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October 2010 Archives

As states implement health benefit exchanges, they'll likely look west for guidance.

On Sept. 30, Gov. Arnold Schwarzenegger launched California to the forefront of the debate surrounding states' role in implementing a key part of the federal health-care reform package known as the Patient Protection and Affordable Care Act. He signed two bills that together create the framework for the California Health Benefit Exchange.

California was the first state in the nation to pass legislation to develop the Health Benefit Exchange and now will be the first to implement it. This exchange, described by the San Francisco Chronicle as a "virtual marketplace where consumers will be able to buy coverage under the new federal health law," won't be available to consumers until January 2014. But because it's the first exchange being set up in the U.S. since the federal health-care reform law passed, it likely will serve as a model for other states.
California jumped quickly on this legislation because it had aggressively pushed for health-care reform three years ago -- reform that Schwarzenegger says included requiring all Californians to have coverage, making coverage affordable for low-income families, ensuring that individuals with pre-existing conditions weren't denied coverage, emphasizing prevention and wellness, and containing costs.

"I'm proud that health-care reform is now the law of the land -- not just in our state, but in all 50 states in the United States," Schwarzenegger said at the press conference. "In the end, nearly all of the objectives in our reform plan were included in the federal reform plan."

Janet Coffman, a professor at the Philip R. Lee Institute for Health Policy Studies at the University of California, San Francisco, echoed this sentiment.
"State health-care reform ultimately was not successful here in 2007, but the health exchange was part of that discussion," she told The Sacramento Bee. "Leaders had spent a lot of time defining what they wanted to see. While other states still are wrestling with some of the concepts behind federal health-care reform, some of our politicians who considered many of these provisions three years ago are some of the same people we have in office now. They've been able to move swiftly from contemplation to implementation."

And as other states consider their options, they're keeping an eye on the Golden State, according to Kathleen Stoll, director of health policy for Families USA, a Washington, D.C.-based health advocacy group. "The two bills that California passed and the governor signed provide guidance not only on how to set up an exchange governing board with strong conflict of interest guidelines," she says, "but it also provides a model for how to set up an exchange that ensures that consumers will get good value for their premium dollars."

When legislative sessions begin in 2011, many state legislatures will likely begin pulling together their respective basic frameworks, filling in the details after receiving guidelines from the U.S. Department of Health and Human Services. Joy Johnson Wilson, health policy director at the National Conference of State Legislatures, told Congressional Quarterly (CQ) that she predicts state lawmakers will start working on their exchange structures in 2011, but the process could last into the following year. By January 2013, exchanges must be certified by the federal government, and Jon Kingsdale, the former executive director of the Massachusetts Health Connector, told CQ that the exchanges must be doing test runs by October 2013.
California's legislation can assist other states, Stoll says, because it authorizes the exchange to use selective contracting, which means that the exchange can leverage the purchasing power of everyone within it.

The legislation also permits the standardization of plans, which Stoll says helps make the whole process of selecting a plan that meets citizens' needs easier. And the exchange is protected against adverse risk selection, so that it consists of a mix of both healthy and sick people. "Those are all really important issues," she says. "So I think states across the country will really look at this California legislation for guidance, and I think [the legislation] creates a foundation that other states can begin to look at."

California, the nation's most populous state -- and one that has led the country on so many fronts, from higher education to pollution control -- could be breaking new ground regarding health-care reform, and other states just might follow.

Link to original Governance article

Achieving a major milestone in health care reform, Governor Arnold Schwarzenegger today announced California's Pre-Existing Condition Insurance Plan (PCIP) has opened for enrollment with coverage beginning today, Monday, October 25, 2010. The PCIP is one of the first major provisions of national health care reform to take effect and is designed to bridge the gap between now and 2014, when insurers will no longer be allowed to decline health coverage or charge higher premiums to individuals with pre-existing conditions.

"Today's action is a major achievement in implementing health care reform in California," said Governor Schwarzenegger. "Operating the high-risk insurance plan is a win-win for our state because we can maximize federal funds while providing more affordable coverage to individuals who desperately need health insurance."

Earlier this year, the Governor announced the state would contract with the federal government to operate a temporary health insurance program for medically uninsured individuals with preexisting medical conditions and tasked the Managed Risk Medical Insurance Board (MRMIB) with implementing the new program. The Administration submitted its proposal over the summer to establish and operate the PCIP through a public-private partnership with contracted vendors, which will be overseen by MRMIB.

In order to expand affordable health coverage to uninsured Californians with pre-existing medical conditions and implement the PCIP, the Governor also recently signed legislation creating the Federal Temporary High Risk Health Insurance Fund to receive $761 million in federal funding. The PCIP will be supported solely through this federal funding and subscriber premiums. It is expected to provide health care coverage to cover up to 23,000 hard-to-insure Californians at any given time.

