THERE’S NO BETTER ILLUSTRATION OF THE SEPARATE WORLDS of California and Washington than the story of Covered California, where consumers routinely buy health insurance through the Affordable Care Act. Washington’s experience has been characterized by bitter partisan rancor between Democrats support- ing Obamacare and Republicans determined to destroy it. California’s experience, after initial misgivings, has been one of bipartisan commitment to Obamacare and to the extension of coverage it offers. Today, however, both efforts are hanging in the balance.
The Supreme Court has agreed to hear a lawsuit by the Trump Administration and 18 state attorneys general to declare the Af- fordable Care Act unconstitutional — a case fraught with political and practical implications. If the act is invalidated, according to the Center on Budget and Policy Priorities, “20 million people would lose health insurance, and millions more would face higher costs for health insurance and health care.” Moreover, the center said, well-off Americans would receive tax cuts worth about $45 billion a year.
The threat of the suit, probably to be decided after the November election, assures that health care, which cost Democrats the Congress in the 2010s, and then helped them recapture the House in 2018, will remain an issue in this year’s presidential and congressional elections.
The intense political squabbles of the primary season have obscured the great changes, and improvements, Obamacare has made in our health care system.
“No question that it has made California healthier,” Peter Lee, executive director of Covered California, told me. “Having health insurance matters.” Referring to two of the states that have not taken advantage of all of Obamacare’s provisions, Lee said “No question there are more people dying in Texas and Florida because they have not implemented the Affordable Care Act.”
This is a crucible moment. The nation is preoccupied by questions of health. The leading achievement of one president, Barack Obama, is under assault by another, Donald Trump. The Supreme Court is poised to weigh in. And voters are approaching a chance to express their views. With that in mind, Blueprint devotes this Special Report to examining the state of American health care and the divergent approaches of Washington and Sacramento as leaders address the issue.
Two different stories
PUBLIC OPINION about the Affordable Care Act has changed markedly since President Obama signed it on March 23, 2010. In January 2011, a Kaiser Family Foundation poll showed 50 percent of those surveyed had an unfavorable opinion of Obamacare while
41 percent approved. But by January 20, with the congressional elections less than a
year away and more people actually enjoying the program’s benefits, public opinion had shifted in favor of the Afford- able Care Act, with 53 percent viewing it favorably and 37 percent unfavorably. And Americans worry about health care. Of those polled by the family foundation, 26 percent said health care was the most important issue, compared
to 23 percent who listed the economy and 14 percent who said climate change.
Such numbers indicate that President Donald Trump and his supporters will be on the defensive with their lawsuit hanging fire, threatening to wipe out Obamacare or at least eliminating some of its most popular features, including the provision that bans insurance companies from denying coverage to those with pre-existing conditions.
All the Democratic candidates have fought hard for government support of health care. But they’re split on what to do about it. Bernie Sanders and Elizabeth Warren, who has suspended her campaign, want Obamacare replaced by a universal government health insurance plan, Medicare-for- All, while the others want expansion of the Affordable Care Act.
I began reporting on health care in 2007. I was drawn to the subject because of the relationship between hard times and access to healthcare. As the recession afflicted people ranging from the poor to the middle class, signs of poverty increased. Once well-off families who had been donors to community welfare agencies now were going to them for help. Foreclosures and unemployment forced families out of their heavily mortgaged homes. Income inequality became worse.
As I pursued stories on the recession, I saw blocks in the Inland Empire covered in fore- closure signs. Health care was intertwined with the economic disaster. Health insurance was expensive, unaffordable to many and particularly hard on the middle class. The federal-state Medi-Cal was limited to the very poor, unavailable to the growing number of unemployed.
Obama’s Affordable Health Care Act barely passed a Democratic-controlled Congress. In the short run, it was politically disastrous to the president and the Democratic Party, which subsequently lost control of the Senate and the House. The conventional wisdom was that Obamacare was poison, and Obama had made a terrible mistake by championing it.
I never saw it that way. I was influenced by what I had seen reporting on the harm caused by the Great Recession and its aftermath. The need for health insurance was so great that the public, once it began to use it, embraced the program. Obamacare, rather than being a word of scorn, would go down in history as a tribute to the name Obama.
A tough issue to cover
“IT IS NOT A 15-MINUTE ISSUE,” said Covered California chief Lee, explaining that the subject doesn’t fit the short, punchy style favored by journalists and producers of political advertisements.
Let’s start with the basics. The best-known government health plan is Medicare, enacted in 1965, covering 59.9 million people over the age of 65, 6.2 million of them in California. Added to this was Obama’s 2010 contribution, the Affordable Care Act, divided into two parts — Obamacare, and Medicaid, or Medi-Cal as it is known in California.
Covered California is the state’s version of Obamacare. A total of 1.53 million have bought insurance policies from private companies through the Covered California exchange. Nationally, 8.2 million people buy their insurance through such exchanges.
Before Obamacare, insurance companies often were best known for denying benefits. The new law changed that. All plans sold on the Covered California exchange are required to cover a large variety of services. They include visits to a physician; emergency care; hospitalization; maternity and newborn care; mental health and substance abuse treatment; free or reduced-price prescription drugs; preventative and wellness services; chronic disease management; and pediatric care.
A total of 11 companies sell insurance policies through the Covered California exchange, including Anthem Blue Cross, Kaiser Permanente, Blue Shield and Molina Healthcare. Premiums vary. For example, the annual cost of a mid-level policy is more than $5,000 a year for a 40-year-old with a $35,000-a-year annual income. State subsidies reduce the cost. Buying insurance seems easy. I inquired through the Covered California web site and the next day, my phone rang all day with calls from agents trying to sell me a policy and help me get a subsidy.
