State Uncertain as Top Court Steps In

SFGate.com, By Emily Bazar –

June 17, 2012: When President Obama’s health care overhaul became law two years ago, California lawmakers jumped into action.

Within months, they adopted several state laws that implement or build on the federal measure, including one to create a state health insurance exchange and another to allow young adults up to age 26 to remain covered by their parents’ health insurance policies.

Lawmakers passed more bills related to the overhaul last year and continue to debate sweeping proposals now.

The difference this year is that the fate of those state laws, and the impact they will have on Californians, hang under what state Sen. Ed Hernandez , D-West Covina (Los Angeles County), called a “cloud of uncertainty.”

Before the end of the month, the U.S. Supreme Court is expected to rule on the constitutionality of the federal health law, called the Affordable Care Act. The court may leave the law intact, overturn it completely, or strike down a key provision that requires most people to purchase health insurance.

Each possibility carries different implications for California, a state that took an early and aggressive approach to implementing the federal law.

“We will have to rethink everything” if the federal law is overturned in part or whole, said Hernandez, chairman of the Senate Health Committee.

“We have to reassess all of these measures. Some of them are actually contingent upon the implementation of the Affordable Care Act,” he said.

Experts predict up to 3 million uninsured Californians will become eligible for health coverage starting in 2014, when the major provisions of the law kick in, such as an expansion of Medicaid eligibility.

California, which already has received more than $1 billion in federal funding, is counting on billions of dollars more.

Should the Supreme Court undo the law’s provisions or funding, some state lawmakers and consumer advocates say that Californians still will benefit from better health coverage, thanks to the new state laws. Others fear that those new requirements will raise the cost of insurance.

“It will be important for everyone in California to step back and think through how we respond in a way that will work for affordable coverage,” said Patrick Johnston, CEO of the California Association of Health Plans.

The list of state bills that implement or expand on the Affordable Care Act is long, and includes:

— A law that created a state health insurance exchange in which Californians will be able to buy health coverage and find out whether they qualify for subsidies.

— A law that prohibits insurance companies from denying health coverage to children with pre-existing medical conditions.

— A law that prohibits insurers from setting lifetime caps on benefits.
“There are things that millions of Californians already are benefiting from,” said Richard Figueroa, director of Health and Human Services for the California Endowment health foundation.

Additional measures are being debated by the Legislature, such as a proposal that would prohibit insurance companies from denying coverage to anyone – not just children – regardless of pre-existing conditions.

Hernandez, who is the author of that measure and a fervent supporter of the Affordable Care Act, said he will move forward with that bill as long as the federal law stands. His office is scouring existing laws to determine which are tied to the fate of the federal law.

Figueroa and Kim Belshé say they believe insurers already have the costs of the new mandates built in to premiums. Belshé, former secretary of the state Health and Human Services Agency, is a California Health Benefit Exchange board member.

“The insurance products being sold last year, this year and next year reflect the changes that have already occurred,” Belshé said.

But Johnston, of the health plan association, said the true effect of the state’s laws on Californians’ pocketbooks will hinge on the Supreme Court’s decision.

He described the pieces of the Affordable Care Act as a “three-legged stool” that works together to keep costs down.

One leg of the stool is the billions in federal funding for expanding coverage, he said. The second is the requirement – known as the “individual mandate” – that most people purchase health insurance. The third is called “guaranteed issue,” which restricts health insurance companies from denying coverage to people for any reason, including pre-existing conditions.

If the Supreme Court strikes any one or more of them down, he said, California “can’t just ignore the leg of the stool that was removed,” he said.

Source: The John & Rusty Report via Word & Brown