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California will keep ACA premiums low – and set a national model

Posted by John McDonough  May 25, 2013 12:53 PM

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For most of this year, we've heard a steady drumbeat of pessimism that the costs of health insurance policies under the new plans to be managed by state-based Exchanges or Marketplaces will be unaffordable, dooming the success of the Affordable Care Act. In the past two weeks, though, we seen evidence from Oregon, Maryland, and now California that premiums will be far below the doom-and-gloom levels predicted by the pessimists.

As the Washington Post's Sarah Kliff explains, in California:

"Health insurers will charge 25-year-olds between $142 and $190 per month for a bare-bones health plan in Los Angeles. A 40-year-old in San Francisco who wants a top-of-the-line plan would receive a bill between $451 and $525. Downgrade to a less robust option, and premiums fall as low as $221."

And those levels are for purchasers with household income over 400 percent of the federal poverty level ($44,680 for a single adult). The vast majority of applicants will be in households with incomes below that, and thus eligible for premium subsidies and cost-sharing protections.

This did not happen by accident.

California, along with a number of other progressive states, decided to make their new Exchange along the "active purchaser" model, rather than just posting whatever insurers want to sell. Peter Lee, the Executive Director of the California Health Benefit Exchange, is an experienced and smart health policy leader with a long history of active purchasing.

This development rebuts assertions that Massachusetts' success with our Health Connector was an aberration because we started out with a much lower level of uninsurance than in most other states.  California has among the highest uninsurance rates in the nation, and an unreformed individual health insurance market. If it works in California, that argument is moot.

This is bad news for those fervently desiring an unmitigated ACA implementation disaster this fall and next year. If a group of active and prepared states can show that the ACA model works, the question arises: what's wrong with the leaders in all those other states who can't get it right? It's no longer the ACA model under the microscope, it's state leaders who lack the interest or the smarts to get it right.

Meanwhile, the New York Times' Robert Peer continues to put the spotlight on half the states where their political leadership refuses to expand Medicaid, even under the generous ACA financing provisions by which the feds will pay 100% of the cost for the first three years, and then no less than 90% thereafter:

"Bee Moorhead, the executive director of Texas Impact, an interfaith group that favors the expansion of coverage, said: 'A lot of people will come in, file applications and find they are not eligible for help because they are too poor. We'll have to tell them, 'If only you had a little more money, you could get insurance subsidies, but because you are so poor, you cannot get anything.  That's an odd message, a very strange message. And if people are sick, they will be really upset.'

"In Atlanta, Amanda Ptashkin, the director of outreach and advocacy at Georgians for a Healthy Future, a consumer group, said: 'Hundreds of thousands of people with incomes below the poverty level would be eligible for Medicaid if the state decided to move forward with the expansion of Medicaid. As things now stand, they will not be eligible for anything. What do we do for them? What do we tell them'"

"Jonathan E. Chapman, the executive director of the Louisiana Primary Care Association, which represents more than two dozen community health centers, described the situation in his state this way: 'If the breadwinner in a family of four works full time at a job that pays $14 an hour and the family has no other income, he or she will be eligible for insurance subsidies. But if they make $10 an hour, they will not be eligible for anything.'"

It is no longer credible for the ACA-resisting states to suggest that they have a better idea. They have had more than three years now to formulate, advance and enact it, and not one has done so. There's only one conclusion that makes sense when it comes to the majorities of lawmakers in these states -- they just don't care about hundreds of thousands or millions of their fellow citizens without health insurance. Shame on them.

This blog is not written or edited by Boston.com or the Boston Globe.
The author is solely responsible for the content.

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About the author

John E. McDonough is a professor of practice at the Harvard School of Public Health. He is the author of the book “Inside National Health Reform”, published in 2011 by More »

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