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Covered California News & Commentary

Topics of interest to both consumers and agents related to Covered California and the ACA biased in favor of the successful implementation of the Exchange and deliberately apolitical.

November 2010 Archives

The "safety net" refers loosely to the health care services available to the most economically and socially vulnerable populations in California, as many as one-third of residents, who are either uninsured (and low income) or covered by Medi-Cal or other public programs, such as Healthy Families.

But the term "safety net" also refers to a diverse combination of health care providers, including community clinics (federally qualified health centers and other community-based organizations that predominantly serve lower-income populations), public hospitals, academic health centers, and mainstream nonprofit and for-profit hospitals and physicians who take care of these patients. The safety net is tied together by a complex weave of federal, state, local and charitable funding.

Just like all of American health care, the safety net is not a system. It is a collection of extremely dedicated, hardworking people doing the very best they can for the populations they serve, in institutions that are not coordinated to optimize the health and health care of the populations they serve.

It's time to prepare for the newly insured - and those left behind under reform. Estimates suggest that more than 8 million Californians may be uninsured today, and health care reform, once fully implemented in 2014, may provide coverage for the majority of those currently uninsured. But some Californians will still fall through the cracks, whether through homelessness, mental illness, undocumented-immigrant status or choice.

Here are the next items on the state's checklist:

New demands on care delivery. The expansion in coverage envisioned in the bill will likely increase the demand for services across health care. Many of the currently uninsured will have an insurance card in 2014 - half of the newly covered with a Medi-Cal card and half with subsidized insurance purchased through the California Health Benefit Exchange. All California health care stakeholders need to identify how to cope with the new demands that this expansion in coverage will bring. For safety net providers, there will be challenges and opportunities in competing for these newly covered Californians, while still keeping open doors for those that are left behind.

New models of care delivery. The growth in coverage, the major and ongoing shift toward chronic care needs, and the lack of adequate primary care delivery resources make transforming the way health care is delivered an imperative. Leaders in the safety net should - and will - be on the front lines of innovating for higher quality and lower costs for their patients.

New ways to be accountable. Throughout all of health care, payers and providers are being asked to demonstrate higher performance through ubiquitous and non-negotiable measurement of performance. This broader trend will continue, and safety net stakeholders must decide how to embrace and customize this trend for their own institutions and the patients they serve.

This is the next big challenge for the country's largest, most diverse state. The most vulnerable Californians will be counting on us to seize the opportunity and to create the best possible future.

As California hammers out details about its forthcoming health insurance exchange, uncertainty remains over how the exchange will affect the state's health care system, Capitol Weekly reports.


Two new state laws -- AB 1602, by Assembly Speaker John Pérez (D- Los Angeles), and SB 900, by Sen. Elaine Alquist (D- Santa Clara) -- laid the foundation for the California Health Benefit Exchange. The exchange will provide an online marketplace for health insurance coverage as required under the federal health reform law. The exchange is scheduled to launch by 2014, but state officials plan to begin initial testing and adjustments at least a year in advance. State residents who seek coverage through the exchange will be able to choose from five levels of coverage. Although each option will offer the same essential benefits package, the plans will differ in expenses and out-of-pocket costs.

Uncertainty About Exchange

Estimates for the number of residents who could receive coverage through California's exchange range from 1.25 million to 8 million. The exchange is expected to provide benefits for the state's 1.2 million beneficiaries of Medi-Cal, California's Medicaid program, as well as thousands of residents enrolled in other public health insurance programs. It is unclear how many additional residents could seek coverage through the exchange.

Experts also have expressed uncertainty about how the exchange will affect California's private health insurance market. The exchange's yet-to-be created governing board will have broad authority to set policies and negotiate agreements with health plans. Some health insurers have expressed concern that the governing board could contract selectively and wield unfair influence over the marketplace.

In addition, the Republican takeover of the House has raised questions about whether Congress will continue to provide federal support for state-based health insurance exchanges. Many GOP candidates who won congressional seats have pledged to dismantle elements of the health reform law (Howard, Capitol Weekly, 11/24).

Exchange Board Poised to Launch

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It's a plunge into the unknown.

The California Health Benefit Exchange is envisioned as a sort of online market place for coverage, handling billions of dollars worth of health care as part of the federal reform law. There, millions of Californians - 1.25 million to 8 million, depending on who's crunching the numbers -- can get reasonably priced coverage.

It is the single most important piece of the health-care reform effort in California, observers say. If it works, reform succeeds; if it fails, reform may fail, too. The exchange is the result of hard-fought legislation involving doctors, health care plans, patient advocates, insurers and others.

What they reached, in the end, is a fragile, complex compromise.

"Our main concern is that if you want it to work for health care, you need to make sure people can see a doctor when they need to get access to care and that the health plans have adequate networks of providers," said California Medical Association spokesman Andy LeMar.

