Legislation proposed to help California launch healthcare overhaul
A special session of the state Legislature produces sweeping proposals to help California implement President Obama's healthcare overhaul.By Michael J. Mishak, Los Angeles Times
2:28 AM PST, January 29, 2013
SACRAMENTO — The state Legislature gaveled in a special session on healthcare Monday, pushing forward with sweeping proposals to help California implement President Obama's healthcare overhaul.
The measures, including a major expansion of Medi-Cal, the state's public insurance program for the poor, would cement the state's status as the nation's earliest and most aggressive adopter of the federal Affordable Care Act. Beginning in January 2014, the law requires most Americans to buy health insurance or pay a penalty.
Gov. Jerry Brown called the special session so healthcare bills that he signs can take effect within 90 days rather than next year.
State lawmakers are racing to pass rules for enrollment in a new state-run insurance market in October. They include a requirement for insurers to cover consumers who have preexisting medical conditions.
Legislative leaders in both houses sponsored bills that would dramatically expand Medi-Cal. Under the proposals, individuals earning up to 138% of the federal poverty level — or $15,415 a year — would be covered, potentially adding more than 1 million Californians to the rolls.
The federal government would subsidize costs for the first three years, phasing down to 90% afterward.
"Ensuring that every Californian has access to quality, affordable healthcare is one of the most important public policy challenges we face," said Assembly Speaker John A. Pérez (D-Los Angeles) at a Capitol news conference. "No Californian should ever face bankruptcy or severe financial setbacks due to illness and injury."
Brown, in his State of the State speech last week, sounded a note of caution even as he embraced the federal law. The long-term costs are unknown, he said, and hold the potential to undermine California's precariously balanced budget.
He called the Medi-Cal expansion "incredibly complex," adding that "it will take more time" to achieve than other parts of the healthcare overhaul. Brown has said the change could allow the state to reduce the roughly $2 billion it gives to counties to care for the uninsured, but county officials and healthcare advocates say that such a move could hurt their ability to help the millions of Californians who will still lack coverage.
Report: Kaiser tops state health insurance market with 40% shareBy Chad Terhune
9:37 AM PST, January 29, 2013
Nonprofit healthcare giant Kaiser Permanente had a 40% share of California's $59-billion health insurance market for employers and individuals, new data show.
A report issued this week by Citigroup analyst Carl McDonald compiled nationwide data on 2011 premiums and enrollment among large and small employers and individuals buying their own policies.
Those insurance markets, excluding government healthcare programs and self-insured employers, totaled more than 80 million people and $317 billion in premiums. McDonald noted these figures don't reflect companies' full market share, but he said these businesses and individual customers account for the vast majority of revenue and profits for most insurers.
In California, Kaiser led the way with $23.3 billion in premiums, or a 40% share, and 5.5 million commercial customers. Overall, the Oakland company has about 6.6 million members in the state and runs 35 hospitals here.
Anthem Blue Cross, a unit of industry giant WellPoint Inc., was second in the state with a 23% commercial market share and $13.7 billion in premiums.
Blue Shield of California came in third with a 14% share, followed by Health Net Inc. at nearly 9% and UnitedHealth Group Inc. at 5%, according to Citigroup.
McDonald said the California market has a significant impact on the entire health insurance industry.
"As California goes, so goes the results of the publicly traded plans, with the California the largest market at four of the six publicly traded plans," he wrote in his report.
Nationwide, WellPoint grabbed the biggest share of this commercial market with 14%. UnitedHealth was second at 12%, and Kaiser was third at nearly 10%, Citigroup data show.
Those companies figure to be among the most affected by the federal healthcare law and the launch of state insurance exchanges for individuals and small businesses in January 2014.
HMO-Like Plans May Be Poised To Make Comeback In Online Insurance Markets
Such plans, similar to the HMOs of old, fell into disfavor with consumers in the 1980s and 1990s, when they rebelled against a lack of choice.
But limited network plans -- which have begun a comeback among employers looking to slow rising premiums -- are expected to play a prominent role in new online markets, called exchanges, where individuals and small businesses will shop for coverage starting Oct. 1. That trend worries consumer advocates, who fear skimpy networks could translate into inadequate care or big bills for those who develop complicated health problems.
Because such policies can offer lower premiums, insurers are betting they will appeal to some consumers, especially younger and healthier people who might see little need for more expensive policies.
Insurers, who are currently designing their plans for next fall, "will start with as tight a network control as they can," says Ana Gupte, a managed care analyst with Sanford Bernstein.
During Trial, New Details Emerge About Hip Maker
By BARRY MEIER
When Johnson & Johnson announced the appointment in 2011 of an executive to head the troubled orthopedics division whose badly flawed artificial hip had been recalled, the company billed the move as a fresh start.
But that same executive, it turns out, had supervised the implant’s introduction in the United States and had been told by a top company consultant three years before the device was recalled that it was faulty.
In addition, the executive also held a senior marketing position at a time when Johnson & Johnson decided not to tell officials outside the United States that American regulators had refused to allow sale of a version of the artificial hip in this country.