"Now that PCIP has opened its doors, we will be working to make sure that all Californians are aware of this valuable new coverage option," said Kim Belshé, Chair of Governor Schwarzenegger's Health Care Reform Implementation Task Force and Secretary of the Health and Human Services Agency. "We are dedicated to providing this more affordable option for our hard-to-insure residents."

Coverage under the PCIP is available to Californians who have been without health coverage for at least six months and have been declined coverage from a carrier due to their pre-existing condition or have been offered coverage at a rate higher than the preferred provider premium rate of the state's high risk pool, the Major Risk Medical Insurance Program. Californians interested in coverage under the PCIP are encouraged to visit www.pcip.ca.gov or call 1-877-428-5060 for more information.

Governor Schwarzenegger announced earlier this year that he is taking aggressive action to implement federal health care reform in California, and his Administration has been working since federal health care reform passed to implement key elements before the 2014 start date. The Governor also formed a Health Care Reform Task Force to implement key reform provisions and programs under health care reform this year, including the PCIP.

Last month the Governor took action on another major component of federal health care reform and made California the first state in the nation to enact legislation creating a health benefit exchange. The California Health Benefit Exchange will make it easier for individuals and small businesses to compare plans and buy health insurance in the private market using federal tax subsidies to make health coverage more affordable.

In Massachusetts, which has had a government-run health insurance marketplace for four years, people typically file paper applications for subsidized coverage offered by one of five state-approved insurers.

In Utah, employees of small businesses can go to a state Web site and sign up for insurance over the Internet, almost as easily as they download music from iTunes.

The success of President Obama's health care overhaul, with its promise of affordable coverage for all, depends on the creation of such retail shopping malls, known as health insurance exchanges.

Massachusetts and Utah provide a glimpse of the future, and they offer radically different models for other states. The battle over health care is shifting to the states, and the design of insurance exchanges will be one of the most pressing issues for state legislators when they convene early next year.

"Utah and Massachusetts may well serve as bookends for other states," said Norman K. Thurston, the policy coordinator at the Utah Health Department.

The Congressional Budget Office predicts that by 2019, about 24 million people will have insurance through exchanges, with four-fifths of them getting federal subsidies that average $6,000 a year per person. People with incomes up to four times the poverty level (about $88,000 a year for a family of four) will be eligible for subsidies.

The Utah Health Exchange organizes the market, allowing consumers to compare a wide variety of health plans sold by any insurers that want to participate.

In the Massachusetts exchange, known as the Connector, the state serves as an active purchaser, soliciting bids from insurance companies and negotiating prices and benefits in an effort to secure the best value for state residents. Health plans cannot be sold through the Connector unless they receive its seal of approval.

"Massachusetts has been more selective and aggressive in contracting," said Jon M. Kingsdale, who was executive director of the Massachusetts exchange from its creation in 2006 until June of this year.

Matthew A. Spencer, manager of the Utah exchange, said: "We are on the other end of the spectrum from Massachusetts. Our exchange is wide open for any carrier that wants to participate. We define the minimum benefits that plans need to offer. But we step back and allow carriers to compete within the exchange, setting their own prices."

The idea of an insurance exchange has bipartisan appeal.

Liberals and conservatives alike see it as a way to concentrate the purchasing power of individuals and small businesses.

The federal law was shaped, to a large degree, by the experience of Massachusetts. But Senator Orrin G. Hatch, Republican of Utah, said: "Utah is not Massachusetts. Nor does it want to be."

Other states will probably fall somewhere along the continuum from Boston to Salt Lake City as they try to figure out the right mix of regulation and competition.

State legislators are asking: Can we get a better deal by limiting competition in the exchange or by accepting all qualified health plans? Should states negotiate premiums or rely on market forces to set rates?

David Clark, a Republican who is speaker of the Utah House of Representatives, said: "In our exchange, the government is a market facilitator, not a contracting agent. We believe in the invisible hand of the marketplace rather than the heavy hand of government."

Utah has no interest in putting its exchange plans out for bid, Mr. Thurston said. "Any attempt to standardize benefit designs tends to discourage competition and entry into the market, and limits choice," he said.

In Massachusetts, State Senator Richard T. Moore, a Democrat who is president of the National Conference of State Legislatures, said: "We took a much more governmental approach. But both models make sense. Small states might find Utah is a good model. Bigger industrialized states might go the route we went."

Massachusetts officials point to the state's near-universal coverage as evidence that their approach is working. The Census Bureau says 95.6 percent of Massachusetts residents were covered by health insurance last year, compared with 83.3 percent for the nation as a whole and 85.2 percent for Utah.

