California Assumes Lead Role in National Reform

by David Gorn, California Healthline Sacramento Bureau

When a number of national health care reform provisions took effect last week, identical provisions had already been passed by the California Legislature and were sitting on the governor’s desk, waiting for a signature.

Yesterday, the governor signed those bills and a slew of other health care reform measures that moved California into the forefront of the national health care reform movement.

While other states have been convening task forces and taking a wait-and-see approach to health care reform, California has acted. Among its first-in-the-nation accomplishments:

  • Expanding on the idea of its smaller state program, California set up a much larger federal high-risk health insurance pool program in record time. The Pre-Existing Condition Insurance Plan has been taking applications for a month now and is expected to enroll patients starting Oct. 7;
  • Following the lead of federal health care reform, the state passed laws to extend dependent coverage to age 26; eliminate pre-existing conditions as a reason to refuse coverage in children under 19; eliminate rescission of health coverage once a patient is covered; and expand preventive care coverage; and 
  • Taking its biggest step forward through the health care reform door, the governor yesterday approved the creation of the California Health Benefit Exchange, a consortium of individuals and small businesses that will pool their buying power through a state agency in order to get better health care coverage at lower prices.

“There are many reasons why California has been so proactive,” Janet Coffman, professor at the UCSF Institute for Health Policy Studies, said.

“For one thing, it’s helpful to draw down the federal dollars,” she said. “And it’s an opportunity to be a model for the nation, in thinking through and proposing solutions to meet the health care needs of its people.”

Been Here Before

California HHS Secretary Kim Belshé said California is ahead of the health care reform curve in part because of its significant efforts to set up health care reform in the recent past.

“California has been at the forefront of efforts to improve health outcomes since the governor and [then Assembly Speaker Fabian] Nuñez proposed health care reform back in 2007,” she said.

The California effort to set up major reform failed to become law, but Belshé said its impact is still being felt.

“While it was unsuccessful,” she said, “it still helped contribute to the model that eventually became federal law.”

That 2007 effort made a big difference in California lawmakers’ willingness to move on working to incorporate national health care reform, once it became law. Since politicians were familiar with the language and concepts of reform, and since the funding was federal, it was easier for California to move quickly.

Because the state already had a high-risk health insurance pool, it had the institutional knowledge of how to run one. In addition, “California has the benefit of having run an exchange program before, so we have the history, the experience and expertise to help develop the legislation,” Belshé said. Belshé was referring to the Health Insurance Plan of California (later called PacAdvantage), which formed in 1992 and operated until 2006.

Other States Are Watching

According to researcher Coffman, it’s difficult to track all efforts in all states. She said about 15 states so far have passed laws of varying authority on the issue of mandating maternity care benefits. Maryland passed a law limiting pre-existing conditions as a basis for denial of health care coverage for children. Connecticut and Massachusetts had established exchanges before the national health care reform law passed.

“But beyond that,” Coffman said, “the most states have done, really, is to set up a task force commission to study things.”

John Arensmeyer, founder and CEO of Small Business Majority, a California-based advocacy organization, said many eyes are trained in this direction.

“I do think the rest of the country is looking to California — looking at what California does in terms of ideas and strategies, and how to structure things,” Arensmeyer said.

“Every state will need, at some point, to do what California is doing,” John Ramey, executive director for Local Health Plans of California, said. “Each state is going to create its own exchange, with some degree of variance between the states. It’s a question of how it’ll be set up, state to state.”

Belshé  said she has traveled across the nation, and the interest in following California’s lead is undeniable. “I’ve been informed by meetings around the country,” she said. “All these things are issues they’re looking at closely. But clearly California is not only going first with the exchange, but in a number of health care reform-related laws,” she said.

“All of the states are thinking and talking about it,” Belshé  said. “But California has moved ahead of thinking and talking.”

Why Go First?

If other states are going to learn from California’s example, and possibly develop better systems and law language, and since national reform isn’t due to kick in until 2014, why would California step on the national stage first?

There are benefits to being first, Coffman said.

“In some cases, passing laws now will enable California to move faster and set up reforms before 2014,” she said. “For instance, with maternity care coverage — the federal government hasn’t yet specified what it wants, exactly, but it’s reasonable to assume maternity will be there. Well, if that change goes into effect in January in California, and we change every policy starting in January, from the point of view of those consumers who stand to benefit from it, that’s a really good thing.”

Some of the federal laws begin this year, such as extending dependent health care coverage to age 26. California’s passage of the same law, basically, is an effort to cut down on ambiguity or contradiction between state and federal law and to eliminate unnecessary lawsuits. The sooner that happens, Coffman said, the better it is for California.

And one other thing: Even though the national health reform law must be implemented by 2014, a lot of federal dollars are available now. To cash-strapped California, that is a tune to which it can dance.

“There are benefits to consumers who could take advantage of these things — for instance, more childless adults will be enrolled more quickly,” Coffman said. “That’s an advantage for people in California, but also for the state in terms of drawing down federal dollars.”

There has also been speculation in Sacramento that, since the national health care reform law is still under fire, the final version in 2014 might be slightly watered down — so it makes sense for the state to act now and be the first state to secure reform funding.

“Given our budget crisis, the state needs every federal dollar it can get,” Coffman said.

“You already see some effort to chip away bits and pieces [of federal reform], like the prevention and public health fund recently. There was activity in the Senate earlier this month to repeal that fund. That was defeated, but it was a skirmish,” Coffman said. “There’s something to be said for getting the good stuff now.”

To Belshé, the work on health care reform in California has provided a strong counterpoint to the contentious and partisan national debate.

“We’ve proven that we can move implementation of health care reform forward,” Belshé said. “But we’ve also shown that you really can bring disparate groups together and agree on things.”

And that’s the lesson Belshé hopes other states monitor most closely — how to include all stakeholders and avoid the partisan infighting that has marked national health care reform.

“I know there’s a tremendous amount of interest in how California has approached and structured the reform principles,” she said. “There are issues around the authority given to an exchange, for instance, and other states are already looking at this to inform their own thinking.

“Every state’s approach to enforcement really varies,” she said. “California has placed priority on setting high standards, and those standards represent a strong foundation you don’t see in other states.”

But as those states move forward with reform implementation, she said, you might see those standards put in place more often, and California’s effort now might eventually help produce a higher level of cooperation, based on mutual interest, around the rest of the country.

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