Historic Week in Health Care Reform

by David Gorn

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California has been working on health care reform for years, but this week's legislative special session had that distinctive sound of a starting gun for the last, big dash toward the Affordable Care Act finish line.

On Tuesday, when Assembly Committee on Health chair Richard Pan (D-Sacramento) convened the opening hearing for the special session on health care, it clearly meant a lot to him.

"Welcome to the first extraordinary session of 2013," Pan said. "As you know, California has been the first in the nation to establish a health benefit exchange under the Affordable Care Act. … We are bringing California in line with the new culture of care."

This week's work included committee passage of a streamlined eligibility and enrollment process, which is likely to sail through the Legislature. The other big piece of legislation created more controversy.

The adoption of a plan to establish geographic rating areas for the individual and small group health insurance market was accompanied by media reports of premium rate increases of 20% or higher. Insurance Commissioner Dave Jones proposed a different type of geographic breakdown that he said would cut down on those rate increases.

The premium increases are not that scary, according to experts who spoke at health committee hearings in both the Senate and Assembly this week. They are a natural result of reorganizing existing geographic rating systems, they said. When people in lower-cost areas are re-classified as being in higher-cost areas, their premium rates may rise, and when people in higher-cost areas are re-classified as being in lower-cost areas, their premium costs may decline.

The worrisome part of that fluctuation for lawmakers and policy officials is that some individual consumers can experience "rate shock" if their premiums rise dramatically. Keeping those increases down is what Jones has in mind with his own version of the geographic rating area plan.

"The proposal we're submitting is an 18-region proposal with a maximum of 8% increases," Jones told committee members. "That's significantly lower than the other [plans]. … This is the one area where you can make a really big difference. The most important thing for consumers is what their rate will be. So this is one decision where you could make a big difference."

Both the Assembly and Senate Committees on Health decided on six regions and passed the bills on to their respective house's Committee on Appropriations.

Covered California, the state's new insurance exchange, decided on 19 regions earlier this month. The federal government suggests state exchanges use no more than seven rating regions.

Although both health committees approved one third the number of regions suggested by Jones, that does not mean it's the end of the discussion, according to Senate Committee on Health chair Ed Hernandez (D-West Covina).

"We're looking at moving it to the next house," Hernandez said at Wednesday's hearing, "and right now we're looking at six rating regions. But this is an ongoing conversation. If [the 18-region plan] has significantly lower numbers, things are always open to amending."

Jones, in a press release, said he was disappointed the committees did not amend the legislation to include his plan. He hoped the 18-region plan could still be worked into the legislation before the bill came to the floor for a vote. Jones said he will take an oppose-unless-amended position on it until then.

"There is still time to get this right," Jones said. "We have an opportunity to protect consumers and minimize the rate increases that many Californians could experience."


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