Health

Uncertainty Over Federal Money Could Spur Covered California Rate Hikes

Published

8 years ago

June 16, 2017

By Emily Bazar, Kaiser Health News

If the federal government does not clarify by mid-August whether it will continue an important health insurance subsidy for consumers next year, California’s state-run exchange will instruct its insurers to sell plans with significantly higher premiums to cover the loss of the money.

“Bottom line, we have come to the conclusion that if there’s no federal commitment to fund [the subsidies] by mid-August, we will presume they will not be funded and use higher rates for 2018,” Amy Palmer, director of communications for Covered California, said in an email.

At issue are the so-called cost-sharing subsidies that reduce what some consumers pay out of their own pockets for medical expenses such as physician visits, prescription drugs and hospital stays. These reduced rates are only available to Covered California enrollees who choose silver-level plans, the second-least expensive among the exchange’s four tiers. The subsidies are to help people whose annual income is between 139 percent and 250 percent of the federal poverty level, or about $34,200 to $61,500 for a family of four.

As of last summer, about half of the exchange’s enrollees — currently about 1.4 million people — benefited from cost-sharing reductions, Palmer said.

The subsidies are under challenge in a pending lawsuit by House Republicans, and President Donald Trump has threatened to stop making the payments, which go directly to health insurers to cover the cost of lowering consumers’ out-of-pocket expenses. The subsidies are separate from the federal health law’s tax credits, which reduce monthly premiums for qualified consumers.

A recent analysis commissioned by Covered California estimated that premiums for silver plans would jump by 16.6 percent if federal funding for cost-sharing subsidies were lost. That is over and above any annual rate increases on the table.
Last week, Covered California instructed participating insurers to submit alternative premium hike proposals for 2018 in the event they lose the federal payments. The agency told them to apply the hikes only to silver-tier plans, since the cost-sharing subsidies are available only to people who buy those plans.

The insurers’ proposed rates are due to Covered California by June 30, and the agency will publicly announce the final rates in mid-July, after negotiations with the health plans.

After that, the exchange can’t wait too long before determining which rates consumers will face in 2018, Palmer said. State regulators will still have to review the rates, and Covered California as well as the health plans will need to time to prepare for open enrollment in the fall.

As a result, the exchange determined this week that it will move forward with the higher rates in August if the uncertainty remains about the federal payments.

“As we hear about health plans exiting some markets, and as we work hard to create necessary market stability, waiting for clear federal guidance on [the subsidy] funding is no longer an option,” Covered California Executive Director Peter Lee wrote in an email to colleagues and health policy leaders on Wednesday.

Lee noted that if Covered California adopts the higher premiums to cover the cost of the subsidies, many consumers would nonetheless be protected from them. That’s because as premiums rise to make up for the loss of the cost-sharing subsidies, federal tax credits would grow to offset those higher premiums.

“These increased costs will be borne by the federal government … and will be significantly more than the federal government would pay if it continued making direct payments” for the subsidies, Lee wrote in a separate letter to Seema Verma, head of the Centers for Medicare & Medicaid Services.

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OPINION: California’s Legislature Has the Wrong Prescription for the Affordability Crisis — Gov. Newsom’s Plan Hits the Mark

Last month, Gov. Newsom included measures in his budget that would encourage greater transparency, accountability, and affordability across the prescription drug supply chain. His plan would deliver real relief to struggling Californians. It would also help expose the hidden markups and practices by big drug companies that push the prices of prescription drugs higher and higher. The legislature should follow the Governor’s lead and embrace sensible, fair regulations that will not raise the cost of medications.

Published

3 weeks ago

June 18, 2025

Oakland Post

Rev. Dr. Lawrence E. VanHook. Courtesy of Rev. Dr. Lawrence E. VanHook.

By Rev. Dr. Lawrence E. VanHook

As a pastor and East Bay resident, I see firsthand how my community struggles with the rising cost of everyday living. A fellow pastor in Oakland recently told me he cuts his pills in half to make them last longer because of the crushing costs of drugs.

Meanwhile, community members are contending with skyrocketing grocery prices and a lack of affordable healthcare options, while businesses are being forced to close their doors.

Our community is hurting. Things have to change.

The most pressing issue that demands our leaders’ attention is rising healthcare costs, and particularly the rising cost of medications. Annual prescription drug costs in California have spiked by nearly 50% since 2018, from $9.1 billion to $13.6 billion.

Some lawmakers, however, have advanced legislation that would drive up healthcare costs and set communities like mine back further.

I’m particularly concerned with Senate Bill (SB) 41, sponsored by Sen. Scott Wiener (D-San Francisco), a carbon copy of a 2024 bill that I strongly opposed and Gov. Newsom rightly vetoed. This bill would impose significant healthcare costs on patients, small businesses, and working families, while allowing big drug companies to increase their profits.

SB 41 would impose a new $10.05 pharmacy fee for every prescription filled in California. This new fee, which would apply to millions of Californians, is roughly five times higher than the current average of $2.

For example, a Bay Area family with five monthly prescriptions would be forced to shoulder about $500 more in annual health costs. If a small business covers 25 employees, each with four prescription fills per month (the national average), that would add nearly $10,000 per year in health care costs.

This bill would also restrict how health plan sponsors — like employers, unions, state plans, Medicare, and Medicaid — partner with pharmacy benefit managers (PBMs) to negotiate against big drug companies and deliver the lowest possible costs for employees and members. By mandating a flat fee for pharmacy benefit services, this misguided legislation would undercut your health plan’s ability to drive down costs while handing more profits to pharmaceutical manufacturers.

