimated] at $33 million general fund," Casillas said. That figure does not include $15 million the state has used from the general fund to help make Healthy Families ends meet, Casillas said. The sum of those two figures -- $48 million -- represents half of what the state is missing. California's share of Healthy Families funding is matched by the federal government so the state is almost $100 million short.

That amount -- reflecting a shortfall of less than two months -- will increase, Casillas said.
Health plans serving Healthy Families need to wait for payment until the deficiency is resolved, said Diana Dooley, state Secretary of Health and Human Services.

"We have a deficiency process every year," Dooley said. "They will be paid, as happens whenever there's a deficiency. Ultimately, they will be paid."

Healthy Families, California's Children's Health Insurance Program, serves 860,000 children. The state is shifting beneficiaries from Healthy Families to Medi-Cal managed care plans and eventually intends to eliminate Healthy Families. The deficit does not affect the transition or the program's beneficiaries.

Since 2009, the Healthy Families program has relied on some of its funding from the MCO tax, which expired despite the Brown administration's effort last year to reinstitute it.
"It has to do with a failure to extend the MCO tax," Dooley said. "So now there will be a deficiency that will be met through the deficiency process."

That could be a sticky process because of the complexity of reinstituting the MCO tax.
Numerical, Political Hurdles in Reinstating Tax reinstating a managed care tax requires a two-thirds vote in the Legislature, which will require Republican support if the governor can't line up every Democratic vote in the supermajority Legislature. Ironically, Republican lawmakers four years ago were fully behind the MCO tax to support Healthy Families, but support has eroded because the state is phasing out the program.

A tax on managed care companies still could pass -- assuming it has the support of the health plans -- but there seems to be some political arm-wrestling in Sacramento over how the money from that tax would be spent.

Patrick Johnston, president and CEO of the California Association of Health Plans, said insurers could support reinstating the MCO tax, but he hoped it would augment coverage and not just go into the existing Medi-Cal fund.

"The state owes the plans, and we expect the plans will be paid for covering children in Healthy Families," Johnston said.

"The state has a cash flow problem, and we expect the state to resolve it and that the plans will get paid. I mean, it's clearly not a dispute about the plans being owed," he said. "So now the state has the option of internal borrowing or seeking a supplemental appropriation."
Internal borrowing is an unlikely fix, Casillas said.

"We would refer to this as a need for a supplemental appropriation," Casillas said. "Borrowing internally was not an option for us, although that was explored. Collectively, we had explored the possibilities or options, given that the MCO tax expired and was not reinstituted. It is apparent we will need a supplemental appropriation, where a bill goes to the Legislature and asks for X amount of money."

Casillas pointed out that MRMIB is stuck in an unusual position because the state's budget relies on an extension of the MCO tax, but those dollars aren't coming into Healthy Families. Basically, part of the Healthy Families budget is funded with money that doesn't exist, once the MCO tax expired.

Measuring the shortfall is made more complicated by the transition of children from Healthy Families to Medi-Cal managed care plans. Enrollment will decline every month, so the monthly additional deficiency must be determined based on changing numbers of enrollees.
"It's very odd that I find myself -- that the program finds itself -- in this position," Casillas said. "We will have to figure out each month and see how that deficiency is growing, even though it's growing off a declining enrollment base."

Health Plans Can Wait Johnston said health plans will wait for the state to resolve its deficiency.

"Just like with anyone else, timely payment is better than late payment," he said. "But the health plans have contracts with the state to provide services, and we'll count on the state honoring its obligation to pay according to the contracts. What the state does internally to manage its cash flow is its problem."

Johnston likened it to selling a car, where the seller doesn't ask how the buyer is going to come up with payment. "Whether you get it from checking or savings is your decision-making process. My expectation is that you'll make the payment. I mean, you don't turn to me and say, 'How do you think I should get the money?'"

The real question is whether the governor can muster the political capital to reinstitute the MCO tax. When the Healthy Families program was in financial trouble in 2009 and was about to restrict enrollment, the health plans were the ones that came up with the idea of the MCO tax, Casillas said.

The state likely needs health plan support to make the reinstatement of the MCO tax palatable to Republicans. However, the health plans association has ideas about how the money should be spent that may differ from the Brown administration's.

All of that makes a bit of a political minefield, so Johnston paused from the discussion, to carefully consider his words.

"We will await further guidance," he finally said.

Health Plan Backing According to Johnston, health plans would support reinstatement of the MCO tax as long as it all doesn't go in the general Medi-Cal pot, but is spent at least in part on beefing up services for seniors and the disabled.

"We would consider a renewal of the MCO tax to supplement the Medi-Cal program and contribute to its long-term integrity," Johnston said. "Medi-Cal is underfunded in many areas, including seniors and persons with disabilities, so a tax on Medi-Cal plans that would draw down federal funds should use the money to supplement and not supplant existing funding.
"
Although the Brown administration has not said publicly where it wants the MCO money to go, Johnston said the state is considering putting all the money from the MCO tax into the general Medi-Cal fund and he doesn't think that's right.

"A tax on Medi-Cal plans must meet the task of being used for Medi-Cal programs, and we think this added money should augment existing funds to fund particular areas that have struggled, most recently the transfer of elderly and frail beneficiaries to Medi-Cal managed care programs will need additional support," Johnston said.

"Health plans have not opposed the MCO tax, but where the money goes always matters," he said. "We would hope that our voice would matter."
The deadline for resolving the issue is June 15, assuming the budget is passed on time.