Board of California’s First-in-the-Nation Health Insurance Exchange to Hold First Meeting

One of the most powerful and far-reaching boards most Californians have never heard of meets for the first time April 20.

Within a short three years, the state’s five-member Health Benefit Exchange must become a clearinghouse for lower income Californians and small businesses shopping for the health coverage the federal government requires them to own beginning in 2014.

The exchange is the first created by a state since passage of the federal Affordable Care Act in 2010. Massachusetts created an exchange previously, which was used, in part, as a model for California’s.

Such exchanges are the lynchpin of the legislation and are aimed at creating a more competitive health insurance marketplace that is intended to lower costs as well as expand access and improve quality of care.

“The concept for the exchange is not dissimilar to Travelocity for airfares – enable consumers to compare and contrast the quality and price of health plan options,” said Kim Belshe, former Health and Human Services cabinet secretary under former Gov. Arnold Schwarzenegger and now an exchange board member.

“We’re also going to help connect individuals and small businesses with federal tax credits to make coverage more affordable.”

That’s easier said than done.

A primary goal of federal health care legislation was to shrink – if not eliminate – the 7 million Californians without health coverage, a large percentage of whom are Latino or Hispanic.

In attempting to reduce that universe of uninsured, the exchange will touch the lives of millions of Californians and, by determining what requirements a plan must meet to be part of the exchange, wield significant leverage over the health insurance industry.

Like most parts of the federal legislation, the exchange doesn’t become operative until 2014 but “2014 is tomorrow,” as Belshe says.

“To successfully implement the exchange by 2014, the work has to begin now,” Belshe said. “Particularly with the planning, regulatory, procurement and information systems that will need to be in place by the winter of 2013 when we’re required to demonstrate our readiness to the federal government.”

As the agenda shows, the exchange’s first meeting is largely ministerial: elect an interim chair, discuss the board’s responsibilities, and create a search committee to find an executive officer and candidates for other staff slots.

So far, there are only four members appointed to the board.

All members — who are unpaid — have four-year terms. The governor has two appointments. The Senate and Assembly each have one.

The Health and Human Services cabinet secretary, now Diana Dooley, is the fifth member.

Belshe was appointed to the exchange board January 1 along with Susan Kennedy, Schwarzenegger’s tough-willed chief of staff.

The appointments were one of the former GOP governor’s last acts in office.

Assembly Speaker John Perez, a Los Angeles Democrat, later named Paul Fearer, the director of human resources at Union bank and the chair of the board of Pacific Business Group on health.

Previously, Fearer chaired PacAdvantage, a health insurance exchange that operated in California from 1992 to 2006. It serves 6,200 small businesses but closed when Blue Shield pulled out after suffering losses through the program.

The Senate has yet to make its appointment although a spokesman for Senate President Pro tempore Darrell Steinberg, a Sacramento Democrat, said one would be made soon although not in time for the board’s April 20 meeting.

Under the federal legislation, tax credits are available to individuals and businesses that buy insurance through the exchange.

Californians earning between 133 percent and 400 percent of the federal poverty level – roughly $29,000 to $88,000 in annual income — can purchase insurance through the exchange.

So can businesses with up to 100 employees although the tax credit businesses receive shrinks depending on its size.

“In 2006 my medical costs were $49,000 and this year they’re $86,000,” said Amy Thomas who runs Pegasus Books in Berkeley and Oakland. “So anything that helps control costs is something I’m supportive of.”

(Editor’s Note: Check out Spotlight below to see Belshe discuss the exchange in more detail.)

 

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