‘Last Distraction’ Removed as California Moves Ahead on Health Reform

By Emily Bazar and Lauren M. Whaley, Center for Health Reporting

First, there was uncertainty over a U.S. Supreme Court challenge. Then came the race for the presidency.

Now, California lawmakers say the uncertainty is over and nothing can stop them from bringing health coverage to millions of uninsured Californians under President Obama’s signature health care law.

“This removes the last distraction and question from anyone’s mind that we won’t be launching a dramatic expansion in coverage in California,” said Peter Lee, executive director of California’s health insurance exchange, a key piece of the expansion.

Last Wednesday, Lee and other California health leaders celebrated Obama’s re-election as a green light for fully implementing the Affordable Care Act. They also applauded the passage of Gov. Jerry Brown’s tax initiative, Proposition 30, saying its success may have prevented additional health cuts at the state level.

More cuts would have complicated the state’s implementation of the federal law, whose major provisions debut in 2014 and include the health exchange and an expansion of Medi-Cal, the state’s version of Medicaid. More than 2 million people could gain coverage in the first year.

“Prop. 30 provides some breathing room (and) gives us the opportunity for a stable foundation from day one,” said Diana Dooley, secretary of the California Health and Human Services Agency.

The way ahead is not entirely clear of potential threats, however. Congressional Republicans have vowed to weaken the law, and upcoming budget negotiations could provide them an opportunity.

California has the most uninsured residents in the country -- about 7 million -- and therefore potentially the most to gain.

“I am just so excited.  For consumers, it means we really can have reform, and the millions of people without insurance can get it,” said Betsy Imholz, special projects director for Consumers Union.

Some uninsured residents will be able to purchase federally subsidized insurance through the exchange, which will offer a marketplace of health plans. Individuals and families making between 138 and 400 percent of the federal poverty level, or up to $92,200 for a family of four in 2012, will be eligible for the subsidies.

The exchange plans to open in October 2013 with an open enrollment period, with coverage to commence in 2014.

By 2019, up to 2.1 million Californians could enroll in the subsidized coverage, according to a joint analysis by UCLA and UC Berkeley.

Exchange leaders didn’t wait for the Supreme Court or the election to get rolling. They already have awarded a $359 million contract for the development of the online portal and have begun soliciting health plans for the program, called “Covered California.”

“Over the coming months, people will very much be looking to California as a model for how an exchange could work,” said Larry Levitt, a senior vice president at the Kaiser Family Foundation. “Particularly as states that are somewhat more behind try and catch up, I have no doubt they’re going to be calling Sacramento to get some advice.”

The Medi-Cal expansion will broaden eligibility for the program by raising the qualifying income level and allowing those who were previously ineligible, such as single adults, to access coverage. Up to 1.6 million Californians could enroll in Medi-Cal under the expansion by 2019.

That process is already under way. About half a million low-income Californians are covered in the “Bridge to Reform,” the state’s precursor to the Medi-Cal expansion.

In Sacramento, state lawmakers are preparing for a special legislative session, called by Gov. Brown, to focus on the implementation of the health law. Bills approved during the special session take effect more quickly – 91 days after adjournment – than those in the regular legislative session.

Work will begin in earnest in January.

In part, California lawmakers have been waiting for direction from the federal government, which soon is expected to release a torrent of regulations and guidance to help states implement the law.

Sen. Ed Hernandez, Democratic chairman of the Senate Health Committee, has ambitious plans for legislation, including a measure that the governor vetoed this year. The bill would have, among other things, implemented a key piece of the federal law that requires health plans to cover anyone regardless of pre-existing medical conditions.

Both Hernandez and Democratic Assemblyman Richard Pan, chairman of the Assembly Health Committee, acknowledge that challenges remain, both at the state and federal levels.

Even though the vast majority of funding for the law is from the federal government, Pan said he worries about the long-term financial impact on the state.

Hernandez pointed to marketing and outreach as a critical challenge, especially in a state with large and diverse ethnic populations. If Californians don’t know about the exchange, he said, they won’t be able to participate.

“The key to success will be having as many people as we possibly can to spread the risk on the exchange,” he said.