"We have the lowest uninsured rate in the nation, and we are immensely proud of that," said Glen Shor, executive director of the Massachusetts Connector.

The White House has provided $49 million to states to help them set up exchanges, which are envisioned as a kind of bazaar where insurers will offer their products side by side, so consumers and employers can make intelligent comparisons.

Congress assumed that insurance would also be sold outside the exchange. But federal subsidies, to help pay for insurance, will be available only to people who enroll in health plans through an exchange.

Exchanges will also play a crucial role as gateways to Medicaid and other public health programs. If people are found eligible, the exchange will help them enroll. In Massachusetts, the same application form is used for Medicaid and for subsidized private insurance purchased through the Connector.

California is another pioneer. On Sept. 30, Gov. Arnold Schwarzenegger, a Republican, signed two bills establishing the California Health Benefit Exchange, with broad powers to "negotiate on behalf of the public" and select qualified health plans.

The legislation generated intense lobbying, and the governor's intentions were unclear until the last minute. Mr. Obama had urged him to sign the bills and was thrilled when he did, aides said.

The fight in Sacramento offers a preview of what other states can expect. In a letter to California lawmakers in August, Natalie Cárdenas, regional director of government relations for Anthem Blue Cross, a unit of WellPoint, complained that the exchange would have the power to pick winners and losers in the insurance market.

"Federal law will already limit the types of products that carriers can offer," Ms. Cárdenas said. "Beyond that, the marketplace should determine what products consumers and small employers can purchase, not a government bureaucracy."

The California Chamber of Commerce urged a veto of the bills, saying they "could lead to unnecessary cost increases and limited choice for employers."

But Betsy M. Imholz, a lobbyist for Consumers Union, said the California laws struck the right balance.

"At first," Ms. Imholz said, "the exchange may want to have a large number of health plans participating. But then the state needs to winnow down the number so consumers can see where they will get the best value."

The California law says the exchange should choose health plans that "offer the optimal combination of choice, value, quality and service."

Massachusetts requires people to have insurance. Utah does not.

Massachusetts provides more generous subsidies. But, Mr. Kingsdale said, the biggest difference is the magnitude of the two state programs.

In Massachusetts, more than 154,000 people receive subsidized coverage through the exchange, and 40,000 receive unsubsidized coverage, which can be bought on the Web. The Utah exchange, created under a 2008 state law, began enrollment this year. About 1,200 people have coverage through the Utah exchange, and the number is expected to grow to 10,000 by July 2011.

"We anticipate exponential growth," Mr. Spencer said.

Under the new federal law, the exchanges must be in operation by January 2014. Federal officials will assess states' progress as of Jan. 1, 2013, and will run the exchange in any state that is unable or unwilling to do so.

The exchanges will have a huge number of duties. They must evaluate health insurance plans and publish "standardized comparative information." They must set up telephone call centers to answer consumers' questions. They must determine who is eligible for subsidies and who will be exempt from the penalties imposed on people who go without insurance. They must build new computer systems to exchange data with state Medicaid agencies, insurance companies, employers and federal agencies.

While the exchange cannot explicitly control prices, it can exclude health plans that show a pattern of "excessive or unjustified premium increases."

State officials worry that sick people will gravitate to the exchange, while healthier people who do not need subsidies will buy insurance outside it. However, insurers must agree to charge the same prices inside or outside the exchange.

Moreover, the law stipulates that members of Congress must get their health insurance through an exchange. So lawmakers will presumably be alert to problems.

New York Times


A version of this article appeared in print on October 24, 2010, on page A23 of the New York edition

When you're the first to launch a new program, it is often greeted with a measure of fear and suspicion, according to Jon Kingsdale, former executive director of the Commonwealth Health Insurance Connector Authority in Massachusetts. And one of the common misconceptions about the exchange in Massachusetts and the exchange-to-be in California, he said, has been the worry that somehow the exchange will be constantly at odds with health insurance companies.

"As a non-regulatory marketplace for insurance, with a mandate to serve the public, there is a strong interest in having long-term, value-based relations with health plans," Kingsdale said. "Meaning, we want them to make a little money."

Kingsdale was part of a who's-who panel of health benefit exchange experts that convened in Sacramento yesterday. The event was sponsored by the California HealthCare Foundation. CHCF publishes California Healthline.

Kingsdale said the California Health Benefit Exchange was formulated with the advice and input of health insurance carriers -- and that California, just like Massachusetts, is counting on active participation in the exchange from those insurance providers.

