Calif. Health Exchange Plans, Rates Announced
FUDGE: This morning, Californians got a better idea of what national healthcare reform called Obamacare will look like for them. They just identified the insurance companies that will make up the healthcare exchange, which uninsured residents can turn to for coverage. Starting at the first of next year, all people will be required to carry health insurance in the U.S. And an estimated 5.3million Californians will be able to purchase insurance through Covered California. Kaiser Permanente, Blue Shield, and San Diego's Sharp health plan will be among the 13 insurers who will participate in the coverage. We begin our discussion with Dana Howard who joins us over the phone, a spokesperson for Covered California. Thank you very much for being with us. HOWARD: So good to be here. FUDGE: What do we know now that we didn't know yesterday about healthcare reform in California? HOWARD: Now we know what plans are going to be available in regions throughout California. Covered California is gonna be broken down into 19 regions, and San Diego is rating region 19. It's good news in the sense that number especially San Diego where there will be six plans that will be offered through Covered California. These are great plans, great insurance. Health Net, Ransom, Kaiser Permanente, Molina, Sharp, which is a great local health plan. And Blue Shield. These companies have come in and made bids to cover California, what types of rates they would be able to offer. And we looked at them and it was very competitive. We have excellent low rates for consumers there. And so this is going to remove barriers for folks to get health coverage. FUDGE: More about the rates later. Why are healthcare exchanges necessary and who are they for? HOWARD: Well, the California health benefit exchange, Covered California, is going to be reaching out to the 5.3million Californians who are in need of health insurance because it's not provided by their employer. And or they are not covered by one of the public health insurances such as Medi-Cal. There are 5.3million Californians who have to purchase that insurance on their own. And a large number of them are simply uninsured. The majority are going to qualify for subsidies to help pay for that. And the only places they can buy or get those subsidies and through Covered California. And the subsidies are on a sliding scale based on your income. But the rates we've been able to negotiate for the healthcare plans are absolutely phenomenal in that there will be who will have to pay, if they qualify for a subsidy, just a negligible amount to get provided coverage, and good coverage. FUDGE: I have one schedule of prices in front of me. Apparently the average cost of a Silver Plan for an individual 40 years old is is $315 a month. That's an average price. And what more can you say about that? HOWARD: Well, just that. It's an average. It's not going to be what the rate is going to be. That's going to vary depending upon a few things, your age, geographical location. It will not be dependent upon your medical condition or health. People will -- it's a whole different ball game now. You cannot be denied for a preexisting condition. So the Silver Plan, you'll have three different or more, in San Diego you have six different plans coming in, that you would to choose from. Some will be above that amount, and some of will below that amount. FUDGE: How can people learn what costs would be appropriate for them? Or when you're with a family of four, what would be the cost? HOWARD: Right now, what's online is really just an indicator of the rates. We still have to go through the formalization of the contract with the healthcare provider. That'll take place in about another month. So about late July, August, we should have the rates posted so you can make that calculation. But you can go online to coveredCA.com and take a look at the calculator tool on there. And it'll give you an idea of what you could expect to pay. FUDGE: Now, what about the companies participating in our healthcare exchange? And what is the incentive for companies to participate? HOWARD: Well, the companies really came in well. They recognize it's a risk tool, it's just not going to be as adverse or risky as what some had tried to claim. They are going to get a good amount of well people in the pool because you can't just have all sick people in your pool or it's not going to be able to survive. That's one of the reasons. Two, you're looking at 5.3million people. That's a huge new market. So they recognize that and said yes, we will -- we do want to be a part of that. You're also able to go to the hospitals and the doctors, what we call the providers and work with them to find both a sustainable but a lower cost rate schedule, rate payment schedule so that they're able to save money that way. And on top of that, the plans looked at the amounts of profits that was involved, and said we're going to target 2-3%. FUDGE: Thank you very much for joining me. HOWARD: It's been a pleasure. And make sure your listeners visit coveredCA.com for more information about this. FUDGE: All right. One of the people who spoke at this morning's Covered California press conference in Sacramento was Melissa Hayden-Cook for San Diego Sharp Healthcare Company. [ AUDIO RECORDING PLAYED ] HAYDEN-COOK: Since the Affordable Care Act passed, Sharp has been working and delivered on healthcare reform in a way that will truly benefit the San Diego community. We truly believe that today is the next step in delivering on that promise, are the promise of affordable, quality healthcare for all San Diegans. FUDGE: We now welcome two San Diegans to our studios who have been deeply involved in the process and the debate surrounding Obamacare. Jan Spencley and Vince Mudd. Jan is executive director of San Diegans for healthcare coverage. Thank you very much. SPENCLEY: Thank you. FUDGE: And Vince Mudd is president and owner of San Diego Office Interiors. He's past Chair of the San Diego Regional Chamber of Commerce. Thanks to you. MUDD: Thank you very much. FUDGE: What do the two of you think of the news that came out today? Jan? SPENCLEY: I'm pretty thrilled. I'm happy because people are going to get broader and more comprehensive coverage. And the rates are lower. They're lower than last year, and they're lower than the average Californian in the State of California. So it's exciting. FUDGE: And Vince? MUDD: When you're in business and you're anticipating a new government program, you're always afraid it's going to be something very, very bad. These the simplest answer for me. These rates are lower than the current group rates that I have in my company. And that's important. That means there'll be a market for people to be able to access the product, it'll be affordable, and the plans, for example the silver plans, they're good plans and they have good benefits. So I'm happy the news was these aren't going to be very high rates which would have driven down use. They're at a level