Spotlight on California: Kaiser Family Foundation Survey Highlights ACA Impact on Golden State Residents; Legislature Caps Some Drug Costs

Friday, June 5, 2015
Michael Gomes
BenefitMall

California has been in the news recently for several health care related issues. A recent Kaiser Family Foundation survey highlights that although Californians are embracing coverage offered through the Affordable Care Act (ACA), many are struggling to pay insurance premiums. In addition, the Golden State recently passed a bill capping the cost of specialty prescription drugs to help ward off inflation.  Let’s take a look at how these issues are affecting Californians with health insurance.

Californians Wary of Insurance Cost, but Embracing Coverage

According to a new survey by the Kaiser Family Foundation, “Many Californians who obtained health insurance last year said they struggled to pay their premiums, although having coverage made them more confident about affording future medical care. Nearly half of newly insured adults in the state said it was difficult to afford the monthly charge and more than a third delayed or went without care.” 

Affordability

Part of the struggle is attributed to California’s high cost of living; 44 percent of Covered California enrollees reported difficulty in paying their monthly premium, compared to one-quarter of adults who had other coverage.

And even with the low-cost plans available through the Exchanges, many low-income residents continue to worry about health care costs. Despite the worry, though, the survey found that many Californians have been using their coverage: nearly 60 percent obtained at least one medical service and almost half got a check-up. And even though the premium may have been difficult to pay, insured consumers stated that they didn’t have a very hard time paying other medical bills. Specifically, 84 percent of insured consumers noted that the costs were higher than they expected, but they didn’t have trouble paying them.

Access to Care

As reported in the survey, many newly insured adults were more likely to have a primary care doctor than those who chose to remain uninsured. California also recently saw a surge in visits to community health centers. Unfortunately though, some state residents are continuing to use the emergency room as a primary care point, leading to higher expenses.

Some newly insured residents also complained that they had trouble getting appointments because of their government sponsored/subsidized coverage. While only three percent of consumers with private plans reported that doctors would not see them, 13 percent of consumers with Covered California insurance and eight percent with Medi-Cal insurance said providers turned them away. 

Understanding the Coverage

A key survey finding highlighted the need to education consumers to better understand their coverage, “If people don’t know what their plans cover, they might get stuck with unexpected costs. About two-thirds of newly insured Californians said they understood what their plan covered, compared to about 80 percent of those who had insurance previously, the study reported.”

Anticipating Future Costs

Brian Kalish reported that there are a few solutions that state policymakers and industry experts are working on to address the high cost of health insurance. California is currently negotiating 2016 health plan rates with its Exchange; it is likely residents will only see a 4.2 percent increase for 2015, versus double digit increases in the past. Covered California is also working to lower out-of-pocket expenses with the cap on specialty drugs and with changes to the standard benefit design at the point of care. This means that the majority of Covered California enrollees—62 percent who chose the silver plan—should see all of their doctors’ visits and prescriptions covered by a co-pay.

Another way to overcome some challenges posed by high costs is to engage Brokers, who can reach the remaining uninsured population. In fact, California has begun to steadily engage Brokers in larger capacities. The barriers that existed in the first year of open enrollment—including access to community events, where agents and navigators were not allowed in the same place, and access to resources or compensation—are quickly becoming a thing of the past now that the state sees value in Brokers.

Cost of Specialty Drugs Capped

A first in the nation, California recently capped what consumers will have to pay for expensive prescription medications each month. This move was a direct assault on the high price of specialty drugs in the state, which often leave consumers unable to afford necessary medication. However, the new limits do not go in effect until January, Chad Terhune reports.

Currently, some patients are left with high out-of-pocket costs in the first few months of using a specialty prescription drug. In fact, these consumers can be forced to spend up to the annual limit of $6,250 for an individual policyholder right away. According to The Sacramento Bee, one Hepatitis C medication has a shelf price of $1,125 a pill, with a typical treatment cost of $95,000.

As was reported in this story, “Most consumers will have their specialty drug costs capped at $250 per month, per prescription. But the exchange resisted pleas from patient advocates to extend that same limit to Bronze health plans, the cheapest coverage available on the state-run marketplace. The monthly cap on Bronze plans will be $500 a month -- after a $500 pharmacy deductible is met.”

Many consumer advocacy groups applauded California’s effort to protect consumers, but some are saying that it didn’t go far enough to protect from high medical bills. Despite that, the positive changes will affect approximately 1.4 million people enrolled in coverage through Covered California. Meanwhile, patient advocates will continue to fight for similar changes for all state residents.

Stay Tuned

Stay tuned as we continued to discuss how California and other any state in the union is faring with their health insurance Exchanges, as well as any other issues affecting Brokers.

The views expressed in this post do not necessarily reflect the official policy, position, or opinions of BenefitMall. This update is provided for informational purposes. Please consult with a licensed accountant or attorney regarding any legal and tax matters discussed herein.