Undoing Covered California

President has caused premiums to rise while trying to proliferate junk plans

illustration by sarah hansel

Len Finocchio picked a rough time to go into business for himself.

Finocchio, a 55-year-old health policy consultant who lives in Santa Cruz, pays $555 a month for a Bronze, high-deductible Kaiser health insurance plan he obtained via Covered California. Though the state’s health marketplace announced July 19 that rates would rise 8.7 percent on average next year, Finocchio falls into an even more expensive bucket: Due to his age and the Covered California region he lives in, which has just 27,000 enrollees and a higher average amount of risk among these people, Finocchio’s rates are slated to go up 16 percent next year. That’s about $88 more a month.

“That’s a ton of money,” Finocchio said.

If only Finocchio knew seven years ago what was in store for him.

Finocchio served from 2011 to 2013 as associate director of the state’s Department of Health Care Services in Sacramento, helping to implement Medicaid provisions of the Affordable Care Act in California. It seems brutally ironic that a law Finocchio helped usher into being would be adversely impacting his life in 2018. But Finocchio, like a lot of people, didn’t count on the presidency of Donald Trump.

Since his election in November 2016, President Trump and his officials have made one decision after another to sabotage the Affordable Care Act. Though an effort to repeal and replace the act fell short in the U.S. Senate last year by one vote, quieter attacks from the administration remain ongoing.

While state officials have tried various methods to push back, people like Finocchio are left to consider if they’ll be priced out of the marketplace and forced to get jobs that offer health insurance.

“I consult and I make decent money consulting, but it’s very inconsistent month-to-month,” Finocchio said. “I feel very vulnerable and exposed with the way premiums are going.”

Many people have reason to feel this way.

If nothing else, Trump has been as advertised when it comes to health insurance. The former reality television star ran for president with a promise to repeal and replace the Affordable Care Act and took executive action hours after his inauguration to direct federal agencies to stop enforcing the act.

While this move was largely symbolic, Trump has taken numerous other actions since then to undermine the act. These actions include: ending cost-sharing reduction payments last year; supporting junk insurance plans; and, perhaps most notably, signing a tax cut bill that eliminated the mandate that people purchase health insurance or pay an IRS penalty.

“The ACA is stuck in purgatory,” Jonathan Oberlander, a PhD in political science from Yale University, wrote in a July 25 piece for the New England Journal of Medicine, “beyond comprehensive repeal but subject to a war of attrition that jeopardizes its gains.”

This war seems like it could conceivably destabilize the ACA enough to collapse it, particularly if Trump manages to win reelection in 2020.

Granted, there’s a question of what will last longer, the scandal-plagued Trump administration or the embattled ACA. But Dave Jones, California’s insurance commissioner, isn’t particularly optimistic for the ACA’s chances.

“I am hopeful … but I also know that President Trump is doing everything he can, both legally and illegally, to undermine it,” Jones told SN&R. “It’s why we’re going to continue to have to be very vigilant and strong in our opposition to his efforts and why we need continued public engagement and protest and opposition against what he’s trying to do.”

The federal government still wields much power, though. While California has a state-based marketplace, which allows a certain degree of self-determination, the exchange utilizes federal funds. Anthony Wright, executive director for consumer advocacy coalition Health Access California, estimated that a full ACA repeal would have cut $25 billion to $50 billion.

While it would take an act of Congress to fully repeal this funding, midterm elections in November remain very uncertain. If Republicans pick up enough votes to mount a successful repeal in both the House and Senate, California could face tough choices to make up the federal funds.

“That’s just not the kind of money you can raise otherwise,” Wright told SN&R.

Wright added, “Twenty-five billion dollars is more than California spends on all of prisons, all of higher education and all of parks combined.”

Meanwhile, rates have already increased because of Trump. Jones said that rates for Silver plans last year were 12.4 percent higher than they they would have been because of Trump’s actions. These rates, he said, will rise again next year.

Finocchio noted that Covered California set its recently-announced rates amidst uncertainty that the Trump administration might look to end risk adjustment payments.

The immigrant community has also faced uncertainty around health insurance, with a Trump presidency that has emboldened hateful rhetoric toward immigrants and increased border enforcement and deportations. Liza Thantranon, regional counsel for health for Legal Services of Northern California, has seen her office get an influx of heart-wrenching phone calls from people it serves.

“We’ve definitely seen a lot of fear from from the immigrant community about reaching out to apply for Medi-Cal,” Thantranon said. “Even if they are actually eligible, they’re really afraid to apply.”

Various efforts are underway in California to push back against the Trump administration on health policy, if slow and incrementally.

On July 26, California Attorney General Xavier Becerra announced that his office would join 12 other states in suing the U.S. Department of Labor over a rule that, according to a release, “allows employers nationwide to group together as Association Health Plans (AHPs) and offer junk health plans that evade ACA coverage requirements and consumer protections.”

Covered California Executive Director Peter Lee said the lawsuit is one of more than a dozen Becerra has actively participated in.

“We appreciate that the attorney general has been mindful that protecting the Affordable Care Act in many ways now depends on sort of state action,” Lee told SN&R.

Where other states have been at the mercy of the federal government in regard to the Affordable Care Act, Californians enjoy some protections beyond having a state-based marketplace. When the Trump administration sought to cut the enrollment period for the marketplace to six weeks, California maintained 12 weeks.

In addition, there’s the role of navigators, who help sign up people for health insurance who might not be able to sign up with a broker. While nationally this funding has been cut by more than 85 percent, navigator funding has been largely preserved in California. The same goes for Covered California’s marketing budget, which saw 90 percent cuts nationally.

Other changes at the federal level have been harder to repel in California. Wright noted that when Covered California announced its 8.7 percent rate increase recently, nearly half the increase was attributed to the elimination of the health coverage mandate within the GOP tax bill.

“If you have less people buying into coverage, that means those that are still there are a smaller and sicker pool,” Wright said.

Wright said states such as Vermont, Maryland and New Jersey have individual mandates. Jones said support for a mandate in California would have to come from the state legislature. Wright noted that there wasn’t a bill for this in the legislature this year, though a mandate got discussed during the budget process.

Broader health policy change in California, such as establishing a mandate or implementing single-payer coverage, could take time. An effort to establish single-payer coverage, Senate Bill 562, died in the state assembly last year.

“I believe that eventually California and the rest of the United States will have a Medicare-for-all program because of the simple economics associated with it,” Jones said. “We spend far more of our GNP on health care in the United States as compared to any other industrialized nation which has single payer.”

But Jones added, “We’re not there yet and we need to continue to advocate.”

Advocates could include frontrunner gubernatorial candidate Gavin Newsom, who has spoken positively of universal health care.

Jen Flory, a policy advocate for Western Center on Law & Poverty in Sacramento, noted that Gov. Jerry Brown’s recent budget included a one-time $5 million contribution from the state’s general fund to establish a commission to look at how a single-payer might be established in the state.

Flory said that while it would be preferable to have federal dollars to do this, California is large enough to have a single-payer system of its own. She noted how in the United Kingdom, England and Wales have one health-care system while Scotland and Northern Ireland each have another.

“If you look at the population of Scotland, it’s much smaller than the population of California,” Flory said.

But there’s a force beyond Trump that could outlast him and perhaps post a greater threat to single-payer implementation in California.

“I don’t think the insurance companies will take a single-payer challenge lying down,” Flory said.