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Covered California and Obamacare related questions from consumers, employers and agents are answered by Phil Daigle with the best information available at the time. Archived entries may no longer be accurate as the Covered California and Obamacare knowledge-base is evolving quickly. TO REQUEST A PERSONAL RESPONSE INCLUDE EMAIL ADDRESS.


Former PacAdvantage Chief Named to Exchange Board.

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Question: Paul Fearer has just been named to the board of the California health insurance exchange. Didn't he fail as head of the spectacularly unsuccessful PacAdvantage exchange?

Answer: Yes. Paul Fearer is the former chairman of PacAdvantage, a voluntary, small group exchange that previously operated in California and failed. Let me be clear, The California SHOP Exchange will not suffer the same fate as PacAdvantage because the law that created the new Exchange has protections against the causes of the PacAdvantage failure - namely adverse selection. The market for small group health insurance in California was adeptly manipulated by the carriers to cherry pick the low risk groups and direct groups with higher risks to PacAdvantage. Over time the exchange could not sustain the cost of claims at competitive rates.

While the California Health Benefit Exchange will not be the exclusive marketplace for health insurance. identical rules will apply to health insurance benefits regardless of where they are sold to avoid adverse selection. Comparable benefit packages must be offered both in or out of the Exchange, otherwise, sicker patients will gravitate toward the market where more comprehensive coverage is sold.

As for the appointment of Paul Fearer to the Exchange board, I think he's a great choice. He has tons of experience on the business side, having been involved in negotiating the purchase of health benefits for large employers like Stanford University and currently, Union Bank. He knows the nuts and bolts of health benefits and his PacAdvantage experience taught what it takes to get an exchange up and running.

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