Author: Lucien Wulsin

Open Letter Re: Exchange News and Tax Credits

Dear friends, family and neighbors,

There are three things happening that you need to know about: 1) open enrollment, 2) redeterminations and 3) reconciliation.

Open enrollment for the Exchanges (Covered California) will close by February 15, so if you want coverage for the coming year, you have to have your application completed and filed by then. If you miss that deadline you cannot enroll until next November 15 except for life change events (such as job changes, births, deaths, divorces, or moving to a new state) that cause you to lose other coverage and thus become Exchange eligible. The very same rules apply in the individual market outside the Exchanges. If it’s a life change event, act quickly; you only have 60 days to apply outside of open enrollment.

Redeterminations happen once a year, when you restate your income for the coming year and you can choose to change plans if you wish. Since the prices for plans changed, some went up and some went down, you want to carefully look at prices and plan networks to see if you want to keep your existing plan or change plans. The tax credits are pegged to the second lowest priced silver plan, so the difference between the plan you choose and the 2nd lowest price silver is used to calculate your tax credit and reduce your premiums.

If your income is between 138% of federal poverty level and 250% of federal poverty level (between about $16,000 and $30,000 for an individual, or $33,000 to $60,000 for a family of four) you can also get a tax credit to reduce your copays and deductibles, but only if you choose the silver plan. So if you are in that income range, your best choice is likely to be silver, otherwise you lose those credits reducing your copays and deductibles.

Reconciliation also happens annually. Reconciliation only happens for those who applied for and received tax credits to help pay their premiums and out of pocket copays and deductibles. When you applied, you projected your income for the 2015 calendar year to qualify for the tax credit. If it went down, you will get a refund, but you need to file your tax return to get it. If your income went up and you did not report the change, you will get a bill for the added amount you owe for the year. The IRS will be sending Form 1095 to report your tax credits and any amounts they owe you or you owe them.

Tax penalties for those who were uninsured during 2014 were $95 or 1% of income, whichever was higher; they will be due by April 15. In 2015, the penalties will go up to $325 or 2% of income. There are exemptions for reasons such as financial hardship or religious beliefs.

Numbers covered. The most recent projection I saw in the Governor Brown’s Proposed Budget for 2015-16 is that Covered California enrollment will reach 2 million and Medi-Cal will reach 12 million (an increase of 3.2 million due to the Affordable Care Act) during the 2015-16 time frame.

ITUP’s Experience. We just got our renewal rates from Covered California’s SHOP program for small business for the coming year, not only no increase but a small decrease despite the fact we are all one year older. A nice way to start 2015!

Hope this is helpful and Happy New Year,


ITUP Summary of Schoen et al, State Trends in the Cost of Employer Health Insurance Coverage (Commonwealth Fund, 2003-2013)

Click here for the full issue brief:
State Trends in the Cost of Employer Health Insurance Coverage, 2003-2013


For the last decade, health insurance premium increases rose three times as fast as worker’s wages. Between 2010 and 2013, the rate of premium increase slowed from 5.1% for the prior seven years to 4.1% for the past three years. Premium rate increases slowed to less than 4% in the neighboring states of Arizona, Oregon and Nevada but stayed higher than 5% in California.

Employee contributions towards the costs of their premiums nearly doubled in the last decade; their out of pocket copays and deductibles increased as well. Employees’ out of pocket costs (share of premium plus out of pocket) increased from 5.3% of household income in 2003 to 9.6% in 2013. Most of that growth occurred prior to 2010.

The slower growth in per member per month (pmpm) applied to both Medicare and private insurance. Medicare’s pmpm growth rates were 5.4% in 2008, 4.0% in 2009, 1.3% in 2010, 2.1% in 2011, flat in 2012 and 2013. Private insurance pmpm growth rates were 7.6% in 2009, 4.5% in 2010, 3.8% in 2011, 4.0% in 2012 and 2.1% in 2013. The reforms of the ACA may account for the slower growth in Medicare costs, but do not explain the slower growth in private employment based coverage, except possibly as radiating impacts.

California’s performance was not exemplary. Average employer costs per individual grew 5.1% nationally and 5.6% in California from 2003-2010; average employer costs per individual grew 4.1% nationally and 5.1% in California from 2010-2013. Average premiums as a percent of median household income grew from 15% in 2003 to 22% in 2010 to 23% in 2013. By comparison, Massachusetts grew from 13% to 16% to 18% over the same time frame. Minnesota’s (the top performer) pmpm premiums grew from 13% to 17% to 16% between 2003 and 2013.

