John Sepulvado of Capital Public Radio recently profiled hair stylist Alexis Nagle, and how she would benefit from health reform in 2014. More specifically, he addresses how the new health insurance exchanges would help a consumer like Alexis have an easy one-stop shop to get coverage–without regard to pre-existing conditions.
But as Alexis says, perhaps the most attactive part of the exchange won’t be the simplicity-of-use or the easy-to-compare options, but the most obvious benefit–it’ll be the place that many Californians can get subsidies and tax credits to better afford coverage. For many Californians under 400% of the federal poverty level–around median income–the exchange will offer subsidies if a basic coverage package is more than a certain percentage of one’s income. So if coverage costs more than a percentage of a family income, on a sliding scale from 2%-9.5%, the subsidies will make up the different between that percentage and the cost of coverage. For many families, that federal assistance could be in the hundreds or even thousands of dollars. For California’s health system and economy, that’s nearly $123 billion in federal funds over the next ten years.
As Sarah Varney of National Public Radio reported earlier in the month, key bills passed the legislature in the past few weeks and now are pending on the Governor’s desk. They would not just set up an exchange, but make it a meaningful one: a true purchasing pool, that would negotiate for the best price and value for consumers. This use of “selective contracting” would provide to individual consumers and small businesses some of the discounts and benefits that large employers and purchasers currently have now. The bill has conflict-of-interest protections, so that insurers are not on the governance of the exchange, and thus not on both ends of the bargaining table.
The two exchange bills, AB1602 and SB900, contain a number of carefully crafted measures to assure the viability of the exchange while allowing the market for health insurance to flourish. Given the failure of an earlier California purchasing pool for small businesses, these steps are important to protect the viability of the proposed exchange while allowing insurers to develop new products.
By signing AB1602 and SB900, the Governor has the chance to lead on health care once again. AB1602 and SB900 would put California where it belongs, as the first state in the nation to implement federal health reform. We’ll see what he does in the next few weeks…