Our View: All eyes are on California health reform

02/05/2013 1:48 AM

02/05/2013 1:50 AM

The November election ensured that the most ambitious health care reform since the creation of Medicare in 1965 will take full effect in January 2014. California, like other states, is gearing up to ensure affordable insurance is available when the individual mandate kicks in, requiring Americans to maintain health insurance coverage so they don't pass their costs to others.

We are far ahead of most states in setting up a marketplace -- an "exchange" called "Covered California" -- where people can buy health insurance if their employer doesn't provide coverage.

As Gov. Jerry Brown recognized in calling a special session Jan. 24, legislators still face major policy decisions:

Expanding Medi-Cal

Unlike some other governors, Brown has embraced expansion. Childless adults who earn up to $15,415 a year (138 percent of the federal poverty level) would be able to get Medi-Cal coverage. Legislators should support this.

The federal government will pay 100 percent of the cost of expansion through 2016, gradually dropping to 90 percent in 2020 and beyond. So there is no cost to California for three years for the 480,000 to 780,000 newly eligible people who are expected to sign up.

There is a catch. Under the old law, only 61 percent of the people who were eligible for Medi-Cal signed up. With the individual mandate, more eligible people are likely to sign up -- 200,000 to 440,000 people in 2014.

For these folks, the traditional 50-50 federal-state division of costs applies. So the state will have to come up with $143 million to $378 million in 2014 to cover these people.

According to a report from the UCLA Center for Health Policy Research, "Medi-Cal Expansion under the Affordable Care Act: Significant Increase in Coverage with Minimal Cost to the State" (http://healthpolicy.ucla.edu), this cost will largely be offset by increased tax revenues from the health care industry and in spending savings from other areas of the budget.

Bridging the gap

Because Medi-Cal enrollments increase during economic downturns and decrease during upswings, we should expect that as the economy recovers, more people will get jobs that provide insurance -- or that will give them enough income to buy insurance in the exchange.

The governor is recommending a bridge program for those earning up to $22,340 annually (200 percent of the federal poverty level), so those shifting out of Medi-Cal can keep their health plan and provider network, giving continuity and stability to individuals and providers.

Individuals paying premiums with federal subsidies would cover the cost, not state funds. Legislators should support this, too.

Diana Dooley, California's Health and Human Services secretary, believes the state will have enough doctors, nurses and other other health providers to handle the newly insured -- with some bumps in the road, such as rural shortages. Success will require a shift away from volume-based medicine -- where doctors get paid by the number of services they provide -- to models that value preventive care and coordination.

Many are doing that. For example, Kaiser Permanente doctors operate under a fixed, prepaid budget, working as a team on everything from prevention to acute care, with each getting a salary and bonuses based on measures of quality and patient satisfaction. To achieve the promise of the Affordable Care Act, providers will have to challenge traditional norms.

The special session is key to getting an expanded health insurance market up and running within 11 months. All eyes are on California lawmakers to get the promise of expanded coverage right in the nation's largest health market.

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