Health Reform in California: Moving Forward NAIC May 30, 2008

Overview ABx1: Policy Advances ABx1: Policy Advances Tuesday Morning Quarterbacking Tuesday Morning Quarterbacking Moving forward Moving forward

ABx1: Policy Advances Coverage or expanded access for nearly all of Coverage or expanded access for nearly all of California’s 5.1 million uninsured California’s 5.1 million uninsured Personal responsibility for coverage Personal responsibility for coverage Shared responsibility for financing – minimum Shared responsibility for financing – minimum employer contribution employer contribution Sweeping insurance market reforms Sweeping insurance market reforms

ABx1: Policy Advances Medi-Cal provider rate increases Medi-Cal provider rate increases Full financing outside the General Fund Full financing outside the General Fund Mechanisms to protect the General Fund Mechanisms to protect the General Fund Short term and long term affordability measures Short term and long term affordability measures

Affordability – Short Term Remove regulatory barriers –Reduce barriers to low-cost delivery models (e.g. retail medical clinics) –Prioritize hospital seismic retrofit based on “worst first” Reduce regulatory red tape –Review mandates; - Eliminate unnecessary reporting requirements –Streamline health insurance product approval Establish a “medical loss ratio” –Enhance insurer & hospital efficiency by requiring 85% of premiums & hospital dollars be spent on patient care Provide tax breaks for individuals & businesses tied to purchase of health insurance –Section 125 plans; Health Savings Accounts

Affordability – Long Term Support health promotion, prevention & wellness Accelerate adoption of health information technology Improve quality and price transparency Promote quality and efficiency of care

Tuesday Morning Quarterbacking Budget context Budget context Adequacy of financing Adequacy of financing Market-based versus government-based Market-based versus government-based Cost containment Cost containment

Basis for Moving Forward Status quo/inaction not an option Status quo/inaction not an option Gubernatorial leadership and resolve Gubernatorial leadership and resolve Framework for reform Framework for reform Broad coalition for reform Broad coalition for reform

Phase 1 - Affordability Medical loss ratio Medical loss ratio Transparency Transparency Health information technology – electronic personal health records; e-prescribing Health information technology – electronic personal health records; e-prescribing Regulatory barriers – retail clinics Regulatory barriers – retail clinics No new mandates No new mandates

Closing Consideration “Changes are Necessary, but what they Ought to be, what they will be, and how, and when to be produced are arduous questions.” John Jay (1787)