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California feels protected against Trump pulling health care subsidies
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California officials are denouncing President Trump for ending the subsidies that help cover out-of-pocket medical costs for 670,000 lower-income Californians. But experts believe the state's health care marketplace is mostly insulated from a move that could hit the industry hard in other parts of the country.
The federal payments that lower out-of-pocket costs will end immediately, but the 11 insurance companies doing business on Covered California are still legally obligated to provide the discounts. State officials estimate that will mean a loss of $188 million for the remainder of 2017.
Covered California's decision this week to add a 12 percent surcharge to silver-tier plans was designed to protect most consumers from the effects of the Trump administration's move, because separate federal subsidies that help pay for consumer premiums will grow to cover most of the additional cost.
"They have figured out a way to build the premiums and instruct insurance carriers to cushion the blow for their enrollees and make sure that it’s still affordable to purchase coverage," said Dylan Roby, a professor at UCLA's Center for Health Policy Research.
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Many consumers will end up paying about what they pay now or even save money, according to Covered California. Roby and others believe the real risk to the state's individual market consumers will be the confusion the presidential action will cause about the state of health insurance.
Consumer advocates and state health officials say that's why it will be important for consumers to comparison shop when open enrollment begins on Nov 1.
"It's always to consumers' advantage to shop," said Betsy Imholz, special projects director for Consumers Union. "Shopping around is more important this year than ever."
"Part of the mission of Covered California is to make our health care system simpler," said Anthony Wright, executive director of the advocacy group Health Access. "And so having this piece of it be so complicated is directly contrary to that goal and mission."
California Attorney General Xavier Becerra characterized the president's termination of the subsidies for out-of-pocket costs, along with a separate executive action he signed Thursday, part of an attempt to "sabotage" Covered California and the other health insurance exchanges created under the Affordable Care Act. He joined with 18 attorneys general to file a lawsuit challenging Trump's ending of the out-of-pocket subsidies.
"I and many of my attorney general colleagues will fight vigorously to ensure Californians and all Americans as taxpayers receive the health care the law provides,” Becerra said in a statement.
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