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Health Insurance Exchange White Paper

Health Insurance Exchange White Paper Health Insurance Exchange White Paper.pdf


Less than five months after President Obama signed into law the Patient Protection and Affordable Care Act (ACA), California passed AB 1602 (Perez) and SB 900 (Alquist & Steinberg), announcing to the country that the state is ready to take on the challenge of implementing and operating a Health Benefit Exchange.

Opening its doors on January 1, 2014, the California Exchange will offer affordable coverage to millions of uninsured and currently under-insured individuals, as well as to small- and eventually to mid-sized employers. Premium subsidies in the form of refundable tax credits will be available to those with incomes between 133% and 400% of the Federal Poverty Level (FPL) and to small, low wage employers. According to the ULCA Center for Health Policy Research, more than 3.2 million Californians will be eligible for the premium subsidies in the Exchange, over two-thirds of whom are currently uninsured.[1]

Section 1311 of the ACA sets the basic minimum requirements for the structure, benefit and operation of each state exchange. AB1602 and SB900 provides additional details, outlining the individual and small employer components, establishing the Exchange’s governance, and generally defining the Exchange’s relationship to other programs (summaries of AB 1602 and SB 900 can be found in Appendix 1). While robust and broad in scope, these bills leave many remaining implementation details to be decided by subsequent legislatures and/or the Exchange Board.

It has been more than a dozen years since California last implemented a large new coverage expansion. At that time, the original Healthy Families Program application was 28 pages long. Initial enrollment was very slow, and it took nearly five years to iron out many of the bugs in the Program. The challenge California now confronts is exponentially greater. While the state has experience administering coverage programs and small insurance pools, it has never been tasked with the creation of such a large, regulated market. The Exchange will cover three to four times as many individuals than Healthy Families, and will entail many more levels of coverage and subsidy. What’s more, the ACA requires state exchanges to be operational by January 1, 2014. Reaching that goal in California, while keeping the Exchange exceedingly simple and attractive to new subscribers, will take strong leadership at the highest levels, sustained and concerted effort by state and county agencies, and constructive collaboration from countless stakeholders.

Over the last two months, ITUP has convened a California Health Benefit Exchange Workgroup[2] comprised of public and private payers, hospitals, community clinics, academics and advocates to discuss the major questions concerning California’s Exchange and to develop recommendations and strategies to help ensure successful Exchange implementation. This paper outlines the basic parameters established by the federal reform and state legislation, summarizes the significant implementation issues at stake, offers descriptions of various stakeholders’ positions, and makes policy recommendations.

[1] Alex Lavarreda and E. Richard Brown, National Health Care Reform Will Help Four Million Uninsured Adults and Children in California, Health Policy Factsheet, Oct. 2009 available at http://www.healthpolicy.ucla.edu/pubs/files/HCR_FS_10-09.pdf.

[2] In addition to ITUP, Workgroup members include representatives from:  Blue Shield of California Foundation, California Health and Human Services Agency, California Health Care Foundation, California Mental Health Directors Association, California Primary Care Association, Central Valley Health Network, Community Clinic Association of Los Angeles, Community Health Councils, County Welfare Directors Association, Cal State University Los Angeles, Department of Health Care Services, Health & Human Services Region IX, Kaiser Health Plan, Local Health Plans of California, National Health Foundation, Managed Risk Medical Insurance Board, Napa Children’s Health Initiative, New America Foundation, Private Essential Access Community Hospitals, , Small Business Majority, The Children’s Partnership, United Ways of California, University of California at Berkeley, and Western Center on Law and Poverty.

To continue reading, download the .pdf full report at the top of the post.

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