The dust is settling on the first round of Obamacare, but the radical changes to our insurance markets and health care are far from over.
In the years ahead, California insurance runs the risk of becoming less competitive, with fewer products and higher prices that shortchange consumers, unless we change direction soon.
For a foreshadowing of our future problems, look no further than Covered California, the health insurance “Exchange” set up by the state to administer the Affordable Care Act (ACA) plans. Covered California is celebrating the news that 1.4 million Californians signed up for new health insurance plans through the exchange. And even this number is likely vastly inflated, considering what will certainly be duplication in signups and customers who will default on their premiums.
They conveniently leave out the fact that they cancelled nearly a million plans themselves, even though the president himself — the Obama in Obamacare — told states they didn’t need to cancel plans to be in compliance. The Exchange marched ahead anyhow, leaving helpless consumers scrambling to find plans in the wake of their unnecessary and harmful decision.
Nine million Californians might lose their plans when the ACA mandates affect employer-sponsored insurance. Maybe more. I won’t see Covered CA trample on these millions of families like they did with individual market consumers. That’s why I sued the Exchange, to stop them from overstepping their authority and pulling the health insurance rug out from underneath a quarter of the state.
My suit also takes dead aim at the reckless spending and waste at Covered California. The Exchange infamously squandered nearly $1.4 million on a video of ‘80s fitness sideshow Richard Simmons prancing around on a stage with a contortionist in an attempt to reach out to millennials. I wish I was making this up, but I’m not. That $1.4 million is more than many Californians will make in a lifetime of work.
The Exchange, only four years old, already projects a $78-million deficit in 2015/16 and more than $30 million the next year. Politicians can’t sit back and watch this happen. Taxpayers and ratepayers need a real advocate to protect them from ridiculous, wasteful spending, and that’s why I am taking the Exchange to court — to hold them accountable.
Without intervention, Covered California could come to the general fund to bail them out or raise the monthly surcharge on health insurance plans so high that it will discourage people from buying insurance in the first place.
Obamacare has valuable components, such as the pre-existing condition coverage, but under the costly and ineffective administration of Covered California, it veers toward disaster.
“MICRA” reform could raise the liability limits for doctors. This would drive up insurance costs above even the inflated ACA-compliant plan costs and choke off the supply of medical care in the state, as doctors leave or limit the scope of their practices to manage their higher exposure.
Even worse, the Department of Insurance (DOI) may get authority over health insurance plan rate increases. This may sound good for consumers, but it’s just the opposite. As is the case with any other product, it’s competition — not government control — that drives down prices. And under this insurance commissioner, the DOI has hardly been the consumer’s friend.
The DOI already pressured Anthem Blue Cross, one of the state’s largest health insurance providers, out of one critical state insurance market, leaving families with fewer choices to meet their health-care needs. DOI is also slow to approve rate decreases that would benefit consumers. Rate decrease applications take between 4-12 months, leaving ratepayers out to dry while the bureaucratic process slowly grinds on.
New product approvals are slow to nonexistent, meaning that Californians are robbed of advances that people in every other state use to protect themselves, their families and businesses, all while saving money. Putting this DOI in charge of health insurance would be a death blow to innovation and competition, leading to higher costs for everyone.
Obamacare changes by the day. Covered California runs ahead of the president himself on his signature policy, leaving a million Californians angry at their canceled coverage and nine million more scared of what’s coming next. Initiatives threaten to inject more government between families, doctors and insurers. This is a wild time, and Californians need the ultimate consumer advocate fighting for them, now and in the future.
I’ve spent my whole career as a small business owner and independent insurance agent helping families and businesses grow and succeed. I’m running for insurance commissioner because in an era of unprecedented change, my experience and commitment to a free, competitive insurance market will serve California just as it has served the many clients I’ve built strong partnerships with over the decades. With the right ideas and right leadership, California can enjoy a future every bit as great as its past.
State Sen. Ted Gaines, who represents Nevada County in District 1, is an independent insurance agent and candidate for insurance commissioner.