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California Asks Insurers for Input into Exchange

By Rebecca Adams, CQ HealthBeat Associate Editor

October 2, 2012 -- Insurers that want to participate in the California health care exchange have until Oct. 12 to submit letters of intent, according to state officials who were poised to release a notice about the process last week.

California was the first state to establish a health benefits exchange after the 2010 health care law (PL 111-148, PL 111-152) passed. A spokesman said that California officials expect between 1.8 million and 2.1 million people to obtain subsidized coverage through the exchange with another 2.1 million Californians purchasing unsubsidized coverage in the exchange, which the law says should be up and running in 2014.

The state is moving ahead on its exchange even as officials in many states across the country continue to press federal officials for more details on how they will operate and how the rules for essential health benefits could affect coverage choices.

On Sept. 25, the California state exchange released a draft solicitation for insurers and collected comments from the public on it until last Thursday. The draft is the first glimpse insurers got of what information exchange officials want from those plans that would like to offer coverage in the exchange for part or all of the state. After reading comments and considering whether to make changes in the solicitation, the exchange is expected to release a final document on Oct. 18.

State officials expect to choose the plans that will participate in the California exchange by March 30, according to the 175-page solicitation, and execute contracts by June 1, in anticipation of an open enrollment period beginning in the fall.

The solicitation shows that the state is interested in signing contracts with insurers of up to three years. The state will ask each insurer to certify that for each rating region in which the plan wants to offer coverage, the plan will offer benefits for the four coverage levels required in the law (bronze, silver, gold and platinum tiers) and a catastrophic plan, and would ask plans to provide details about additional any benefits that would be offered.

Separately, the California insurance commissioner is praising other efforts to implement the exchange. Insurance Commissioner Dave Jones applauded Gov. Jerry Brown's signing of legislation that creates a licensing framework for Consumer Operated and Oriented Plans (COOPs), a nonprofit health insurance option in exchanges that was provided for in the health care law.

"This legislation will enable California to offer more affordable, quality insurance products in the Health Benefits Exchange, thus providing consumers with competitive, lower premiums, allowing them to keep more of their hard earned dollars," Jones said in an Oct. 1 statement. "I believe one of the most pressing issues facing Californians is the lack of available options for obtaining affordable health coverage. With the goal of providing insurance options to nearly one million low-income Californians in need of affordable health care, co-ops can serve as one affordable option available to these individuals and families."

The co-op bill takes effect on Jan. 1. It includes a provision banning a co-op plan from converting or selling a for-profit or non-consumer-operated entity after receiving a solvency loan. The state law also requires co-ops to comply with insurance governance standards.

Jones noted that the federal government has given out more than $1.6 billion in low-interest loans to co-ops located in more than 20 states.

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