The latest bad news for the Affordable Care Act comes from California, a state that the Obama administration has consistently pointed to as an important indicator of the law’s success. President Barack Obama even traveled to the Golden State in June to tout the health-care law’s success at “pushing down costs” for consumers. Unfortunately, several analyses have recently revealed that because of Obamacare individual health insurance premiums are headed anywhere but down for California residents.
The Los Angeles Times reported yesterday that Californians will actually be paying more for less because of the “Affordable” Care Act. From the article:
The doctor can't see you now.
Consumers may hear that a lot more often after getting health insurance under President Obama’s Affordable Care Act.
To hold down premiums, major insurers in California have sharply limited the number of doctors and hospitals available to patients in the state's new health insurance market opening Oct. 1.
While this piece of news can’t be helpful to the White House’s effort to sell Obamacare, it shouldn’t come as a surprise to anyone who has been following the troubled implementation of the health-care law.
The basic reason Obamacare raises premiums is simple: It fundamentally changes the marketplace for health insurance by putting in place a number of onerous and highly restrictive federal regulations. Most notably, the law requires insurers to cover all comers, regardless of pre-existing health conditions. Obamacare also severely limits the factors that insurers may account for in pricing their policies. For example, insurers may not vary premiums based on health status and must charge a 64-year-old no more than three times as much for the same plan as they would charge an 18-year-old. Finally, the law mandates that insurers cover a number of benefits that they may not have had to previously.
In tension with these economic and regulatory factors working to raise premiums is the political pressure being applied by the Obama administration, particularly in states like California, to keep premiums as low as possible. One of the only ways left, then, for health plans to meet these competing demands is to restrict access to certain care providers -- limiting patients’ ability to choose specific doctors or hospitals, lengthening wait times or forcing them to see a new doctor because their current one isn’t part of an insurer’s provider network.
This is exactly what will happen in California come 2014, when the state’s Obamacare exchange is launched. Physicians and physician organizations in California have expressed concerns that these limited provider networks may most adversely impact minority communities, the very ones that the health-care law purports to help most. Those concerns reflect the fact that while some coverage is better than none at all, Obamacare’s supporters have dramatically oversold the supposed benefits of the law.
For example, the Times reported that the insurer expected to offer the best prices on California’s health-insurance exchange next year is Health Net. But enrollees in its plans will have access to just 2,316 physicians in Los Angeles County. That’s one-quarter of the physicians available to enrollees in an Anthem Blue Cross plan, and less than half of the doctors available to enrollees in Kaiser Permanente’s exchange-qualified plans. Cheaper plans with limited networks and access to fewer providers should be options for consumers, but Obamacare is effectively forcing low-income Californians into this kind of coverage.
And what of others who might voluntarily choose plans with limited provider networks? California’s health exchange regulator has suggested -- in a stroke of unwelcome paternalism --that it reserves the right to drive out health plans that fail to provide sufficiently expansive networks of providers. This kind of heavy-handed regulatory activity undercuts the contention that Obamacare will expand options for consumers looking for affordable health-care coverage.
With all of these troubles for Obamacare, it’s no wonder that a growing percentage of Americans think it’s a bad idea. A CNN/Opinion Research poll conducted in early September found that 57 percent of Americans either oppose most or all of the health-care law. News like this from California -- a state that the Obama administration itself has held up as the paradigm of what Obamacare implementation can be -- means those numbers will only get worse as time goes on.
(Lanhee Chen is a Bloomberg View columnist and a research fellow at the Hoover Institution at Stanford University. He was the policy director of Mitt Romney’s 2012 presidential campaign. Follow him on Twitter.)