As Vice President Biden famously saidback in 2010, the Affordable Care Act (ACA) is a big deal, literally and figuratively. The era of Obamacare is about a large-scale shift in the American healthcare system, and the millions of Californians who signed up for new coverage—or just any coverage at all—seem to indicate that a big deal will also be a good deal for the state.
But as healthcare in California becomes part of something very big, what happens to smaller, local plans and providers across the state? In cities from Sacramento to San Luis Obispo, doctors, insurance companies, and patients are all trying to strike a delicate balance between the benefits of a bigger healthcare system and the very particular needs of local communities throughout California.
In advance of the Zócalo/The California Wellness Foundation event “Does Obamacare Give Sacramento More Choices?”, we asked policymakers, journalists, and scholars of healthcare: What role is there for local health plans and providers in post-Obamacare California?
Defining ‘local’ healthcare in California
California led Obamacare implementation with early Medi-Cal expansion and the first insurance marketplace. More than 3 million people have coverage now, cutting California’s number of uninsured in half. The 70,000 newly insured consumers in the Sacramento area spent the past year understanding and using health services from their local providers. The meaning of “local,” of course, depends on your perspective and these perspectives are sometimes at odds.
From the consumer’s perspective, “local” means having plans and providers in close proximity with accessible hours, capable staff, and cultural competence. Consumers want affordable local plans and providers offering quality services. But many consumers also want access to providers—such as academic health centers—that may be in other parts of the state. And although provider choice will increase in some Sacramento-area plans in 2015, narrow networks that limit access to services are frustrating to consumers and advocates.
From the perspective of the major payers of insurance—employers and Covered California—“local” also means affordable plans and providers that meet basic quality standards. But insurers’ ability to offer affordable plans with broad provider choice depends on the competitive nature of the local market. Insurers may exclude expensive local and regional hospitals and physicians from plans to maintain affordability. Purchasers are relentless in driving local value.
From the healthcare provider perspective, “local” often means their competitive position relative to other providers in the market. This means having adequate supply (professionals, beds, equipment) and using these resources as efficiently as possible. It also means delivering services in ways consumers find desirable.
Finally, 2015 rates for Covered California plans in Sacramento will rise by only 3.7 percent, on average. This should be positive from the local as well as the statewide perspective.
Dr. Len Finocchio is a senior researcher at Mathematica Policy Research. From 2011–2013, he was associate director at the California Department of Health Care Services, where he managed key components of ACA implementation.
Local health providers want to stay small and survive
Lots of federal money fuels the Affordable Care Act. But along with it comes new imperatives that effectively put local health plans and providers in a Darwinian struggle for solvency. And like many such struggles, getting bigger may be the fastest solution.
My dermatologist is an example. After he burned some unwelcome cells off my head, he complained to me that federal electronic health record requirements may force him to merge with a local hospital, which can more readily afford to install and manage such systems.
The hospital, in turn, is trying to stave off Medicare penalties for too many readmissions, and is dealing with relentless pressure from both Medicare and private insurers to cut costs.
The answer for both of them may be another creation of acronym-laden Obamacare, an Accountable Care Organization (ACO). As foreseen by the legislation, providers in an ACO would be paid by the government and insurers on quality of care measures, not fee-for-service, and would control costs by increasing preventative care while reducing patients’ emergency room and specialist visits.
To work right, ACOs themselves need to be big. They must gather a huge population of patients to attract insurers, and enough doctors and hospitals to achieve economies of scale.
The move toward ACOs seems inevitable. Using its massive leverage, Medicare is already making ACO deals, and insurance companies are right behind it. As the move gains momentum, some hospitals and doctors could be left behind.
Daniel J. Stone, medical director of the Cedars-Sinai Medical Group, told me that ACOs will spread rapidly for the same reason that commercial airplane manufacturing narrowed to two main competitors, Boeing and Airbus. “We are being tested by the wind tunnel of efficiency,” he said.
Roger Smith is the managing editor of the California HealthCare Foundation Center for Health Reporting at USC’s Annenberg School for Communication and Journalism. Before joining the Center he was national editor of the Los Angeles Times, where he supervised coverage of the Affordable Care Act from inception to implementation.
The market for local health plans is getting bigger
Local providers’ participation in Medi-Cal is more critical than ever—in part because more than 1 million new Medi-Cal enrollees are predicted under the Affordable Care Act, and because those enrollees will significantly increase the number of people in locally based county-affiliated plans (such as L.A. Care).
The California market for individuals signing up for healthcare on their own, without a group plan, is predicted to double in size by 2019 because of new subsidies for purchasing private coverage, the ban on denying coverage based on pre-existing conditions, and the requirement that individuals have coverage or pay a penalty. This growth creates an opportunity for local health plans to increase enrollment.
Four big commercial insurers covered the vast majority of Covered California enrollees (94 percent), just like they did in the individual market in 2011 (91 percent). But the six local plans offered through Covered California in 2014 had somewhat higher market share (5 percent) than local plans had in the individual market in 2011 (2 percent). Chinese Community Health Plan had 28 percent Covered California market share in San Francisco, the highest of any local plan.
Covered California’s 2014 premiums were lower than experts predicted, and 2015 premiums grew at a lower rate than was typical pre-reform. These premiums partly reflect more limited provider networks in some Covered California plans, including Anthem and Blue Shield, compared to some of their job-based or individual market plans. Under narrower networks, some local providers may gain patients, while others may see fewer.
Over the next few years, enrollment trends will reveal consumers’ level of willingness to trade off provider choice with lower premiums. In the meantime, a California law (California Senate Bill 964) signed in September increases state oversight of individual market and Medi-Cal plans’ provider networks to help ensure adequacy and timely access to care.