"We've been loud and long supporters of universal health care, and the health insurance exchange will help do that."

For low-income people, federal money will be available to help cover expenses. For the exchange-approved insurers that provide them with coverage, there are fiscal benefits in the form of direct payments covering the costs of the low-income customers. The target startup date is 2014, although beta testing and tweaking is expected to begin the year before.

Since the incentives in the exchange are fueled initially by federal money, the system may be imperiled if those funds dry up in tight economic times.

"Primarily, it is designed to draw down federal dollars, either as subsidies or as tax breaks," said Charles Bacchi of the California Association of Health Plans, which represents 39 health care organizations, including such giants as Kaiser Permanente, Anthem Blue Cross and Blue Shield of California.

"At its core, its function is to match up consumers with federal subsidy dollars," he added.

To participate in the exchange, all health insurers will have to provide an essential coverage package, required by federal law. And that uniformity represents a new world for the plans.

"California, for the first time in the market place, is going to organize the products and the plans are going to have to play by the new rules," said Jennifer Kent of the state's Health and Human Services Agency.

"The exchange will determine if it's in their (the companies') best interest or in the consumers' best interest, organizing them in a way that we've never organized them before."

But the creation of such a powerful state agency is fraught with uncertainty, experts agree. There is more mystery than clarity - particularly how it will affect the private market place.

"How do you manage the exchange? How powerful is it, and how does it compete with the outside market?" Bacchi said, noting that the exchange should offer a wide range of health plans ensures that consumers have plenty of choice when choosing coverage.

Another concern to the health plans is the power of the exchange to choose who participates - "selective contracting" they term it.

"It is really unclear in the bills what they are going to require as a condition of contract," he said.

In part, that's because the exchange's yet-to-be-created governing board will have wide discretion over policy, and in part it's because political changes are roiling Washington that could have a critical impact on California's access to federal money.

The contracting issue raises a pivotal, pocketbook question because the exchange will have broad authority to negotiate agreements. The legislation allows those in "good standing" to participate, but what is good standing? And some health care insurers fear the board may engage in selective contracting and exert unfair marketplace pressure.

And with the GOP retaking the House - and apparently seeking to scale back or eliminate health care reform - will the exchange really get up and running in California?

"Nobody knows what Congress is going to do next year. Will it try and dismantle health care reform? Will it try and pull the rug out from under the funding? There is a big question about what is going to happen next in Washington," LaMar said. The CMA supported the legislation that created the board. Pre-reform exchanges were set up in two other states, Utah and Massachusetts.

"Aside from setting up some infrastructure, there is nothing that can be done. The federal regulations haven't been issued yet, and they won't be issued until April."

First, the five-member governing board of the exchange has to be picked after Jan. 1 - two appointees of the governor, each with four-year terms; one each from the Senate Rules Committee and the Assembly Speaker, for a five-year term and two-year term, respectively; and the secretary of the state Health and Human Services Agency.

The board, in turn, will then hire an executive director who will put together a staff and find a location to house the new agency.

Two bills set up the exchange, SB 900 by Sen. Elaine Alquist, D-San Jose, and AB 1602 by Assembly Speaker John Perez, D-Los Angeles.

Language in the law gives the governor the ability to appoint two members of the exchange board without having them going through confirmation by the Democrat-controlled Senate - a significant negotiating victory for the governor, because it gives him two members on the board who will be there for the duration of Jerry Brown's governorship.

The legislation says any appointments that Schwarzenegger makes after Jan. 2 will not be subject to the confirmation. Brown is expected to take office on Jan. 4 - giving Schwarzenegger a 48-hour window to appoint the two members.

Estimates of the level of participation in the exchange and the dollar amounts involved vary wildly.

Some 1.2 million people who currently receive benefits in the state's Medi-Cal system are likely to be shifted to the exchange, at least temporarily, as are several hundred thousand in other programs. That number, however, could rise dramatically if an increasing number of people see the exchange as a place to get reasonably priced coverage.

When the exchange goes on line, what is known colloquially as the "precious metals" packages will be offered - the so-called "Platinum," "Gold," "Silver" and "Bronze" coverage plans, with "Platinum" the highest priced. Catastrophic coverage also will be offered. Everyone is eligible to purchase whatever coverage they want, because the question here is cost, not eligibility.

Each level of coverage offers the essential benefits package. But they differ in expense levels and out-of-pocket costs, such as co-payments, special nursing costs, long-term nursing, in-patient services and the like.

In the exchange, there are limits on out-of-pocket costs that an insured consumer can be required to pay - perhaps $5,000 per person and $11,000 for a family, for example - and the idea is that market competition will help drive down the costs.

There also are limits on insurers, noted Sen. Mark Leno, D-San Francisco, a member of the Senate Health Committee. The double lure of tax breaks and subsidies is the key, because it drives both customers and companies to the exchange. In effect, the exchange is an interface between public and private entities - reflecting the compromise that finally was hammered out.

