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CaliforniACA – April Newsletter

California’s Uninsured

About 4.7M of California’s 7M uninsured will have access to subsidized coverage in 2014. 3M will qualify for Medi-Cal, and 1.7M will be eligible for refundable tax credits in the Exchange.  About 0.9M  persons with individual coverage and incomes under 400% of FPL ($89,000 for a family of four) would be eligible for credits in the Exchange. About 1.2M of uninsured Californians can purchase through the Exchange, but have incomes too high to qualify for credits. Over 1M of California’s uninsured are undocumented workers and their families who are barred from any form of coverage in the Exchange although some could be eligible for Medi-Cal coverage of genuine emergencies.

§1115 Waiver

All 58 of California’s counties have submitted applications to the state Department of Health Care Services for the waiver’s Low Income Health Program (LIHP), and they have been preliminarily approved. The waiver provides federal match for counties’ coverage of low-income adults not eligible for Medi-Cal. Based on the county projections, approximately 455,000 adults will be covered. County LIHPs may begin as early as June 1. Through the Delivery System Reform Incentive Pool (DSRIP), 17 county and public university hospital and clinic systems will draw down $3.3B in federal matching funds to upgrade their delivery systems.

Pre-Existing Condition Insurance Plan

California passed SB 227 (Alquist) and AB 1887 (Villines) to implement PCIP. As of February 2011, 1,621 Californians have enrolled in PCIP, which has funding capacity for 24,100.

California Health Benefit Exchange

California passed AB 1602 (Perez) and SB 900 (Alquist and Steinberg) to establish the California Health Benefit Exchange. It will be an independent public entity with no state General Funds and financed solely by participant fees; it will selectively contract for the best price and quality with private health plans. Four of the five board members of the Exchange have been appointed. SB 703 (Hernandez) would establish a basic health plan for California’s uninsured (830,000 individuals) with incomes between 133 and 200% of FPL; it passed the Senate Health Committee on April 6, 2010.

Extension of Dependent Coverage for Young Adults

There are an estimated 1.3M uninsured young adults between 19 and 25 in California. Between September and December 2010, CalPERS alone enrolled 28,769 dependents.

Small Business Tax Credits

An estimated 465,000 California small businesses are eligible for the tax credit. Of those eligible, an estimated 135,900 qualify for the maximum credit, indicating they have less than 10 employees and average salaries of $25,000 or less. Only 57% of small businesses in California were aware of the health insurance tax credits.

Early Retiree Reinsurance Program

In California as of March 23, 2011, 473 businesses, employers, and unions have been accepted into the Early Retiree Reinsurance Program (ERRP) to receive reimbursement for medical claims for early retirees, their spouses, and dependents. CalPERS expects to receive $200M in reimbursements from the program in 2011 and estimates that premium increases will be reduced by an average of 3%.

Public Health and Prevention

California public and private entities received $42.7M in grants from the ACA’s Prevention and Public Health Fund to address issues such as tobacco prevention/cessation, HIV testing, obesity, integration of primary and behavioral health, and upgrading public health laboratory capacity to identify, track and report on the spread of infectious diseases. California also received $18.2M in other ACA grants to address workforce needs, pregnancy assistance, and mother and infant home visits.


In 2010, California’s community clinics received $102.4M in new ARRA funds and $34.4M in ACA funds to expand primary care services.  In 2011, California clinics received $105K in ARRA grant funds, and $92.2M in ACA clinic grants to expand primary care.

Workforce Capacity

California has one primary care physician for every 2000 Medi-Cal beneficiaries. When the number of Medi-Cal beneficiaries is expanded in 2014, California is likely to need to increase primary care capacity through some combination of educating and attracting the equivalent of 350 new physicians to provide primary care to Medicaid beneficiaries full time, expanding community clinics, making greater use of physician extenders and/or increasing the scope of practice of other practitioners. The Senate Health Committee recently approved SB 635 (Hernandez) to redirect funds to increase support of primary care workforce in underserved communities. UC San Francisco opened a $15.5M Teaching and Learning Center in January to utilize simulation technology to train doctors, nurses, pharmacists, and dentists (January 2011). Rural counties are pursuing initiatives in telemedicine and a greater reliance on nurses and other health professionals.


California hospitals pay a fee to enhance their Medicaid rates so that they are paid closer to cost. SB 90 (Steinberg) and AB 113 (Monning) extend this fee and the district hospital intergovernmental transfers for an additional 6 months until July 1, 2011 so that California’s hospitals can qualify for about $3 billion annually in increased federal matching. A portion of these funds is designated to maintain the state’s Medi-Cal coverage.

Health Information Technology

California’s Regional Extension Center (CalHIPSO) has received $32 million in federal grants to help California providers adopt electronic health records (EHR), and Cal eConnect administers the $38 million in federal grants to develop the Health Information Exchanges for meaningful use. EMR/EHR adoption rates are increasing among California hospitals, clinics and office-based physicians. Large percentages of hospitals (about 82%) and clinics (73%) plan to apply for federal incentive payments in 2011 or 2012. About a fifth of hospitals and clinics have fully implemented EHRs. Many of the EHR/EMR systems now in use are not yet ready to meet the federal “meaningful use” test required to receive federal incentive payments.

Accountable Care Organizations

California providers (such as Health Care Partners, Sharp, Monarch, Hill Physicians Group, Brown and Toland) are already developing ACO pilots for California’s privately insured with major health plans including Anthem, Blue Shield, Aetna and United, as well as payors like CalPERS.  Local safety nets with the assistance of California foundations are exploring the creation of safety net based ACOs.

Insurance Regulations

California received $1 million in federal grants to prevent unreasonable insurance premium increases. As of January 1, 2011, SB 1163 (Leno) gives California regulators limited power to review health plan premium increases. Department of Insurance and Department of Managed Health Care now have the authority to enforce an 80% medical loss ratio (MLR) for individual and small employer policies. AB 52 (Feuer), introduced in March 2011, allows regulators to approve or reject excessive premium increases. AB 2244 (Feuer) bars health plans who fail to comply with the ACA requirement to guarantee issue children’s coverage from participating in the Exchange for 5 years, effective January 2011.

For more background information, please refer to the download below.
CaliforniACA - April Newsletter (Background) CaliforniACA - April Newsletter (Background).pdf

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