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California Exchange Compared to its Predecessors

California is the first in the nation to pass legislation to create a health benefit exchange in response to the national health care reform law. But that doesn’t mean it’s the first exchange in the nation.

Four other states implemented some kind of exchange ahead of the national reform law — Massachusetts, Connecticut, Utah and the newest exchange recently established in Washington state.

“In Utah, it’s more of a clearinghouse model,” according to Julie Sonier, deputy director of the University of Minnesota’s SHADAC (the State Health Access Data Assistance Center). “And Connecticut is different, in that it’s entirely a private model. It’s less like an exchange, and more like a set of insurance products for their members. They’re not trying to organize the market.”

Part of SHADAC’s intention with the briefing on exchanges was to look at how each one of the systems work, how they compare to each other and especially how they compare to California’s model.

Both Massachusetts and Washington are closer to what California wants to implement, Sonier said, because those two models incorporate Medicaid recipients.

“They’re similar in that they have a way to access subsidies and they also set some sort of minimum standards” for the health insurance companies that participate in the exchange, she said.

“The Utah model is fairly new, it started a year ago in August,” Sonier said. “They modified the law in April. It’s not very large yet because it’s so new.”

It’s not nearly as nascent as the Washington exchange, which started taking applications just last month, and is expected to start coverage in January 2011.

All of them will need to be modified in some way before January 2014, and for that, they may want to look to California’s model, Sonier said.

“California’s is the first state specifically designed to comply with ACA (Affordable Care Act). Out of the four, California’s is most similar to the one in Massachusetts. It has a fairly active role for the board that runs it.”

Washington’s model also resembles California’s exchange but, Sonier said, “Washington will need to do more by 2014. People are eligible for subsidies at up to 200% of poverty level, and the federal level is at 400% above poverty.”

All state exchanges across the nation will need to connect people to Medicaid coverage, she said.

“A number of states are planning to take action in 2011,” Sonier said. “They usually come into session in January, so you’ll see a lot of activity at the start of the year, at least a couple of dozen states.”

The process of setting up an exchange is complex, she said — installing proper information systems, for instance. “How does it interact with the federal government, with Medicaid? There’s a lot to be built so that it looks seamless to consumers.”

The bulk of exchanges will be established at the start of 2011, Sonier said, and they will all be looking at how California did it, along with investigating the benefits of the four established exchange models. A few states might delay until early 2012, but beyond that would mean federal involvement in setting up an exchange system.

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