The Alan Katz Health Care Reform Blog

Health Care Reform From One Person's Perspective

Governor Schwarzenegger Signs California Health Benefit Exchange Legislation

Posted by Alan on September 30, 2010

California became the first state to enact legislation creating an exchange under the Patient Protection and Affordable Care Act on September 30th when Governor Arnold Schwarzenegger signed into law AB 1602 (authored by Assembly Speaker John Perez) and SB 900 (by Senator Elaine Alquist). The two bills create the California Health benefit Exchange. In signing the bills Governor Schwarzenegger stated “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 five-person Board created by the legislation are tasked with creating an exchange to present health plan options to individuals and small businesses beginning January 1, 2014. Concurrent with Governor Schwarzenegger’s signing of the bills, the Obama Administration announced a $1 million grant to the state “to fund the costs of preliminary planning efforts related to the development of the Exchange.” Further federal funds are expected to become available to the California Health Benefit Exchange in 2011. After 2014 the Exchange is designed to be supported entirely from fees paid by health plans and insurers, meaning no general revenues will be allocated to the entity.

Some carriers supported the legislation; others urged the Governor to veto it. The concern of many opponents was the power given to the Exchange’s Board to exclude accept or exclude carriers from the Exchange. The fear, which is demonstrated on a weekly basis by local, state and federal agencies every day, is that the Board will use the carrot of being included in the Exchange as a lever to dictate what insurers do (and what plans they offer) outside the Exchange. Giving this power to an independent Board (one that is exempt from significant oversight by the legislative or executive branches of government) is seen as a threat to the private marketplace.

Supporters argue that this power is essential if the Exchange to going to fulfill the desired (and desirable) goal of negotiating lower health insurance premiums for consumers and businesses buying through the Exchange.

Brokers have had another concern about AB 1602 and SB 900. The federal health care reform envision exchanges that include “navigators” to help consumers and business owners explore their health insurance options. However, the PPACA leaves it to states to define the actual specifics of the navigator role. Will they simply be a “help desk” answering questions about how to use the exchanges or will they be actively engaged in providing advice and guidance on which plan a consumer or business should select? The California laws leaves these details to the Exchange Board. What’s of concern, however, is that language that would have required the California Exchange’s navigators to be licensed was removed from the now-signed legislation shortly before it was passed by the Legislature.

And there’s a sentence in Governor Schwarzenegger’s press release touting his signing of AB 1602 and SB 900 that is at both once reassuring and of great concern. “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.” While it’s reassuring the Schwarzenegger Administration recognizes that agents and brokers need to be involved with the Exchange, it’s of concern that they consider licensed professionals to be on an equal footing with unlicensed community organizations and others.

What will be important for the California Association of Health Underwriters, the leading organization representing independent producers, and other agent groups to work through with the Legislature and the Exchange Board is that there is a difference between licensed, regulated brokers and others. Each can play a role. When it comes to publicizing the Exchange and providing general advice about how to use it, non-licensed individuals and entities can play an important and valuable role. Helping consumers select the health plan that best suits their unique needs and then providing ongoing service to purchasers once they’ve obtained coverage, however, is best performed by licensed and regulated professionals.

The statement in the Governor’s press release is consistent with this division of labor, but only because it lacks details. Follow-up legislation and explicit regulations will be needed to assure consumers have access to qualified professionals. The National Association of Insurance Commissioners sees a continued role for brokers as an essential consumer protection. In a resolution adopted during their August 2010 meeting, the NAIC noted that “employers and consumers will need professional guidance even more in the future” as a result of health care reform. 

While Governor Schwarzenegger’s signing of AB 1602 and SB 900 directly impacts only Californians, other states are likely to study these bills as they contemplate the design of their own exchanges – another reason why legislation to clarify brokers’ role in the state’s Exchange should be introduced and enacted quickly in the next legislative session. So this California development could have repercussions across the country.

In some of the comments posted on this blog, some have suggested that Democratic states are likely to create anti-broker exchanges while more Republican states will create broker-friendly ones. This view, however, ignores the facts that Republican’s health care reform proposals are as those of Democrats to increase health care costs while undermining brokers’ role in the system. Consider Republican support for mandating carriers to offer health insurance coverage to all applicants (“guarantee issue”) and their opposition to requiring all consumers to purchase coverage (an “individual mandate”)  No surer recipe for skyrocketing health insurance costs exists than imposing guarantee issue without an individual mandate. Assuming lawmakers will do the right thing just because of the political party they are in is naive. What’s required is a strong political and educational push by people who understand the current system, who sees its flaws, and have practical and meaningful ideas on how to fix it. Put another way, brokers must stay involved and engaged regardless of which political party holds the majority of seats in their state’s legislatures.