"You don't want them going out of business because they can't make a decent return," Kingsdale said. "You want to drive value so that they're able to make money. If they do a good job, they get financially rewarded in the marketplace."

And at the same time, patients in California can use the group buying power of the exchange to secure lower premium rates and better coverage, Ed Neuschler of the Institute for Health Policy Solutions said. "The exchange has to offer convenient access to consumers, with a choice of competing qualified plans," he said. "Nobody is required to use the exchange. But there is a core population, several groups that are highly incentivized by tax credits, and that's where the critical mass will come from to make the exchange viable."

Panelists touched on several issues that will have to be dealt with in detail by the exchange's five directors, once they're identified and seated, probably in January. Among the first issues they'll deal with, according to yesterday's panel, are how to use a competitive process to select insurers, how to interact with two different state regulators and how to implement the "no wrong door" policy in the exchange.

California HHS Secretary Kim Belshé, the first speaker at yesterday's briefing, stressed another important aspect of exchange implementation. "Notwithstanding the hope and promise of the exchange," Belshé said, "the rules between Medi-Cal and the exchange will be really important." The national health care reform law, she said, "basically offers universal coverage from poverty up to 400 percent of poverty. That construct raises all sorts of issues. What are the enrollment processes and systems to facilitate that? What standards will we employ to offer these plans?," Belshé said. "Medi-Cal is now about coverage," she said. "It's not your mother's Medi-Cal program anymore. There are very different rules around eligibility and streamlined enrollment. This is all about getting people enrolled. The federal government is picking up the tab for most of that," she said.

California's first-in-the-nation status still doesn't leave a ton of time to plan for all of it, Sumi Sousa of the Assembly Speaker's office said. "In terms of a timeline, everyone was saying, 'Why are you doing this now?' " Sousa said. "Well, just walk back. We need to be ready six months ahead of time, that's up and running. And we'll only just get started January 2011. "That's really just 2½ years to do this entire thing," she said. "And that doesn't happen on a dime. We need to have consumers who want to enroll. We need products that people want to buy. Otherwise, it's not going to last very long. We need everything about that structure to say, we're open for business -- we're open for business for people."

Caifornia Healthline
by David Gorn
Read more: http://www.californiahealthline.org/capitol-desk/2010/10/experts-evaluate-californias-exchange.aspx#ixzz13E6wFONt

California Gov. Arnold Schwarzenegger with Sen. Elaine Alquist, D-Santa Clara, signs legislation creating a health care exchange.

For the 2.5 million Californians who buy their own health insurance, the 6.6 million who are uninsured and the million-plus who get their insurance through their jobs at the state's smallest businesses, finding a good health plan is a daunting task.

Just comparing plans can be confusing. Finding the right plan that's also affordable can be even tougher.

That may be changing. Last month, California became the first state to pass legislation establishing a health insurance exchange as part of federal health care reform, which requires most Americans to have coverage by 2014 or pay a fine.

The California Health Benefit Exchange will provide a place for small businesses and people without employer-based insurance to join together to buy health insurance at lower rates, aided by federal subsidies to low- and middle-income consumers.

Every state is required by the federal law to create an exchange that will begin operating in 2014.

"This is a revolutionary change from the current health care system in California," said Anthony Wright, executive director of Health Access California, a nonprofit consumer group.

"Right now, individuals and small businesses are at the mercy of insurers. This allows the exchange to negotiate on their behalf for the best price and value."

The idea for the exchange is that millions of people who now pay top dollar for insurance because they're buying individually or in small groups -- or forgoing coverage because of cost -- will benefit from the exchange's bulk purchasing power to get a better price. The exchange also is charged with making it easier for consumers to compare plans and choose what works best for them.

Created as an independent government agency, the California Health Benefit Exchange is led by a five-member board that will be appointed by the governor and Legislature early next year.

The legislation establishing the exchange was opposed by the California Chamber of Commerce and some insurance companies that said it would limit customer choice.

Patrick Johnston, chief executive of California Association of Health Plans, said his group believes "the creation of an exchange is a good mechanism for consumers to get health coverage, particularly those who have not had insurance."

The new law raises questions, however, he added.

"One question is whether all qualified plans will be in the exchange marketplace for consumers to consider or whether the exchange will severely limit what plans are available."

Patrick Johnston, a San Diego politician, said the exchange's "selective contracting" power could exclude smaller regional plans such as Sharp HealthCare in San Diego.

Chamber spokeswoman Marti Fisher wrote in an August letter to lawmakers, "A five-member board with unrestrained authority and without oversight is not in the best interest of the people of California."

Although the exchange won't start serving consumers until 2014, experts say there's no time to waste in getting organized.