ITUP Summary of the Legislative Analyst’s November 2014 Fiscal Outlook for the 2015-16 Budget

You can find the full version of the LAO’s Fiscal Outlook here: The 2015-16 Budget: California’s Fiscal Outlook


The Legislative Analyst’s Office mid year projection is that California will finish the 2014-15 fiscal year with a $2 billion surplus and that the entire surplus will be allocated to K-12 education due to Prop 98.

The LAO projects that California will end the next (2015-16) fiscal year with a $4.2 billion surplus and that the entire surplus will be allocated to building up the Rainy Day Reserve fund and to paying off debt due to the new budget rules passed under Proposition 2. This assumes a healthy contribution to K-12 under Prop 98 and no other new spending initiatives from the Governor or state legislature.

Finally the LAO projects that in the projected surpluses in future years, Prop 98 will grow education spending; Prop 2 will pay off debts and build the Rainy Day Reserves. While the Analysis predicts moderate sustained economic growth, if the economic growth stalls or the stock market tanks, the state’s budget surpluses will disappear.

The Analysis projects that GDP will grow between 2.5 and 3% for the next six years, that personal incomes will grow about 5% and unemployment will drop from 7.5% to 5% while inflation will average about 2%.

State General Fund revenues are projected to grow about 3.5 to 4.0% for the next 6 years. State General Fund spending is expected to grow about 2.5%. State spending on K-12 is projected to grow 1.4% over the next 6 years and CSU and UC at 4.4% and 4.0% respectively. Medi-Cal General Fund Spending will grow about 4.0% annually, most of that growth occurs after 2016-17.

It projects that Medi-Cal enrollment will slow and then decline for families and individuals as the economy continues to improve and the one time increase due to the ACA is absorbed. It reports that 2 million enrolled under the “optional” expansion (i.e. for the most part the medically indigent adults) and 1 million enrolled under the “mandatory” expansion (i.e. existing program eligible but not heretofore enrolled due to administrative and informational obstacles.

The Analysis predicts that per member per month payments will grow about 3.5%, and slightly less for seniors’ spending. The analysis projects that California will receive an additional $500 million if CHIP is reauthorized as the match rate for expansion children would increase from 65% to 88%. Lastly it concludes that California will need to revise its 3.9% Medi-Cal managed care tax (raises $900 million) to comply with federal rules governing provider and plan taxes.

Welcome to 2015

Dear Friends and Colleagues,

Happy New Year; welcome to 2015. We have much to celebrate — nearly 3.5 million Californians newly enrolled in Covered California and Medi-Cal, and almost 600,000 new applications and 350,000 determined eligible in the first month of open enrollment for Year 2. In year 1, California reduced its high uninsured rate by half. Just as important, health care costs per capita are under control and premiums are reflecting the slower growth in the costs of care and medical errors and unnecessary re-admissions are down by 17%. So in California at least, the Affordable Care Act is working and working well on all three fronts – more coverage, improved quality and lower costs – due to all your efforts.

This is only the beginning. In the coming year, we have important opportunities to get better. We need to design coverage that will insure every Californian regardless of income or immigration status. San Francisco, Alameda and Los Angeles have already made important progress towards that goal, and we need to learn and apply these lessons in other counties and the State Legislature. While President Obama’s Executive Order paves the way, Congress and the President need to forge an agreement on immigration reform, so that immigrant workers can emerge from the shadows and further grow our economy.

We need to design coverage that is more affordable and effective in meeting patients’ health needs. Integrating behavioral and physical health is our biggest challenge and opportunity; it will help patients, families and the entire society if we treat the whole person, rather than trifurcating the care of those with serious mental illness and substance abuse disorders into three separate systems. Integrating delivery systems and reforming the outdated ways we reimburse doctors, hospitals, health plans and other providers is at the top of our to do list. E-medicine has great potential to integrate care, reduce costs and improve outcomes in a transformative fashion. If we can do these things, high-value and great health outcomes will become the norm for every Californian.

We thank you immensely for all the extraordinary achievements of the past year due to your hard work. As we enter the New Year, our challenges become ever more interesting, and our collaborations ever more effective.



Lucien Wulsin

P.S. Register for the ITUP Conference – just 6 weeks away! Friday is the last day to claim to early bird rate.

