Amid the cheering in many quarters over the Supreme Court's decision to uphold the federal
Millions of Californians will still lack insurance even after a massive coverage expansion. Medical costs and premiums are expected to keep rising, at least in the short run. And many of those who do gain coverage could have a tough time finding a doctor to treat them.
"The implementation challenges are huge and the expectations for cost control are unrealistic," said Arthur Kellermann, a physician and director of Rand Health, a nonprofit research group in Santa Monica. "I'm an ER doctor and I've been reading about the promise of lowering costs by keeping people out of the emergency room for 20 years, and it hasn't happened yet."
The court ruling does provide enormous benefits to a state where 7 million residents are uninsured. Starting in 2014, California will receive as much as $15 billion a year to expand Medi-Cal coverage for the poor and to provide federal subsidies to people buying policies in a state-run exchange. About 4 million Californians are expected to gain coverage.
Consumers will be guaranteed health coverage regardless of preexisting medical conditions, and insurance companies are required to spend at least 80% of premiums on medical care for individuals and small businesses.
California Insurance Commissioner Dave Jones said covering even a portion of the state's uninsured should sharply reduce the amount of uncompensated medical care that's driving up the price of health insurance.
On average, California families pay an extra $1,400 each in annual premiums to cover medical bills for the uninsured, according to the California Endowment.
"That cost shift is one of the big drivers of cost in the system," Jones said.
Consumers and employers would welcome any relief. The average premium for employer coverage in California has increased 154% over the last decade, more than five times the 29% increase in the state's overall inflation rate.
Experts say premiums could rise further as the federal mandate increases demand for health coverage in a market dominated by a small group of insurers.
"Employers are worried the law doesn't go far enough to reduce the long-term cost trends," said David Lansky, chief executive of Pacific Business Group on Health. "There is still a lot of work to do."
There are other provisions in the Affordable Care Act designed to encourage more coordinated patient care and take away incentives for hospitals and doctors to provide unnecessary treatments.
Many California physician practices and hospitals are at the forefront of those experiments. But it's too early to tell whether any of those ideas will work on a larger scale, experts say.
"In theory, there are some things in the law that will reduce costs," said Paul Keckley, executive director of the
California is ahead of other states in establishing an online exchange where consumers and small businesses will be able to comparison shop for a health plan.
This week, the California Health Benefit Exchange requested $196 million from the federal government to help build its enrollment system.
Next month it will begin discussing requirements for health plans that want to be sold through the online marketplace.
The exchange plans to start enrollment in October 2013 for policies that take effect in January 2014.
More than 2 million Californians are expected to buy policies with federal subsidies earmarked for families earning about $92,000 or less annually. A family of four in California earning $70,275 would have to pay about $556 a month for subsidized coverage, according to the Kaiser Family Foundation.
An additional 2 million Californians would be covered through an expansion of Medi-Cal, the joint state-federal program for the poor and disabled.
About 3 million Californians are expected to remain uninsured. About 1 million of those won't be able to afford coverage yet will be ineligible for federal aid because of their immigration status, and the other 2 million won't participate even if they are eligible, according to research by
Many uninsured Californians still don't understand how the law will affect them, and reaching them may be difficult in such a big, diverse state.
Experts said strong enrollment is crucial in order to ensure a mix of healthy and sick policyholders to keep premiums affordable. Without a diverse pool of customers, premiums will continue to escalate, turning off new applicants.
"It's incredibly important to have millions enrolled on Jan. 1, 2014, because the more people we get in, the lower rates are for everybody," said Anthony Wright, executive director of Health Access, a consumer advocacy group.
Patrick Johnston, chief executive of the California Assn. of Health Plans, said state officials must resist adding unnecessary requirements for health benefits that make policies offered through the exchange unaffordable.
Zig Fayant, a 59-year-old gas station attendant in Los Angeles, said he routinely ended up in the emergency room when his diabetes flared out of control before he found help at a county-run medical clinic.
"I really can't afford to pay for insurance on my own," Fayant said. "I won't be able to see the doctor without some kind of help."
There are also concerns about whether California will have enough primary-care doctors willing to treat patients like Fayant. There are shortages of primary-care physicians in 74% of California's counties, according to the California Medical Assn.
State leaders say they want to see nurse practitioners and physician assistants take on a bigger role in primary care. The federal law seeks to address the issue by boosting annual reimbursements by an estimated $700 million for physicians treating Medi-Cal patients.
That should attract more doctors to Medi-Cal, but at the same time patient demand will increase significantly, said Howard Kahn, chief executive of L.A. Care Health Plan, which covers more than 1 million lower-income patients.
"You couldn't accomplish both coverage expansion and full cost containment at once" under the federal law, Kahn said. "This moves us in the right direction."