"The lead time California has is adequate but not overly generous," said Jon Kingsdale. Kingsdale knows the challenges of building an exchange from the ground up -- he was the founding executive director of the Massachusetts agency created in 2006 to administer that state's universal health care law, which has been a model for the federal reforms.

His advice to California: get moving quickly, figure out the marketplace and go on the road with a statewide campaign to "communicate, communicate, communicate" with the public.

"There's a lot of interest and anxiety about health reform in California and across the country," said Kingsdale, who left the Massachusetts Health Connector in June to work as a consultant.

"Without a lot of communication, there's a potential for misinformation and more anxiety. There also is a big opportunity to get out accurate information about the California Health Benefit Exchange and how it will work."

How the state exchanges work is set out in the federal Patient Protection and Affordable Care Act that became law in March. The law specifies that people with a household income between 133 percent and 400 percent of the poverty rate will get an immediate tax credit to help offset the cost of insurance. Depending on income, people would pay no more than 2 percent to 9.5 percent of their income on health insurance.

(People with incomes below 133 percent of the poverty rate will be eligible for Medi-Cal under an expanded federally funded program.)

A study by the nonprofit Families USA estimated that 28.6 million Americans, including nearly 3.5 million Californians, would be eligible for the premium subsidies in 2014. An additional 2 million Californians are expected to buy insurance through the exchange without a subsidy, because it will offer easy comparison shopping, said state Health and Human Services Secretary Kim Belshe.

Still, "there are a lot of important unanswered questions," Belshe said. Among them: Will individuals and small business owners buy coverage or opt, instead, to pay a fine?
"It's really important that we work together across all sectors ... to underscore the value of coverage," she said.

Last month, the U.S. Department of Health and Human Services announced $49 million in grants to help states set up the exchanges. California was awarded $1 million, and more funding is expected in the spring, Belshe said.

Once the exchanges are operating in 2014, they are required to be self-supporting. California's exchange is prohibited from using general fund money to help pay for the program.

Instead, administrative costs will come from insurance premiums. The state Legislative Analyst's Office said in August that it couldn't calculate administrative costs because the agency hasn't been created, but estimated they would be "tens of millions of dollars."

The analyst's office noted that administrative costs account for about 3 percent of the cost of insurance premiums in the Massachusetts exchange. When Massachusetts launched its program in 2006, about 9 percent of residents were uninsured. Today, that's down to 2.6 percent, according to state officials.

Kingsdale said the Massachusetts exchange began offering both subsidized and unsubsidized insurance just six months after legislation established his agency. Programs continue to be added. "I like to say we were laying the tracks and running the trains at the same time," he said.

Kingsdale said the California Health Benefit Exchange board and its new staff must quickly assess the needs of its customers, both subsidized and unsubsidized, and the health plans it will market. For it to succeed, the exchange must become the simplest and best place to get insurance, he said. "We found customers wanted more standardization between carriers so they could compare apples to apples," Kingsdale said. "But that can quash innovation" among plans.

It's a balancing act between consumer concerns and creativity in health plans, he said. "We found that to be a challenge in Massachusetts and I think that will be a challenge in all of the states."

Another challenge was resistance by small employers in offering their workers a choice of health plans, rather than just one, Kingsdale said. "A choice requires new ways of pricing plans, and that remains a challenge," he said. "How the California Health Benefit Exchange sees its role in offering health care to small employers will be interesting."

California reached a pivotal milestone along the road to health reform implementation recently with Governor Arnold Schwarzenegger's historic signing of two bills creating the California Health Benefit Exchange.

This Sacramento briefing will examine the central challenges facing the state as it works to establish an operational health benefit exchange by 2014.

Thursday, October 21
12:00 - 2:00 PM
California State Association of Counties Conference Center
1020 11th Street, Second Floor
Downtown Sacramento

To listen in, call 866-244-8528 and use participant pass code 639160.

Participants will provide a synthesis of the design and policy issues that informed California's approach to establishing an exchange. This will include introductory remarks from Kim Belshé, secretary of the California Health and Human Services Agency, as well as perspectives from Jon Kingsdale, former executive director of the Massachusetts Health Connector, and Rick Curtis, president of the Institute for Health Policy Solutions. Both Kingsdale and Curtis advised California's Health Reform Task Force this year.

Panelists include:

  • Kim Belshé, secretary, California Health and Human Service Agency

  • Rick Curtis, president, Institute for Health Policy Solutions

  • Patrick Holland, managing director, Wakely Consulting Group and former chief financial officer, Massachusetts Health Connector

  • Jon Kingsdale, independent consultant and former executive director, Massachusetts Health Connector

  • Marian Mulkey, director, CHCF Health Reform and Public Programs Initiative

  • Ed Neuschler, senior program officer, Institute for Health Policy Solutions

  • Sumi Sousa, special assistant to Assembly Speaker John Pérez

Lunch will be available starting at 11:15 AM.

