LAO: Health Benefit Exchange Bills Would Not Add to Deficit
California's budget deficit would not grow deeper if Gov. Arnold Schwarzenegger (R) approves two bills to establish the California Health Benefit Exchange, according to a recentÂ analysis from the Legislative Analyst's Office, the AP/Bloomberg Businessweek reports (Mohajer, AP/Bloomberg Businessweek, 9/24).
The health reform law calls for the creation of insurance exchanges to provide coverage options for individuals and small businesses. The exchanges are required to be fully operational by January 2014.
SB 900, by Sen. Elaine Alquist (D-Santa Clara) would set up the state's insurance exchange to help consumers compare information about insurers before choosing a health plan.
According to the LAO report, California's health insurance exchange would not add to the state's deficit because it would rely on fees and federal grants.
When federal funding expires in 2016, health insurers would pay fees to continue participating in the exchange. Any additional costs likely "would be passed on to enrollees through premiums," the report said.
The LAO report conflicts with an earlier analysis from the California Chamber of Commerce, which estimated that AB 1602 and SB 900 would hit the state's general fund with costs that could exceed $1 billion annually.
On the Governor's Desk
AB 1602 and SB 900 are awaiting Schwarzenegger's approval. The governor has until Thursday to sign or veto all pending legislation.
If Schwarzenegger approves the bills, California would become theÂ first largerÂ state to establish a board to oversee its health insurance exchange following the passage of the reform law (AP/Bloomberg Businessweek, 9/24).
For additional coverage of California's health insurance exchange bills, see today's Capitol Desk post.
Pension Issues Remain Sticking Point in Budget Negotiations
Meanwhile, Schwarzenegger and state lawmakers have yet to reach agreement on proposed pension changes and other elements of a budget package.
The governor is seeking a two-tier pension program that would decrease benefits with stricter retirement formulas for new state employees. Schwarzenegger also aims to reduce pay by about 10% for current state workers by imposing higher pension contributions and unpaid days off.
However, Democrats would like the governor to negotiate any proposed pension changes with labor unions that have yet to agree to contract changes (Yamamura, Sacramento Bee, 9/28).
State To Seek Loan
In related news, State Treasurer Bill Lockyer (D) said he plans to pursue a loan of more than $5 billion from various banks to use as interim financing after the state enacts a budget plan.
The extent and terms of the loan are still being worked out, according to Joe DeAnda, spokesperson for Lockyer (Yamamura, "Capitol Alert," Sacramento Bee, 9/27).
On Monday, KPCC's "KPCC News" reported on state lawmakers' continued efforts to reach a budget deal (Small, "KPCC News," KPCC, 9/27).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.