California healthcare exchange sets benefits and costs for plans

The state's healthcare exchange, Covered California, began a small revolution Wednesday when standardized benefits and costs were unveiled for insurance plans it will begin selling next year. 

The federal government's Affordable Care Act requires most people to have insurance by January 1, 2014. The law requires insurance companies to offer certain minimum benefits to consumers, but California’s health care exchange — which will offer one-stop shopping for individuals and small business owners — are taking it a step further.

Covered California quantified just what those benefits entail and how much consumers will fork out in deductibles and co-pays. It also set an annual cap on out-of pocket costs for low-income residents.

“Our board made this decision to adopt [standardized] benefits because it’s the right thing to do for consumers,” said Covered California executive director Peter Lee, speaking at a press conference to announce the standards.

Lee said the change makes it possible for consumers to accurately compare plans sold on the exchange.

That’s practically revolutionary said Betsy Imholz, who is with the west coast office of  Consumers Union — the advocacy wing of Consumer Reports.

“Shopping for health insurance is the most dreaded consumer task,” Imholz said. She added that the marketplace for individual insurance policies is currently like the Wild West.   

 “You really can’t easily tell what’s covered, what’s not covered,” Imholz said. “Deductibles sometimes apply to one thing, but not another. It’s just very hard to know what you’re getting, to know what you’re not getting, and then to compare plans to each other.”

Imholz said Covered California’s standardized benefits will make it easier for the 8.8 million Californians expected to acquire healthcare coverage through the exchange. More than a fourth of them will be eligible for federal subsidies to help pay for premiums.  That assistance can only be spent on plans offered by the exchange.

The Affordable Care Act allows people earning up to 250 percent of the federal poverty rate to pay a small percentage of their income on premiums.  Covered California’s Lee says that’s why he can now say with certainty what the lowest-income residents in California will pay for healthcare— and what that money buys.

“A family of four knows that they could have good health insurance that costs less than $100 a month” said Lee, “and for $4 they can see a doctor.  That’s less than a bus ride.”

Plans for low-income Californians set a maximum out-of-pocket cost of $6,000 a year for an individual or $12,000 for a family. Lee says the out-of-pocket cap was designed to prevent medical illness from forcing people into bankruptcy or foreclosure.

The board of Covered California has yet to set the premium cost for consumers who don’t qualify for federal subsidies.  That will depend on what plans the exchange ultimately chooses to offer. 

In coming months, the exchange will consider bids from insurance companies who want to sell plans, and than negotiate any changes.  A spokesman for Covered California says it expects to finalize decisions on what plans to offer in June.