We are near capacity for the event and reservations are required. RSVP to Sue Gutierrez of the Center for Health Improvement, and arrive early to guarantee a seat.
Event recording and materials will be made available on this page following the briefing.

California Health Care Foundation - www.chcf.org
Read more: http://www.chcf.org/events/2010/briefing-california-health-benefit-exchange#ixzz12YkbY43p

NEW ORLEANS -- California got a round of applause from health policy leaders around the country this week for being first out of the gate with reform-driven laws to set up a state-run health insurance exchange.

"Let's stop for a minute and thank California for being the first state to pass enabling legislation," said Trish Riley, director of health policy and finance for the governor of Maine and moderator of a panel on exchanges during the National Academy for State Health Policy's 23rd Annual State Health Policy Conference.

"I'm envious of California," Riley told a room full of state officials who hoped to get some insights they could take home to start building their own exchanges. "I think there's a lot we can learn from the process they've already gone through."

Sandra Shewry -- former director of and current adviser to the California Department of Health Care Services -- outlined the California exchange, which was born last week when Gov. Arnold Schwarzenegger (R) signed two bills spelling out the details of the new state entity.

"It's a multipurpose tool, like one of those Swiss Army knives with lots of options," Shewry said. "We think that's the best way for us, but it may not be the best for every state. There isn't a line in the ACA (Affordable Care Act) that defines what an exchange should be, and I think it's quite purposeful that the ACA doesn't say the exchange is X. We have the ability to create what works best for us."
California Chose Middle Road

"Some people who don't know us think we tend to be extreme," Shewry said, "but we picked the middle path in this case."

Shewry said there are three main options in designing an exchange:

  • As a market definer and organizer, in which the exchange becomes the market;

  • As a purchaser, in which the state body selectively contracts with insurers; or

  • As a clearing house in which the exchange acts as a platform for all plans offered by all issuers.

California's exchange, which will be governed by a five-member board, fits firmly in the middle category, Shewry said. "The board will have discretion over many of the details and in some situations may lean further toward one end or the other, but for the most part, our exchange falls in the middle," Shewry said.

Joel Ario, deputy director of the federal HHS Office of Consumer Information and Insurance Oversight and Shewry's co-panelist in the session on exchanges, told state health policy leaders that health insurance exchanges "are more of a Republican idea than most people realize."

"Back in 2004 and 2005, it was Republicans who were pushing for this kind of exchange, and it was Romneycare before it was Obamacare," Ario said, referring to former Massachusetts Gov. Mitt Romney (R).

"In California last week, you had Republicans arguing with a Republican governor that he shouldn't sign those bills (establishing the exchange), but at the end of the day, he did it because it's a good idea for the people of California," Ario added.

California HealthLine
Thursday, October 07, 2010
by George Lauer, California Healthline Features Editor

Read more: http://www.californiahealthline.org/features/2010/california-exchange-gets-lots-of-attention-at-conference.aspx#ixzz11hwIx9N5

The winner of California's insurance commissioner election will play a key role in setting up the state's new health insurance exchange. Last week, Gov. Arnold Schwarzenegger (R) signed legislation (AB 1602 and SB 900) to lay the foundation for the California Health Benefit Exchange, which will offer a marketplace of health insurance options for individuals and small businesses. The federal health reform law calls for the creation of such exchanges. The two leading candidates for California's insurance commissioner post -- Dave Jones (D- Sacramento) and Mike Villines (R- Clovis) -- are Assembly members whose terms end this year.

Where the Candidates Stand on Health Insurance Exchanges

Jones has emphasized the importance of proceeding carefully during the creation of California's health insurance exchange. He said, "If we don't design the health exchanges well, they'll fail because (insurers) will cherry-pick the market and leave only sick people in the exchange."

Villines has said he would support the exchanges as long as they: allow for health insurance transparency, foster competition, and maintain a safety net.

Jones' Stance on Other Health Issues

Jones has said that he will enforce new regulations under the federal reform law that require insurers to spend at least 85% of premiums on medical care. In addition, Jones previously supported legislation that banned price discrimination against women in the individual insurance market and an unsuccessful bill that would have mandated state approval of health insurance rate increases.

Villines' Stance on Other Health Issues

Villines has said the insurance commissioner's job is to protect consumers and help the economy by creating jobs. He said providing affordable health plans and other insurance products would provide the best protection for consumers. In addition, Villines has said he is willing to cross party lines to effectively implement provisions of the federal health reform law.

