The Health Coverage Marketplace of the Future

The federal government released new regulations on the Exchange and Medicaid eligibility today, and also granted $39 million to California to fully fund the next year of operation of the state’s new Health Benefits Exchange, as it prepares to create a purchasing pool that in 2014 and beyond will provide more affordable, federally subsidized, coverage to millions of Californians.

Getting these $39,421,383 in funds are the next step in creating a new consumer-friendly marketplace of the future, for Californians to get affordable health coverage. Under the new federal health law, the Exchange will allow millions of Californians to pool together to bargain for the best price and value with the insurance industry. This will be transformative from the current individual market where consumers and small businesses are left all alone at the mercy of the big insurers.

The three proposed rules also released today by HHS and Treasury focus on the following:

* Easy, Simple Access to Coverage for Consumers and Small Businesses: New rules will make it easy for consumers to enroll in high-quality health plans and get help paying for health coverage through premium tax credits and cost sharing reductions. Small employers participating in the Small Business Health Options Program will be able to offer their employees a choice of health plans and cut their costs with new tax credits.

* Health Insurance Premium Tax Credit: Individuals and families will receive premium tax credits to help defray insurance costs, increasing access to health coverage for millions of middle class American families.

* Medicaid Eligibility: Coordinating the Exchange with Medicaid and Children’s Health Insurance Program eligibility will make enrollment seamless for qualified Americans and reduce the administrative burden on states.

Comments on the rules are being sought, with a deadline in 75 days. Forums are being planned by HHS, including one in Sacramento, CA.

So what does this mean? Individuals will no longer be charged based on how sick they are, but on how much they can afford, with federal subsidies available in the Exchange based on a sliding scale. With this Exchange, we have the opportunity to structure a market where insurers compete based on cost and quality, customer service and wellness, rather than how effectively they avoid people who need care, and confuse the rest of us with the complexity of their benefits.

California was the first state in the nation to take this central step of implementing the new federal health reform law by passing legislation in 2010, AB 1602 (Perez) and SB 900 (Alquist/Steinberg), to establish a new health insurance Exchange. Many other states have followed suit this year.

In 2014, the new Exchange will be the new one-stop shop for getting health coverage for individuals and small businesses, both providing easy-to-compare choices, access to federally-funded subsidies to make coverage affordable, and the bulk purchasing power (bigger than large employers or CALPERS) of millions of Californians to bargain for the best price and value.

An estimated 3-4 million or more Californians who will be eligible to participate in the exchange starting 2014 (and more in future years as larger employers are allowed to join in).

The chair of the Exchange board is Governor Brown’s Secretary of Health and Human Services, Diana Dooley. Governor Schwarzenegger appointed two of his top aides, his chief of staff Susan Kennedy and his secretary of health and human services secretary Kim Belshe. Assembly Speaker John Perez made his appointment of Paul Fearer, a Union Bank executive who is chair of the board of the Pacific Business Group on Health. The Senate Rules Committee, chaired by Senate President Pro Tem Darrell Steinberg, recently appointed Dr. Bob Ross, CEO of The California Endowment. The appointments are subject to important conflict-of-interest requirements that they do not represent health insurers or the industry, so the Exchange can freely negotiate on behalf of consumers and purchasers.

The board has a lot of work to do to get this new purchasing pool up and running by 2014–and that’s why the new resources are important. The board will determine criteria by which the exchange negotiates with insurers, and will help organize the marketplace so consumers can make meaningful comparisons. This board will work to set up seamless eligibility and enrollment systems for health coverage and to the new federal subsidies that will be available for individuals, families, and small businesses. The Administration and the Exchange should move quickly–including with pending legislation–so that Californians will be positioned to be ready on day one to maximize enrollment and take advantage of billions of dollars in new tax credits and subsidies to help families and small businesses afford coverage.

Health Access California promotes quality, affordable health care for all Californians.
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