Californians to Be Covered | Estimated 3.4 million (more than two-thirds of uninsured Californians 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) unless the cost of coverage exceeds 5% of wages for coverage with a maximum out-of-pocket of $1,500. Employees with other specified health coverage are also exempt. 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 must accept the expenditures (unless his or her share of expenditures would exceed 5% of wages paid by the electing employer. Employees with evidence of other specified health care coverage are also exempt).
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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. Employers must elect to pay or play for full-time employees and pay or play for part-time employees.
- All employers are required to establish Section 125 plans to tax-shelter employer and employee health insurance contributions.
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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 | The Health and Human Services Agency must develop health care provider performance measurement benchmarks and incorporate these into a common pay-for-performance model to be offered in every state-administered health care program. |
Public Program Expansions and
Support for Low- Income Individuals | - Employees and dependents eligible for public programs and eligible for Cal-CHIPP would receive their public program through Cal-CHIPP.
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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 2009, 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.
Plans must guarantee issue five classes of benefit plans approved by the California Department of Insurance and the Department of Managed Health Care, except for individuals identified as those 3 to 5% most expensive to treat if covered under an individual insurance policy. These individuals would be eligible for the state’s high risk pool, the Major Risk Medical Insurance Program (MRMIP). - MRMIP would be funded by an assessment on health plans as outlined in AB 2 (Dymally).
- Simplified medical underwriting, including standardized individual application form.
- Health plans and insurers with one million or more enrollees in California would be required to submit a good faith bid to be a participating plan in Cal-CHIPP.
- Applies rules currently regulating the small group market (such as guaranteed issue) to the mid-sized (51 - 100 employees) employer market.
In 2010, eliminates rate bands for small and mid-sized groups (2-50 and 51-100 employees); establishes community rates with premium variation only by age, geography, family size and benefit plan. Establishes a new board to support the creation of public health plan networks and to develop these networks to provide services in counties with no county plan (local initiative). - Health plans must spend 85% of premiums on patient care.
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Insurance Market Requirements/Reforms: Connector/Purchasing Pool | Establishes Cal-CHIPP to be administered by MRMIB to negotiate and purchase health insinsurance for eligible enrollees. |
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 earning less than 300% FPL to meet the 5% requirement.
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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)
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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.
Participating health plans in Cal-CHIPP required to have enrollee cost-sharing that promotes prevention and health maintenance. 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).
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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 phasing out "rate bands" take effect.<!--[endif]-->
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