Open Letter on the Next Section 1115 Waiver

California’s next §1115 waiver provides an important opportunity to improve health outcomes for over 10 million Californians. We wanted to share our thinking on possible directions. We have completed our nine regional workgroups throughout the state and our stakeholder convenings in Southern California counties. So these comments are informed by the diverse, passionate and interesting ideas we heard, the discussions we have held and reactions we have received to the California waiver outline and the CMS approved New York DSRIP waiver.

We would encourage a large and transformative waiver as opposed to a small, targeted one. Just as the Bridge to Reform set California on the path to early and successful enrollment, we would urge that the next waiver focus on dramatically improving patient outcomes now that we have the expanded Medi-Cal coverage and managed care platforms in place to do so.

Download the letter here.

Based on our workgroups, there is a great deal of support at the local level for improving the care and outcomes of care to the newly insured. There is agreement that waiver renewal is a terrific opportunity to improve the functioning of Medi-Cal managed care, which has expanded greatly in terms of covered lives and the complexity of the medical conditions covered, and now needs to focus on further improving health outcomes. With the next round of the §1115 waiver our goal can and should be to achieve excellent outcomes for all the newly insured enrolled with all the participating safety net providers. There is widespread doubt that significant cost savings can be achieved given the already low levels of Medi-Cal spending, but wide consensus that improved outcomes and better quality care are achievable.



Upcoming Waiver – Thoughts From Southern California (UPDATED)

This four part series examines the upcoming Medicaid Waiver. Section 1 is background on waivers; Section 2 reviews California’s implementation of the Affordable Care Act; Section 3 provides 2012 data on Southern California’s safety nets on the eve of ACA implementation, and Section 4 discusses the 11 key issues brought up during our convenings and one on one discussions for Southern California stakeholders to consider as California decides what form of a waiver should be sought in 2015.

Read Sections 1 & 2 here.

Read Section 3 here.

Read Section 4 here.

What is a waiver? 42 USC §1315 (Section 1115 of the Social Security Act) authorizes states to seek waivers of certain specified federal laws – in this case §1902 of the Social Security Act. Typically these are experiments that cost the federal government less (budget neutrality) than it otherwise would have spent, that waive particular components of the Social Security Act, and that deliver better, more cost effective services.

California’s 2010 waiver, known as the Bridge to Reform combined a variety of changes: LIHP (Low Income Health Program), SNCP (Safety Net Care Pool), matches for state workforce programs, matches for state programs for the uninsured, DSRIP (Delivery System Reform Incentive Pool), four CCS (California Children’s Services) pilots and eight Medi-Medi managed care pilots (including managed care for the seniors and persons with disabilities and the Medi-Medis or dual eligibles). The LIHP aspect of the waiver expired at the end of 2013, and SNCP and DSRIP are due to expire in November 2015.

The next waiver does not have much flexibility to increase coverage of or pay for uncompensated care to California’s uninsured because California has already implemented the Medicaid expansion and Covered California quite successfully. The federal government cannot give a waiver to expand emergency Medi-Cal to the undocumented beyond its current scope because those provisions do not appear in §1902 of the Social Security Act. It can give waivers under Section 1115 in 2015 to make the Medicaid expansions work better, and it can give waivers under Section 1332 in 2017 to make Covered California and its intersections with Medicaid and employment-based coverage work better.

Read Sections 1 & 2 here.

Read Section 3 here.

Read Section 4 here.


California’s Implementation of the 2010 DSRIP Waiver

Summary of California’s Implementation of the 2010 DSRIP Waiver – 3rd Year

California Health Care Safety Net Institute, Aggregate Public Hospital System Annual Report in California’s §1115 Medicaid Waiver’s Delivery System Incentive Program Demonstration Year 8 (December 31, 2013)

Public hospitals, including the five UC hospitals, were eligible for $3.3 billion in federal matching funds over a five-year period. The California Health Care Safety Net Institute has summarized the first three years of implementation. The five categories for improvement were: 1) infrastructure development, 2) innovation and design, 3) population focused improvement, 4) urgent improvements in care and 5) HIV transition projects.

Infrastructure development included the following: moving from episodic reactive visits to data-driven population health management. It included more primary care capacity, disease management registries and electronic health records.

