Covered CA Rate Increase Driven by High Drug Prices

Dr. Ed Hernandez
California State Senate, 22nd District

Covered California announced a statewide weighted average increase of 13.2% for 2017, which is due in part to the loss of the federal reinsurance program and the high cost of specialty drugs.

Millions of previously uninsured Californians now have health care coverage because of the Affordable Care Act, but containing health care costs remains a challenge. While I am disappointed by this news, the rate increases are driven by the rise in underlying medical costs. It’s important to remember that prior to the enactment of the ACA, double-digit premium increases were the norm. To help with the transition toward full coverage for all Americans, the ACA included a mechanism to smooth out price fluctuation in the first few years. That mechanism is going away, which is part of the reason we are seeing this level of rate increases. However, with all of the choices consumers have through Covered California, individuals who experience large increases will likely be able to find a competing plan with a lower rate increase. 

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CalChamber Reports on Status of Major Business Bills 

Fox and Hounds Daily Editors

(Editor’s Note: The following announcement and link to bills’ report was issued by the California Chamber of Commerce.)

Numerous business priorities remain to be considered when legislators reconvene after their summer recess, according to the California Chamber of Commerce summary of the status of top priority bills for the business community.

The Senate fiscal committee has scheduled hearings on a number of “job killer” bills, and one awaits consideration by the entire Senate.

The CalChamber report presents the status of bills as of July 1, when the Legislature began its summer recess.

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The New Budget Formula People Are Talking About on the Streets

Joe Mathews
Connecting California Columnist and Editor, Zócalo Public Square, Fellow at the Center for Social Cohesion at Arizona State University and co-author of California Crackup: How Reform Broke the Golden State and How We Can Fix It (UC Press, 2010)

I spent much of my work time over the past six months running around South Los Angeles, for a Zocalo series on the region.

To my surprise, I heard quite a bit from people in South L.A. about a new budget formula in California. It relates to the savings of Prop 47.

Awareness of the details of Prop 47 runs high in South L.A., because of its potential to change the lives of people who have criminal convictions. Among other things, Prop 47 reduces incarceration, which generates budget savings for the state. The formula about which there was so much discussion involves how the state’s Department of Finance – which works for governor – determines what those savings are. The amount of savings is then directed to services that include re-entry programs, various prevention programs to keep people out of jail, and services for crime victims.

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Primary Election Takeaways

Mark Baldassare
President of the Public Policy Institute of California

With the release of the official Statement of the Vote on Friday, the 2016 California primary is now in the history books. The final tally by the Secretary of State offers many new insights for those of us who closely follow elections and polling in California. This year’s results deserve a particularly close look because of the extraordinary presidential primaries and the first-ever top-two primary for an open US Senate seat.

My colleague Eric McGhee has provided an excellent analysis of primary turnout and the outcomes of top-two legislative district races in two earlier PPIC blog posts. I’m going to focus on some trends that caught my attention in the final numbers regarding the presidential primaries, the top-two US Senate primary, the state ballot measure, voter engagement, and turnout in key regions. 

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The Consequences of Weak Pension Earnings

David Crane
Lecturer and Research Scholar at Stanford University and President of Govern for California

Several reporters have asked about the consequences of CalPERS’s weak investment earnings. Although CalPERS has not issued an actuarial report since June 30, 2014, one can draw an inference that its Unfunded Liability has grown about $50 billion since then, to $140 billion. Here is how you get there:

Start from this chart on page 120 of CalPERS’s 2015 annual report:

The “Actuarial Accrued Liability (AAL)” in column three shows pension liabilities as of 6/30/14 were $395 billion, up from $210 billion nine years earlier. That’s a 7.27% annual growth rate, which makes sense since pension liabilities grow at the discount rate (7.5%), less any amortization. Assuming the same 7.27% growth rate, AAL as of 6/30/16 should have climbed to roughly $454 billion.

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The Unusual GOP Convention Show

Richard Rubin
He writes about political issues and is President of a Public Affairs Management Firm. He also teaches courses on the Presidential & Congressional Elections at the University of San Francisco and is Vice Chair of the California Commonwealth Club.

