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Exchange Passage Raises Question: Now What?

When you’re the first to launch a new program, it is often greeted with a measure of fear and suspicion, according to Jon Kingsdale, former executive director of the Commonwealth Health Insurance Connector Authority in Massachusetts.

And one of the common misconceptions about the exchange in Massachusetts and the exchange-to-be in California, he said, has been the worry that somehow the exchange will be constantly at odds with health insurance companies.

“As a non-regulatory marketplace for insurance, with a mandate to serve the public, there is a strong interest in having long-term, value-based relations with health plans,” Kingsdale said. “Meaning, we want them to make a little money.”

Kingsdale was part of a who’s-who panel of health benefit exchange experts that convened in Sacramento yesterday. The event was sponsored by the California HealthCare Foundation. CHCF publishes California Healthline.

Kingsdale said California’s health benefit exchange was formulated with the advice and input of health insurance carriers — and that California, just like Massachusetts, is counting on active participation in the exchange from those insurance providers.

“You don’t want them going out of business because they can’t make a decent return,” Kingsdale said. “You want to drive value so that they’re able to make money. If they do a good job, they get financially rewarded in the marketplace.”

And at the same time, patients in California can use the group buying power of the exchange to secure lower premium rates and better coverage, Ed Neuschler of the Institute for Health Policy Solutions said.

“The exchange has to offer convenient access to consumers, with a choice of competing qualified plans,” he said. “Nobody is required to use the exchange. But there is a core population, several groups that are highly incentivized by tax credits, and that’s where the critical mass will come from to make the exchange viable.”

Panelists touched on several issues that will have to be dealt with in detail by the exchange’s five directors, once they’re identified and seated, probably in January.  Among the first issues they’ll deal with, according to yesterday’s panel, are how to use a competitive process to select insurers, how to interact with two different state regulators and how to implement the “no wrong door” policy in the exchange.

California HHS Secretary Kim Belshé, the first speaker at yesterday’s briefing, stressed another important aspect of exchange implementation.

“Notwithstanding the hope and promise of the exchange,” Belshé said, “the rules between Medi-Cal and the exchange will be really important.”

The national health care reform law, she said, “basically offers universal coverage from poverty up to 400 percent of poverty. That construct raises all sorts of issues. What are the enrollment processes and systems to facilitate that? … What standards will we employ to offer these plans?,” Belshé said.

“Medi-Cal is now about coverage,” she said. “It’s not your mother’s Medi-Cal program anymore. There are very different rules around eligibility and streamlined enrollment. This is all about getting people enrolled. The federal government is picking up the tab for most of that,” she said.

California’s first-in-the-nation status still doesn’t leave a ton of time to plan for all of it, Sumi Sousa of the Assembly Speaker’s office said.

“In terms of a timeline, everyone was saying, ‘Why are you doing this now?’ ” Sousa said. “Well, just walk back. We need to be ready six months ahead of time, that’s up and running. And we’ll only just get started January 2011.

“That’s really just 2½ years to do this entire thing,” she said. “And that doesn’t happen on a dime. We need to have consumers who want to enroll. We need products that people want to buy. Otherwise, it’s not going to last very long. We need everything about that structure to say, we’re open for business — we’re open for business for people.”

Related Topics

Capitol Desk Medi-Cal The Health Law