Finding the Right R/x for California’s Health Insurance

0

L.A. business owners will be dramatically impacted by health care reform and by the continuing debate on how best to achieve the goal of universal coverage. Yet one of the most important features of the new legislation is also one that has curiously garnered very little public attention. This is the mandate that each state establish and launch a health insurance exchange by Jan. 1, 2014.

Health insurance exchanges promote choice and make health insurance more affordable by allowing an individual or small business to compare the costs and benefits of various health plans while accessing various subsidies and tax credits. With such information and support in hand, small business owners and individuals will be better prepared to select a health plan that best fits their needs and budget.

Here in Los Angeles County we are home to nearly 240,000 small businesses (one-49 employees). They know what other business owners in California have felt – that statewide health insurance premiums increased 7.5 percent in 2009 compared with a 0.6 percent decrease in overall consumer prices. What’s more, since 2002, premiums have increased by 118 percent, more than four times the 23 percent increase in California’s overall inflation rate.

With health insurance premiums rising at such an alarming rate, it is no wonder that small business owners are looking for relief and some clear path to value-based purchasing. That’s why the decision of how health insurance exchanges are implemented is so important. If done properly, exchanges have the capacity to help us move to a more rational method of purchasing health coverage while getting society closer to achieving the noble goal of universal coverage for all its citizens.

In that regard, California has a leg up on the rest of the nation. We’ve already experienced both sides of the equation – the failed state efforts to create an exchange and the private sector establishment of the nation’s oldest and most successful health insurance exchange for small and midsize employers, CaliforniaChoice. The challenge now is to find a way to harness all this experience so that as many eligible persons as possible can be enrolled in the new exchange with the least possible disruption to individuals or local employers.

Toward that end, California’s regulators have a choice. One option is for them to attempt to eliminate all competition and try to do it all themselves. But that would be disruptive to the employers and consumers who would be forced to change insurance arrangements. It also raises the question of whether running a retail insurance “store” for Californians – which is what, in essence, the state exchange will become – is an appropriate venture for government. After all, this is not exactly an area where there is a track record of government success.

Public-private partnership

A much better recipe is the creation of a bold new public-private partnership that harnesses existing private sector distribution channels such as brokers and insurance agents that already touch millions of citizens every month. Establishing the exchange in this way would also best serve the needs of those millions of consumers and businesses who will qualify for subsidies or tax credits, and who deserve the same dignity and freedom to shop as will be available to commercial insurance shoppers.

While other states are trying to figure this all out from scratch, let’s take advantage of the unique opportunities we have here in California and form the kind of public-private partnership that will achieve the goals set forth in the new legislation in the most efficient and cost-sensible manner possible. In doing so, California can be a model for the rest of the country in showing how to do this right.

Health care purchasing needs to be a collaborative process between all parties if the goals of universal coverage are to be achieved. We know from experience that establishing, marketing and administering a health exchange is no easy task, which is why previous state-run small-group exchanges have failed. But California can not afford to fail again. The new exchange must work properly. Millions of Californians and a quarter-million of L.A. small business owners are depending on it. Let’s all pull together to make this work.

Ron Goldstein is president of Choice Administrators Exchanges, the administrative branch of the state-approved health insurance exchange, CaliforniaChoice.

No posts to display