"The carrot is that insurers who chose to participate in the exchange get the federal subsidy. The goal here is to expand coverage and standardize coverage," he said. "The delicate balance that was crafted in the federal reform was to expand the market exponentially for the for-profit insurers and limit their ability to deny coverage," he said.

"But whether all this contains costs is yet to be determined," Leno added.

Most people get their health insurance through their employers. For those who don't, the exchange is envisioned as a cost-effective alternative for perhaps 24 million to 30 million people across the country.

In California, the law creating the state exchange is the nation's first under the federal health care reform law.

The exchange sounds a bit like a brokerage, but it's actually quite different: Like a brokerage, the exchange will seek out the products that match a customer's needs, then allow the customer to pick and choose from the five plans. The online selection, by law, is required to be easily understood in plain language with an apples-to-apples comparison.

But the exchange also will provide information to other agencies, including the Internal Revenue Service and numerous state agencies to track consumers' eligibility to take advantage of subsidies and incentives and to track the federal money flow.

In the end, the exchange is envisioned as the best way to protect consumers and encourage a competitive market place.

"For anyone who wants to buy coverage, you should buy it in the exchange, if we do the job the way we need to," Kent said.

Capitol Weekly

By John Howard

Read full article here

A state evaluation gives ratings of poor to Anthem Blue Cross, Blue Shield of California, Health Net, UnitedHealthcare and Cigna in that category. Aetna performs slightly better.
Most major health insurers in California do a poor job of paying claims and providing customer service for members in preferred provider organization plans, according to a new state survey.

The evaluation by the California Department of Insurance comes as many workers assess their healthcare options this month before enrolling for another year of insurance benefits through PPO plans that serve 2.5 million people statewide.

In the quality report card, Anthem Blue Cross, Blue Shield of California, Health Net Inc., UnitedHealthcare and Cigna Corp.received the lowest possible ratings -- poor -- for customer service. Aetna Inc. earned a slightly better rating of fair.

Most of those insurers also garnered marks of fair for the ease and speed with which members see doctors and get medical care. UnitedHealthcare earned a grade of good.

No insurer received the top overall rating: excellent.

The insurers said they welcomed the scrutiny even as they defended their own efforts to improve customer satisfaction and streamline care.

But California Insurance Commissioner Steve Poizner called the findings "atrocious," saying insurers "must step up and improve the quality" of their healthcare services in a marketplace that generates $17 billion a year in revenue.

"This is hopefully a wake-up call for insurance companies," Poizner said Thursday. "They are simply underperforming. People should be concerned."

By Duke Helfand, Los Angeles Times
Read full article

California has moved quickly to implement key provisions of the federal health care overhaul law, including a health benefits exchange, but the exchange - and California's plans - could be vulnerable as House Republicans threaten to starve the federal health program of funding. Last month, California became the first state to begin establishing a state-run health insurance exchange - California Health Benefit Exchange - that is supposed to open for business by 2014 to help millions of the state's uninsured obtain health insurance.

The U.S. Department of Health and Human Services has given the state $1 million - with possibly more funding to come, federal officials said - to help set up the exchange. But the prospect of additional federal funding could face intense scrutiny by congressional Republicans seeking to cinch up congressional purse strings. Republican control of the House "could make things very messy. Actually, it's already very messy," said professor John Ellwood of the Goldman School of Public Policy at UC Berkeley, a former special assistant at the Congressional Budget Office. "If something requires an appropriation" of federal funds, "that's where the Republicans will attempt to starve it," Ellwood said.

The federal government expects to spend nearly $1 trillion over the next 10 years to implement the health care package - much of it already appropriated when the legislation was signed into law by President Barack Obama in the spring. There still is ambiguity in the funding process because at least $115 billion in discretionary funding to implement key requirements of the program still needs approval by Congress. It could cost the Internal Revenue Service as much as $10 billion over 10 years to determine eligibility for tax credits used to purchase coverage through the exchange. And it could cost Health and Human Services another $10 billion over a decade to implement changes in health insurance programs for seniors, the poor and children.

"I think it would be ill-advised for California to move forward to implement Obamacare," said Rep. Tom McClintock, R-Elk Grove, who wants the federal health care law repealed. "Unless the state is anticipating a miraculous revenue windfall, it better be careful about committing additional dollars."

There may be little Republicans can do to take back the $5 billion already appropriated to help states set up insurance exchanges, the virtual marketplace that will allow the uninsured and those eligible for tax credits to purchase health insurance. It's still unclear how much it will cost California to set up its exchange and it will remain so until a five-member oversight board can be installed to begin designing how the exchange would work. Billions of dollars are at stake for California, including $13.8 billion in tax credits that would flow through the exchange to cover 3.5 million Californians.