National conventions are political circuses without the dancing elephants and trapeze artists, but there is the usual assortment of speakers who we have trouble taking seriously even if they are not dressed like clowns.

This year some of the levity may be downplayed as conventioneers gather to wrestle with divisions both within and between the major parties as the nation must confront mounting violence that has paralyzed entire communities.

We might recall actor Clinton Eastwood’s rambling discussion with an “empty chair” at the last GOP convention whose comic routine had the delegates twisting uncomfortably in their seats.

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California at GOP Convention

Joel Fox
Editor of Fox & Hounds and President of the Small Business Action Committee

There is one place that the influence and power of California–the home of the sixth largest economy in the world, cultural icons and high tech gurus–is relatively insignificant: the Republican national convention.

Despite delivering the most delegates of any state and having the greatest representation in the Electoral College, California is little more than a side note at the GOP convention. The reason is simple: California cannot deliver those Electoral College votes for the Republican ticket. In the presidential election California is a Democratic stronghold.

The state’s delegates are being housed not in Cleveland, the convention’s host city, but in Sandusky, Ohio, an hour’s ride away from the convention. Officials will tell the delegates they are an hour away, but it will be longer. I’ve been to one of these events before. Delegates are told, for security reasons, the bus hauling the delegates cannot drive the same route all the time. Some of those side routes on city streets add considerably to the commute time. After convention hours, mingling with officials and other delegations or reporters is drastically reduced if delegates don’t want to miss the official bus back to Sandusky.

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Trump and Pence: Pass Me the Dice 

Duf Sundheim
Former Chairman of the California Republican Party

The difference between Donald Trump and Indiana Governor and Trump VP pick Mike Pence is the difference between a Saturday night jazz singer and the member of the church choir.  Trump will sing How High the Moon 27 different times 27 different ways.  Pence will be singing Rock of Ages the same way in the same pew his grandaddy did two generations ago.

Trump knows Newt and Christie better.  For Donald, they would have been “easier” choices.   He may have chosen Pence more to help him win the election, work with people outside Trump’s inner circle both before and after the election.

How do Newt and Christie feel?  Who knows.  But I can imagine a scenario where Newt and Christie were promised other posts (Chief of Staff for Newt? AG for Christie?) which those two probably would enjoy more anyway.

Will it work? Pass me the dice, I’ll roll them and let you know.

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Why Raise Taxes For Mass Transit When Driverless Cars Are The Future?

Susan Shelley
Columnist for the Los Angeles Daily News and Southern California News Group

The news from Florida of the first-ever fatal accident in a driverless car, a 2015 Tesla Model S, was quite a surprise.

They’re here.

Ready or not, autonomous driving technology has arrived, and if there’s one thing we’ve learned about technological change, it’s that there’s no going back again.

The National Transportation Safety Board is investigating the accident in Florida, but NTSB Chairman Christopher Hart told the National Press Club recently that the crash will have no effect on the advance of driverless cars.

“This train has left the station,” he said.

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LA County Parks Tax: The Straw That Broke the Camel’s Back?

Jack Humphreville
LA Watchdog writer for CityWatch, President of the DWP Advocacy Committee, Ratepayer Advocate for the Greater Wilshire Neighborhood Council, and Publisher of the Recycler

On Tuesday, July 5, the County Board of Supervisors voted to place on the November ballot a $95 million parcel tax to benefit the County’s parks.

Unlike a traditional parcel tax of $40 on each of the County’s 2.4 million parcels, this new parcel tax will be based on the square footage of improved property in the county (6.4 billion square feet) times 1.5 cents per square foot, an amount that may be adjusted upward based on the Western Urban Consumer Price Index.  Over the next 35 years, this tax will raise almost $6 billion based on reasonable assumptions for inflation and growth as compared to $4 billion under the traditional parcel tax.

This new levy will replace two parcel taxes totaling $81 million that were approved by the voters in 1992 and 1996, one of which expired in 2015 ($52 million) while the second parcel tax ($29 million) will expire in 2019. 

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