that I think they're going to gain those 5.3million customers. FUDGE: It'll be a while before we know how well this healthcare exchange is going to work, right? MUDD: I would assume it's going to be a disaster. Only because -- and I'm not saying it because these guys are all failures. But it's very difficult to do, it's very hard. Of the current system we have, it took a while to get going. No one should think it's going to be clean and easy. Patience is required. However, it does the two big problems. No.1, those that were paying for health insurance were always subsidizing those without. They will now be paying less. So current companies who are not in the exchange whose employees are not in the exchange are actually going to see their rates lowered as a result of the exchange as well. So this is potentially a benefit for those in it and those outside of it want FUDGE: But it's going to be -- what did you say? MUDD: A disaster. It should be. Try to find data online right now, and it's very difficult to get. But it's okay in the sense that it's hard to do. We have time to work our way into it. And we can make it less of a disaster. But I just mean it could be tough. Don't be surprised. FUDGE: Jan? SPENCLEY: I don't know about a disaster. [ LAUGHTER ] SPENCLEY: I wouldn't say that. I think nobody should declare victory or failure too quickly. It's going to take a long time to educate people as to what's available and get them enrolled. And I think it's important to note that we're not talking about people who have been traditionally insured. We're going to have to go out and work with them and assist them. So it's not just going to happen overnight. This is a new marketplace. FUDGE: There are continuing criticisms of Obamacare for people who fear and maybe some people who hope that it will fail. One says many employers will drop their insurance, preferring to pay a penalty for not providing healthcare because that would be cheaper for them under the Obamacare plan. Vince? MUDD: I try to help as much as I can as an employer. Two thing, we're an interesting lot as Americans. We don't like paying for something and receiving no benefit. So that just inherently is not us. No.2, one of the largest tax deductions that a profitable company can take is the deduction on employer-sponsored health plans. If an employer decides to pay the penalty, they no longer receive the tax deductions that they currently have. And No.3, in a competitive market environment, we like having the idea of having a great place and benefit for our employees. However, there are employers who want to get completely out of the business of providing any kind of healthcare to their employees. Now that there's a safe place for their employees to go in the exchange, some employers might choose to get off of that system. But I would remind them, you're still going to be paying a penalty and receiving no benefit. I don't think there'll be a mad dash for that at all. I think the numbers are strange. I don't think employers will jump out just because they're doing something that many of them have already been doing. FUDGE: Jan? Anything you want to say about that? SPENCLEY: I think it's silly to suggest that people -- they have no inducement to provide coverage today in those over 298% over 50, I think it's 96%, provide coverage today without inducement and without a penalty. This is a business decision. It's a complex business decision. And they're going to continue to make that decision in the future. FUDGE: When you look at companies with over 50 employees, which Obamacare applies to, in California, how many of those companies, what percentage of those companies already provide healthcare coverage? MUDD: In San Diego County, 97% of the companies are under 25 employees anyway. Those folks are unaffected by this at all. As a matter of fact, they will receive benefits. However the answer to the other question is I believe the number is 95% -- SPENCLEY: 96%. MUDD: Of the companies in California are providing healthcare today. FUDGE: Here's another criticism. Healthcare reform applies to employers who have 50 or more workers putting in at least 30 hours a week. This will cost firms near the 50 limit to reduce their staff or make sure their staff work less than 30 hours a week. Your response? SPENCLEY: First of all, it's 32 hours, and in working with businesses today, they either have a 50% threshold for providing coverage if they offer coverage, or they have a 30-hour coverage. These seem to be the standards. They have been doing it all along. And they have been managing their benefits that way all along. This doesn't add anything new to the market. It increases what is defined as the full-time worker. MUDD: There's a fundamental misunderstanding of how businesses employ people. If you have a business that can operate with 11 people, you'll have 11 people. If you have demand in your business that requires 90 people that work 40 hours a week, you will employ 90 people that need to work 40 hours a week. I think this belief that businesses are that modular, that they would change that much -- FUDGE: In order to not pay healthcare? MUDD: It's odd. At the end of the day, we want a healthy workforce because the employees are our greatest asset, and we need them healthy and working. It's an interesting criticism. I think it's without merit. FUDGE: Polls show that most people know very little about how Obamacare will affect them. And a lot of them don't even know that the law is in force. Is that a problem? SPENCLEY: I don't think that's a problem. I think coming out too early without information with a call to action and not being able to tell them exactly how they can enroll or where they can learn about coverage, that we didn't need to go out there. There's also been a pretty big misinformation campaign which has not helped with that. But I think the fact is that we've actually cautioned the state in a number of comments not to come out too soon marketing when you have nothing to deliver. That's marketing 101. FUDGE: Vince, do you think Obamacare will bring down the cost of healthcare in the United States and maybe the cost for businesses like yours? MUDD: Yes. I know it will. And I compare it to workers' comp. That's another mandated product that every business has been paying for for the last 90 years in California. When everyone's in, when you have a larger pool, the numbers go down. If we can get to a point where we look at the delivery of care versus the insurance product value of care, you're going to see your costs go down. Sharp is in the exchange. Sharp has a healthcare plan, and Sharp has a hospital system and doctors and they're all over San Diego as is Kaiser. I think folks are going to be able to use care better, they'll be healthier, it's going to drive down the cost, and that's very good for business. FUDGE: All right. Vince, thank you very much. MUDD: Thank you. FUDGE: And Jan Spencley, Executive Director of San Diegans for Healthcare Coverage. Thanks to you. SPENCLEY: Thank you.
