Health Plan Pooling Bill Moves to Governor’s Desk

This week’s approval by the state legislature of the creation of a statewide health benefit exchange would eventually result in competition between health plans in the exchange.

A bill passed yesterday is designed to help public health plans compete more robustly with the larger private health plans, by allowing public plans to pool risk and share networks for the joint offering of health plans.

The idea of SB 56, by Sen. Elaine Alquist (D-Santa Clara) is to ensure competition and make a broader array of affordable plans available, according to John Ramey, the executive director of Local Health Plans of California.

“What it does is, it gives explicit authorization for public agencies to join together to offer products in concert through the exchange,” Ramey said. “It offers the opportunity to jointly market the same product by the local-based health plans.”

There are three types of public health plan agencies affected. There are local initiative health plans, such as those offered by San Francisco and Alameda counties; the county-organized health systems, such as exist in San Mateo and Santa Barbara counties; and the public managed care plans in 34 smaller and more rural counties, mostly in Northern California.

“In part, the idea is for counties to be able to offer the same benefit under the same name, like, for instance, something called Golden Bear health coverage,” Ramey said. “So someone living in Contra Costa County can pick the same product as someone in Alameda County, even though in actuality they’re offered by separate health plans. It gives them a better opportunity to make their plans known and for people to select them.”

The bigger private health plans would still have an advantage, but this pooling of coverage plans would be helpful, Ramey said.

“It facilitates involvement in the exchange,” he said. And since more involvement is often one of the goals cited for a strong exchange, this could be an important element in making the exchange work, Ramey said.

The Senate passed SB 56 on concurrence in a 21-10 vote. It now goes to the governor’s desk.

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