California Exchange Gets Lots of Attention at Conference

NEW ORLEANS — California got a round of applause from health policy leaders around the country last week for being first out of the gate with reform-driven laws to set up a state-run health insurance exchange.

“Let’s stop for a minute and thank California for being the first state to pass enabling legislation,” said Trish Riley, director of health policy and finance for the governor of Maine and moderator of a panel on exchanges during the National Academy for State Health Policy’s 23rd Annual State Health Policy Conference.

“I’m envious of California,” Riley told a room full of state officials who hoped to get some insights they could take home to start building their own exchanges. “I think there’s a lot we can learn from the process they’ve already gone through.”

Sandra Shewry — former director of and current adviser to the California Department of Health Care Services — outlined California’s exchange, which was born last week when Gov. Arnold Schwarzenegger (R) signed two bills spelling out the details of the new state entity.

“It’s a multipurpose tool, like one of those Swiss Army knives with lots of options,” Shewry said. “We think that’s the best way for us, but it may not be the best for every state. There isn’t a line in the ACA (Affordable Care Act) that defines what an exchange should be, and I think it’s quite purposeful that the ACA doesn’t say the exchange is X. We have the ability to create what works best for us.”

California Chose Middle Road

“Some people who don’t know us think we tend to be extreme,” Shewry said, “but we picked the middle path in this case.”

Shewry said there are three main options in designing an exchange:

• As a market definer and organizer, in which the exchange becomes the market;
• As a purchaser, in which the state body selectively contracts with insurers; or
• As a clearing house in which the exchange acts as a platform for all plans offered by all issuers.

California’s exchange, which will be governed by a five-member board, fits firmly in the middle category, Shewry said.

“The board will have discretion over many of the details and in some situations may lean further toward one end or the other, but for the most part, our exchange falls in the middle,” Shewry said.

Joel Ario, deputy director of the federal HHS Office of Consumer Information and Insurance Oversight and Shewry’s co-panelist in the session on exchanges, told state health policy leaders that health insurance exchanges “are more of a Republican idea than most people realize.”

“Back in 2004 and 2005, it was Republicans who were pushing for this kind of exchange, and it was Romneycare before it was Obamacare,” Ario said, referring to former Massachusetts Gov. Mitt Romney (R).

“In California last week, you had Republicans arguing with a Republican governor that he shouldn’t sign those bills (establishing the exchange), but at the end of the day, he did it because it’s a good idea for the people of California,” Ario added.

Dwindling Resources, New Bosses

In addition to the obvious and overarching theme of how to deal with health care reform, two common threads ran through the NASHP conference this year — budget austerity and leadership change.

“This is a very exciting time, but also somewhat depressing, frankly,” said Paul Halverson, director of the Arkansas Department of Health.

“We’re seeing unprecedented budget cuts in many states at the same time we’re trying to gear up for major new federal programs. It’s a very difficult time for states.”

Several conference speakers said the next couple of months will be particularly difficult to navigate because of an expected widespread changing of the guard in November. In addition to congressional changes, November elections include governor races in 37 states — with 25 of them guaranteed to have new administrations. An unusually high number of state legislative offices are also expected to have new occupants.

As a result of all that political turnover, state policymakers will also move in and out of jobs.

“After the election, there are a lot of people in this room who will need jobs,” HHS official Ario said, eliciting a ripple of nervous laughter. “I want to put together an exchange team at HHS — former insurance commissioners, former Medicaid directors, all kinds of people. Get in touch in a couple of months,” Ario added.

New Focus, New Urgency

The conference’s three days of meetings ranged from big-picture analysis to micro examinations of specific programs dealing with mental illness, obesity, care provider diversity and other issues.  Every session was designed to look at old issues through new reform-focused lenses.

Along with the new focus comes a new sense of urgency, which sometimes bumps against the traditionally slow moving bureaucracy.

In a session dealing with integrating eligibility and enrollment systems for Medicaid, children’s programs and state exchanges, Sam Karp, vice president for programs at the California HealthCare Foundation (publisher of California Healthline) and co-chair of the national Health IT Policy Committee’s Enrollment Work Group, said “systems can be built relatively quickly with clear guidance.”

“When Cindy Mann (deputy administrator at CMS and the agency’s director of Medicaid and state operations) said guidance would be coming incrementally, that made me nervous,” Karp said. “You don’t design systems in an incremental way. You can build them incrementally, but it’s hard to design them that way.”

Large, Engaged Turnout

This year’s conference is not only well attended (perhaps the organization’s biggest turnout but numbers aren’t tallied until the conference ends), the level of engagement seems higher as well.

“All of these meetings are packed and people are actually paying attention,” said a state Medicaid director from the midwest, a veteran of many conferences.

Alan Weil, executive director of NASHP, agreed.  

“People are focused,” Weil said. “No one is here because they have to be. People involved in health policy no longer have time to be hypothetical. They have to be nuts and bolts and I think that shows here.”

Donald Berwick, new administrator of CMS and leader of the federal side of the health reform equation, told state policymakers successful reform depends on how well state and federal leaders listen to each other and make harmonious decisions.

He used the New Orleans setting to make a musical analogy of state and federal officials playing in a health care reform band in his address titled, “Leading the Band: Federal Action that Supports State Implementation.” 

Well-known and generally supported by state health policy people, Berwick urged conference attendees to keep their sights on “the triple-aim of health care reform — improving the health of the individual, improving the big picture for the whole population and bending the cost curve.”

The standing ovation for Berwick at the end of his talk “was an acknowledgement from all these policy people that we appreciate him being in the job,” said Tricia Leddy, senior policy adviser for the Rhode Island Department of Health and a NASHP veteran.

“I think people also appreciated what he had to say, but mostly we’re just really glad he’s where is,” Leddy said.

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