State-Based Coverage Solutions: The California Health Benefit Exchange

by Rebecca Farley on September 5, 2011

California was the first state to create its own health insurance exchange after the passage of the Affordable Care Act. Now, a new report from the Commonwealth Fund describes some of the key decisions California made and examines whether and how they can serve as a roadmap for other states. Decisions ranged from the structure and governance of the exchange to coordination with public programs, payment of premiums, and reducing adverse selection. 

From the Commonwealth Fund issue brief:

Federal legislation purposely gives states flexibility to craft their own insurance exchanges, entities that organize a marketplace of standardized insurance products for consumers. California took advantage of this leeway by:

  • Creating an exchange that will function as an active purchaser in the marketplace, rather than simply as a centralized portal for people to shop for subsidized health insurance;
  • Taking significant steps to combat adverse selection both against and within the exchange, including requiring all insurers to sell all tiers of products and making exchange participation a condition of selling catastrophic plans; and
  • Choosing not to preclude community-based health plans from developing commercial offerings for the exchange.

These decisions will help provide a roadmap for other states as they set up their own health insurance exchanges.

Click here to keep reading about California’s health insurance exchange.


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