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February 3, 2013

Editorial: California under the microscope on health reform

The November election ensured that the most ambitious health care reform since the creation of Medicare in 1965 will take full effect come January 2014.

The November election ensured that the most ambitious health care reform since the creation of Medicare in 1965 will take full effect come January 2014.

California, like other states, is gearing up to ensure that affordable insurance is available when the individual mandate kicks in next January, requiring Americans to maintain health insurance coverage so they don't pass their costs to others.

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

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

Expanding Medi-Cal

Unlike some other governors, Brown has embraced expansion. For the first time, 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 future years. 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.

However, 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 already 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 new 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" (, 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.

Seamlessly bridging Medi-Cal

and private health insurance

Since 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 same 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 already 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 make the promise of the Affordable Care Act real, 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 health coverage right in the nation's largest health market.

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