California’s Health Insurance Exchange Law: Why Does It Matter?

The Affordable Care Act (ACA) has created a new system of health insurance exchanges. States can design and implement the exchanges to offer new opportunities for access to affordable, accountable health insurance. California’s law is the first in the nation..

Under the federal ACA, exchanges will open in 2014 to offer standardized insurance plans to individuals and small businesses, with subsidies available to people earning up to 400% of the federal poverty level. The California law creates a 5- member governing body with two important features. First, it must “take into consideration the cultural, ethnic, and geographical diversity of the state so that the board’s composition reflects the communities of California.” Secondly, its strong conflict of interest provisions exclude participation by active agents of the insurance and health care industries.

In a key provision for affordability, the state will have the right to engage in “selective contracting” with insurance plans, meaning it will be able to negotiate on premium rates. In addition, it has the right to “require carriers to offer additional products within each of” the five levels of coverage specified by the ACA. These could conceivably refer to supplementary dental plans.

The exchanges for individuals and small employers are initially separate. They could be united in the future, pending a study due by 2018.

The exchange must be self-supporting, after repaying an initial loan for administrative start-up, although there is a prospect for General Fund support. Critics have noted that this funding limitation could hamper the exchange’s viability.

The law includes other important features. It requires coordination with existing health programs. The exchange must provide “oral interpretation services in any language for individuals seeking coverage through the Exchange and makes available a toll-free telephone number for the hearing and speech impaired.” And, “The board shall ensure that written information made available by the Exchange is presented in a plainly worded, easily understandable format and made available in prevalent languages.” Further, the Board must “consult with stakeholders relevant to carrying out” its activities, including “health care consumers who are enrolled in health plans, individuals and entities with experience in facilitating enrollment in health plans, representatives of small businesses and self-employed individuals, the State Medi-Cal Director, and advocates for enrolling hard-to-reach populations.”

Read the bills here:

California Exchange Bill AB 1602


CA Exchange Bill – Senate Bill 900 (Governance)

Three Things Worth Fighting For: A Public Option. Women’s Rights. Single Payer.

It was tempting to think that the Bush presidencies were an error from which we’ve now recovered. It’s increasingly apparent that there are deep structural fissures in our society that, like the earthquakes in Chile, have not played themselves out. Unlike that force of nature, we can do something about it – but it will take some work. Here are three tests that demand our commitment:

1. The public option. Americans want an alternative to the predatory insurance industry. They aren’t ready to mandate turning the whole apparatus of paying for health care over to the government, and we’re not going to talk them into it this year. But they damn well want a safety valve from corporate insurance.

Now, the public option is a new entity. We can predict with certainty that it will have lower administrative expenses and won’t pay profits or million dollar bonuses to executives based on denying needed care. The finer points are less certain.

But critics on the left who have consistently contended that the public option could never work seized with relish a 10-page memo dashed off by the Congressional Budget Office to House Ways and Means Chair Charles Rangel on October 29, 2009, stating that the public plan would likely enroll only about 6 million of 30 million newly covered lives. This estimate itself rested on some questionable assumptions. The House bill (in Sec. 213) tightly constrained the grounds for variation in premiums. In Sec. 322, it also limited the amount the public plan could pay to providers. Nevertheless, CBO said the public plan would have higher premiums than other plans in the new Exchanges:

That estimate of enrollment reflects CBO’s assessment that a public plan paying negotiated rates would attract a broad network of providers but would typically have premiums that are somewhat higher than the average premiums for the private plans in the exchanges.

In addition CBO stated that:

The public plan would have lower administrative costs than… private plans but would
probably engage in less management of utilization by its enrollees and attract a less healthy pool of enrollees. (The effects of that “adverse selection” on the public plan’s premiums would be only partially offset by the “risk adjustment” procedures that would apply to all plans operating in the exchanges.)

These unsubstantiated assumptions were not repeated in CBO’s extensive (167-page) examination in December, 2009, of the factors involved in speculating on the effects of possible reforms.

We need a public option. Progressives should fight as hard as we can for the most robust possible public plan. A new public entity that could enroll up to 31 million is estimable, next to 25 million in the Veterans Affairs system, 45 million in Medicare, 49 million in Medicaid, and millions more in other federal programs. It is just a step, but it is potentially a step forward.

2. Women’s rights. Abortion restrictions were voted down in the Senate, 54 – 45, scant days before Nelson bludgeoned them back in. But the House does not have a reliable pro-choice majority. The state of Utah has criminalized miscarriages if there is a claim that they are related to an attempted abortion.

I repeat: The state of Utah has criminalized miscarriages if there is a claim that they are related to an attempted abortion.

The attack on reproductive rights is not, it turn out, a side show in health reform. It is a major shot across the bow. The assault is serious, it is not going away, and progressives are going to have to fight about it, hard.

3. Single payer. Unlike the abortion issue, health reform is not a step backwards for state single payer efforts. Employers have been using ERISA (the Employee Retirement Income Security Act) for decades to block state reforms that would make them pay up for health insurance. Crusading Dennis Kucinich could still fight to get his ERISA amendment in the final bill, opening an important new avenue for states, and eliminating likely long court battles.

Happily, progressives are figuring out that if we want a progressive Congress, we need to run progressive candidates. Challengers are showing up in Democratic primaries against Bart Stupak and other pretend Dems, and organizations are springing up to support them. It will take more than the election of November, 2008, to recover from decades of neoliberal politics and corrupt economics. Passing health reform is the step we can take in the next few weeks. Fighting to make it work will be one of the projects we dig in for over the next few years.