This week, the Assembly Committee on Health approved a bill to establish low-cost health coverage for as many as 800,000 low-income Californians. For a program that could pull a substantial number of expected participants out of the California Health Benefit Exchange, there has been surprisingly little resistance to it.
That’s because the state stands to save money with the new Basic Health Program, according to SB 703 author Sen. Ed Hernandez (D-West Covina).
“With this program, the state can supply more affordable coverage [for low-income beneficiaries] without a dime from the state general fund,” Hernandez said. “And it would reimburse providers at much higher rates than Medi-Cal would pay — about 20% to 25% higher reimbursement rates.”
Hernandez pointed to a comprehensive, independent study conducted by Mercer, a health care consulting firm that developed an actuarial model to investigate the idea’s feasibility. That study’s final tally, Hernandez said, “pencils out for the state, and for the people in the program.”
The Basic Health Program would establish an alternative to the exchange’s coverage for two sets of Californians — adults with income between 133% and 200% of the federal poverty level, and for legal immigrants with income below 133% of the poverty level.
The rough idea is that the Basic Health Program would cover essential health benefits at a minimum cost, and the federal government would subsidize 95% of the cost.
The big question with the basic health option is that it could draw patients away from the still-being-formed health benefit exchange. Since the exchange is supposed to gain leverage to negotiate rates on behalf of a sizable patient population, the potential loss of participants to the basic plan has been a concern.
“If this bill were to become law,” Hernandez said, “the exchange would still be the largest in the country.”
According to Jim Gross of the Local Health Plans of California, it might actually help the exchange.
“We had a concern that the population that’s below 200% of federal poverty level wouldn’t really be in a position to purchase coverage from the exchange,” Gross said. “As the committee analysis points out, there are a lot of unanswered questions here. But the exchange will still have 1.8 million participants, and this could actually help the exchange by reducing risk and getting coverage to those who might not have been able to afford it.”
SB 703 already has been approved by the Senate. The Assembly Committee on Health approved it on a 13-5 vote, and the bill now heads to the Assembly Committee on Appropriations.
Physical Therapy Bill Defeated In Committee
Meanwhile, a contentious bill to redefine the financial relationship between physical therapists and physicians went down to defeat in the Senate Committee on Business, Professions and Economic Development.
“We do believe that California consumers benefited from rejection of AB 783,” Stacy DeFoe of the California Association of Physical Therapists said. “I am pleased that the bill didn’t make it out of committee.”