The facts regarding California’s healthcare insurance coverage are remarkable. In 2009, 16.8 million Californians had employer-based coverage; 1.75 million Californians had health insurance purchased on the private market; 7.5 million Californians were covered by Medi-Cal (California’s version of the federal Medicaid program); 900,000

California children from lower-income working families were enrolled in the Healthy Families program, a low-cost public health insurance program; 6,923 Californians were enrolled in the Major Risk Medical Insurance Program ("MRMIP"), the state’s existing “high-risk” pool, as of May 2010; and more than 8 million Californians – nearly

23 percent – were uninsured, according to a UCLA report issued in March 2010.

In March of 2010, President Obama signed into law the Patient Protection and Affordable Care Act of

(the “Affordable Care Act” or “ACA”). The ACA provided for the establishment of state insurance exchanges that are intended to provide competitive marketplaces for individuals and small employers to directly compare

available private health insurance options on the basis of price, quality, and other factors. The exchanges, which will become operational by January 1, 2014, are expected to enhance competition in the health insurance market, improve choice of affordable health insurance, and give small businesses the same purchasing clout as large businesses.

California was the first state in the nation to enact legislation creating a health benefit exchange under the ACA. California’s Health Benefit Exchange will enhance competition and provide the same advantages available to large employer groups by organizing the private insurance market, including a more stable risk pool, greater purchasing power, more competition among insurers and detailed information regarding the price, quality and service of health coverage.

It is expected that the California Exchange will support consumer choice by making comprehensive information about health plans available in an objective, easy-to-understand format, including:

• A website that provides standardized comparison information on qualified health plan benefit
  plans/options;
• A calculator for applicants to compare costs across plan options;
• A web-based eligibility portal to help link individuals to health coverage options available to them; and...
• A toll-free consumer assistance hotline.

Eligibility

Individuals and small employers meeting federal citizenship requirements may enroll in the Exchange. Federal health care reform makes tax credits and subsidies available in 2014 to Californians with incomes between 133 and 400 percent of the federal poverty level (in 2010, approximately $29,000 to $88,000 for a family of four).

The Exchange will ensure that Californians eligible for federally authorized tax credits and subsidies get those benefits. In fact, the tax credits will be available only for the purchase of healthcare coverage through the state exchanges. Small employers with less than 100 employees may also purchase coverage through the exchange.

Costs

In September 2010, the federal government awarded California $1 million to fund preliminary planning efforts related to the development of an exchange. After 2014, the Exchange must be self-supporting from fees paid by health plans and insurers participating in the Exchange.

Voluntary Health Plan and Insurer Participation

Health insurance products offered through the Exchange must be available in the same form to consumers purchasing coverage outside the Exchange. All health plans and insurers participating in the Exchange must offer all Exchange plans at the federally designated “Bronze”, “Silver”, “Gold” and “Platinum” levels as defined in federal regulations. Catastrophic plans will only be available through health plans and insurers participating in the Exchange. The catastrophic plans will be available both inside and outside the Exchange from these health plans and insurers.

California’s Exchange

California’s Health Benefit Exchange is an independent public entity within state government with a five-member board appointed by the Governor and the Legislature. The Governor appoints two members of the Exchange Board; the Senate Rules Committee appoints one; and the Speaker of the Assembly appoints one. The Secretary of the Health and Human Services Agency or another designee will serve as an ex-officio voting member of the Board. Appointed members will serve four-year terms. Members of the Exchange Board and its staff are subject to strict conflict-of- interest provisions. They may not be employed by, a consultant to, a member of the board of directors of, affiliated with, or otherwise a representative of, a carrier or other insurer, an agent or broker, a health care provider, or a health care facility or health clinic.

Problem Solved, Right? Wrong!

Although the state Exchange will go a long way toward stabilizing the individual and small-business health insurance markets, and the tax credits will make health insurance affordable for more people, it does nothing to address the underlying, artificial cost drivers that are contributing to the unsustainable increases in healthcare costs: Fraud, waste, abuse and inappropriate and poor-quality care. While the exchanges will temporarily bring costs down by spreading the costs of coverage across a larger risk pool, these unnecessary cost drivers will continue to inflate healthcare costs to unsustainable levels and we will continue to pay too much for our care.

For these reasons, and despite significant progress last year toward healthcare reform, CHCC’s work to improve the quality of healthcare, to save lives, and to bring down the costs of care based on better outcomes for all continues to be relevant and important work.