The Obamacare Exchange Trainwreck

Cindy Vinson and Tom Waschura are big believers in the Affordable Care Act. They vote independent and are proud to say they helped elect and re-elect President Barack Obama.

Yet, like many other Bay Area residents who pay for their own medical insurance, they were floored last week when they opened their bills: Their policies were being replaced with pricier plans that conform to all the requirements of the new health care law.

Vinson, of San Jose, will pay $1,800 more a year for an individual policy, while Waschura, of Portola Valley, will cough up almost $10,000 more for insurance for his family of four. …

As state- and federal-run health insurance exchanges debuted across the country offering a range of prices for different tiers of insurance coverage, the new online marketplaces — which represent the centerpiece of Obamacare — could greatly benefit more than 40 million Americans who now lack coverage. But an additional 16 million — who buy individual health insurance policies on the open market — are finding out that their plans may not comply with the new law, which requires 10 essential benefits such as maternity care, mental health care and prescription drug coverage. …

Covered California spokesman Dana Howard maintained that in public presentations the exchange has always made clear that there will be winners and losers under Obamacare.

“Some people will see an increase who are already on the individual market purchasing insurance,” he said, “but most people will not.”

Covered California officials note that at least 570,000 of the 1.9 million people who buy their own insurance should be eligible for subsidies that will reduce their premiums.

Even those who don’t qualify for the tax subsidies could see their rates drop because Obamacare doesn’t allow insurers to charge people more if they have pre-existing conditions such as diabetes and cancer, he said.

People like Marilynn Gray-Raine.

The 64-year-old Danville artist, who survived breast cancer, has purchased health insurance for herself for decades. She watched her Anthem Blue Cross monthly premiums rise from $317 in 2005 to $1,298 in 2013. But she found out last week from the Covered California site that her payments will drop to about $795 a month.

But people with no pre-existing conditions like Vinson, a 60-year-old retired teacher, and Waschura, a 52-year-old self-employed engineer, are making up the difference.

“I was laughing at Boehner — until the mail came today,” Waschura said, referring to House Speaker John Boehner, who is leading the Republican charge to defund Obamacare.

“I really don’t like the Republican tactics, but at least now I can understand why they are so pissed about this. When you take $10,000 out of my family’s pocket each year, that’s otherwise disposable income or retirement savings that will not be going into our local economy.”

Both Vinson and Waschura have adjusted gross incomes greater than four times the federal poverty level — the cutoff for a tax credit. And while both said they anticipated their rates would go up, they didn’t realize they would rise so much.

“Of course, I want people to have health care,” Vinson said. “I just didn’t realize I would be the one who was going to pay for it personally.”

When Ruth Haskins, a gynecologist in Folsom, California, does a pelvic exam and pap smear on a woman with insurance, she gets $95 to $200. If the patient is elderly, federal Medicare pays $36. For the low-income on Medicaid, the state gives $25, and it’s about to go down.

The reduction comes as Medi-Cal, California’s Medicaid program for 8.5 million people too poor to afford health care, is on the verge of adding 1 million participants under President Barack Obama’s health-system overhaul, according to the state Health Care Services Department.

Finding doctors willing to treat them may be harder. The biggest U.S. state by population is projecting its first budget surplus in almost a decade and spending $1.5 billion to expand Medi-Cal. Yet many physicians, as well as dentists and pharmacies, will see their fees cut 10 percent under a 2011 deal by Governor Jerry Brown to balance an $86 billion budget.

“While the budget has indeed been brought into balance, that balance is by a narrow margin,” H.D. Palmer, a spokesman for Brown’s Finance Department, said by e-mail. “That’s why the budget assumes that the difficult but necessary reductions that helped bring the budget into balance are ongoing.”

Brown, a 75-year-old Democrat, came to office in January 2011 facing a $26 billion deficit through June 2012. He pressed lawmakers to cover part of the shortfall by extending expiring taxes and fees. When Republicans blocked the plan, the governor cut $10 billion in spending, including Medi-Cal reimbursements.

Doctors temporarily staved off the reduction with a federal lawsuit, but lost. The 10 percent cuts are now being implemented by the health care department. In addition, to make up for higher reimbursements while the cuts were delayed, the agency will withhold another 5 percent to recoup overpayments.