Fortunately, there’s still time (even in California) to make a difference. As noted, CAHU is already working on needed changes to AB 1602 and SB 900. Meanwhile, the National Association of Health Underwriters is deeply involved in working with state legislatures and insurance commissioners to help them develop exchanges that implement the letter and spirit of the Patient Protection and Affordable Care Act while preserving consumers’ access to qualified, professional producers.

In any change of the consequence and complexity presented by health care reform there will be advances and setbacks. The nice thing about politics and legislation is there’s always another election and another legislative session coming up. The key is to avoid giving in to despair with each setback, but rather to persevere until one achieves the next advance.


17 Responses to “Governor Schwarzenegger Signs California Health Benefit Exchange Legislation”

  1. Alan,
    Great post. I’m curious if you have any insight into your comment: “What’s of concern, however, is that language that would have required the California Exchange’s navigators to be licensed was removed from the now-signed legislation shortly before it was passed by the Legislature.”

    While I don’t want to get bogged down in a post-mortem on these bills, I think it dramatically informs the future if we have some insight into why and how this important language (that NAHU and CAHU worked so hard to protect) was removed from the final bill.

    I appreciate your knowledge and experience and am glad we have you as a resource. I am sure CAHU will provide additional details and guidance on these bills in the coming days, but at the moment your blog is the only mention of them on the CAHU website.

    Thanks for your continued service to our industry Alan.

    -Dennis Carlson
    Past President, Sacramento Association of Health Underwriters

  2. Curt Cella said

    From the category of ‘I don’t know whether to laugh or cry’ I bring Alan and his readers this:

    So in the first broad scale attempt to get folks who need access to “affordable health insurance” via the federally funded high risk pools the number of folks here in CA that have APPLIED for the PCIP numbers less than 450.

    Let me repeat that and let’s just take a moment to let that number sink in: FEWER THAN 450.

    Here are some immediate takeaways: What is ‘affordable’ to the federal government is obviously NOT what is affordable to the American people which would lead one to believe that when 2014 rolls around and folks are eligible for tax credits, the cost of those tax credits for health insurance costs that will flat out continue to spiral upwards will put this country on an even quicker path to bankruptcy.

    Folks who don’t want to pay for health insurance will continue to….wait for it….NOT buy health insurance! They’ll take the fine or whatever Washington and the IRS will call it and you’ll continue to have crappy risk pools that will do nothing to drive down health insurance costs.

    Yet another clear indication that this flawed legislation has yet to score one single “victory” for the American people: Child only plans are disappearing; group health plans will rise due to the rise in in covered dependent age to 26 which is a lose-lose for employer and employee alike; the high risk pools are all flash and no go when it comes to re-mediating a situation the American people were told was dire; the Democrats who threw in on this legislation refuse to even open their mouths about it now when campaigning so as a political chit to be cashed in come election time it is worthless…

    I mean seriously: Can this be any worse? Think about it folks – in a state like California where the media and every democrat in this state swore up and down that it was doomsday when it comes to finding health insurance for those with pre-existing conditions – less than 450 people in the ENTIRE state have materialized to take advantage of this program?! SERIOUSLY?!?!?!?!

    I swear: This situation has gotten so utterly absurd it just defies all logic anymore.

    • Curt Cella said

      _In states where the federal government runs the program directly, the insurance plan doesn’t provide coverage for prescription drugs until people have met a $2,500 annual deductible. “Applying this high … deductible to the pharmacy benefit is a real barrier to consumer access to medications,” Steven Browning, a Texas official, wrote HHS last week.

      Sorry to continue on this rant but I must comment on the line above: So in essence what Mr Browning wants is ZERO deductible health plans. Good gravy. Well so much for plan concepts like the HSA-compatible plans which are successfully serving a vast number of Americans. I mean Lord knows we wouldn’t want folks to have any kind of deductible that might actually help with process of introducing cost control into the health care arena – folks who have deductibles and have to meet those deductibles are more discriminating buyers of services because it is their money being laid down on the table – thus you have some stake in the game as a health care consumer.

      Oy vey! Can we just stop the charade and call this whole thing what it actually is: Nobody is going to be happy until this country has nationalized healthcare. Anything short of that is utterly doomed to failure despite how much effort and fake math Congress puts into it. Good grief if they’re going to complain about a $2500 annual ded this is all a giant waste of everyone’s time. Seriously.