Some provisions of the law already are being rolled out. Adult children up to 26 years old can now be included as dependents on their parents' health policies. And insurers cannot deny coverage to children with pre-existing health conditions.

While the GOP doesn't have the votes to repeal the overhaul law, it now has vast power to block funding for many programs that states like California are already banking on.
"The idea that everything is hunky-dory is all wrong. You've got between now and 2014 to get this massive thing off the ground," said John R. Graham, director of health care studies at the Pacific Research Institute, a conservative think tank based in San Francisco. "You'll need people ... and you can't do anything if you don't have the money to pay people to get it off the ground."

Backers of health care reform say Republicans are overstating their ability to halt the overhaul package. They might have won control of the House, but Democrats retained control of the Senate. "The Republicans in Congress cannot change the law, because they need the Senate to go along," said Ken Jacobs, who chairs the Labor Center at UC Berkeley and an overhaul advocate. "The law is in place, and we need to move forward toward implementation," Jacobs said. "To the degree that it will be up to states to move toward implementation, the ball keeps rolling." That's likely the case in places like California that are controlled by Democrats.

At least 21 Republican-controlled states have challenged the health care law, which was a lightning-rod issue in last week's midterm elections that gave the GOP control of the House of Representatives.

Posted By Bobby Caina Calvan
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Republican victories in state elections across the country might be more likely to affect the implementation of the federal health reform law than the GOP takeover of the House of Representatives, the Los Angeles Times reports.

Although the GOP gained control of the House during last week's midterm elections, Democrats retained a majority in the Senate. In addition, President Obama is expected to veto any efforts to repeal the health reform law through federal legislation.

State-Level GOP Victories

During last week's election, Republican candidates gained at least 11 governor's offices, while losing three. The GOP also gained control of legislatures in at least 25 states. Prior to the elections, Republicans held control of 14 state legislatures, according to the Times (Levey/Japsen, Los Angeles Times, 11/7).

State Responsibilities Under Overhaul

State leaders are tasked with administering several key aspects of the health reform law, such as:

  • Establishing and running health insurance exchanges;

  • Overseeing an expansion of Medicaid;

  • Setting standards for minimum benefits in health insurance exchanges; and

  • Determining a process for reviewing health insurance premium increases.

Possible Influence Over Reform's Implementation

Although state leaders lack the power to completely block the health reform law, they could exert considerable influence over the way the overhaul is implemented, the Washington Post reports.

According to analysts, Republican governors and legislators are more likely to emphasize privatization and other free-market approaches, while Democratic leaders might focus on government oversight and stricter regulation (Aizenman, Washington Post, 11/9).

Republican governors also could combat the health reform law by joining a multistate lawsuit challenging the constitutionality of the overhaul's requirement that all U.S. residents obtain health coverage by 2014.

In addition, GOP lawmakers might attempt to slow down the rollout of various reform law provisions through legislative processes.

Although California already has passed legislation establishing the California Health Benefit Exchange, no Republicans in the state Senate voted for the measures (Los Angeles Times, 11/7)

Read Full Article

The federal government today approved California's five-year, $10 billion Medi-Cal Section 1115 waiver proposal that will fund key coverage initiatives for low income Californians and better coordinated care for Medi-Cal recipients.

California's current waiver expires this month and the state has been negotiating a new waiver to fund a variety of health care initiatives that will better position the state and its safety net providers to care for the significant number of Californians that will become eligible for Medi-Cal and the California Health Benefit Exchange in 2014.

California recently enacted bipartisan urgency legislation, subject to the final federal approval gained today, that implements the provisions of the new waiver in AB 342 (J. Pérez) and SB 208 (Steinberg).

"I want to thank the Obama Administration for its incredible commitment to California and bipartisan cooperation," Pérez said. "Not only is this the largest Medicaid waiver ever approved, it invests in our state and our counties and helps vulnerable Californians gain access to better, more coordinated care. I also want to thank the members of our Congressional delegation that have supported this effort over the last year. They have truly made a difference."

The federal Center for Medicare and Medicaid Services has broad authority to "waive" federal Medicaid law to fund state demonstration projects that will improve the state's Medicaid programs and services to low income and disabled people.


California will receive approximately $10 billion in federal funds to invest in the health delivery system and support the state's preparation for and transition to the requirements of federal health care reform. These investments are also designed to help slow the rate of growth in health care costs within the Medi-Cal program.

$3.3 billion for investments in California's public hospitals.

$2.9 billion over the next four years for county based coverage for low-income individuals who will become eligible for full Medi-Cal in 2014.

$3.9 billion for uncompensated care costs to safety net hospitals and the state.

Generates over $2.5 billion in General Fund savings over the five year term of the waiver.

Website of Assembly Speaker John A. Pérez: www.asmdc.org/speaker

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