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California speeds revamp of health insurance market

With Obama victory, state officials move ahead with implementing healthcare changes under the Affordable Care Act and expand insurance coverage.

November 07, 2012|By Chad Terhune, Los Angeles Times
  • The California health insurance exchange, now called Covered California, aims to enroll about 2 million new people in Medi-Cal and help an additional 2 million consumers purchase private coverage with federal subsidies. Above, a rally is held in January in downtown Los Angeles to protest planned cuts to the state Health and Human Services Agency budget.
The California health insurance exchange, now called Covered California,… (Michael Robinson Chavez,…)

With President Obama's reelection lifting a potential roadblock, California officials are rushing to implement the federal healthcare law and revamp the insurance market for millions of Californians starting next fall.

Republican challenger Mitt Romney had vowed to overturn the Affordable Care Act, casting uncertainty over efforts in California to use billions of federal dollars to extend coverage to many of the state's 7 million uninsured.

Wednesday, California officials disclosed plans to spend nearly $90 million next year on marketing and outreach to millions of consumers who may become eligible for premium subsidies and other assistance under the federal law starting in 2014.

"The election removes what was really the last distraction from focusing on the job, which is to get millions of Californians enrolled in health coverage," said Peter Lee, executive director of the California Health Benefit Exchange, which was renamed Covered California last week.

California was the first state to establish an insurance exchange after Congress passed the Affordable Care Act in 2010, and more than 30 other states have sought federal help in enacting their own. But some Republican-led states resisted the healthcare expansion as the presidential campaign wore on, and now the federal government may step in to open exchanges in those states.

The California exchange aims to enroll about 2 million new people in Medi-Cal, the state's Medicaid program for the poor and disabled, and help an additional 2 million Californians buy private coverage with federal subsidies.

State leaders and consumer advocates remain concerned about whether the exchange will attract enough initial enrollment, particularly among healthier consumers, to keep premiums affordable. "I think the exchange will be a tougher sell than originally thought," said Steve Valentine, president of Camden Group, an El Segundo healthcare consulting firm.

Meanwhile, health insurers are scrambling to assemble networks of medical providers, negotiate rates and design various health plans that comply with new levels of standardized benefits in the exchange.

"There are lots of details to sort out, and we don't have all that much time," said Paul Markovich, president of Blue Shield of California.

State lawmakers also must resolve several insurance issues in a special session expected to convene in January. Open enrollment in this new state-run insurance market will start in October 2013.

Those policies take effect in January 2014, when most Americans face the requirement to buy health insurance or pay a penalty.

To woo consumers, Lee said, the exchange plans to use a wide range of marketing methods, from grass-roots efforts through churches and schools to advertising on TV and radio, to educate California's large and diverse population about the new healthcare options. Next week, the exchange's board is expected to finalize its marketing and enrollment plans ahead of a Nov. 16 federal deadline.

With the election over, federal officials are also expected to issue more guidance to states on implementing the healthcare law.

Some industry experts have lobbied federal officials to phase in new rules that limit the difference in consumer premiums by age. By some estimates, that change may raise rates for some younger consumers as much as 45% under the federal law. Older consumers could pay about 13% less.

Critics said this change may attract too many sicker policyholders and too few of the young, healthier customers, threatening the viability of the exchange if healthcare costs rise too fast.

Patrick Johnston, president of the California Assn. of Health Plans, warned that "the risk of rate shock is real."

The exchange hasn't taken a formal position on the age-rating issue, but Lee said he's open to federal officials gradually implementing those requirements beyond 2014.

"We need to look at a whole range of options to moderate price increases," he said.

chad.terhune@latimes.com

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