California Leads the US in Health-Care Reform Preparations, but Challenges Remain

As implementation of the Affordable Care Act (ACA) continues to get underway, the states are literally all over the map when it comes to making their preparations for health-care reform. However, California is one of the states most prepared, and the progress being made in the Sunshine State offers a peek into what the rest of the country can expect over the next couple of years.

Under the ACA, the residents of each state will have access to a health insurance exchange (pdf), a marketplace where Americans can shop for affordable health insurance. The states can choose to run their own exchange or can partner with the federal government to set up the exchange in time to start enrolling consumers in insurance plans by Oct. 1, 2013. If a state chooses not to set up an exchange, the U.S. Department of Health and Human Services will set up that state's exchange.

California was the first state to set up an exchange. According to the exchange, which is called Covered California, approximately 2.6 million Californians (pdf) shopping for health insurance will qualify for financial assistance in 2014, thanks to the ACA. Approximately 2.3 million California residents are expected to buy their health insurance through Covered California by 2017.

"Our Legislature set a foundation early on for the state's establishment of a health-benefit exchange," says Marian Mulkey, director of health reform and public programs for the California Healthcare Foundation, an organization that advocates for improvements to the California health-care system. "It put governance in place, made a lot of important decisions and worked very hard to get to the point where we are."

Lower Costs for Consumers

Recently, Covered California caught the attention of the rest of the nation when it announced that the average cost of one of its least expensive individual coverage plans next year would be $304 a month. In announcing the plans and rates that will be available for 2014, Covered California Executive Director Peter V. Lee said, "This is a home run for consumers in every region of California. Our active negotiating will not only benefit potential enrollees to California but will benefit all Californians by making health care affordable." While many critics of the Affordable Care Act have predicted that the law would lead to higher insurance premiums across the country, some of California's expected 2014 rates were as much as 29 percent below the average 2013 rates for small-business plans in that state.

The other major part of the ACA that's slated to go into effect in 2014 is the Medicaid expansion, which will enable states to expand Medicaid so that it will cover Americans making 133 percent of the poverty level, which is approximately $31,000 for a family of four. The expansion is optional, and many Republican-controlled states, including Texas and Alabama, have refused to take part in it. However, there has been little opposition to the expansion or any other parts of the ACA in Democrat-controlled California. "California has been a little bit more favorably inclined toward the provisions of the law, which is no surprise, given the party profile of California voters," Mulkey says.

More than 1.4 million adults under age 65 will become eligible for Medi-Cal, California's Medicaid program, as a result of the Medicaid expansion, according to a study conducted by the University of California, Berkeley's Center for Labor Research and Education and the UCLA Center for Health Policy Research.

California Still Faces Challenges

So what are the biggest challenges remaining for California? One is making sure that the transition is smooth for health-care consumers, Mulkey says. Another challenge is making sure that Californians are aware of their rights under the law. A Kaiser Family Foundation poll released in April found that 42 percent of Americans didn't know that the ACA was the official law of the land.

One way that California is addressing that issue is by providing grants for community organizations to do outreach. There has also been a major investment in marketing and media communications to get the word out. "I think everybody is working very hard to make [the transition to the ACA] as effective and user friendly as possible, but it's a very big job, and there's a short timeline to make it work," Mulkey says.

Tamara E. Holmes is a Washington, D.C.-based journalist who writes about health, wealth and personal growth.