AP/San Jose Mercury News reports (Dillon, AP/San Jose Mercury News, 10/5).

Read more: http://www.californiahealthline.org/articles/2010/10/6/new-california-insurance-commissioner-will-help-set-up-health-exchanges.aspx#ixzz11dacNegO

Other states are watching California closely as it begins working out details of an independent board that will oversee the state's new health insurance exchange established under the federal health care reform law.

Last week, Gov. Arnold Schwarzenegger (R) signed legislation (AB 1602 and SB 900) to lay the foundation for the California Health Benefit Exchange, which will provide a marketplace of health insurance options for an estimated 3 million state residents. The California Health Benefit Exchange is slated to be operational by 2014.

AB 1602 and SB 900 also call for the creation of a five-member oversight committee to define how the exchange will operate and run the program. Kathleen Stoll, director of health policy for the advocacy group Families USA, said many states currently are debating how independent to make their health insurance exchange oversight boards. She said, "California now provides a starting point, if not a model, for other states."

Questions About Oversight Board

The California Chamber of Commerce, some taxpayer groups and other critics argue that California's board will lack sufficient accountability to the public. However, the state Legislative Analyst's Office contends that new state legislation includes "numerous provisions" to establish public accountability for the health insurance exchange.
LAO said CHBE's oversight board will:

  • Be appointed by elected officials;

  • Be subject to rules on public disclosure and open meetings;

  • Face audits and yearly performance reviews; and

  • Have four-year terms for its members.

LAO also said that the Exchange will be similar to existing state agencies that operate under independent oversight boards, such as:

  • The Managed Risk Medical Insurance Board, which administers Healthy Families, California's Children's Health Insurance Program; and

  • CalPERS' health benefits division.

Board Members

Schwarzenegger will be able to appoint two members to the board on January 1, 2011, before he leaves office. Senate President Pro Tempore Darrell Steinberg (D- Sacramento) and Assembly Speaker John Perez (D- Los Angeles) each will be able to appoint one member. The final board member will be the new governor's secretary of health and human services

(Calvan, Sacramento Bee, 10/5).
Read more: http://www.californiahealthline.org/articles/2010/10/6/california-in-spotlight-as-it-works-out-details-for-health-benefit-exchange.aspx#ixzz11iIhu225

By signing a pair of bills passed by the California legislature,Gov. Arnold Schwarzenegger has made his state the first to authorize a health insurance exchange in accordance with the Affordable Care Act. Some other states, meanwhile, are consulting companies that run insurance websites before they consider bills to establish exchanges. During this electoral season, it seems, studying the issue is seen as more politically prudent than diving into it.

Meanwhile, the $49 million that the feds are giving 48 states and the District of Columbia to do those studies is creating a new market for companies that have online insurance marketing experience, reports Anna Edney in a Washington Post/Bloomberg article Among the companies that are meeting with officials from a number of states are Choice Administrators of Orange, Calif., and Connecticut Business & Industry Association of Hartford, which already runs a small business insurance exchange. In addition, EHealth, a large e-insurance operator, has won a $19 million federal contract to build and operate a federal website that will allow consumers to compare state-by-state insurance options.

The reform law doesn't allow private companies to run state insurance exchanges. But they can maintain websites, operate call centers, and handle billing, among other services. Considering the sheer size of the future exchanges -- which are expected to enroll about 24 million people when they're fully functioning -- this presents a real business opportunity for firms in a variety of fields.

The Affordable Care Act requires the states to implement insurance exchanges for individuals and small businesses by Jan. 1, 2014. They must build the infrastructure for the exchanges by January 2013. If the states can't or won't do this, the federal government will do it for them. Today, the only states with functioning exchanges are Massachusetts and Utah. These were established before the ACA's passage, so they will have to make some changes to comply with the federal law.

Besides helping states create web platforms that will be easy for consumers to use, the federal study grants can be used for any of these purposes:
• Assess a state's IT systems and delineate new requirements;
• Work with community organizations to include the public in the planning process;
• Plan consumer call centers;
• Hire staff and determine staffing needs;
• Plan coordination between the exchange and Medicaid and the Children's Health Insurance Program;
• Establish performance benchmarks.

Alaska and Minnesota turned down the exchange grants. Alaska did so because it's currently involved in a 20-state lawsuit against the federal reform law. Minnesota spurned the money because state governor Tim Pawlenty, expected to be a Republican presidential candidate in 2012, is refusing to accept any federal health grants. Which brings us back to politics. If states use the study grants to come up with feasible exchange plans, and if they start involving stakeholders in discussions, it will be much harder for them to refuse to participate. But in the end, each state will still have to pass legislation enabling their exchanges -- and that will be a much higher hurdle to pass.