      • Curt Cella said

        Oops! MY bad It’s actually worse than I thought: I Just looked at the PCIP plan – $1500 annual deductible with a $500 annual ded for brand name drugs.

        Uh… wow.

    • Curt,

      You asked if things can get any worse…yes.

      Did any of you hear the latest regarding McDonald’s and others, threatening to cancel all mini-medicals?

      In today’s NYT:

      “To date, the administration has given about 30 insurers, employers and union plans, responsible for covering about one million people, one-year waivers on the new rules that phase out annual limits on coverage for limited-benefit plans, also known as “mini-meds.” Applicants said their premiums would increase significantly, in some cases doubling or more.”

      30 Waivers already, to cover their rear-ends. Wouldn’t do to have over one million people end up uninsured because of ObamaCare, now would it. That’s rhetorical. Link to article (NYT): .

      NAHU Members, and all other Health Agents, if you aren’t donating to and helping elect those candidates who are attempting to unseat Democrats, what are you waiting for? A Pink Slip? Should you not act now, it will come.

      • Curt Cella said

        Spencer –
        Thought you would find this interesting:;more-from-section

        Deflect deflect deflect….delay delay delay….typical pre election strategy….What’s your bet that right after election Admin and Sebelius drop the hammer on mini meds ASAP!

        You know I have just been stewing about the whole topic of these high risk pool plans — I ran a few quotes and these plans are consistently MUCH higher than individual plans that would cost a consumer much less: The difference between the two plans? Current affordable indiv plans require more buy in from consumer in terms of annual deductible, OOP max. In other words: The federal gov would rather that you simply not be able to buy their high risk health plan because you can’t afford the monthly premium rather than a have a health plan that costs $100-$200 but requires more consumer $$ buy in.

        Look I realize there are folks out there that can’t afford either strategy but there ARE folks out here who DID have a health issue in the past but don’t now. Shouldn’t the PCIP take that into account and offer up a plan option that gives someone – at the least – catastrophic coverage – at a reasonable premium they can afford?!

        What I find infuriating here is that this a blatant example of government sticking its paw into something it is ill-equipped to market properly. Once again we have government intervention into private industry that – through committee – creates an animal with an elephant’s head, a body of a giraffe, and the feet of a hippo! In the end no one is happy or served by this:

        * Seems lots of folks simply can’t afford the premium so the plan sits there on the market like an orphan.
        * It has rich benefits that aren’t rich enough according to far left nationalized medicine crew.
        * The result is an outlier that will serve a fraction of the market it was intended to.

        The real shame of this is that we are starting to see just exactly what health coverage will look like come 2014 when the whole process is turned over to government and amateurs. PLEASE: Someone show me one market that is better run by government than private industry? This is all shaping up to be an unmitigated disaster. Every agent reading this blog today has helped clients avoid higher plan strategies and secure more affordable more uniquely appropriate coverage for their clients. We are reminded of that every single day we strap on a head set or chat with a client, yet we have legislators who have fed at the public trough (and received their government issued health plans) for so long they have no clue what it is that health insurance agents actually do. The Exchange legislation they are creating right now as we speak is literally throwing the baby out with the bathwater.

        • Curt,

          I followed that link and found this to be most enlightening: “An article in Crain’s Chicago Business ( quotes Kathleen Sebelius, Secretary of Health and Human Services, as saying that about 50 companies, including McDonald’s, have requested waivers on the medical-loss ratios. Sebelius said her department cannot make a decision on this issue until the National Association of Insurance Commissioners advises HHS on how to define medical-loss ratios. (NAIC has issued a policy draft, but has not officially presented it to HHS yet.) [interrupt article]

          So while Sebelius would like to cut some backroom deals to make the bitter pills go down better before the mid-term elections, as long as the NAIC has not yet issued its Policy DRAFT to HHS, HHS is stuck and cannot issue waivers. Oh gee, how sad that (again) the Administration did not think aheaD and may leave millions uninsured just before or after the elections, those same peole being insured BEFORE ObamaCare came along to “ruin their day”. What we know, is that they (the Feds) don’t know anything, in spite of their wanting to cover everything up, sweep it under the rug for a couple of years, and hope that none in the Electorate notice.

          [Article continues]”So despite the happy talk from McDonald’s, the fate of mini-med plans is definitely still up in the air at the moment. And even if they survive for another few years, they will be banned starting in 2014, when the state insurance exchanges start up. When that happens, look for McDonald’s and its ilk to pay the statutory fines to the government and let their workers fend for themselves on the insurance market.”[End of article, quotes]

          This leaves me, the reader, as it obviously leaves the author, with the following:

          1. In 2014, no matter what else happens, all things staying the same, the mini-meds are illegal and will disappear, if not much sooner.

