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State To Continue With Insurance Exchange Despite Court Case

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).

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