This bill would also endanger patients by eliminating safety requirements for pharmacies that dispense complex and costly specialty medications. Additionally, it would restrict home delivery for prescriptions, a convenient and affordable service that many families rely on.

Instead of repeating the same tired plan laid out in the big pharma-backed playbook, lawmakers should embrace Newsom’s transparency-first approach and prioritize our communities.

Let’s urge our state legislators to reject policies like SB 41 that would make a difficult situation even worse for communities like ours.

About the Author

Rev. Dr. VanHook is the founder and pastor of The Community Church in Oakland and the founder of The Charis House, a re-entry facility for men recovering from alcohol and drug abuse.

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Oak Temple Hill Hosts Interfaith Leaders from Across the Bay Area

Distinguished faith leaders Rev. Ken Chambers, executive director the Interfaith Council of Alameda County (ICAC); Michael Pappas, executive director of the San Francisco Interfaith Council; and Dr. Ejaz Naqzi, president of the Contra Costa County Interfaith Council addressed the group on key issues including homelessness, food insecurity, immigration, and meaningful opportunities to care for individuals and communities in need.

Published

4 weeks ago

June 14, 2025

Oakland Post

Troy McCombs (from the state of Washington), Elder Mark Mortensen (from Irvine, CA), Michael Pappas, Rev. Ken Chambers, Dr. Ejaz Naqvi, Elder Sigfried Nauman (from the state of Washington), and Richard Kopf. Courtesy photo.

Special to the Post

Interfaith leaders from the Bay Area participated in a panel discussion at the annual meeting of communication leaders from The Church of Jesus Christ of Latter-day Saints held on Temple Hill in Oakland on May 31. Distinguished faith leaders Rev. Ken Chambers, executive director the Interfaith Council of Alameda County (ICAC); Michael Pappas, executive director of the San Francisco Interfaith Council; and Dr. Ejaz Naqzi, president of the Contra Costa County Interfaith Council addressed the group on key issues including homelessness, food insecurity, immigration, and meaningful opportunities to care for individuals and communities in need.

Chambers, said he is thankful for the leadership and support of the Church of Jesus Christ Latter-Day Saints’ global ministry, which recently worked with the interfaith congregations of ICAC to help Yasjmine Oeveraas a homeless Norwegian mother and her family find shelter and access to government services.

Oeveraas told the story of how she was assisted by ICAC to the Oakland Post. “I’m a Norwegian citizen who escaped an abusive marriage with nowhere to go. We’ve been homeless in Florida since January 2024. Recently, we came to California for my son’s passport, but my plan to drive for Uber fell through, leaving us homeless again. Through 2-1-1, I was connected to Rev. Ken Chambers, pastor of the West Side Missionary Baptist Church and president of the Interfaith Council of Alameda County, and his car park program, which changed our lives. We spent about a week-and-a-half living in our car before being blessed with a trailer. After four years of uncertainty and 18 months of homelessness, this program has given us stability and hope again.

“Now, both my son and I have the opportunity to continue our education. I’m pursuing cyber analytics, something I couldn’t do while living in the car. My son can also complete his education, which is a huge relief. This program has given us the space to focus and regain our dignity. I am working harder than ever to reach my goals and give back to others in need.”

Richard Kopf, communication director for The Church of Jesus Christ in the Bay Area stated: “As followers of Jesus Christ, we embrace interfaith cooperation and are united in our efforts to show God’s love for all of his children.”

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“Unnecessary Danger”: Gov. Newsom Blasts Rollback of Emergency Abortion Care Protections

Effective May 29, CMS rescinded guidance that had reinforced the obligation of hospitals to provide abortion services under the Emergency Medical Treatment and Labor Act (EMTALA) when necessary to stabilize a patient’s condition. Newsom warned that the rollback will leave patients vulnerable in states with strict or total abortion bans.

Published

4 weeks ago

June 14, 2025

Oakland Post

iStock.

By Bo Tefu, California Black Media

Gov. Gavin Newsom is criticizing the Centers for Medicare & Medicaid Services (CMS) for rolling back federal protections for emergency abortion care, calling the move an “unnecessary danger” to the lives of pregnant patients in crisis.

Newsom warned that the rollback will leave patients vulnerable in states with strict or total abortion bans.

“Today’s decision will endanger lives and lead to emergency room deaths, full stop,” Newsom said in a statement. “Doctors must be empowered to save the lives of their patients, not hem and haw over political red lines when the clock is ticking. In California, we will always protect the right of physicians to do what’s best for their patients and for women to make the reproductive decisions that are best for their families.”

The CMS guidance originally followed the 2022 Dobbs decision, asserting that federal law could preempt state abortion bans in emergency care settings. However, legal challenges from anti-abortion states created uncertainty, and the Trump administration’s dismissal of a key lawsuit against Idaho in March removed federal enforcement in those states.

While the rollback does not change California law, Newsom said it could discourage hospitals and physicians in other states from providing emergency care. States like Idaho, Mississippi, and Oklahoma do not allow abortion as a stabilizing treatment unless a patient’s life is already at risk.

California has taken several steps to expand reproductive protections, including the launch of Abortion.CA.Gov and leadership in the Reproductive Freedom Alliance, a coalition of 23 governors supporting access to abortion care.