California's Health Benefit Exchange
The purpose of state health insurance exchanges is to make health insurance more affordable and easier to purchase for small business and individuals.
The health reform legislation (Patient Protection and Affordable Care Act) signed into law in March 2010 by President Obama creates state-based health insurance exchanges. States can choose to operate their own exchanges or participate in a multi-state exchange.
California early on chose to operate its own exchange, now known as "Covered California."
The California exchange's vision is to improve the health of all Californians by assuring their access to affordable, high quality care.
Our mission is to increase the number of insured Californians, improve health care quality, lower costs, and reduce health disparities through an innovative, competitive marketplace that empowers consumers to choose the health plan and providers that give them the best value.
The California Health Benefit Exchange is guided by six primary values:
- Consumer-focused: At the center of the Exchange's efforts are the people it serves, including patients and their families, and small business owners and their employees. The Exchange will offer a consumer-friendly experience that is accessible to all Californians, recognizing the diverse cultural, language, economic, educational and health status needs of those we serve.
- Affordability: The Exchange will provide affordable health insurance while assuring quality and access.
- Catalyst:The Exchange will be a catalyst for change in California's health care system, using its market role to stimulate new strategies for providing high-quality, affordable health care, promoting prevention and wellness, and reducing health disparities.
- Integrity: The Exchange will earn the public's trust through its commitment to accountability, responsiveness, transparency, speed, agility, reliability, and cooperation.
- Partnership: The Exchange welcomes partnerships, and its efforts will be guided by working with consumers, providers, health plans, employers and other purchasers, government partners, and other stakeholders.
- Results: The impact of the Exchange will be measured by its contributions to expanding coverage and access, improving health care quality, promoting better health and health equity, and lowering costs for all Californians.
California was the first state in the nation to enact legislation creating a health benefit exchange under federal health care reform. Enabling legislation can be found here: Chapter 655, Statutes of 2010 (Perez) and Chapter 659, Statutes of 2010 (Alquist).
Starting in 2014, the California Health Benefit Exchange will make it easier for individuals and small businesses to compare plans and buy health insurance on the private market.
The Exchange will enhance competition and provide the same advantages available to large employer groups by organizing the private insurance market, including a more stable risk pool, greater purchasing power, more competition among insurers and detailed information regarding about the price, quality and service of health coverage.
The Exchange will support consumer choice by making comprehensive information about health plans available in an objective, easy-to-understand format, including:
- a website that provides standardized comparison information on qualified health plan benefit plans/options
- a calculator for applicants to compare costs across plan options
- a web-based eligibility portal to help link individuals to health coverage options available to them
- a toll-free consumer assistance hotline
Individuals and small employers meeting federal citizenship requirements may enroll in the exchange. Federal health care reform makes tax credits and subsidies available in 2014 to Californians with incomes between 133 and 400 percent of the federal poverty level (in 2010, approximately $29,000 to $88,000 for a family of four). The Exchange will ensure that Californians eligible for federally-authorized tax credits and subsidies get those benefits. Small employers with less than 50 employees may also purchase coverage through the exchange.
The federal government awarded California $1 million to fund preliminary planning efforts related to the development of an exchange. On August 12, 2011, the California Health Benefit Exchange received a $39 million Level I Exchange Establishment grant that will help the state plan for and design the Exchange and will be used to recruit necessary technical and support staff and to contract for specific subject matter experts. After 2014, the Exchange must be self-supporting from fees paid by health plans and insurers participating in the Exchange.
Voluntary Health Plan and Insurer Participation
Health insurance products offered through the Exchange must be available in the same form to consumers purchasing coverage outside the Exchange. All health plans and insurers participating in the Exchange must offer all Exchange plans at the federally designated bronze, silver, gold and platinum levels. Catastrophic plans will only be available through health plans and insurers participating in the Exchange. The catastrophic plans will be available both inside and outside the Exchange from these health plans and insurers.
The Exchange is an independent public entity within state government with a five-member board appointed by the Governor and the Legislature.
Two members are appointed by the Governor; one by Senate Rules Committee; and one by Speaker of the Assembly. The Secretary of the Health and Human Services Agency or another designee will serve as an ex-officio voting member of the Board. Appointed members will serve four year terms.
- Members of the board or of the staff of the Exchange are subject to strict conflict-of-interest provisions. They may not be employed by, a consultant to, a member of the board of directors of, affiliated with, or otherwise a representative of, a carrier or other insurer, an agent or broker, a health care provider, or a health care facility or health clinic.
The Exchange does not change how existing state health care coverage programs are administered.
Medi-Cal and the Healthy Families Program will continue to be administered by the Department of Health Care Services (DHCS) and the Managed Risk Medical Insurance Board (MRMIB), respectively.
- The Exchange will screen for and enroll individuals in Medi-Cal or the Healthy Families Program if they are eligible for those programs. The federal law requires state exchanges to perform this function.
- The Exchange will coordinate with DHCS, the MRMIB, and California counties to ensure that individuals are seamlessly transitioned between coverage programs if their eligibility changes.