Officials hurry to set up California health benefit exchange

SACRAMENTO — At a mid-November conference in Sacramento on implementation of the federal health care overhaul in 2014, California Health and Human Services Secretary Diana Dooley outlined the political aspects of the task ahead.

Though President Barack Obama had been re-elected in part on the promise of expanding access to health care, Dooley said, voters will hold her boss to a higher standard if he seeks re-election in November 2014. They will judge Gov. Jerry Brown in part on how well the state delivers on that promise.

There is much to be worked out, such as a Medi-Cal expansion expected to add up to 1 million new enrollees by including all those with incomes up to 138 percent of federal poverty guidelines. Brown is expected to call a special session of the Legislature this month to deal with implementation issues.

But perhaps nothing will make or break the success of the overhaul in California, and the public's perception of it, than the performance of the state-run health benefit exchange, Covered California. By Oct. 1, it must have an online insurance marketplace up and running, with the expectation of signing up about 1 million enrollees before the end of 2014.

The agency's 2013 timeline calls for posting a model contract for qualified health plans by Jan. 18, requiring plans to file rates with regulators by May 15, signing contracts and announcing the list of participating plans by June 30 and opening pre-enrollment Oct. 1.

Throughout the year, agency officials plan to train "navigators" — county social workers, staff at community-based organizations and insurance agents and brokers — to counsel and guide Californians on how to use the system.

Although California was the first state to create its health benefit exchange and last week became among the first seven states to receive conditional federal approval of its program, the timetable is tight if the exchange is to meet Executive Director Peter Lee's goal of becoming a place at which buying an insurance policy becomes "as easy as buying a book on Amazon."

The Jan. 1 deadline that seemed so distant when the Affordable Care Act was enacted in 2010 is now less than a year away.

"Now that we've passed the Supreme Court and the election, our biggest obstacle is the clock," said Anthony Wright, executive director of the advocacy group Health Access.

"The exchange has done an admirable job of wrestling with the many challenges of establishing a new marketplace," said Patrick Johnston, president and CEO of the California Association of Health Plans. "It's a big, complicated state, and there's much to figure out."

Initial response has been promising.

After an inquiry from the exchange in October, 33 health plans submitted preliminary notices that they plan to sell policies through the exchange. At least six bidders responded in each of the seven geographic coverage areas, and there were 12 bidders in the Southern Coastal Area region, which includes Ventura, Santa Barbara, San Luis Obispo and Orange counties.

"That gives us a sense that there is a lot of interest, and why not?" Wright said. "This is a chance to offer their product to a couple million people, many of whom will be getting significant financial help to buy their product. Why wouldn't they jump at that?"

Under the health law, those who get group insurance through large employers will still do so. In addition, Medicaid, the federal insurance program for poor people that is called Medi-Cal in California, will grow to cover an estimated 20 million additional people nationwide, according to a study last month by the Henry J. Kaiser Family Foundation and the Urban Institute. For everyone else, the health benefit exchange will come into play.

Insurance companies will offer "gold" and "platinum" plans with different co-payments and annual out-of-pocket expense limits. All will have to offer a minimum level of what are deemed essential services, including prescription drugs and mental health care, and provide preventive care such as immunizations with no patient cost-sharing.

Consumers will be able to go to the Covered California web portal to compare and shop for plans. Those with incomes of up to 400 percent of federal poverty guidelines, or $44,680 for individuals and $92,200 for a family of four, will be eligible for federal subsidies to offset some of the premiums.

People will still be able to buy individual plans directly from an insurance company, but only those who make purchases through the exchange will be eligible for subsidies.

"For consumers, this will be a game-changing moment," Wright said. "They will pay for coverage based on what they can afford. Some people are now spending 10, 20, 30 percent of their incomes on coverage. With the exchange, they will pay from 2 percent to 8 percent."

Johnston said plans will compete largely based on the network of doctors and hospitals that participate and to a lesser degree on price.

"A policy or plan that offers the doctors a consumer wants to continue with or see and the hospitals a person wants to have access to — that's what will matter most," he said.

As for price, Johnston said that while the subsidies will make individual health plans more affordable for most consumers, the costs for the insurance product will rise.

"All the policies will have comprehensive benefits with many preventive services at no cost to the patient. But still, doctors and labs will have to be paid," he said. "The cost-drivers remain and are added to."

In addition to the individual-market exchange, the agency will run a second exchange, the Small Business Health Options Program, that will allow businesses with fewer than 50, mostly low-wage employees buy plans for their workers and receive a 50 percent tax credit.

David Chase, California director for a group called Small Business Majority, said business owners, many of whom may have been lukewarm or hostile to the federal health overhaul, are just now beginning to focus on the details.

"They now know that the health care law is here to stay, and small business is hungry for information," he said. "At this point, there are still a lot of questions in the small-business community."

But he thinks that once small-business owners become familiar with the tax credit, interest in the exchange will spike.