A deep dive into the details of health reform…

Thursday, May 13th, 2010

* Legislators Get a Deep Look at Actions that States Need to Take to Implement Reform
* Also This Week: Release of Gov’s “May Revise” Budget; Draft Medi-Cal Waiver Plan

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The year’s health policy debate is kicking into high gear this week, balancing California’s interest in implementing and improving health reform with our state’s tough budget situation. On Friday, Governor Schwarzenegger will unveil his proposed May Revise of the state budget, including no new taxes but “absolutely terrible cuts.

EXCITEMENT OVER HEALTH REFORM: But despite the Capitol bracing for the bad budget news budget news, there was a sense of optimism in the air, as yesterday, the California state legislature held a special joint hearing of both the Senate and Assembly Health Committees to review the challenges and opportunities of health reform. While legislators have already begun consideration of over a dozen specific bills to implement and improve aspects of health reform, this is their first sustained examination of federal health reform since its passage over a month ago. It was covered in the Sacramento Bee, the San Francisco Chronicle, and HealthyCal.com.

Senator Elaine Alquist, chair of the Senate Health Committee, heralded the “once in a lifetime opportunity” to implement health reform, and indicate her personal goal to not just implement but to “build upon” the federal law.

Assemblyman Bill Monning, chair of the Assembly Health Committee, indicated his “excitement and enthusiasm” for “maximizing the opportunities” under health reform. He expressed his approval that the Governor had directed his staff to implement reform. “This is good news,” he said.

CALIFORNIA’S IMPLEMENTATION: Marian Mulkey from the California HealthCare Foundation started the hearing with a broad overview of the federal health reform, the state’s role, and the provisions that need to be implemented in both the short and long term. She projected that of the 7 million uninsured in California, 2 million of them will be newly enrolled in Medi-Cal; and another 2-4 million will newly get private coverage, with help of the new subsidies or new market rules. That will leave still leave 1-2 million uninsured in California alone.

Alan Weil of the National Academy of State Health Policy spoke on specific opportunities for states under federal health reform. His top 10 list of advice for states included:
· Be strategic with the insurance market exchange
· Regulate commercial health insurance market effectively: “New standards won’t enforce themselves,” Weil said to audience laughter.
· Simplify and integrate eligibility systems
· Expand provider and health systems capacity
· Attend to benefit design
· Focus on the dually eligible (those seniors and people with disabilities in both Medicaid and Medicare programs)
· Use new data to drive improvements in the health system
· Pursue public health goals
· Engage public in policy development and implementation
· Demand quality and efficiency from the health care system

Senator Alquist asked what one action would be to bend the cost curve, to which Weil responded is that “the most important thing to know is that there isn’t just one thing,” before talking about multi-sector coordinated efforts to establish concrete goals so there’s accountability, community priorities and measurable goals, especially around public health.

In response to legislator questions, Assemblyman Monning spotlighted his legislative efforts to maximize federal funds for both workforce development, and for ensuring an ombudsman program and other consumer assistance in California. Senator Alquist invoked her bills as well, including SB227 to implement a high-risk pool for those denied by pre-existing conditions, and SB890, a comprehensive proposal to reform the individual insurance market that includes medical loss ratio standards.

CREATING AN EXCHANGE: Jon Kingsdale, director of the Commonwealth Health Insurance Connector described the Massachusetts experience with exchanges. He stressed the need for a central, trusted source of information to counter misinformation. Mr. Kingsdale said that without such information, everyone will be nervous and asking “What is happening to me?” To outline the magnitude of the task, he cited that in just 2 years, the connector held 338 town hall meetings statewide and had a series of telephone conference calls. Mr. Kingsdale quickly did the math, converting the numbers for what that would translate to for California. “Statewide, California would have 1,700 meetings in 2 years, responding to 12,000 phone calls per week”—even before the program is up and running.

According to Kingsdale, the core mission of any exchange is to create a market and “to sell insurance… a commercial enterprise with public policy goals.” He suggested that an exchange could reduce distribution costs that can be as high as 20% of premiums in a state like California. In Massachusetts, they have been able to bring those costs initially down below 5%, and are now at 3%. Mr. Kingsdale spotlighted the ability of an exchange to negotiate for the best possible price, and the success that the exchange has had in doing so.

Another important role of the Exchange is to make getting insurance easy to use: the best thing that has come out of the Connector has been how many people have used it. He has been stopped on the street and thanked, he has been told numerous times how easy it is to get enrolled, and he is surprised at the various mixes of people taking advantage of it.

Assemblyman Monning inquired as to whom makes up their governing structure in Massachusetts. Mr. Kingsdale suggested the board include “customers” like consumers, labor, who will be the users of the exchange and can drive change, rather than people representing the health industry from insurers or providers.

MEDI-CAL WAIVER: David Maxwell-Jolly of the Department of Health Care Services spoke next on the impact of Federal Health Care Reform on the Medi-Cal Section 1115 Waiver.

Earlier this week, the Schwarzenegger Administration had unveiled a new, just-released plan for the waiver, which will govern the next five years of this critical safety-net program. The proposal has evolved from its original inception, most notably to take advantage of some new opportunities available under the new health reform law.

Maxwell-Jolly indicated his goals with the waiver were to slow long-term growth in health costs, reform the delivery of care, and to begin expansions of care to uninsured in California, and preserve the infrastructure that the state needs to be ready for 2014.

STAKEHOLDERS WEIGH IN: Beth Capell of Health Access California, stating she was “delighted a federal law was in place” and California will and should “improve upon it,” both in getting more Californians enrolled and in regulating insurers, especially in the individual market. Elizabeth Landsberg of Western Center on Law and Poverty said she “excited about implementation because poor people have a lot to gain.” She pressed that eligibility needs to be seamless. Sara Flocks of the California Labor Federation expressed strong support for health reform but cited concerns that some large employers would game the system by changing workers hours, and this issues needed to be monitored. Dr. Ellen Shaffer of the Center for Policy Analysis spoke briefly in support of federal health reform, and about how implementation can be concurrent with consideration of single payer reforms.

John Arensmeyer of Small Business Majority [organization name corrected from original post] expressed that small businesses pay up to 18% more than large businesses in buying coverage, reiterating the sentiment that size matters. So he sought a large exchange that is “aggressive” in bargaining for the best price, and that insurance rules should be the same inside and outside of the exchange. Charles Bacchi of the California Association of Health Plans indicated how some insurers were adopting elements of health reform quickly, but cautioned to go slow in other areas, and against legislative efforts that were unrelated or went beyond federal reform. Dr. Phil Phinney of the California Medical Association Board of Trustees, gave highlights from the CMA perspective, including reiterating comments by legislators on increasing the workforce to meet increased demand. Other public comments, generally supportive, came from Suzie Shupe, of California Children’s Health Initiative, Caroline Negrete of California Alliance for Retired Americans and OWL, and Erica Murray of California Association of Public Hospitals.

As Assemblyman Monning stated, this hearing was “only a first step” in the process. Next steps involve both the budget, the negotiations around a Medicaid waiver, and a series of bills, from setting up a new high-risk pool to a full exchange, to be considered in the next few weeks and months.

Thanks to Nellie Price and Tony Torres for their reporting on the hearing.

Health Access California promotes quality, affordable health care for all Californians.
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