With all the health reform bills on the Governor’s desk, it may be useful to highlight the different types of reform.
Many of them are plain-vanilla measures simply conforming state health insurance laws to the new federal reform, especially for those patient protections that start to come online this September 23rd: allowing young adults to join their parents’ plan; no cost-sharing for preventative care; no annual or lifetime caps on coverage; etc.
Other proposals attempt to adapt to the Affordable Care Act in greater detail than what is in federal law, and in those details they work not just to implement but to improve upon the federal law. For example, the health insurance exchange bills set up exchanges in California as encouraged by the federal law, and make various decisions that are left up to the states.
But I want to spotlight reform that not just implement and improve health reform, but also provide for a better and smoother transition in the insurance market between now and 2014, when the biggest elements of health reform kick in. These include:
* access and affordability for children with pre-existing conditions, by not just implementing the federal law prohibiting of denying such coverage, but also limiting how much more such children can be charged. In 2014, neither children nor adults will be allowed to be denied or charged different because of their health status.
* categorizing plans in the Platinum/Gold/Silver/Bronze tiers based on actuarial value, so consumers can make some general comparisons between plans. In 2014, these will be more specific tiers in the exchange.
* phasing in some minimum benefit standards early, such as maternity coverage and mental health parity. These will be part of the basic benefit package in 2014.
The benefits of these bills, if signed by the Governor this month, are several. First of all, the measures would provide important consumer protections earlier than the federal law requires. But I also think it is important to have policies that allow for a smoother slide path to 2014, from the “wild, wild west” of California’s insurance market, to a more regulated and transparent market. The transition to guaranteed issue, modified community rating, and other market reforms are big, and it would be smarter to phase them in over the next three years, rather than simply wait until 2014 and go from 0-60 in one quick swoop. It’s like moving a fishtank in your house: the new location is going to be better, but you have to be careful in the transition.
One point is we don’t want the insurers to use the next three years as a way to game the marketplace. There’s a fear that insurers may work even harder to avoid sick people in this period before 2014, knowing they will no longer be able to deny them afterwards. Those who are the most aggressive in this regard before 2014 will have an advantage of having a healthier risk pool to cover in 2014 and beyond. That’s a problem, and part of the way to solve that is to start putting in place the new rules of the road, so that the market can adjust slowly but clearly.
We’ll see what the Governor does.