The details about the involvement of the executive, Andrew Ekdahl, with the all-metal hip implant emerged Wednesday in Los Angeles Superior Court during the trial of a patient lawsuit against the DePuy Orthopaedics division of Johnson & Johnson. More than 10,000 lawsuits have been filed against DePuy in connection with the device — the Articular Surface Replacement, or A.S.R. — and the Los Angeles case is the first to go to trial.
The information about the depth of Mr. Ekdahl’s involvement with the implant may raise questions about DePuy’s ability to put the A.S.R. episode behind it.
Asked in an e-mail why the company had promoted Mr. Ekdahl, a DePuy spokeswoman, Lorie Gawreluk, said the company “seeks the most accomplished and competent people for the job.”
On Wednesday, portions of Mr. Ekdahl’s videotaped testimony were shown to jurors in the Los Angeles case. Other top DePuy marketing executives who played roles in the A.S.R. development are expected to testify in coming days. Mr. Ekdahl, when pressed in the taped questioning on whether DePuy had recalled the A.S.R. because it was unsafe, repeatedly responded that the company had recalled it “because it did not meet the clinical standards we wanted in the marketplace.”
Before the device’s recall in mid-2010, Mr. Ekdahl and those executives all publicly asserted that the device was performing extremely well. But internal documents that have become public as a result of litigation conflict with such statements.
In late 2008, for example, a surgeon who served as one of DePuy’s top consultants told Mr. Ekdahl and two other DePuy marketing officials that he was concerned about the cup component of the A.S.R. and believed it should be “redesigned.” At the time, DePuy was aggressively promoting the device in the United States as a breakthrough and it was being implanted into thousands of patients.
“My thoughts would be that DePuy should at least de-emphasize the A.S.R. cup while the clinical results are studied,” that consultant, Dr. William Griffin, wrote.
A spokesman for Dr. Griffin said he was not available for comment.
The A.S.R., whose cup and ball components were both made of metal, was first sold by DePuy in 2003 outside the United States for use in an alternative hip replacement procedure called resurfacing. Two years later, DePuy started selling another version of the A.S.R. for use here in standard hip replacement that used the same cup component as the resurfacing device. Only the standard A.S.R. was sold in the United States; both versions were sold outside the country.
Before the device recall in mid-2010, about 93,000 patients worldwide received an A.S.R., about a third of them in this country. Internal DePuy projections estimate that it will fail in 40 percent of those patients within five years; a rate eight times higher than for many other hip devices.
Mr. Ekdahl testified via tape Wednesday that he had been placed in charge of the 2005 introduction of the standard version of the A.S.R. in this country. Within three years, he and other DePuy executives were receiving reports that the device was failing prematurely at higher than expected rates, apparently because of problems related to the cup’s design, documents disclosed during the trial indicate.
Federal Rule Limits Aid to Families Who Can’t Afford Employers’ Health Coverage
By ROBERT PEAR
WASHINGTON — The Obama administration adopted a strict definition of affordable health insurance on Wednesday that will deny federal financial assistance to millions of Americans with modest incomes who cannot afford family coverage offered by employers.
In deciding whether an employer’s health plan is affordable, the Internal Revenue Service said it would look at the cost of coverage only for an individual employee, not for a family. Family coverage might be prohibitively expensive, but federal subsidies would not be available to help buy insurance for children in the family.
The policy decision came in a final regulation interpreting ambiguous language in the 2010 health care law.
Under the law, most Americans will be required to have health insurance starting next year. Low- and middle-income people can get tax credits to help them pay premiums, unless they have access to affordable coverage from an employer.
The law specifies that employer-sponsored insurance is not affordable if a worker’s share of the premium is more than 9.5 percent of the worker’s household income. The I.R.S. said this calculation should be based solely on the cost of individual coverage, what the worker would pay for “self-only coverage.”
“This is bad news for kids,” said Jocelyn A. Guyer, an executive director of the Center for Children and Families at Georgetown University. “We can see kids falling through the cracks. They will lack access to affordable employer-based family coverage and still be locked out of tax credits to help them buy coverage for their kids in the marketplaces, or exchanges, being established in every state.”
In 2012, according to an annual survey by the Kaiser Family Foundation, total premiums for employer-sponsored health insurance averaged $5,615 a year for single coverage and $15,745 for family coverage. The employee’s share of the premium averaged $951 for individual coverage and more than four times as much, $4,316, for family coverage.
Under the I.R.S. rule, such costs would be considered affordable for a family making $35,000 a year, even though the family would have to spend 12 percent of its income for full coverage under the employer’s plan.
The tax agency proposed this approach in August 2011 and made no change in the definition of “affordable coverage” despite protests from advocates for children and low-income people and many employers. Employers did not want to be required to pay for coverage of employees’ dependents. But they said that family members should have access to subsidies so they could buy insurance on their own.
However, that would have increased costs to the government, which would have been required to spend more on subsidies.
Paul W. Dennett, senior vice president of the American Benefits Council, which represents many Fortune 500 companies, said: “Individuals who do not have affordable family coverage should be eligible for premium tax credits in the exchange. The final rule does not provide that.”
Under the law, people who go without insurance will generally be subject to tax penalties. In a separate proposed regulation issued on Wednesday, the Internal Revenue Service said that the uninsured children and spouse of an employee would be exempt from the penalties if the cost of coverage for the entire family under an employer’s plan was more than 8 percent of household income.