Innovation and design included: transforming primary care clinics into medical homes, and moving from silos to integrated seamless systems integrating primary care, specialty care, behavioral health and hospital based services.

 Read the rest of the summary here: DSRIP Waiver Summary


Just off the Covered California bus after two great days in the Bay Area and Central Valley. Carolina Coleman is on the bus today, then John Connolly on Thursday, and Chauntrece Washington on Friday. They hope to see you if you are at one of the bus stops.

Open enrollment begins this Saturday at 12:01 am online and the call centers will open at 8:00 am. This year, there will be 200 brand new storefronts, manned by application assisters, more call center employees, and an improved online enrollment. The plans have increased the doctors in their networks. Let us know how it’s working and what needs improvement.

This year, the open enrollment is shorter: three months as opposed to six months last year.

Remember that 3.4 million Californians enrolled last year, cutting the state’s uninsured rate in half, so we need to help new people to enroll for the first time and help existing people who will be renewing their coverage.

Thanks for everything you do. We’re in.


Prepared by: Lucien Wulsin, ITUP, 11/12/14

We’re in!

ITUP is on the Covered California 23-city bus tour to mark the start of this year’s open enrollment. We started at 6:45 from the Covered California headquarters, then to the Capitol Steps, Petaluma Health Center, Martin Luther King Memorial in San Francisco and Yerba Buena High School in San Jose, and slept over night in Gilroy. Today, we head for Merced, Fresno and Bakersfield – a great way to celebrate Veteran’s Day.

3.4 million Californians were covered in year 1 of the Affordable Care Act (ACA). That’s cut our state’s uninsured rate in half in just 12 months. This is what I signed on for as a young lawyer forty years ago. One of my early clients was a Vietnam vet who had been unemployed and just got a full time job in Boston, MA. His employer did not offer coverage, and he got a notice that he was losing Medicaid because he was working. I told him, “This must be a mistake, we cannot have a stupid system like that in America where you get a job and lose your coverage. I’ll try to get that taken care of.” After poring over the law books, I had to tell him that this was in fact the crazy system we had, and I’d try to get it fixed.” He said, “Don’t worry about me. I can get my care at the local VA. It’s coverage for my wife and kids that I’m really worried about.” Being fresh out of law school, I thought that might take a few months for legislators and program administrators to repair this unjust omission.

Here we are 40 years later. Massachusetts finally fixed that problem in 2006 with its historic RomneyCare legislation. The nation passed and President Obama signed the Affordable Care Act in 2010, and California is “all in.”

With all the frustration of the first year’s rollout, let’s remember, 1) its taken 100 years to get here, starting with the leadership of President Teddy Roosevelt, 2) California has already covered nearly 3.5 million in its first year, and 3) there are many stories of returning veterans and their families trying to get coverage and basic health care, just like my early experience. We have a lot to appreciate and reflect on in the leadership of American’s veterans as we all face the future together.

Thank you Covered California. We’re in!

Lucien Wulsin, ITUP, 11/11/14

Rate of Health Spending Falls

CMS’ Office of the Actuary reports in Health Affairs on the increases in health spending. For the period 1990-2008, health spending grew at 7.2% annually or 2% higher than GDP growth. For the five-year period 2008-2013, the rate of health spending fell by more than 50% and grew at the same rate as the overall economy (GDP). The slow down was due to the recession and the slow but steady rate of recovery combined with the ACA reforms in Medicare spending. For the next ten years, the rate of growth in health spending is projected to be 5.7% or 1.1% greater than the rate of economic growth (GDP). The reasons for the increase are: 1) a faster rate of economic growth and 2) increasing baby boomer retirements into the Medicare program.

Screenshot 2014-11-04 14.30.01

The rate of Medicare spending growth will be highest between 2019 and 2023 due to boomer retirements and the aging of Medicare eligibles; the ACA reforms will moderate the growth in Medicare. The rate of increase in Medicaid spending will spike in 2014 as the ACA’s Medicaid expansions financed by the federal government take effect, then the increases fall to normal levels. The rate of private insurance spending will grow as more people are covered through the Exchanges, then slow beginning in 2019. The growth in private insurance is primarily due to more people covered through the Exchanges, mitigated by the ACA’s caps on the tax expenditure growth of high cost plans beginning in 2018. The rate of individual out of pocket spending will fall significantly as more of the uninsured move into the Exchanges and Medicaid, then increase to keep pace with the rise in GDP beginning in 2019.