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California Dreamin’ on Obamacare

2:24 PM, May 31, 2013 • By JEFFREY H. ANDERSON
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Supporters of President Obama’s overhaul of American medicine are touting the early evidence from California’s Obamacare exchange (still under construction) as good news for their side.  But as the Los Angeles Times notes, the Golden State’s version of Obamacare will mean higher insurance premiums and a lower quality of care, as those who use its exchanges to buy federally mandated insurance will encounter not only higher prices but also diminished access to hospitals and doctors. 

Obama doctors

The Times observes that “one downside for many consumers will be far fewer doctors and hospitals to choose from.”  The Times writes:

“People who want UCLA Medical Center and its doctors in their health plan network next year, for instance, may have only one choice in California’s exchange: Anthem Blue Cross. Another major insurer in the state-run market, Blue Shield of California, said its exchange customers will be restricted to 36% of its regular physician network statewide.

 “And Cedars-Sinai Medical Center, one of Southern California’s most prestigious and expensive hospitals, said it’s not included in any exchange plans at the moment.”

Moreover, the nation’s largest health insurance company, UnitedHealth Group, has declined to participate in California’s government marketplace, and Aetna and Cigna have followed suit.  Perhaps this is for the best, since the Department of Health and Human Services, under secretary Kathleen Sebelius, has contracted with a company now owned by UnitedHealth Group to help build and police the very exchanges in which UnitedHealth Group, the parent company of UnitedHealthcare, will often be competing. 

The good news for Obamacare, the Times says, is that California’s exchange premiums “came in lower than expected.”  The Times writes:

“[Blue Shield chief executive Paul] Markovich said premiums for Blue Shield’s existing individual policyholders will rise 13% next year on average for coverage under exchange plans.

 “That marked an improvement from earlier predictions of even bigger rate hikes. The state issued a report in March that estimated premiums for many consumers could go up 30%, on average.”

Talk about defining down success:  Rates that we expected to rise by 30 percent are only rising by 13 percent!

It’s true that many of those who buy insurance at these newly inflated prices will have their purchases heavily subsidized by their fellow Americans’ tax dollars.  But that doesn’t change the fact that the plans’ actual prices will be higher than they would have been without Obamacare, nor the fact that even the subsidized prices will be higher than the prices of many plans available to people today.

The Times explains why:

“Premiums are generally rising to reflect the federal law’s requirements for richer benefits and guaranteed coverage regardless of people’s medical history.

“‘The physicians and hospitals that signed up for our network have agreed to accept lower reimbursement specifically to make the exchange more affordable,’ Markovich said.” 

These lower reimbursement rates for doctors and hospitals, in turn, mean that doctors and hospitals will often try to avoid patients who buy insurance through the exchanges.

John Goodman writes that, thanks to Obamacare, California’s medical system now looks to be headed down the same road as Massachusetts’s.  Goodman writes:

“Insurance sold in the Massachusetts exchange pays doctors and hospitals only about 10% more than what Medicaid pays....

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