Covered California confronts challenge of signing up millions of remaining uninsured

As the Affordable Care Act’s third open-enrollment season kicks off Sunday, health care experts around the nation will be closely watching whether Covered California gains more traction — and signups — than it did in 2015.

The Golden State’s health care exchange was the country’s darling in the first year of Obamacare, getting 1.1 million uninsured people to enroll in private plans in 2014. But that total inched up to only 1.3 million this year.

By comparison, enrollment in Medi-Cal — the government program for the poor and disabled that was greatly expanded under the Affordable Care Act — soared to 4 million over the same two-year period.

As a result, nearly 70 percent of California’s previously uninsured adults gained health coverage.

Yet almost 4 million other California residents remain uninsured, about a quarter of whom are illegal immigrants who cannot access the health exchange plans or Medi-Cal.

Peter Lee, the exchange’s peripatetic leader, is hoping a new multilingual, $29 million statewide advertising campaign aimed at 2 million uninsured residents eligible for subsidized or essentially free health care will convince them to get with the program.

But plenty of the remaining uninsured say they cannot justify the cost of insurance — even if they have to pay a big fine for remaining unprotected.

San Jose resident Miguel Delgadillo has already made up his mind. Until the price of health insurance comes way down, he said, don’t bother him.

“What little income there is after taxes goes to my house payment — that’s my top priority,” said the 55-year-old part-time teacher.

He said he likes the idea of a national health care law, but not the $451 he would have to pay each month for health insurance. That’s the cost of the lowest price plan available to him.

Delgadillo, who has been uninsured for seven years, shares a dilemma with tens of thousands of other Californians: He’s a middle-class person who narrowly misses the income threshold that would qualify him for a subsidized health plan.

“I’m in a strange situation, but there are probably other people like me: college grad, own a home and make a nice income. But I cannot afford medical insurance,” said Delgadillo, who has a second job and tries to live as healthy a lifestyle as possible.

“I tell people: ‘If I get sick, I hope I die fast and that’s the end of it,’ ” he said.

The story makes Lee wince. But he said he empathizes with Delgadillo.

“What the Affordable Care Act did was bring health care to millions,” Lee said. “It did not make health care cheap. … If he made half as much, he would probably get health care for free.”

Obamacare’s critics have said that while its premiums may be attractive to the lower-income people who qualify for subsidies — indeed, half of Covered California’s 1.3 million enrollees pay less than $100 a month for their plans — the premiums are too high for middle-class people who earn close to 400 percent of the federal poverty line. That’s the cutoff point for subsidies.

And it will be tougher for many of the uninsured to buy a 2016 plan because Covered California premiums have increased on average 4 percent statewide. In the Bay Area, the rates jumped higher — to more than 6 percent in Alameda and San Mateo counties, 7 percent in Santa Clara County and 12.8 percent in Santa Cruz County.

Even Covered California’s pricey marketing and outreach campaign can’t overcome that hurdle, said Robert Laszewski, a nationally renowned health care policy expert based in Virginia.

The problem for people like Delgadillo, he said, will only get worse “until Congress realizes that they have to do something to remedy it,” including regulating the new exchanges so people have more choices and lower-cost plans.

And the threat of the steepest penalty imposed so far — $695 or 2.5 percent of a person’s income (whichever is higher) for anyone who does not sign up for a 2016 plan — may not faze many middle-income people.

“It doesn’t bother me,” Delgadillo said.

That was always Cody Wagner’s attitude. Unlike Delgadillo, the 29-year-old construction general manager could afford to buy insurance, but he refused because he didn’t like the government telling him what to do.

Last spring, however, the Internal Revenue Service notified the Campbell resident to alert him about the thousands of dollars in penalties he would owe unless he bought health insurance.

So he purchased an unsubsidized plan that costs him $286 a month — which turned out to be less than the penalty would have been.

Still, he said, “I should not be forced to pay that. It’s just frigging wrong.”

Lee doesn’t think so.

Beyond the penalty, Lee said, the uninsured run the risk that a catastrophic accident could land them in the hospital facing huge medical costs — and possibly bankruptcy.

That’s something that had worried Fremont resident Arianna McLaren, 22, for months.

Since last April, she had gone uninsured, hoping that insurance would come with her next job. But after she was hired in early summer to work as a tutor for children with autism, she found out that she had to wait 90 days for the insurance to kick in.

She said that will finally start this week –and that it can’t happen soon enough.

In September, McLaren sprained her wrist riding a dirt bike. With no health plan to rely on, she had to pay $200 at a urgent care clinic to have her wrist diagnosed, X-rayed and wrapped.

Although McLaren is fine, the incident scared her.

“I thought, like, what if I did break it? I had never had a problem before,” she said. “Maybe medical insurance is a good thing.”

As Covered California aims to retain most of its current 1.3 million enrollees and add a few hundred thousand more, Lee is trying to publicize what’s new this year: the addition of two more insurance plans, increasing the number to an even dozen; and an expansion of some plans into new geographic areas so that nearly every Covered California consumer will have a choice of at least three plans.

In addition, more than 90 percent of California hospitals now will be available through at least one health insurance company. And least 74 percent of the hospitals will be available through three or more health insurers.

The exchange also has added adult dental coverage plans and increased the number of medical services that are not subject to a deductible, Lee said. And starting Jan. 1, the exchange is capping co-pays at $250 a month for individual specialty medications.

Yet for all the improvements, Lee acknowledged that it will take at least four more years before the exchange is able to attract 80 percent of the 2 million eligible for a subsidy or Medi-Cal.

“You will never get more than that,” Lee said. “There is virtually no program in the world, particularly anything where people have to pay something, that will go much above that.”

Contact Tracy Seipel at 408-920-5343. Follow her at Twitter.com/taseipel.