Wednesday, April 3, 2013

California First to Set Standard for Health Benefits

This article was written by Judy Lin, Associated Press, Wednesday, February 13, 2013, reprinted by permission

SACRAMENTO, Calif. (AP) — California's health benefits exchange became the first in the nation Wednesday to set a standard benefits design to help people comparison shop for insurance under the federal health care overhaul.

The move will help consumers more easily determine what kind of coverage they want to buy, said Peter Lee, executive director of Covered California.

"We're changing the focus of health insurance from being a shell game — hiding from consumers what's covered and what's not covered — to being about health insurance providing the best care possible, to help people stay healthy, get care when they need it and lower costs," Lee said during a news conference at the exchange's headquarters in the state capital.

Under the Affordable Care Act, each state is setting up its own marketplace where individuals and families can purchase private health plans resembling what workers at major companies already get.

While the federal law requires health plans to offer comprehensive benefits such as emergency services and maternity care, California is one of the few states requiring participating health plans to follow a uniform benefits structure to help consumers make a choice.

The state intends to allow health plans to propose alternatives.

While low-income people will be referred to safety-net programs, the federal government will help many middle-class households pay their insurance premiums.

State officials estimate that about 2.6 million Californians will be eligible for federal subsidies. With California's standard benefits, those people will be able to figure out their monthly premiums and out-of-pocket expenses before insurance companies submit their bids later this year to the exchange.

For example, individuals earning between $11,490 and $17,235 a year can expect to pay as little $4 to see their primary care physician, while those making $17,235 to $22,980 would have a co-pay of $20.

Under the Affordable Care Act, Californians eligible for assistance will pay only a certain percentage of their income, with the federal government paying the rest. Insurers must submit bids that detail their rates to be listed on the exchange.

Anthony Wright, executive director of Health Access California, a group that advocates for low-income families, applauded the marketplace design as a crucial improvement for individuals and small businesses.

"Consumers trying to buy health coverage today face a complex and confusing experience, facing fear of the fine print," Wright said in a statement. "The standardization of benefit designs will make it easier for consumers to compare health plans. It will force insurers to compete on cost and quality and customer service, rather than consumer confusion."

Patrick Johnston, president and CEO of the California Health Plans Association, which represents health insurers, said it's too soon to tell how the design will impact premium prices.

"By requiring the same benefits and deductibles for each category of coverage, Covered California may reduce confusion among consumers about the differences in pricing among plans but may also increase premiums," Johnston said in a statement.

Covered California officials say the state learned from the experience in Massachusetts, which provided the model for President Barack Obama's health reforms. That state launched its health insurance exchange without standardizing benefits but has since switched.