Why California Is The Key To The Obamacare ‘Fix’

If the attempted Obamacare fix is going to work at all — an already debatable proposition — it needs to take hold in the biggest state in the Union: California.

But unfortunately for the White House, internal state politics could make it hard for that to happen. California has institutionalized the very practice that the Obamacare “fix” is supposed to address — the only state marketplace to do so.

California has always been key to the health care reform law’s success. Most importantly, of course, it’s the biggest state. That means it’s the biggest state to build its own insurance marketplace, expand Medicaid, etc. If you can make the law succeed in a state where one in eight Americans lives, that goes a long way toward making Obamacare work nationwide.

And in a state where Obama won by more than 20 percentage points in 2012, it follows that support for Obamacare has always been strong, too. House Minority Leader Nancy Pelosi (D-CA) helped shepherd the law through Congress when her party held the majority.

But there have been cracks in that West Coast support in recent days.

Sen. Dianne Feinstein (D-CA) has co-sponsored a bill that would attempt to rectify the president’s “if you like your health plan, you can keep it” pledge. And Pelosi is reportedly backing a similar legislative fix penned by another California Democrat, Rep. George Miller.

The White House doesn’t want Congress to get involved; that’s why it proposed its own fix. So if its plan to help people whose health policies have been canceled under the law — by allowing them to stay on their plans, so long as their insurer and state regulator allow it — is going to hold any weight, California needs to get onboard.

That’s not going to be easy, though.

The whole plan is predicated on state regulators allowing their insurance companies to do what the White House has proposed: let people stay on their current, non-Obamacare compliant plans.

The administration has already lost some usually stalwart allies like the Washington insurance commissioner. So getting California to sign onto the plan would be a big win.

But a uniquely messy policy situation in the Golden State might stop that from happening.

Here’s why: The California marketplace, Covered California, has required insurance companies to terminate their non-compliant plans by Dec. 31, 2013, if they want to sell there.

So that’s set up a showdown of sorts over the ‘fix’ between Covered California and the state insurance commissioner, Dave Jones, who told reporters Thursday that he opposed Covered California’s cancellation policy from the start.

The reason for the policy is: California’s insurance companies wanted things this way. As Jones tells it, the insurance companies first went to the state legislature to require the Dec. 31 cancellations, but were turned down at least in part because of his opposition. Then they beseeched Covered California, which agreed to the policy and codified it into its contracts with insurers.

The marketplace’s rule doesn’t apply to insurers who aren’t selling plans on Covered California — Jones said he would allow those companies to make the White House’s offer to their customers — but that’s a small portion of the state’s insurance market.

Most insurers are selling on the marketplace, so they fall under its rule. Jones said that he’s asked the marketplace to “release” insurers from the contractual obligation that they made and take up the administration’s offer.

“I’ve asked Covered California to take this action immediately, so that health insurers then are free from this contract provisions and can then follow the president’s request — and my request — that they allow their existing customers to renew their existing policies into 2014,” he told reporters on a conference call.

“To make that possible in California, it’s also critically essential that Covered California release health insurers… from its contract provision mandating that they cancel their policies by Dec. 31, 2013, and I’ve asked Covered California to do exactly that.”

A Covered California spokesperson didn’t immediately respond to TPM’s request for comment. But whatever answer the marketplace ultimately gives will say a lot about how well the White House’s Obamacare ‘fix’ is going to work.

Dear Reader,

When we asked recently what makes TPM different from other outlets, readers cited factors like honesty, curiosity, transparency, and our vibrant community. They also pointed to our ability to report on important stories and trends long before they are picked up by mainstream outlets; our ability to contextualize information within the arc of history; and our focus on the real-world consequences of the news.

Our unique approach to reporting and presenting the news, however, wouldn’t be possible without our readers’ support. That’s not just marketing speak, it’s true: our work would literally not be possible without readers deciding to become members. Not only does member support account for more than 80% of TPM’s revenue, our members have helped us build an engaged and informed community. Many of our best stories were born from reader tips and valuable member feedback.

We do what other news outlets can’t or won’t do because our members’ support gives us real independence.

If you enjoy reading TPM and value what we do, become a member today.

Latest Dc
Masthead Masthead
Founder & Editor-in-Chief:
Executive Editor:
Managing Editor:
Associate Editor:
Investigations Desk:
Editor at Large:
General Counsel:
Head of Product:
Director of Technology:
Associate Publisher:
Front End Developer:
Senior Designer: