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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.


April 2011 Archives


The California Health Benefit Exchange Board held its first meeting on April 20, 2011. The federal Affordable Care Act (ACA) requires the establishment of health benefit exchanges that allow individuals and small businesses to purchase coverage. Today's meeting was the Exchange board meeting in the country. A number of actions were taken.

The board has five members, and four of those seats have been filled; the Senate has yet to appoint. Members include California Health and Human Services Agency Secretary Diana Dooley; S. Kimberly Belshé, former Health and Human Agency Secretary to Governor Schwarzenegger; Susan Kennedy, former chief of staff to Governor Schwarzenegger; and Paul Fearer, Senior Executive Vice President and Director of Human Resources at Union Bank as well as Board Chair of the Pacific Business Group on Health.

The Exchange Board voted to make Secretary Dooley the interim chair of the body. In addition, the board voted to pursue a Level II federal planning grant to support the establishment of the exchange and to submit the grant on September 30, 2011. The board also voted to establish a subcommittee of its members to direct grant development and to establish a second subcommittee for purposes of search/recruitment of the Executive Officer, Chief Counsel and other key positions. The board appointed Pat Powers as Acting Administrative Officer until a permanent Executive Officer is hired.

The Exchange board has set an aggressive schedule in order to develop a federal grant by September 30, 2011. Several policy decisions will have to be made in the coming months in order for the board to develop the grant. The board will meet next on May 11 and will discuss health insurance markets, program integration of public health care programs, public health and social services programs, the Basic Health Plan option, and the Small Business Health Options Program (SHOP) Exchange requirements. The board will meet at least monthly, and possibly more frequently than that, through 2011.


Congressional negotiators hammering out a deal to slash tens of billions of dollars in federal spending have agreed to strip a provision in the Affordable Care Act requiring employers to give low-paid employees company-paid vouchers to purchase coverage in state health insurance exchanges.

The health care reform voucher provision was originally inserted in the health care reform measure by Sen. Ron Wyden, D-Ore., as the legislation was working its way through Congress.e learned that budget negotiators agreed to repeal the voucher provision.

How Vouchers Would Have Worked

Under the Free Choice Voucher provision, employees would have to meet two conditions to be entitled to the employer-funded vouchers: their family income could not exceed 400% of the federal poverty level, and the premium contributions their employers require them to make must be between 8% and 9.8% of their income.

If those conditions are met, those employees would be entitled to receive a voucher from their employers, and the value of the voucher would not be tied to the plan in which the employee was actually enrolled. Instead, the voucher's value would be equal to what the employer would pay if the employee were enrolled in whichever of its plans offered the "largest" premium contribution by the employer. Then, the employee could use the voucher to purchase health insurance coverage from a state health insurance exchange. The exchanges are authorized under the reform law and are supposed to be set up by 2014.

If the cost of a policy purchased by an employee through the exchange is less than the value of the voucher, the employee could pocket the difference in cash, which would be considered income and taxed.

Costly for Some Employers

The provision, to go into effect in 2014, would have a huge and costly impact on employers with large numbers of low-paid workers--such as retailers--who are required to pay a high percentage of the premium. And, depending on how the legislative language is interpreted in subsequent regulations, it also could prove costly to employers that offer employees a choice of health care plans ranging from relatively low-cost to very expensive plans.

Experts say the provision is almost certain to result in adverse selection, inflating employer costs. For example, a young, low-paid employee working for a company with a high concentration of older, less healthy and expensive-to-insure employees likely would receive a voucher whose value would be much higher than the cost of buying coverage in an exchange, especially if the employee purchased a lower-cost high-deductible plan. Under the reform law, exchanges can base premiums on the age of policyholders. As a result, employees remaining in the employer's plan would be the most costly to insure, pushing up employers' health insurance premium costs.


ACA Coverage Projections

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The federal health reform law will help about six million uninsured Californians obtain health insurance by 2016, but it also will increase overall state spending by 7%, according to a new RAND study.

California-Specific Findings

  • The proportion of California residents with health insurance will increase from 80% today to 96% by 2016;
  • The number of uninsured Californians will decrease from 7.5 million today to 1.6 million by 2016;
  • Enrollment in Medi-Cal, California’s Medicaid program, will increase by 58% by 2016;
  • About 17% of nonelderly California residents will receive coverage through the state health insurance exchange by 2016; and
  • The reform law will increase state spending by $2 billion annually by 2016 and by $4 billion annually by 2020.

Reasons for Changes in Coverage, Spending

Researchers said the reform law will increase access to health insurance because Californians will be able to obtain coverage through the state health insurance exchange and the forthcoming expansion of Medi-Cal. They also noted that the Medi-Cal expansion would contribute to the predicted higher levels of state spending even though the federal government is covering a substantial portion of the costs for newly eligible Medi-Cal enrollees.

Read more: http://www.californiahealthline.org/articles/2011/4/6/study-reform-law-to-expand-coverage-hike-state-spending.aspx#ixzz1KfhX4ZMc


Former Health and Human Services Agency Secretary Kim Belshé has taken a new job as senior policy adviser with the Public Policy Institute of California, the nonpartisan think tank and polling outfit announced today.

The former Schwarzenegger administration official had previously served as deputy secretary of the Health and Welfare Agency and director of the Department of Health Services under Republican Gov. Pete Wilson. Belshé is also a member of the new California Health Benefit Exchange Board, which will create an insurance market to be used under the federal health care overhaul. She was appointed to that post by Gov. Arnold Schwarzenegger.

The organization also announced that PPIC board member and retired Edison International Chairman and CEO John Bryson has been elected chair of its board of directors and that Northern Illinois University Center for Governmental Studies Director Robert Gleeson has been hired to as vice president of research.

"We are excited that these three dynamic and experienced leaders are taking on key roles at PPIC," says PPIC President and CEO Mark Baldassare said in a statement. "Their talents will be invaluable in our efforts to improve public policy and shape a better future for California.

Read more: http://blogs.sacbee.com/capitolalertlatest/2011/03/former-hhs-secretary-kim-belshe-joining-ppic.html#ixzz1Ia4TMgbN

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