The California State Insurance Department and Department of Managed Health Care (DMHC) both agreed on October 3 to approve a 4.2% average increase for individual care premiums under Covered California, the state’s version of Obamacare. Yet for the first time, regulators admitted the reason rates did not skyrocket is their socialized health plans may be “narrow networks” that limit access to doctors and hospitals. 

With open enrollment for Covered California starting on November 15, the state’s two insurance regulators said they didn’t find the proposed premiums “unreasonable. Shelley Rouillard, director of the Department of Managed Health Care told the Los Angeles Times, “After careful and in-depth analysis, the DMHC found that the health plans’ proposed premium rates are actuarially sound”.

The California State Insurance Department said it only reviewed rates from Health Net Inc., but deemed those rates to be reasonable under the law.

However, the state agencies have not yet ruled on the narrow networks many of these plans force on their customers–a major source of complaints about Covered California, and indeed Obamacare itself.

Covered California has been in turmoil since it was learned last month that enrollment delays and dropped coverage hit about 30,000 consumers. The state exchange acknowledged that it failed to promptly process insurance applications for 20,000 people to health plans recently, causing confusion and interruptions in coverage. Another 10,000 people had their paid insurance coverage canceled prematurely because they were deemed eligible for Medi-Cal based on a check of their income. The exchange said the private insurance should remain in place until Medi-Cal, the state’s Medicaid program for lower-income residents, kicks in.

The latest admission that the exchange insurance company list of doctors and hospitals may have been inadequate follows a tremendous number of consumer complaints (including my own) that patients who paid premiums received inadequate access to care. 

The Los Angeles Times reported last week that Health Net is discarding its Preferred Provider Organization (PPO) and dumping 54% of its network doctors. Health Net said the situation is only temporary and they are adding providers and will update regulators.

The state does operate a database for 2015 that lists which doctors accept Covered California patients. But it does not list which plans they will accept. 

Some healthcare experts suspect Covered California’s new transparency regarding “narrow networks” is an effort to make Proposition 45 more attractive on the ballot next month. 

The highly controversial measure would give the state’s elected Insurance Commissioner omnipotent power over rates for individual and small-business policies.  

The 10 Covered California insurers have led the industry in raising $37 million to defeat Proposition 45 after Consumers Union said Anthem, Blue Shield and Health Net all failed to supply enough information to justify their rate increases. 

Consumers Union asked why supposedly not-for-profit Blue Shield has been able to double its reserves since 2006 to a record high $4.4 billion this year. The San Francisco-based Covered California exchange insurer said its reserves have nothing to do with rate increases and that they would never try to profit from or narrow networks.

Chriss Street suggests that if you are interested in government waste, please click on “$50 Billion Porkapolooza on Last Day of Federal Budget Year“