Obamacare insurance exchanges: look to California
Well before last month's Supreme Court ruling, California already had a jump on setting up the health-care marketplaces known as insurance exchanges. Now as the 2014 deadline approaches, many states will be looking to the Golden State for lessons on what to do.
California has long been ahead of the game in many policy matters: taxes, religion, environment. Now add to that health-care reform and the complicated process of creating a marketplace for people to shop for health-care plans.Skip to next paragraph
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With the federal requirement that all states must have a so-called health-care exchange up and running by 2014, many states will be looking to the Golden State for lessons on how it has run its exchange since its inception in 2010.
According to health providers, insurance agents and state officials, here’s the takeaway: Start as early as you can, be ready for great excitement over the possibilities and great frustration in implementation, have an army of flexible tech geeks and have infinite energy.
Under the Affordable Care Act (ACA), which got the Supreme Court’s endorsement June 28, health-care exchanges must be established in each of the 50 states. Exchange operators will have to figure out how to make them understood to consumers, what sort coverage and benefits will be available and which insurance companies will be allowed to participate. States can join together to run multistate exchanges or choose not to run one at all, in which case the federal government will do so.
Already several states— New Jersey, South Carolina, Louisiana, among others— have announced they would refuse to set up the exchanges, leaving it in the hands of the federal government. Other states, like Mississippi, are moving ahead to design their own exchanges precisely because they don’t want the federal government to do it for them.
California was one of the first out of the gate to begin setting up an exchange in 2011 following passage of the Affordable Care Act in 2010. (Massachusetts had set up a similar exchange under its own state law passed in 2006). Part of the reason California was ahead of the game was that 18 years earlier it had set up the nation’s first exchange, at its peak enrolling about 150,000 people. It collapsed under financial strain in 2006.
“We are moving from a world where insurance companies once competed by avoiding sick people to one where they compete on service, cost, and quality,” says Anthony Wright, executive director for Health Access, a statewide consumer advocacy coalition.
Peter Lee, head of the California Health Exchange, says with a $39 million federal grant his agency has since hired 40 permanent staff and is on track to be open for the exchange for business in 2013. By January 2014, millions will enroll in insurance that wouldn’t otherwise have access, he says. Currently about one-fifth of Californians are uninsured.
Although the ACA mandates that everyone participate in exchanges, there are significant hurdles: insufficient penalties for not purchasing policies, language and cultural barriers, consumer confusion, and being able to access help from insurance agents, Internet links, and state or community organizations.
“California knows they will enroll those with immediate medical needs right off the bat, but the biggest challenge will be how to reach and enroll the rest of the population,” says Dierdre Kennedy-Simington, vice president of Polenzani Benefits in Pasadena and president-elect of the Los Angeles Association of Health Underwriters.
Ms. Kennedy-Simington says a key issue is ensuring an adequate number of healthy people buy health insurance to balance out the unhealthy people, whose medical costs tend to be higher. It’s a concept known as “adverse selection,” and it was a major part of the collapse of the Health Insurance Plan of California.