State To Continue With Insurance Exchange Despite Court Case

TOPIC ALERT:

Efforts to launch the California Health Benefit Exchange will continue regardless of an impending U.S. Supreme Court decision on the constitutionality of the federal health reform law, according to the exchange's Executive Director Peter Lee, the San Francisco Chronicle reports (Ross, San Francisco Chronicle, 4/5).

Background

The reform law requires that all states launch online insurance marketplaces by 2014. California's exchange is expected to help more than two million state residents obtain health coverage under the law (California Healthline, 3/16).

The Supreme Court case questions whether the federal government can require residents to buy insurance and whether federal lawmakers can pressure states to expand insurance coverage through Medicaid. The court is expected to announce a decision by the end of June.

The Kaiser Family Foundation has estimated that California could receive an additional $45 billion to $55 billion in federal funds between 2014 and 2019 if the health reform law is upheld.

Last week, California Health and Human Services Agency Secretary Diana Dooley said California will strive to implement health reform regardless of the court's decision (California Healthline, 4/2).

Advancing the Exchange

Lee said, "California passed a law to have an exchange, and it's moving ahead on all cylinders," adding, "The commitment will be there no matter what."

The exchange already has received $40 million in federal funds, and state officials expect to obtain additional funding this summer (San Francisco Chronicle, 4/5).

In recent weeks, exchange officials have announced contracts worth a total of nearly $2 million, including:

  • $900,000 to Ogilvy Public Relations Worldwide to coordinate communications and outreach;
  • $700,000 to PricewaterhouseCoopers to develop health plan management processes and strategies to improve health care delivery in California; and
  • $300,000 to Wilcox Miller & Nelson for recruiting executives (California Healthline, 3/16).

In addition, exchange officials said they have held "very positive meetings" with health insurers such as Kaiser Permanente, Blue Cross and Blue Shield.

The exchange could be financially self-sufficient by 2015 if the state can follow through with its plans, according to the Chronicle.

Implications of Supreme Court Decision

Health industry experts have acknowledged possible setbacks for health insurance exchanges if the Supreme Court rules again the law. For example, the law's individual mandate is tied to billions in federal subsidies to help those who cannot afford to buy their own insurance. 

Robert Laszewski -- president of Health Policy and Strategy Associates -- said, "Subsidies only go through exchanges. If the court strikes enough of the law down, the money goes away and the exchanges are dead."

Lee acknowledged that the subsidies "provide important gas in the tank." However, he said, "We have five million Californians without health insurance. To not move ahead would be a disservice" (San Francisco Chronicle, 4/5).

Tim Colling
"Maybe with reform in place and more money there will be adifferent outcome." That money ("more money") will come from a new tax on everyone disguised as mandatory health coverage and mandatory new taxes on employers to pay for it. Those new taxes (the healthcare takeover act calls them "fines") will result in a BIG new inflationary trend in the prices of all goods and services in the United States.
Jeff Buchanan
I think this is a good thought and if we can get the uninsured covered somehow I'm for it. However, California had an exchane called the Health Insurance Plan of California (HIPIC) for short. Unfortunately it folded. Maybe with reform in place and more money there will be adifferent outcome. We'll see....
Clark Norwood
Oh my, I keep defaulting back to reason and logic when I see these blunders about to occur. I keep forgetting I live in Calilala Land. Where's that map to Prescott, AZ?
Tim Colling
You don't understand. What makes sense or is fair is not important. What matters is how the government can have more and more control over our lives and our money.
Clark Norwood
Wow $45 million in federal funds, what happens if the SCOTUS rules against the individual mandate and perhaps the whole program. What happens to the $45 million already received? Will the feds do what MediCal does - PULL THE MONEY BACK or just not send the balance that has not been paid if any. "We have five million Californians without health insurance. To not move ahead would be a disservice" What about the other 25-30 million people of California who have to pay for the coverage of those without it. The state is still in a very deep hole and is still digging deeper. How is the state to pay for the new program with out federal funds, more taxes? "The exchange could be financially self-sufficient by 2015 if the state can follow through with its plans" When has that happened in recent history? We need only look to another state run program, the HIGH SPPED RAIL system. Started at $30Billion and soon ballooned upto $98Billion, I don't think this state program will work either.

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