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In Praise of the Affordable Care Act – The Exchange

There have been widely reported, continuous attacks on the Affordable Care Act (ACA), but relatively little review of its important progress. This series will summarize some of that progress here in California. This paper reviews the progress of the California Health Benefits Exchange – a purchasing pool for small employers and individuals. The Exchange distributes the tax credits for small employers and tax credits for moderate and middle-income individuals to help pay for their costs of coverage. It is expected to offer coverage for at least 2 million and up to 5 million individuals and small businesses in California.[1]


  • ACA creates an Exchange for small employers and individuals. California has passed legislation — AB 1602 (Perez and Steinberg) — creating the California Health Benefits Exchange. California chose to have an independent public agency with an appointed five member governing Board; the Board hired its Executive Director, Peter Lee, and key staff. The California legislation requires the Exchange to use a competitive selection process to contract with interested carriers. The California HealthCare Foundation has outlined four potential models for the selection process.[2] The Exchange has hired PricewaterhouseCoopers to design options for the Exchange’s purchasing strategies and solicited and is considering stakeholder input for the standards to apply for contracting plans.[3]
  • ACA authorizes an IT system to determine eligibility for the Exchange, Healthy Families and much of Medi-Cal. California has contracted with Accenture to develop its IT system.[4] The UX 2014 design for the on line consolidated application is also complete.[5] California is still in the process of deciding the future roles of county welfare offices in determining program eligibility.[6]
  • The ACA requires an IT system will display prices and benefits and quality indicators of the plans with which the Exchange has contracted.
  • The ACA authorizes “Navigators” to explain the Exchange to potential participants. The Exchange is examining a range of options[8] presented by Richard Heath and Associates as to who will serve as navigators and expects to make a decision in the middle of July who will be eligible to be the navigators.
  • The ACA authorizes the Exchange to determine eligibility for Medi-Cal MAGI, Healthy Families and the Exchange. The Exchange has not yet decided the respective roles[9] of the local county welfare offices, the Healthy Families programs and the Exchange in determining eligibility and operating a service center to assist program applicants and expects to do so at its July meeting.
  • The ACA authorizes a Basic Health Plan option for states wishing to offer Medicaid or CHIP like coverage for adults with incomes between 133 and 200% of FPL.[10] The California legislature is still debating this option – SB 703 (Hernandez).[11]


[1] Lavarreda SA, Cabezas L, “Two-Third of California’s 7 Million Uninsured May Obtain Coverage Under Health Care Reform,” UCLA Center for Health Policy Research, February 2011.  Long P, Gruber J, “Projecting the Impact of the Affordable Care Act on California,” Health Affairs January 2011 vol. 30 no. 1 63-70.

[2] http://www.chcf.org/publications/2011/08/health-benefit-exchange-visions

[3] http://www.healthexchange.ca.gov/BoardMeetings/Documents/May%2022,%202012/HBEX-QHPStakeholderReport_5-18-12.pdf, http://www.healthexchange.ca.gov/StakeHolders/Pages/Default.aspx

[4] http://www.healthexchange.ca.gov/Documents/CalHEERS_Announcement_05_31_12.pdf

[5] http://www.ux2014.org/

[6] The California Welfare Director’s Association is seeking the authority to determine eligibility for the Exchange, Healthy Families and the Medi-Cal expansions.

[7] http://www.healthexchange.ca.gov/Documents/CalHEERS_Announcement_05_31_12.pdf

[8] The recommended options would distinguish between paid Navigators/Assisters who must have no financial interest in enrollment with a particular plan or provider and uncompensated assisters who may have financial interests in enrolling subscribers with particular plans or providers. All must have the same training and meet the same competency standards. The California Community Clinic Association maintains that its members should be paid for their services as navigators despite their incentives to enroll those they assist in their own networks of care.

[9] CWDA seeks to be the sole service center for all program eligibility and to play the major role in determining eligibility for all programs.

[10] ACA §1413

[11] California’s local health plans support the BHP arguing that it improves affordability for lower income subscribers, while the commercial plans oppose the BHP option, arguing that it weakens the integrity of the pool.

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