California exchange will offer policies

San Francisco Chronicle, By Victoria Colliver –

June 29, 2012: As California moves ahead to put the federal health care law in place, front and center is the creation of what is known as the exchange, a virtual marketplace where individuals and small businesses will be able to purchase insurance.

State health officials hope the exchange will be kind of like Travelocity or Amazon for consumers – a sort of one-stop shop for health coverage.

“We know buying insurance is really complicated. We want to make it as easy as buying a book on Amazon,” said Peter Lee, executive director of the California Health Benefit Exchange, an independent government agency.

Thursday’s Supreme Court decision upholding most of the federal health care law cleared the way for states to create these marketplaces where people will be able to buy insurance, often with federal subsidies. The exchanges will become available on Jan. 1, 2014, when insurers will be required to sell coverage to everyone, regardless of their age or health history, and they will no longer be able to charge higher rates to people with medical problems.

While other states balked, California became the first in the country to begin creating its exchange in 2010, shortly after President Obama signed the health law. It now has a five-member board and 36 employees. Next month it will start deciding many of the key details.

The state has also been aggressive in getting federal funds to help establish its exchange. On Wednesday, just a day before the court’s ruling, the exchange’s board requested $196 million from the federal government to help build its enrollment system – that’s on top of the $40 million it has already received in setup costs.

The federal government has decided which essential benefits the plans offered by the exchanges must cover, including contraception, maternity care and substance abuse, but states have leeway to determine the details of those benefits.

Now Lee and his colleagues will get down to the work of figuring out exactly what kind of benefits the plans will offer and determine which insurers will sell in the exchange. They will set up the website that will allow people to select and compare their options, and launch a multilingual public education campaign to let people know about the exchange.

Lee said he envisions the exchange as a “no wrong door” place. And with the rolls of the state’s Medi-Cal program expected to expand by up to 3 million people under the federal law, the exchange will be a place to go even for people who want to know whether they’re eligible.

Those who aren’t candidates for the low-income health program will be able to compare the plans that are offered and find out whether they’re eligible for a federal subsidy.

An estimated 5 million uninsured Californians who are ineligible for Medi-Cal are expected to be able to buy coverage through the exchange to avoid being taxed for not having insurance under the health plan’s mandate.

These include more than 3 million people who will be eligible for subsidies in the form of advance tax credits that can be applied solely to the purchase of coverage in the exchange. The other 2 million – mostly those who are self-employed or otherwise do not have insurance through an employer – are expected to buy it from the exchange without the federal help.

Subsidies will be available on a sliding scale for individuals and families earning between 138 and 400 percent of the federal poverty level – which makes a family of four with an annual income of $93,000 eligible for a subsidy. Tax credits will also be available to small businesses with fewer than 25 employees that are low-wage earners.

The exchange hopes to start enrolling people in October 2013.

But there’s still the question of how much longer it will be known as the “exchange.”

“We don’t even know what we’re going to call ourselves,” said Lee, adding that the organization plans to test a few possible names through focus groups.

Source: John & Rusty Report via Word&Brown.com