Calif. Offers Glimmer of Hope Amid Disastrous Obamacare Rollout

Calif. Offers Glimmer of Hope Amid Disastrous Obamacare Rollout

By Lou Cannon - November 14, 2013

The Democratic bastion of California twice gave Barack Obama its 55 electoral votes, and the Golden State now represents the best hope of salvaging the national health care mess known as Obamacare.

Covered California, the state health care exchange, enrolled 30,830 people during its first month of operation, more than the 27,000 the federal government signed up in the 36 states combined where it is running the exchanges.

The California enrollment number is only the tip of the iceberg. According to data released Wednesday by the California Department of Health Services, 370,000 people began applications for health care, most of them on Covered California’s website, which has functioned relatively smoothly -- particularly in comparison to the troubled federal site. Of these, 86,000 were determined to be eligible for coverage on the exchange and another 72,000 for Medi-Cal, California’s version of Medicaid, the federal-state program that provides health care for the poor.

The Affordable Care Act, as Obamacare is formally known, badly needs a success story. California, the first state to create its own exchange after the law was passed in 2010, is the most promising candidate, according to those familiar with its workings.

“The numbers are better than encouraging,” said Covered California Executive Director Peter V. Lee (pictured). “They show momentum and very high consumer interest.”

His optimism was echoed by insurance companies and consumer groups.

Thomas Epstein, vice president of California Blue Shield, the state’s third largest insurance company, said Covered California was functioning efficiently after initial glitches and could serve as a “beacon” for the nation. The state “has the most people, a huge uninsured population and capable people in charge of its exchange,” Epstein said.

Anthony Wright, executive director of the watchdog consumer group Health Access, which has at times been critical of Covered California, said before the enrollment numbers were announced that the first month’s figures were not critical. Noting that coverage does not begin until Jan. 1 no matter when purchased, Wright said: “There are not a lot of people who pay their bills three months in advance. I know I don’t.”

Micah Weinberg, a health care consultant who is a policy adviser to the Bay Area Council, pointed out that California’s showing compares favorably with early enrollments when Massachusetts introduced mandatory health coverage under Gov. Mitt Romney in 2007. Only 123 people signed up during the first month and 2,289 in the second for “Romneycare,” on which Obamacare is patterned. Enrollment spiked at 36,617 in the 11th month, just before the penalty for non-compliance went into effect.

The upbeat mood in Sacramento contrasted with the gloom in Washington, where the president’s approval numbers have fallen to record lows after he apologized for promising repeatedly that no Americans would lose insurance policies as a result of the Affordable Care Act. Millions of Americans have in fact had their policies canceled, most often because their coverage did not meet the minimum standards set under Obamacare.

Reflecting the views of the insurance industry, Epstein said it would be a mistake to require reinstatement of these policies. He said such action would encourage young and healthier Americans to buy these cheaper policies, changing the risk pool and raising the premiums for those who purchased insurance through the exchanges or privately.

Even by the scaled-down standards of the Obama administration, the numbers released Wednesday in Washington were disappointing. The administration said 106,000 persons had enrolled in new health-insurance plans during the first month of exchange operation. This compares to a projected half-million enrollees.

Of these 106,000, only 27,000 were signed up on the federal website, which has been slowed to a crawl even when working since its inception Oct. 1. The other 79,000 were signed up in the 14 states and District of Columbia, which operate their own exchanges.

The total did not include a single enrollee in Oregon, where Gov. John Kitzhaber, a former emergency room physician, had promised a particularly robust health care exchange. Instead, Cover Oregon, as the marketplace is called, has yet to go online. According to news reports, it was projected to be larger and more complicated than the other state exchanges, and its complexity may have caused its delay.

Readers should beware of the figures used in this and any other article on Obamacare. Some of the tabulations on exchange sign-ups have included those who enrolled in Medicaid. Indeed, nearly nine of 10 sign-ups nationally appear to be for that program.

But there’s nothing inherently less important in signing up for Medicaid than for a subsidized individual or family insurance policy. According to the Kaiser Family Foundation, there are 47 million people in the United States who have no health insurance. When the Affordable Care Act passed in 2010, the administration hoped to enroll 28 million of these uninsured, with roughly half of the number reflecting an expansion of Medicaid. People earning up to 138 percent (about $32,500 for a family of four) above the poverty level are eligible for Medicaid. Those earning between 138 percent and 400 percent above the poverty level are eligible for federal subsidies on a sliding scale.

Correctly estimating these subsidies has been difficult for the best of the state exchanges -- and a nightmare for the federal exchange, which was overwhelmed long before it tried and failed to open for business on Oct. 1. According to state sources, the Department of Health and Human Services lacked the ability and never expected to operate 36 exchanges; early estimates were that all but a dozen states would choose to run their own exchanges.

The better state exchanges -- including those in California, Washington state and Kentucky -- also took a more common-sense approach to sign-ups on exchange websites. Most American shoppers compare prices and products before giving personal information such as credit card numbers to a website. Covered California allowed potential customers to go online and “shop and compare” weeks before they were eligible for coverage. Washington HealthPlanFinder, the Washington state exchange, also encourages customers to shop first before trying to enroll.

Washington reported 35,500 sign-ups for coverage during the first month, although most of them (about 31,000) were for Medicaid.

The relative success of the state exchanges compared to the federal ones does not mean they are out of the woods. Even Covered California has been besieged by newspaper reports -- some of them searing -- detailing accounts of people, often with life-threatening illnesses, who have lost coverage under Obamacare. Others, numbering in the thousands, have seen insurance premiums rise. In an interview with the Sacramento Bee, Covered California director Lee called this “sad” but inevitable.

No one in authority wants to address the issue of lost coverage on the record. Privately, they say that the individual tragedies are offset by tens of thousands of cases in which people who previously had no health insurance whatsoever will be covered. “It’s no answer to the people who have lost coverage to say this is the greatest good for the greatest number, but that’s what it amounts to,” said one insider.

Overall, however, Covered California has reason to take pride in its early progress. California, which twice in the past century was on the verge of operating its own health care system, has largely been spared the partisan animosity that has dogged Obamacare. It hired top technicians and held open public hearings in an effort to learn what Californians wanted in the way of a health care system.

“It hasn’t been easy,” said Kimberly Belshe, a member of the Covered California board who served as a health policy official under two former governors. “It’s not like ‘Field of Dreams,’ where if you build it, people will come.” Instead, she said, the exchange has succeeded by hiring top technicians, test-marketing its products and spending considerable resources on promoting them. Neither Belshe nor anyone else associated with Covered California is claiming victory, but by any standard the exchange is off to a good start. 

Lou Cannon, who is traveling in Scotland, has written about the campaign for RealClearPolitics.

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