SACRMENTO, Calif. /California Newswire/ — Governor Arnold Schwarzenegger late yesterday (Sept. 30) signed AB 1602 by Assembly Speaker John Pérez (D-Los Angeles) and SB 900 by Senator Elaine Alquist (D-Santa Clara) creating the California Health Benefit Exchange, an entity that will help California consumers and small businesses shop for and buy affordable health insurance starting in 2014. The Governor’s action makes California the first state in the nation to enact legislation creating a health benefit exchange under federal health care reform.

“For national reform to succeed, it will be up to the states to make it work, and California is moving forward on reforms that will provide affordable and quality health care insurance,” said Governor Schwarzenegger. “Choice and competition have the power to improve health care quality and reduce health care costs for California consumers. With the California Health Benefit Exchange, we will be able to create a competitive marketplace where consumers can choose among qualified health plans – all without relying on the state’s General Fund.”

The Governor announced earlier this year that he is taking aggressive action to implement federal health care reform in California including helping develop the structure for an exchange to foster competition and make health insurance affordable. The Governor formed a Health Care Reform Task Force to implement key reform provisions and programs under health care reform this year, including the Exchange.

The California Health Benefit Exchange will make it easier for individuals and employees of small businesses to compare plans and buy health insurance in the private market using federal tax subsidies to make health coverage more affordable. Federal health care reform makes tax credits and subsidies available in 2014 to Californians with incomes between 133 and 400 percent of the federal poverty level (approximately $29,000 to $88,000 for a family of four).

The Exchange will be governed by a five-member board appointed by the Governor and the legislature. Between now and the end of 2013, the Exchange board and staff will develop procedures and criteria to enroll Californians in the Exchange and select qualified health plans to participate. Similar to the purchasing pool proposed as part of comprehensive health reform advanced by Governor Schwarzenegger in 2007, the Exchange will enhance competition and give individuals and employees of small businesses the same advantages available to large employer groups including a more stable risk pool, greater purchasing power, more competition among insurers and detailed information regarding the price, quality and service of health coverage.

“We believe the Exchange will improve the way millions of Californians get health insurance in our state,” said California Health and Human Services Agency Secretary Kim Belshé, who chairs the Governor’s Task Force on Health Care Reform Implementation. “The Exchange will focus competition on price, quality and service – giving individuals and small business employees the same large-group purchasing advantages and more affordable options now enjoyed by those who work for large firms.”

The Exchange will work in partnership with agents and brokers, community organizations and other “navigators” to help consumers make informed decisions based on the price, quality and value. Once the Exchange opens in January 2014, California consumers will be able to use it to research their health coverage options and access federally-funded tax credits and cost-sharing subsidies. Click here to read more on the California Health Benefit Exchange.

The federal government announced today that California will receive $1 million to fund the costs of preliminary planning efforts related to the development of an Exchange. Additional federal implementation grants are expected be announced in the Spring of 2011. After 2014, the Exchange will be self-supporting from fees paid by health plans and insurers participating in the Exchange. No state General Funds are appropriated for operation of the Exchange.

In addition to taking action on the Health Benefit Exchange bills today, Governor Schwarzenegger announced he also signed the following bills to implement health care reform in California:

SB 1163 by Senator Mark Leno (D-San Francisco) – Health care coverage: denials: premium rates.
In July, Governor Schwarzenegger announced the state’s medical insurance rate review proposal to make costs more transparent and ensure greater consumer protection. SB 1163 embodies the Governor’s proposal by requiring all premium filings be reviewed and certified by an independent actuary to ensure premium costs are accurately calculated and all proposed rate increases be posted on both department and insurer websites making costs more transparent. These consumer protections exceed what federal law requires under federal health care reform.

SB 1088 by Senator Curren Price (D-Los Angeles) – Health care coverage: dependents.
This bill prohibits health plans and health insurers from setting the limiting age for dependent children covered by their parent’s health insurance policy at less than 26 years of age.

AB 2244 by Assemblymember Mike Feuer (D-Los Angeles) – Health care coverage.
AB 2244 implements and phases-in provisions of federal health care reform, ensuring that children cannot be denied coverage or priced out of the market if they have pre-existing conditions. The bill prohibits insurers that sell individual market policies in California from refusing to sell or renew coverage to kids with pre-existing conditions.

AB 2345 by Assemblymember Hector De La Torre (D-South Gate) – Health care coverage: preventive services.
Aligning state law with federal health care reform, AB 2345 requires health care service plan contracts to cover certain preventive services with no cost-sharing.

AB 2470 by Assemblymember Hector De La Torre (D-South Gate) – Health care coverage: cancellation: rescission.
This bill prohibits a person’s health care insurance policy from cancelling insurance once the enrollee is covered unless there is a demonstration of fraud or intentional misrepresentation of material fact by the terms of contract or policy.

The Governor and his Administration have been working since federal health care reform passed to implement key elements in California before the 2014 start date. In April, the Governor announced the state will contract with the federal government to operate a temporary health insurance program for medically uninsured individuals with preexisting medical conditions. In July, the Governor’s Administration submitted the state’s proposal to the federal government to establish and operate the federal Pre-existing Condition Insurance Plan through a public-private partnership with contracted vendors, which will be overseen by the California Managed Risk Medical Insurance Board. To implement this program and expand affordable health coverage to uninsured Californians with pre-existing medical conditions, the Governor also recently signed legislation creating the Federal Temporary High Risk Health Insurance Fund to receive $761 million in federal funding: SB 227 by Senator Elaine Alquist (D-San Jose) and AB 1887 by Assemblymember Mike Villines (R-Clovis).