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Calif. says ‘no’ to Obamacare freebies, makes own law

By   /   November 21, 2013  /   News  /   No Comments

Part 77 of 97 in the series Obamacare
AP file photo

HE HAS AN OPINION: state Sen. Ted Gaines, R-Rocklin, vice chairman of the state’s insurance committee, says it doesn’t bode well that California’s rules are stricter than Obamacare. “This three-for-one freebie is so bad that even the No. 1 Obama cheerleader state had to break ranks. I’m not shocked anymore by any ridiculous Obamacare example. I’m surprised it’s not four-for-one or six-for-one.”


By Tori Richards | Watchdog.org

One of the most liberal states in the nation has said no thanks to a key Obamacare provision and instead is enacting its own version of the law.

California has decided to skirt the “Buy 1, Get 3 Free!” loophole in the Affordable Care Act, a modest piece of the sprawling health care regulation with huge implications. The provision holds the insured blameless for failing to make monthly premium payments while requiring doctors and insurers to continue to offer health care. During a three-month grace period before cancellation, subsidized policy holders can see doctors, have operations and rack up medical bills without paying for anything.

Doctors and insurers will be left holding the bag.

“California is usually leaning to the left, but Obamacare has gone so far that even the left coast is coming back a little to the center,” said Rep. Louie Gohmert, R-Texas, who is among a core group of congressional members who have tried to unwind Obamacare.

He has a counterpart in California: state Sen. Ted Gaines, R-Rocklin, who is vice chairman of the state’s insurance committee.

“When even California has stricter rules (than Obamacare) for a giveaway, that should tell you something,” Gaines said. “This three-for-one freebie is so bad that even the No. 1 Obama cheerleader state had to break ranks. I’m not shocked anymore by any ridiculous Obamacare example. I’m surprised it’s not four-for-one or six-for-one.”

To that end, the California Department of Managed Health Care is drafting its own version of section 156.270 of the Affordable Care Act that says policy holders will be suspended and unable to use their Obamacare plan after one month of non-payment, which is consistent with California law for all other plans purchased outside of the state’s exchange.

“From our perspective this makes it much clearer to the enrollee who ultimately is responsible to pay these bills,” said Marta Green, spokesperson for DMHC. “If I walk into an insurance provider in month two or three and if I get $10,000 worth of services, at the end of the month I am responsible for $10,000 worth of bills. We are not going to have people caught unaware.”

California is drafting language to the law and then it must go through a 45-day public comment period before it can be enacted.

“We have to analyze those comments and if everyone is on board we will finalize the regulation,” Green said. “It is our priority to get this resolved.”

CALIFORNIA: Don't come knocking on our door

CALIFORNIA: Don’t come knocking on our door

March is the first month that doctors could conceivably be stuck with fronting free health care.

The freebie loophole first caught the attention of the vocal California Medical Association several years ago. CMA officials immediately began peppering the U.S. Department of Health and Human Services with notices of concern seeking clarification. Initial drafts of Obamacare left insurance companies on the hook for all three months of the grace period.

“Nobody really had any idea that the feds were going to go in this direction – that doctors are left holding the bag for months two and three,” said CMA Association Director C. Brett Johnson. “They came out of nowhere with this and didn’t give us a public comment period.”

When the federal government’s final ruling came down on March 27, 2012, the CMA found that it violated several California laws. But it was also missing something that would give the CMA some leverage: language stating that the Affordable Care Act was preemptive, meaning that the federal version would prevail over conflicting state laws.

So, armed with this bit of ammunition, the CMA set its sights on state health regulators and found a willing ally.

Besides the three-month grace period, Obamacare also violates these California laws:

  • “Prompt pay,” which states that health plans must promptly reimburse health care providers, and
  • “Recision,” which means California has a host of conditions that must be in place before retroactively terminating a policy. None of these are addressed in Obamacare.

In addition, Obamacare creates a federal dichotomy because the law states that insurance companies cannot charge different rates inside the exchange. In reality, rates would have to be higher inside the exchanges to compensate for the grace-period freebies.

So the DMHC contacted the Center for Medicare and Medicaid Services and told them what they intended to do.

“We got approval,” Green said. “What California is proposing is that if you (the insured) get in the black and pay your premium retroactively, you are all good. If you had services, you will be reimbursed.”

On Tuesday, the American Medical Association passed a resolution stopping short of backing California’s version of Obamacare. It asked for doctors to be notified if patients were in the grace period and stated an opposition to any federal law that would preempt state law.

“States have been floating around saying, ‘This really sucks but it’s out there and we don’t know what we can do,’” Johnson said. “We have a solution.”

Contact Tori Richards at [email protected] or on twitter @newswriter2.


