Californians to Be Covered

Estimated 3.4 million (more than two thirds of Californians uninsured at a given point in time).

Requirements Imposed on
Consumers/Individuals

• An employee working for a firm that pays a fee (instead of paying for employee health expenditures) must enroll in the newly created state purchasing cooperative called California Cooperative Health Insurance Purchasing Program (Cal-CHIPP). Premiums for an employee in a family earning less than 300% FPL would not exceed 5% of family income.
• Employees working for an employer who pays for health expenditures shall accept the expenditures (unless his or her share of expenditures would exceed 5% of income for families earning under 300% FPL or unless the employee has evidence of other health care coverage).

Treatment of Self-Employed

Enhanced access to coverage through reformed individual insurance market.

Requirements Imposed on
Employers

• Pay or play approach - employers required to pay 7.5% of Social Security wages for employee health care expenditures or pay equivalent amount into a trust fund to allow employees to access coverage through Cal-CHIPP.

• All employers are required to establish Section 125 plans to tax-shelter employer and employee health insurance contributions.

Treatment of Small Employers

No exemption from minimum spending requirement (“pay-or-play”) based on employer size (except for the self-employed).

Requirements Imposed on
Providers

None stated.

Changes in Provider Payments or Reallocation of Funds for Providers

None stated.

Public Program Expansions and
Support for Low- Income Individuals

• Healthy Families expansion for children in families with incomes between 133 and 300% FPL, regardless of immigration status, pending the appropriation of state funds.

• Establishes uniform eligibility standards for children regardless of age and simplifies the Medi-Cal and Healthy Families enrollment process.
• Expands Medi-Cal to parents and children ages 5-18 living at or below 133% FPL.
• Expands Healthy Families coverage to parents with incomes between 133% and 300% FPL, pending federal approval and pending the appropriation of state funds.

• Employees and dependents eligible for public programs and eligible for Cal-CHIPP would receive their public program through Cal-CHIPP. All carriers selling group coverage are required to offer a Cal-CHIPP Medi-Cal and a Cal-CHIPP Healthy Families Plan to eligible employees.  Employees eligible for public programs that have other group coverage are eligible for these plans and premium assistance.

Role of Counties

Counties’ obligation to serve the indigent unchanged.

Role of Federal Government

Expansion of Healthy Families and Medi-Cal would generate federal matching funds under existing policy (i.e., would not require Medicaid waiver application). (Expansion would require a state appropriation.)

Changes in State Tax Code and State Tax Revenue

Establishment by employers of Section 125 plans to tax-shelter employer and employee health insurance contributions would reduce state tax revenue.

Insurance Market Requirements/Reforms:

Guaranteed Issue, Rating Reforms, and Other Requirements
Imposed on Health Plans

• By 2010, all health plans required to guarantee issue and use community rating in the individual market (e.g. premiums may vary based on age and geography, not health condition) for individuals without serious medical conditions.
• Individuals with specified serious medical conditions would be eligible for high risk pool (to be funded by an assessment on health plans as outlined in AB 2 (Dymally). 
• Simplified medical underwriting, including standardized individual application form. Requires health plans to offer three uniform benefit designs to facilitate comparison shopping.
• Applies rules currently regulating the small group market (such as guaranteed issue) to the mid-sized (51 - 100 employees) employer market.
• Health plans must spend 85% of premiums on patient care.

Insurance Market Requirements/Reforms:

Connector/Purchasing Pool

Establishes CA Cooperative Health Insurance Purchasing Program (Cal-CHIPP) to be administered by MRMIB to negotiate and purchase health insinsurance for eligible enrollees. Cal-CHIPP will offer at least three uniform benefit packages that will also be offered by insurers in the private market as well as Medi-Cal and Healthy Families equivalent plans.

Insurance Market Requirements/
Reforms:

Participant Contribution to Obtain
Coverage Through Purchasing Pool

• Maximum contribution cannot exceed 5% of family income for families earning less than 300% FPL.
• Premium contributions based on sliding scale for those with household income less than 300% FPL.
• MRMIB would set premiums for those under 300% FPL to meet the 5% requirement.

Financing Sources and Cost Estimates

(Note: Estimate may be revised to reflect forthcoming modeling results and amendments).

Total $8.3 billion cost estimate to be financed through:

• Employer contributions
• Employee contributions
• State funds
  
• Federal funds (Medicaid, SCHIP)

Cost Containment:

Prevention and Wellness

Uniform benefit packages include coverage for primary and preventive care with minimal patient cost sharing. California will “adopt and encourage” healthy lifestyles through workplace and individual efforts to improve health.

Cost Containment:

Additional Provisions

• Establishes a new Health Care Cost and Quality Transparency Commission to establish a cost, quality, and transparency plan.

• Intends for plans and providers to participate in implementation of a personal health records system.
• Centralized assessment of new technology.

• Participating health plans required to implement preventive services.

• Requires MRMIB to negotiate with Medi-Cal managed care plans.

• Cap on health plan administrative costs and profits (must spend 85% of premiums on patient care).

Enforcement

None stated.

Implementation Timeline

• July 2008 - Medi-Cal and Healthy Families expansion, pending the appropriation of funds.
• July 2008 - Health plans must spend at least 85% of premiums on patient services.
• January 2009 - Cal-CHIPP created.
• October 2009 - Employer spending requirement begins.
  
• January 2010 - Insurance market reforms.