The Senate spotlights the new exchange…

Thursday, April 22, 2010

* Pair of Bills By Chair Elaine Alquist Allows California to Swiftly Move Forward
* Insurers Urged to Offer More Consumer-Friendly Policies on the Individual Market
* Apples-to-Apples Comparison Shopping in Individual Market is Closer to Reality
* Vice Chair Strickland’s Challenge to Expansion of Medi-Cal is Voted Down

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KEY SENATE BILLS PASS SENATE HEALTH COMMITTEE: On Wednesday, California continued its march toward making health reform meaningful here as a pair of bills authored by Senate Health Committee Chair Elaine Alquist and Senate President Pro Tem Darrell Steinberg won committee approval.

These and other key consumer protection measures all passed on a 5-0 vote. Due to sickness and/or scheduling conflicts, all three Republicans and one Democrat on the committee were absent, thus requiring a unanimous vote from the remaining five Democrats in order for bills to proceed.

SB 900 (Alquist/Steinberg) sets up a new insurance exchange that actively uses its negotiating power to seek out the best deals for individual and small group policyholders. SB 890 (Alquist/Steinberg) standardizes and simplifies the health insurance market so that consumers better understand their choices and can make apples-to-apples comparisons.

SB 900 is similar to AB 1602, authored by Speaker John Perez, which the Assembly Health Committee passed on Tuesday. The measures are expected to be reconciled further along the legislative process, as the flagship measures to deliver on federal health reform’s promise, and create a fair, consumer-friendly exchange as a market where consumers could shop for the best policies at the best prices would be fulfilled.

In introducing her bill, Senator Alquist said, “This establishes the exchange as an active purchaser that will try to get the best possible deal for consumers shopping for individual policies.” She said the exchange would be administered by a board of legislative and gubernatorial appointees that would meet in public every two months. The board will be held accountable for its decisions, Alquist said.

Health Access advocate Beth Capell said it is estimated that between three and nine million Californians would get coverage through the exchange. The exchange will ensure that people are charged for health insurance on a sliding scale, so those who make less will be charged less, and those with higher incomes will pay prices according to a sliding scale as well. It is envisioned that this fundamental building block of health reform in California would be consumer-friendly enough to attract small businesses into the exchange.

An exchange might reduce the number of uninsured in California — currently estimated at 8.2 million — to roughly 2-3 million. “We are hopeful that the exchange will help create a real culture of coverage in California,” Capell told committee members.

Alquist’s SB 890 aims to standardize the range of policies that are available to individual consumers so that “apples-to-apples” comparisons could be made. The bill standardize the market, from the current “confusing maze of over 100 products” where consumers have little ability to determine the differences between plans.

“This would be the first step in beginning to implement health care reform,” Alquist said. “We need to restructure for Californians the market in which they buy their own insurance.” As many as 2.5 million Californians, or 7% of all Californians, shop and pay for their own insurance in the growing individual market, which has been largely unregulated

SB890 received broad support from a range of stakeholders, including Health Access California, Kaiser Permanente, Congress of California Seniors, California Medical Association, California Hospital Association, and many others.

Insurers and brokers raised concerns with both bills. A common refrain was to wait until the federal government issued more clarifying regulations. An ongoing issue spotlighted by the insurers was about any provision that went beyond the federal law.

Nevertheless, California is moving along at establishing federal health care reform at a quick clip. The state is well-poised to make swift and certain progress at reform, in part due to extensive policy work done in 2007, when California nearly passed its own version of reform before Governor Schwarzenegger’s “the Year of Reform” was squelched.

In other important action:

* The Senate Health Committee also passed legislation by Senator Mark Leno (D) to require health plans and insurers to disclose information justifying premium rate hikes and the methodology and frequency of their coverage denials to consumers. Leno’s bill, SB 1163, would also require insurers to disclose impending premium increases 180 days before they go into effect — rather than the 30-day notice current law requires. Leno noted that increases in premiums have far out-paced actual increases in medical costs. In 1960, he said, health insurance premiums made up 5% of the Gross Domestic Product; in 2000, that proportion grew to 13% of the GDP; in 2010, it grew to 17.3% of the GDP; — and by the year 2025, if that rate of growth were not stopped, health insurance premiums would make up 25% of the GDP. “It is completely unsustainable,” the senator said.

* SB 1283, by Senate President Pro Tempore Darrell Steinberg (D) also passed with a 5-0 vote out of committee on Wednesday. The bill would require a closer examination of the Department of Managed Health Care’s progress at responding to consumer complaints, grievances and appeals of denial of coverage. A consumer testified that when an autistic child needed prompt medical treatment and was denied it by Blue Shield, the grievance process was so slow and ineffective as to take nine months instead of the legally required seven-day process. Steinberg’s bill would allow consumer advocates to examine whether the Department is following the letter of the law of the 1999 Patient Bill of Rights that Health Access and a broad consumer coalition established. Health Access advocate Beth Capell told committee members: “We need to revisit a law we put into place a decade ago and get families the care they need when they need it — and not see them subjected to Dickensian delays.”

* SB 1088, authored by Senator Curren D. Price Jr. (D), was passed by the committee.. The legislation would build a bridge to uninterrupted insurance coverage for young adults up to age 26 who are on their parents’ policy as students of a four-year university. Prior to federal health reform, a university graduate would be dropped as a dependant from a policy.

* Another bill by Senator Leno would require insurers to provide timely access to care to children at school. SB 1200 clarifies existing law to make certain that health plans cover children with chronic conditions such as asthma while they are in school.

* During most bill deliberations on Wednesday, lobbyists for the insurance industry were hard-pressed to argue why they might oppose the bills. In the wake of federal health reform, last year’s oft-repeated, pro-industry opposing argument — that any additional mandate would simply add to insurance company costs, and ultimately spread higher costs to all policyholders — lost its punch. With reforms now the law of the land, the California Association of Health Plans, Health Net, Anthem Blue Cross and industry special interest groups were being very watchful of any changes to the California individuals market.

* And the partisan position that opposed federal health care reform lost ground as well on Wednesday. Senator Mark Wyland, standing in for Vice Chair Tony Strickland (R) presented an opposition bill that protested against the expansion of Medi-Cal — as called for by federal health reform — as too costly. But Capell pointed out that allowing people with incomes up to 133% of the poverty level to qualify for Medi-Cal also brought with it the promise of $124 billion in federal funds for California in the next decade. She and other opponents made clear that the the federal government was paying for 100% of the cost of newly eligible patients, and even after some phasing down until 2020, the federal government would provide a higher 9 to 1 marching rate. That pretty much took the steam out of the protest bill, which failed to pass by a 0-5 vote.

Many of these bills are now headed to the relevant Appropriations Committees for review. For more information, contact Health Access California.

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