The cuts took effect Sept. 5 for dentists and medical-transport workers, and will hit medical-supply companies Oct. 24. Many physicians, clinics and pharmacies will see their reimbursements lowered starting Jan. 9.

That will be just in time for California to expand Medi-Cal eligibility by about 1.4 million adults with incomes at or below about $15,900, slightly above the federal poverty line, starting Jan. 1. About 1.1 million are projected to join.

California doctors already have the third-lowest Medicaid payments in the U.S., at 51 percent of what Medicare paid for the same services in 2012, according to the California Budget Project, a nonpartisan research group in Sacramento. Only Rhode Island and New Jersey were lower.

The coverage of Chad Henderson has been massive. He was featured in The Washington Post Thursday as “the Obamacare enrollee that tons of reporters are calling.” He was also profiled in The Huffington Post as someone who “beat the glitches to sign up for Obamacare.” He was interviewed by Politico, multiple local news organizations, and, according to his Facebook feed, was asked to be part of a conference call hosted by the Department of Health and Human Services.

Chad’s story was tweeted out by the official Obamacare Twitter feed. It was promoted to the media by Enroll America, a health-care activist group headed by a former White House communications staffer, as a sign of Obamacare’s success. Henderson told reporters at multiple news outlets that after a three-hour wait to sign up online, he enrolled around 3 a.m. Tuesday morning in an unsubsidized private insurance plan that would cost him about $175 a month. He also said that his father enrolled in separate coverage plan that would cost about $250 a month after factoring in the subsidies for which his father qualified on his approximately $24,000 annual income.

Chad’s decision to purchase his own, separate plan might surprise some. A monthly premium of $175 would represent about 30 percent of his pre-tax take home pay–about $583 a month on the $7,000 part-time income he claimed. And he could have chosen to be covered by his father’s plan, which, under the Affordable Care Act, would have been required to cover dependents up to the age of 26. Chad said his father encouraged him to be covered under his own plan, even though the cost was higher. “He’s old school, so he wants me to take responsibility,” Chad told The Huffington Post.

Henderson’s story was promoted as proof that the new health law can work for individuals. That was exactly how Chad intended it. He was a volunteer with President Obama’s campaign last year, and his LinkedIn page still lists him as an active volunteer with Organizing for Action, the former campaign organization which now advocates for the president’s legislative agenda.

He told The Washington Post that he was sharing his story because he wanted the new health law to succeed.

“I’ve read a few articles about how young people are very critical to the law’s success,” he said to The Post. “I really just wanted to do my part to help out with the entire process.”

But details of Chad’s story proved difficult to verify. And in a phone interview conducted this morning, Chad’s father Bill contradicted major details of Chad’s story. I reached Bill Henderson by following a series of links at Chad’s Facebook page, through which I was able to speak directly to the father.

Bill Henderson told me that both he and his son were interested in getting coverage, but that he had not enrolled in any plan yet, and to his knowledge, neither had his son. He also said that when they do enroll, getting the most coverage for the least money would be the goal, and that he expects that he and his son will get coverage under the same plan.

Bill told me that Chad had been looking into plans online. “He told me that there’s different plans. And we haven’t decided which plans to enroll in yet.”

I asked him whether he and his son had talked about going on separate plans, and he told me that, “We’ll probably go on the same plan, more than likely.”

Gov. Sean Parnell has not decided whether Alaska will accept expanded Medicaid funding from the federal government, according to Josh Applebee, deputy director for health care policy for the state.

The funding could extend coverage to between 35,000 and 40,000 uninsured people, he said.

Parnell will decide by Dec. 15, when he submits his budget to the Legislature, Applebee said.

The Medicaid expansion would extend the government insurance program mainly to low-income adults without children, he said. The annual income range for eligibility would be up to $13,900 for a single person and up to $18,900 for a couple, Applebee said.

A percentage of the group who would qualify for the expanded Medicaid coverage are Alaska Native and have access to care in the Alaska Native health care system, he said. Providers say that federal funds available in that system do not fully cover the costs of care, Applebee said. Increased Medicaid coverage would allow Native health providers to bill Medicaid to cover more of the cost of care.

The Department of Health and Social Services is putting together a report looking at the costs and benefits of expanding Medicaid. Parnell is waiting to review that before he makes a decision, Applebee said.