Californians to Be Covered

Estimated 4.1 million (more than three-quarters of uninsured Californians at a given point in time).

Requirements Imposed on
Consumers/ Individuals

All Californians are required to have a minimum level of coverage. The Secretary of Health and Human Services shall define the minimum level of required coverage for individuals via the regulatory process.

Treatment of Self-Employed

Same individual mandate applies.

Requirements Imposed on
Employers

Proposal expresses the legislature’s intent that this plan will be financed, in part, by employer contributions on a sliding scale from 0 - 4% of total payroll based on payroll size.

Treatment of Small Employers

Lower payroll employers would pay a smaller contribution based on a sliding scale, which is yet to be determined.

Requirements Imposed on
Providers

Changes in Provider Payments/Funding

Private hospitals and physicians will receive a Medi-Cal rate increase. A percentage of rates paid to fee-for-service physicians may be linked to performance measures.

• Develops taskforce to examine and make recommendations on professional scope of practice for nurse practitioners.
• Allows greater flexibility for and use of physician assistants.

Public Program Expansions and
Support for Low-Income Individuals

• Healthy Families expansion for children up to 300% FPL, regardless of immigration status.
• Medi-Cal expansion for all legal residents up to 100% FPL (with benefits less extensive than those existing Medi-Cal beneficiaries).
• Medi-Cal expansion (via benchmark plan to new pool) to parents and caregivers at or below 250% FPL (benefits may be less extensive than traditional Medi-Cal).
• Medi-Cal expansion (via benchmark plan to new pool) to young adults, ages 19 and 20, earning below 250% FPL (benefits may be less extensive than traditional Medi-Cal).
• Individual/family contribution toward premium for coverage obtained through purchasing pool is linked to gross income. Legislative summary provided by the Governor’s office envisions a sliding scale:
  

• 0-150% FPL pays no premiums or out of pocket costs;
• 151-200% FPL  pays no more than 4% of income for premiums;
• 201-250% FPL will pay no more than 5% of income for premiums;
• 250-350% FPL will receive a tax credit to ensure cost of premium for an approved minimum coverage product that does not exceed 5% of income.

Role of Counties

• Counties maintain responsibility for care of the adult undocumented indigent population.
• Counties will share costs of providing coverage to those they currently serve (amount to be determined).
• Counties with a public hospital can apply to the state to provide coverage to certain Medi-Cal beneficiaries through new Local Coverage Option program.

Role of Federal Government

Majority of federal financing associated with increased provider payments and eligibility expansions (expected under existing Medicaid policy). State would seek Medicaid 1115 waiver to support innovations in financing and care delivery (e.g., incentives and rewards for healthy behavior) and to extend coverage to childless adults.

Changes in State Tax Code and State Tax Revenue

• Modifies state tax code to conform to federal health savings account rules.
• Establishment by employers of Section 125 plans to tax-shelter employer and employee health insurance contributions would reduce state tax revenue.
• Enacts a tax credit for individuals purchasing coverage who have incomes of 250-350% FPL to ensure cost of premium for an approved minimum coverage product that does not exceed 5% of income.
  

Insurance Market Requirements/ Reforms:

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

• Health plans must offer and renew coverage to all Californians (“guarantee issue”).
• Phased transition with rating bands, eventually premiums may vary based only on age and geography (not health status/conditions).
• Health plans must spend 85% of premiums on patient care.

Insurance Market Requirements/ Reforms:

Connector/Purchasing Pool

A purchasing pool administered by MRMIB would establish a subsidized benefit package, administer premium subsidies, incorporate a “Healthy Actions Incentive/RewardsProgram,” and offer non-subsidized products, such as dental and vision.

Insurance Market
Requirements/Reforms:

Participant Contribution to Obtain
Coverage Through Purchasing Pool

Sliding scale contributions required to obtain coverage through purchasing pool.

Financing Sources and Cost Estimates

Plan expresses intent that financing come from:

• Employer contributions;
• Employee and individual contributions;
• Federal funds;
• Redirection of safety net (county) funds;
• Hospital fees; and
• New revenues generated by leasing the state lottery.
  
• Governor indicates an expectation that voters will decide on the funding on the November 2008 ballot.

Cost Containment:

Prevention and Wellness

• All plans required to offer “Healthy Action Incentive/Rewards Program;” subsidized plans must include these as well.
• California Diabetes Program (contingent on state budget appropriation) promotes diabetes management and prevention with focus on Medi-Cal patients. 
• Community makeover grants to local health departments for obesity prevention and other preventive issues (contingent on state budget appropriation).

Cost Containment:

Additional Provisions

• Cap on health plan administrative costs and profits (must spend 85% of premiums on patient care).
• Healthcare Quality and Transparency Act to monitor costs and quality.
• Makes a variety of changes aimed at increasing health care quality and efficiency and reducing costs, including changes to professional scope of practice, promotion of PHRs, and e-prescribing.

Enforcement

Secretary of Health and Human Services will work the Franchise Tax Board and other state agencies to develop an enforcement mechanism for the individual mandate.

Implementation Timeline

• July 2010 - Medi-Cal and Healthy Families expansion, pending the appropriation of funds.
• July 2010 - Individual mandate begins.
• July 2010 - Health plans must spend at least 85% of premiums on patient services.
• July 1, 2010 - Medi-Cal rate increase.
• 2009-2016 - Phase-in of insurance market reforms.