California Health Insurance Exchange
Estimate the cost of health insurance for your family
The state's largest health insurers, including Anthem Blue Cross, Blue Shield and Kaiser Permanente, will be among 13 plans competing to provide coverage to millions of Californians through the state's new health exchange, officials announced Thursday.
Covered California, the state agency running the health insurance marketplace, detailed plans and prices to be offered by private insurers when the exchange begins enrolling customers in October.
Coverage begins Jan. 1, the same time virtually everyone in the country will be required to have health insurance or pay a penalty.
The announcement marked the first time Californians got a clear picture of coverage offered under the new rules in President Barack Obama's Affordable Care Act.
Geography will play a key role in determining premiums. Insurers must cover even the sickest patients and are restricted in how they can vary prices between customers.
For example, a 40-year-old San Francisco resident who earns more than $46,000 a year will be able to choose among five plans. Depending on how much coverage that person wants, he or she can pay a monthly premium of between $221 and $501.
A 40-year-old resident in Fresno who earns about $15,400 a year will be able to pick from four plans and will be eligible for federal subsidies. That person can expect to pay between $53 and $102 on premiums each month on a middle-of-the road health insurance plan.
Residents can go online to view what plans are being offered in their part of the state and figure out how much they will pay for health insurance depending on their household income and level of coverage they desire.
Peter Lee, executive director of Covered California, said the agency's negotiating with health plans helped make insurance affordable in California.
"This is a home run for consumers in every region of California," he said in a statement.
Patrick Johnston, president and CEO of the California Association of Health Plans, said care providers have worked hard to ensure consumers have access to better health benefits and avoid financially crippling medical bills.
"Anthem Blue Cross looks forward to the opportunity to serve the millions of Californians who will purchase health insurance through Covered California," said Darrel Ng, spokesman for the insurance company.
The goal of the exchange is to offer individuals and small businesses a choice of private insurance plans similar to the range already offered to workers at large companies.
The intent is to provide affordable plans with access to local doctors and hospitals, an annual cap on out-of-pocket expenses, and guaranteed coverage despite current medical conditions.
While low-income people will be referred to public safety-net programs, the federal government will offer subsidies to help some middle-income households pay their insurance premiums.
The cost of health care under the federal reforms already is emerging as a concern for middle-income people who do not get their insurance through an employer. Earlier this year, an actuarial report commissioned by Covered California found that middle-income residents could see individual health premiums increase by an average of 30 percent under the new law.
Health exchange officials say the new health insurance plans will be more comprehensive, making comparisons to current plans and premiums essentially meaningless. Lee said the rates offered in many plans turned out to be lower than the actuaries had estimated.
An estimated 5.3 million Californians will be able purchase insurance through Covered California. Of that, some 2.6 million will qualify for federal assistance.
People will be able to enroll through the website, but counselors also will be available at call centers to help them find a health plan or determine their eligibility for subsidies and tax credits.
The state is offering translation to Spanish and other languages to help people compare and choose a health plan that works best for their health needs and budget.
State officials said there was high interest from insurance companies because of the number of uninsured residents in California.
On average, there will be five plans to choose from in each region of the state. Rural areas will have two or three, according to Covered California.
The 13 plans include: Alameda Alliance for Health, Anthem Blue Cross of California, Blue Shield of California, Chinese Community Health Plan, Contra Costa Health Services, Health Net, Kaiser Permanente, L.A. Care Health Plan, Molina Healthcare, Sharp Health Plan, Valley Health Plan, Ventura County Health Care Plan and Western Health Advantage.
Officials running the state's exchange divided California into 19 regions for rate-setting purposes. Aside from where a person lives, insurers are limited in their ability to charge consumers different prices for health care.
That is in part because California rejected an option under the federal law that allows companies to charge smokers up to 50 percent more for their premiums. Additionally, insurance companies are required to accept all applicants regardless of their medical histories and cannot charge older customers more than three times what younger customers pay.
California was one of the few states that required participating insurers to follow a uniform benefits structure so consumers would have an easier time choosing between plans.
Earlier this year, Covered California announced standard benefits that people can expect to receive under the Affordable Care Act. The state said the maximum out-of-pocket cost per year will be $6,350, which will help reduce the chance of personal bankruptcy.