Laurel Lucia is a policy analyst at the UC Berkeley Center for Labor Research and Education. She has been conducting research related to the Affordable Care Act for more than five years.
SHANA ALEX CHARLES
Smaller, local health plans are getting more and more viable
Obamacare increases the opportunities for smaller, local plans to thrive in California, as we saw during the first open enrollment period. While it’s true that the four biggest plans in California gained the most enrollees through Covered California, many of the smaller, local plans also enjoyed great success.
The Chinese Community Health Plan in the Bay area, for example, more than doubled their anticipated enrollment. They were able to reach their target population because Covered California divided the state into 19 regions, and thus allow smaller, local plans to appear alongside the more well-known companies to potential enrollees in their particular geographic area. This increase in marketing is a huge advantage for those plans contracting with Covered California. However, not all of the smaller plans were able to compete, since the marketplace used its power to approve plan contracts before a small plan could be listed.
My prediction is that Covered California will increase the visibility of small plans in the coming years, and that they will increase their ability to be viable alternatives to the bigger, more well-known companies. The equalizing power of this new marketplace cannot be underestimated—there’s just no better way to increase competition and give the small plans equal access to a well-funded customer base.
Shana Alex Charles is a research scientist and director of the Health Insurance Studies program at the UCLA Center for Health Policy Research. Her research focuses on discontinuous health insurance, particularly among low-income children, access to care, underinsurance, and political issues surrounding healthcare reform at both the state and the national levels.
Local health providers are limited by Obamacare
Unfortunately, San Luis Obispo County has far fewer choices now than before Obamacare. Several carriers offering individual plans, most notably Aetna, withdrew from the area as well as the whole state of California, rather than comply with the new regulations. The only two insurance companies available here for individuals through Covered California are Anthem Blue Cross and Blue Shield of California. Those companies offer fewer plans than those offered off the exchange, further limiting choice for those who apply through Covered California.
The most significant complaint is the very narrow network of providers in San Luis Obispo County, which again limits choice and results in many folks having to change doctors or facilities to be able to stay in network. To Anthem’s credit, they have significantly increased the number of physicians in recent months. Many physicians are still reluctant to participate due to lower reimbursement under Obamacare. It has always been difficult for health plans to recruit physicians in this county, since we do not have a sufficient population to support large practices, and the high cost of living requires new physicians to be cautious about low reimbursements. (Since San Luis Obispo County is considered a “rural” area according to Medicare, reimbursement rates are lower than in more populous areas.)
The small group plans offered to employers through Covered California, known as SHOP, are even more limiting. Only Blue Shield and Health Net are available, and far fewer options are available than on the direct market. This causes continuous confusion, as Covered California continues to advertize the tax credits and choices available through SHOP, when it has little to offer most employers here.
Although the promise was that Obamacare would bring more competition and choice, the exact opposite has occurred in San Luis Obispo, resulting in fewer insurance companies, fewer plans to choose from, and fewer doctors accepting the new Obamacare plans.
Michael Framberger has been in the insurance field for 36 years, holds numerous educational designations, and is a Certified Wellness Speaker. He is the author of Get Happy, Get Healthy, Be Wealthy: It’s Your Choice!, as well as numerous articles on heath and wellness.
Coverage must equal access to care
California leads the nation in seizing the opportunity to enroll millions of its people in health coverage. We must work together to ensure that the coverage delivers on the promise of access to care. In California we recognize that the number of clinicians per patient is a necessary but insufficient measure of access. State law requires health plans to provide consumers with timely access to providers located within a reasonable distance of where they live. Making good on the promise of access requires changes across delivery, financing, and regulatory systems. Sacramento’s rich landscape of innovative competing health systems, a network of safety net providers, and a medical school provide the perfect environment to get started. Here are a few ideas:
– Focus our most expensive and highest trained resource—physicians—on the most complex care. Physicians must practice “at the top of their scope,” solving diagnostic challenges, creating care plans and coordinating care for patients with complex conditions, and helping people toward the end of life to navigate their remaining time. Our region must make better use of scarce physician resources.
– Expand roles of other health professionals. Many primary care tasks could be reallocated to non-physician health professionals. California licenses more than 50 kinds of health professionals, including nurses, licensed clinical social workers, and physical and occupational therapists. Many are underused. Our region’s professional schools and health systems’ leaders can identify where existing care providers could do more.
– Train non-licensed health workers for new responsibilities.Medical assistants, peer support specialists, and community health workers can add capacity. Standing orders and training can expand their roles. Existing care sites can develop new roles in the care team.
– Technology. Care processes should embrace tele-health, e-mail, phone, web, and other technologies that make care more convenient and accessible. Our local medical school is a leader in telehealth. This expertise should be embraced and spread.
– Payment reforms. Purchasers, health plans, and policymakers can work together to reform payment mechanisms to reward outcomes instead of office visits and procedures. Government purchasers such as Covered California, CalPERS, and Medi-Cal can send strong, consistent signals to the market with regard to access, price and quality.
– Regulation. Regulations and incentives must keep pace with changes in care delivery. Being located in the capital, our region has the opportunity to make policymakers aware of best practices and identify needed changes in regulation.
By rethinking how care is delivered, we can make California healthier and turn health coverage into improved patient access in Sacramento County.
Sandra Shewry is director of the State Health Policy Office at the California HealthCare Foundation. She previously held a number of senior leadership positions within California state government, including director of the California Department of Health Care Services, which administers the state Medicaid program (Medi-Cal).