Viewpoints: Be warned: Costs for Californians under Obamacare about to spike

08/29/2014 12:00 AM

08/28/2014 3:00 PM

Obamacare had a “Mission Accomplished” moment earlier this month. The California Department of Insurance announced that health care plans on Covered California would see premiums increase by 4.2 percent for 2015.

Only in the post-Obamacare world does this constitute good news. We’ve forgotten that the law was initially supposed to lower health care premiums for California families by as much as $2,500 a year. Instead, it’s raising them for the second year in a row.

Moreover, this increase seems reasonable only because it pales in comparison to last year’s. State Insurance Commissioner Dave Jones announced last month that premiums for individual health care plans rose anywhere from 22 percent to 88 percent between 2013 and 2014, when Obamacare went into effect.

Premiums weren’t the only things that jumped. In the last year, the cheapest health care plans nationally included a 40 percent higher deductible, on average. Many plans also had hikes in coinsurance fees. Combined, many Californians are facing out-of-pocket health care costs that, even after taxpayer subsidies, are significantly higher than they were before Obamacare.

That’s why next year’s 4.2 percent premium increase looks reasonable – we’re still shell-shocked from last year.

There are other reasons not to be excited. Faced with Obamacare’s coverage mandates – a 60-year-old must purchase a plan that covers pediatric services, among other absurd examples – as well as the law’s regulatory burden (13,000 pages and counting) one of the only ways insurance companies can keep increases relatively low is by cutting plans down to skin and bone.

Consider the growing number of plans with smaller networks and fewer choices. Blue Shield’s Covered California plans include just 75 percent of the hospitals that participate in the insurer’s larger group plans, and just 60 percent of the doctors.

Such “narrow networks” plans are increasingly common under Obamacare. They keep costs from rising too much, albeit at the cost of patient choice.

This trend benefits no one in our state, especially Californians with rare medical conditions. It can make finding qualified specialists – already in short supply – an even more harrowing experience. Such stories abound in California; news outlets from Sacramento to San Diego have reported on patients who no longer have access to doctors who can treat them, patients who must wait months before seeing their doctors, and so on.

Think about what that means. Before Obamacare passed, many Californians could choose a health care plan that fit their family’s needs without breaking the bank. Today, many have to choose between a plan that offers worse coverage at a higher price and one that offers comprehensive coverage at a stratospheric price.

To be fair, Obamacare can conceal these plans’ real costs through taxpayer subsidies. Yet even here, there’s an unpleasant surprise lurking in the near future for the 1.4 million Californians with Covered California plans. Those who automatically re-enroll for their current plans in 2015 may face steep tax penalties come April 15.

As different plans are introduced onto the exchange, subsidy rates may change for every consumer on the market. However, Obamacare does not automatically recalculate these subsidy rates for those who automatically re-enroll. Thus it is likely that many will continue receiving 2014-level subsidies that are more than they qualify for under 2015 rates.

But the IRS won’t tell them until next April when their taxes are due – and then they’ll have to pay back the difference.

By then, many Californians will have received hundreds or even thousands in improper subsidies. Experts predict people in this situation could owe Uncle Sam between $300 and $2,500, even if they kept the same plan, had the same income and received the same subsidies as this year.

Apparently this constitutes victory for Obamacare. We’re looking at higher premiums, worse coverage and back payments to the IRS. Californians simply can’t afford for Obamacare to be any more successful.

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