By Ken Terry | October 5, 2010
Read more at BNet.com

This past week, Gov. Arnold Schwarzenegger signed legislation confirming California's position as the national leader on health care reform.

California was the first state in the nation to pass legislation to develop a health benefit exchange to implement the federal law and now will be the first to create an exchange, an entity that will help California consumers and small businesses shop for and buy affordable health insurance.

Janet Coffman, PhD, a professor at the Philip R. Lee Institute for Health Policy Studies and the Department of Family and Community Medicine at UCSF, addresses some of the reasons California is ahead of other states and the benefits of being on the cutting-edge of health care reform.

Q: What is a health benefit exchange?

A: The health reform legislation signed into law in March 2010 by President Obama calls for a health benefit (or health insurance) exchange in each state by 2014. The exchanges aim to make health insurance more affordable for small business and individuals by allowing them to compare the costs of various health plans and different types of health coverage. All health insurance sold through the exchanges will provide comprehensive benefits without annual or lifetime limits on coverage. No one will be denied coverage due to his or her health status. Tax credits and subsidies will also be provided to make coverage more affordable for low- and middle-income persons. Some states may operate their own exchange and others may join a multi-state exchange.

Q: What is California's model for a health benefit exchange?

A: The California Health Benefits Exchange would be its own entity within the state government. Importantly, the California exchange would be an active purchaser that will develop a competitive process to select health insurers who will participate in the exchange. This is different from an "e-insurance" model, which simply provides information about health plans that can be purchased through the exchange. The downside of an "e-insurance" model is that individuals and small business would continue to apply for coverage on their own much as they do today. Being an active negotiator on behalf of large numbers of individuals and small businesses should result in more competitive prices for consumers.

Q: What is the benefit of enacting health care reform legislation more quickly than other states?

A: First and most importantly, California residents will have expanded access to health care sooner. Low-income childless adults comprise one of our state's biggest coverage gaps. Many do not have access to employment-based insurance and are not currently eligible for Medi-Cal, Medicare, or other public programs.

Also, since California will receive funds from the federal government, we'll be able to draw down federal money sooner. For people newly eligible for Medi-Cal, the federal government will pay a larger share of costs than it does for those currently enrolled in the program. The federal government will pay 100 percent of the cost from 2014 through 2016, 95 percent in 2017, 94 percent in 2018, 93 percent in 2019, and 90 percent in 2020 and subsequent years. These are large increases over the share of Medi-Cal costs the federal government historically has paid in California (50 percent) and the enhanced share paid during the last two fiscal years (65 percent).

In addition, starting in 2011 and continuing through 2014, states can receive financial assistance to help pay for the cost of creating a health benefit exchange. Given the current budget crisis, our state needs all the money it can get. It's also possible that future lawsuits and skirmishes may start chipping away at some of the provision. The idea of a health benefit exchange was contentious at the federal level, for example, so if the concept ultimately gets watered down, we still have the state legislation.

Q: Why is California in the position of being able to act so quickly?

A: Our leadership in this area in part reflects the energy and efforts put into health care reform discussions in 2007. California had one of the most sustained debates, other than Massachusetts. State health care reform ultimately was not successful here in 2007, but the health exchange was part of that discussion. Leaders had spent a lot of time defining what they wanted to see.

While other states still are wrestling with some of the concepts behind federal health care reform, some of our politicians who considered many of these provisions just three years ago are some of the same people we have in office now. They've been able to move swiftly from contemplation to implementation.

Maryland is the only other state that has gotten anything substantive passed - by substantive I mean legislation that goes beyond forming a committee or task force. In April, for example, Maryland legislators passed a law prohibiting health plans from denying coverage for children with preexisting conditions and allowing dependents up to age 26 to remain on their parents' coverage.

Q: Has the large number of uninsured people in California created a sense of urgency in our state?

A: California does have one of the highest percentages of uninsured people in the country; we're sixth in the nation. Historically there have been two large industries - agriculture and until recently, construction - that traditionally have employed many uninsured people and undocumented immigrants. Meeting this need may have played a role in pushing through health care reform legislation more quickly, but Texas also has a high percentage of uninsured and has not been as proactive as California. I really believe we're building on established thinking by leaders who are committed to propelling us forward.

Q: What other health care reform provisions have California passed?

A: Governor Schwarzenegger has signed legislation that extends eligibility for health care benefits for dependents up to age 26, prohibits insurers from excluding children with pre-existing conditions, and prohibits insurers from cancelling a person's health insurance policy except in cases of fraud or intentional misrepresentation of fact

By: Janet Coffman
University of California, San Francisco
Philip R. Lee Institute for Health Policy Studies

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