The second and much larger portion of the Affordable Care Act provided for a major expansion of Medicaid, the federal-state program giving free or low-cost health care to poor children and adults. Medi-Cal is the California version of Medicaid. It offers free or low-cost health coverage for children and adults with limited income and resources.
Nationally, nearly 75 million are enrolled in Medicaid. In California, Medi-Cal serves 13.1 million of that number.
But most Americans are not insured through a government program. They receive health insurance through employer-sponsored plans, which serve about 156 million people. Some of these are quite good. A generous corporation, trying to build and retain an expert work force, might cover most, if not all, of the cost of premiums, deductibles and copays. Some unions, after long and arduous negotiations, have signed contracts that do the same.
Such benefits don’t help low-paid workers, especially those in non-union business- es. The Commonwealth Fund, which monitors health costs, said more than a third of these workers spend 10 percent or more of their income on insurance premiums — or go without.
“Despite the nation’s strong economy and low unemployment, what employers and workers pay toward premiums continues to rise more quickly than worker’s wages and inflation over time,” the Kaiser Family Foundation said. Foundation president and CEO Drew Altman added: “The single biggest issue in health care for most Americans is that their health costs are growing much faster than their wages are. Costs are prohibitive when workers making $25,000 a year have to shell out $7,000 a year just for their share of family premiums.”
The questions of affordability and rising costs stand in the way of delivering decent health care at reasonable prices.
One possible solution would be to enroll everybody in a program of government provided insurance, Medicare for All, first proposed by Sen. Sanders, who continues to be its strongest advocate. “[S]ome half a million people go bankrupt in this country for medically related reasons,” he told the Los Angeles Times editorial board recently. “[Y]ou’re struggling financially; you’re diagnosed with cancer. … You make $50,000 or $60,000 a year, you run up a bill for $50,000, $100,000. How do you pay that bill? I mean, it’s insane.”
But huge obstacles confront Sanders. His presidential campaign sputtered out, and Congress has been reluctant to embrace his health care ideas.
Lessons of California
I ASKED EXPERTS about lessons learned from the Covered California experience. The most important, they agreed, was that it required a strong bipartisan commitment to providing health care, accepted in California but not in Washington, where the Republican blockade has prevented any sort of cross-aisle cooperation. That partisan divide also has encouraged affected industries to hold out.
The story in California is different — and more encouraging. The support of the state’s then-Republican governor, Arnold Schwarzenegger, working with legislative Democrats, took Obamacare out of the arena of state partisan politics.
I talked with Gerald Kominski, professor of health policy and management and a senior fellow at the UCLA Center for Health Policy Research and a professor at Luskin’s Department of Public Policy. He explained how the insurance companies moved from hostility to participation in the Covered California operation. He is an expert on the financial impact of health care, including the Affordable Care Act and health care reform.
“California has embraced Obamacare,” he said. “I was there at the signing of the authorizing legislation under Arnold Schwarzenegger.” The fact that it began under a moderate Republican governor, rather than the conservative anti-Obama regimes of the red states seeking to overturn Obamacare, gave Covered California clout when negotiating with insurance companies. California, he said, “embraced it immediately and under a Republican governor and said we are going to make it work.”
“They [Covered California officials] negotiate aggressively with the companies to get the most coverage at the lowest cost,” he added. “Covered California is negotiating for 1.5 million lives. When it goes into the marketplace, it has tremendous power. It is not passive. It will ask for initial bids and go back and say, ‘We think you can do better.’”
Wesley Yin, associate professor of public policy at Luskin and the Anderson School of Management at UCLA, was acting assistant secretary of economic policy at the Treasury Department and a senior economist in the White House Council of Economic Advisers in the Obama Administration, where he worked on implementing the Affordable Care Act. His work has helped shape the working consensus in California.
Yin is the co-author of a report by Covered California that looked at ways of making the program more affordable. The report, accepted by Gov. Gavin Newsom, led to two major changes in Covered California. One was popular: increasing the state subsidy to recipients. The other was not as popular: imposing monetary penalties for those who do not buy health insurance.
In general, the penalties are not popular with Democrats, Republicans or independents. Penalties never are. But they have a purpose. They are designed to push people to buy Covered California policies, and they are integral to the whole package; the larger the pool of policyholders, the lower the rates. The penalties, added to your state tax bill, run from an estimated annual minimum of $695 for an individual to more than $2,000 for a family of four. The subsidies, meanwhile, aim to further the attractiveness of Covered California. They vary by income. For example, a family of four with an annual income of $105,064 would be eligible if a premium exceeds 16 percent of its income.
“It has made a difference,” Yin said. “Enrollment has been boosted by a lot. That
is the big headline, and that’s because of the subsidy and the penalty, the two combined. We are … making it affordable . … People who don’t have health insurance now can get health insurance.”
Yin said the “salient question is not whether it is Medicare for All or doing it through an exchange. … There are different ways to achieve these goals. They all require money. The key point is how much are we willing to spend on coverage.”
At the bottom of all this is a commitment to progress, irrespective of politics.
“I am a pragmatist,” Kominski said. “The most feasible thing for a Democratic president to do is expand the ACA but guarantee everyone could participate in some sort of public insurance program. It could be opening up Medicare, Medi-Cal or a public option, a government-sponsored insurance plan that would compete with private companies.”
Obamacare is popular and it is growing. There are still big gaps, too many uninsured and underinsured among them. But the message from California is that Obamacare, once despised, is now embraced, that bipartisanship and real-life experience have turned abstract policy into a valued program.