Part of 97 in the series Obamacare
  1. Obamacare compliance means less money for TN service agencies
  2. The mystery of Obamacare spending in Arkansas
  3. Obamacare raises questions for MD small business owners
  4. Kansas official on Obamacare: ‘Let someone else be the guinea pig’
  5. Obamacare insurance marketplace has plenty of kinks on first day
  6. OR’s Obamacare insurance marketplace hits technological snag
  7. Fail: Day 1 of the New Mexico Obamacare rollout
  8. Senator asks: Do you want this dysfunctional government taking over health care?
  9. Jobs, coverage at risk with Obamacare, MN union health official says
  10. Oregon’s Obamacare ads resemble middle school art
  11. VIDEO: Obamacare vs Affordable Care Act: Comedy triumphs in court of confusion
  12. Patience is key to navigating Illinois’ Obamacare marketplace
  13. Hawaii residents, lawmakers frustrated with health connector glitches
  14. Healthy young, key to Obamacare, aren’t buying it
  15. NM’s health exchange tries to lure ‘young invincibles’
  16. Obama drama: Senator blames governor for big rate hikes
  17. Progressive group navigates Oregon students through Obamacare
  18. Maddening: Trying to log onto federal health care site
  19. You know that one guy who successfully signed up for Obamacare? He didn’t
  20. What’s wrong? It’s been a week, and Obamacare website still not working
  21. HHS Secretary Sebelius back in FL after embarrassing Obamacare rollout
  22. Health centers enroll Floridians in Obamacare as application problems persist
  23. VIDEO: Stewart skewers Sebelius on Obamacare
  24. Obamacare effect? 9 companies exit Nebraska’s health insurance market
  25. Obamacare: Children of undocumented parents face an uncertain future
  26. Which way do we go? Obamacare navigator registration in TN in question
  27. NM health exchange tries to ease problems with Obamacare website
  28. CPA says hype over Obamacare small business tax credit is misleading
  29. Obamacare navigator under fire for arrest warrant
  30. Reports of Obamacare fraud emerge in Tennessee
  31. After two weeks, FL online Obamacare enrollees are hard to find
  32. Illinois state governor touts 100K Obamacare enrollees, all in Medicaid
  33. Kansas lawmaker calls for crackdown on Obamacare navigators
  34. WI health care exchange seeing few getting through
  35. Hawaii’s Obamacare exchange relaunches with more glitches
  36. We’ll know next month how many people in NM signed up for Obamacare — maybe
  37. Zero: Number of Nebraskans Obamacare navigators have signed up
  38. It took this Delaware woman 11 days to sign up for Obamacare – and she was the first
  39. How many people have signed up for health insurance in VA? Who knows?
  40. What else? NM federal health exchange ads stalled due to website problems
  41. Blue Cross hires temp workers to deal with Obamacare glitches
  42. If Obamacare is the next Medicare, will physicians leave en masse?
  43. Three problems that won’t be solved by fixing the Obamacare exchange glitches
  44. Plenty of Oregonians interested in Obamacare, but none can enroll online
  45. Criticize this: Obamacare premiums a near match to WI disclosures
  46. Report: Missourians will see sharp rise in premiums under Obamacare
  47. Kansas navigators say they’ve enrolled no one in Obamacare
  48. Obamacare too costly for rich Coloradans, Democrat congressman says
  49. Study: Kansas premiums to spike following Obamacare rollout
  50. Hang on to your candy: Creepy Uncle Sam is back
  51. Obamacare or bust: NM Watchdog turned back again
  52. Medical journals, experts refute claim that Medicaid cuts ER use
  53. Arkansas spends $4M on Obamacare ads, wants more
  54. LOL: In July video, HHS bragged about being ‘on schedule’ with Obamacare
  55. Illinois uses Day of the Dead to market Obamacare
  56. Sebelius denies GOP’s Terry ‘unreliable’ Obamacare info
  57. About 290,000 Washington residents lose health insurance plans
  58. Broken promise: Obamacare cancels almost 20,000 Kansas health care plans
  59. Top hospitals opt out of Obamacare
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  62. Obamacare: Religious groups want to ‘move mountains’
  63. Obamacare hitting Wisconsin residents with double whammy
  64. Kansas AG: Obamacare threatens consumer privacy
  65. 1,500 in New Mexico have to move out of the high-risk insurance pool
  66. Cover Oregon website fiasco creates jobs, but costs millions
  67. For Florida’s Obamacare small business exchange, it’s crunch time
  68. Only 877 Wisconsinites have signed up for Obamacare, federal report says
  69. Just 172 in NM have completed Obamacare applications: ‘Woefully inadequate,’ says NMIX board member
  70. With only 346 Oklahomans signed up, leaders decry ‘Obamacare debacle’
  71. Defying Obamacare: ‘Send them the bill,’ NM insurance official says
  72. Kansas Obamacare enrollment dwarfed by nearly 20,000 cancellations
  73. Numbers don’t lie: In Illinois, Obamacare means Medicaid
  74. Wisconsin governor proposes insurance plan to address Obamacare rollout failure
  75. Tennesseans might know Tuesday if they can keep canceled health insurance
  76. People demand answers over Oregon’s Obamacare fail
  77. Calif. says ‘no’ to Obamacare freebies, makes own law
  78. HI health exchange violates federal law, League of Women Voters say
  79. Obamacare video winner: ‘Forget about the price tag’
  80. Harvard study finds ‘striking’ rejection of Obamacare by young Americans
  81. HI health exchange has signed up 574 people, for about $348,000 apiece
  82. Are the uninsured getting Obamacare coverage in Illinois?
  83. Secret Obamacare handbook the feds don’t want you to see is online
  84. Lost in translation: Once-supportive Hispanics turning backs on Obama, ACA
  85. HI Obamacare exchange not fiscally sustainable, lawmakers told
  86. Illinois’ latest Obamacare targets: gold diggers and momma’s boys
  87. Now Democrats are bashing California’s Obamacare exchange, too
  88. Obamacare: For $1.37M we get Richard Simmons in lurid web stream
  89. Obamacare: A welcome mat for IRS horrors
  90. California senator seeks audit of state Obamacare exchange
  91. Report: Hawaii ranks worst for Obamacare signups
  92. CA senator sues Obamacare exchange for causing policy cancellations of 1M
  93. Failure of Maryland Obamacare exchange could mean higher premiums in North Dakota
  94. Video: Watch Creepy Uncle Sam make it rain
  95. Five bright spots surrounding the Obamacare exchange failures
  96. Obamacare architect admitted in 2012 states without exchanges lose subsidies
  97. Architects of Richard Simmons Obamacare dance-off rehired in $156M PR campaign


Tori formerly served as staff reporter for Watchdog.org.