If only implementing health care reform was as easy as flipping a switch.
It’s not, and before it goes into effect on Jan. 1, 2014, there are a number of steps that state officials must take. The first was to create the California Health Benefits Exchange. The next is to put in place an option known as the Basic Health Plan.
Let me explain why this is so vital to ensuring lower-income Californians have access to care, and why it’s critical that the state Legislature pass Senator Ed Hernandez’s SB 703.
Come 2014, most of us will either keep the health care plans we have now or purchase insurance through the Health Benefits Exchange, which will be a Costco-like marketplace where employers and individuals can pool together to get coverage in a more cost-effective way. But for poorer Californians, the Exchange will still be too expensive. Even with federal subsidies and tax credits, the cost of basic coverage through the exchange is estimated to average $123 per month for those in the lower-income bracket. For a working person who earns wages just above the federal poverty level, that would equal 10 percent of their income.
So, even with the Exchange, ensuring that lower-income Californians will be able to afford basic benefits remains an unanswered challenge.
That’s where the Basic Health Plan comes in. It’s an additional tool provided in President Obama’s Patient Protection and Affordable Care Act that gives states the ability to establish a subsidized health plan for working people who earn between 133 and 200 percent of the federal poverty level, or about $15,000 to $21,500 per year. By reducing administrative costs and using existing health plans and health networks that have experience serving lower-income populations, the Basic Health Plan can provide quality care for less than $20 per month. That’s much more affordable.
That state’s big health care insurers, such as Kaiser and Blue Shield, are predictably opposed. They don’t want a lower-cost plan pulling potential customers and profits away.
For the rest of us, though, the Basic Health Plan makes sense because it will strengthen the Exchange. When Congress passed the Affordable Care Act, they specifically included the Basic Health Plan option because they understand that the needs of a small state differ from those of a large state like California. In our state, even with a basic plan in place, the Exchange will still have a customer pool of 2 million people. That means it will spread both its costs and its risks over one of the largest customer bases in the country.
For taxpayers, the Basic Health Plan also makes sense. Two independent financial studies, conducted by Mercer and by the Urban Institute, have both concluded that California will be able to implement this plan at zero cost to taxpayers, and that available federal subsidies will more than cover the costs.
SB 703 will put this Basic Health Plan in place, and the Legislature ought to pass it swiftly.
Ed’s Note: John Ramey is president of the Local Health Plans of California.