          2. Just how many millions will find themselves uninsured due to ObamaCare by 2014?

          3. Given the Exchanges adopted Rules for CA, which has now set the model for the USA, how many Brokers/Agents will remain in business, and how many will be financially devastated and be added to the Unemployment roles, their families harmed as well, their futures bleak?

          Frankly, I thought it would take longer than it has for this atrocity of a HCR Law to begin to blow up. Thankfully, it’s blowing up already. I am very hopeful that all Agents/Brokers in the Health Market realize the fragility of their future careers and make the “Right” choices in the next few weeks. The people of this country canNOT afford these kinds of indecision and games when being exacted on people’s quality of lives and for mega-Billions of dollars.

          Thanks for the link, Curt, and the comments.


      • Curt Cella said

        Oh and here’s another indication of just what lies ahead for the entirety of the US consumer health care market come 2014:;drawer-container

        Think about it folks – we might just end up paying more and more for health coverage for health care services that will be simply unavailable or delivered by an overstressed health delivery systems where workers make mistakes and there is little or no accountability.

        Good gravy – for all those who wanted our health care system to look just like Canada’s or England’s you shall have it – BUT – you WILL pay more for it each and every year! (Great marketing slogan: Pay MORE! Get LESS!)

        Attention! Attention on deck! Health Reform DID NOTHING to address the underlying skyrocketing costs of health care in this country – it simply made health insurance out to be the bad guy because that was the simplest and easiest approach for the simpletons in Congress.

        • Curt,

          You said, Think about it folks – we might just end up paying more and more for health coverage for health care services that will be simply unavailable or delivered by an overstressed health delivery systems where workers make mistakes and there is little or no accountability.

          Good gravy – for all those who wanted our health care system to look just like Canada’s or England’s you shall have it – BUT – you WILL pay more for it each and every year! (Great marketing slogan: Pay MORE! Get LESS!)”

          Curt, I’d suggest that the “Gravy” “ain’t” so good, lots of floury chunks, make you gag.

          That is a great “ObamaCare” bumper sticker: “ObamaCare, Pay MORE, Get LESS!”

          Only a few more weeks, friends, colleagues, and folks. Be active, spread the word, help make a true and important change, and vote and encourage others to vote “Right”. Even if it means swallowing hard, and flushing down the vote with a glass of water.

          This really and honestly is our one chance.

  3. Navigators help pilots, not consumers. It would be a shame if brokers don’t have an active role and are not fairly compensated.

  4. Curt Cella said

    Alan –
    Thanks for your recap and ….uhhh…. I guess the rebuke on my commentary on the effects of party politics on this whole subject. Perhaps I did simplify this situation too much by discussing it in terms of political parties but to be honest: THAT is exactly how I see this shaping up. Is that too simplistic a view…? Perhaps, but to be brutally honest you can no longer go wrong setting the bar as low as it can possibly go when it comes to state and federal legislators.

    I believe you are right when you say the Republican concepts were as screwy as the Democratic concepts when it came to this whole subject matter – and why not? Each side of the aisle simply doesn’t “get it” when it comes to fixing what is plaguing this nation when it comes to affordable healthcare. And why should they? How many health insurance brokers do you know who are serving in Congress? I suspect there are far more doctors in Congress and thus far more ability to DEFLECT an inept Congress from the real cost drivers in our health system – HEALTH CARE SERVICES! I simply can’t locate anything in this landmark legislation that will help put a cap on skyrocketing healthcare costs. Of course there is the babble about the ability to grade the health care profession on the basis of quality and thus quality will equal cost controls….to which I say: B and S! That line from A to B sure isn’t straight and it will be so convoluted,parsed up and watered down by the health care industry and their lobbyists that component of the Affordable Care Act will quickly get lost in the haze…. Hey here’s an idea: How about a component of Health Reform that says if you’re a community hospital or have an affiliation with a community hospital you simply have no option other than to accept a person’s health insurance. Here in CA we have all sorts of health care providers who get a bug up their butt and as part of their ‘negotiating strategy’ simply tell their patients – Sorry but we don’t accept that insurance anymore…
    Hey folks: A health insurance PLAN is how consumers pay for their health care services in this country. It’s unlike other forms of insurance (Auto) in that YOU WILL USE IT! If we are going to legislate the health insurance industry from a federal and state level in some bizarre attempt to control a a private industry then where the heck are the same federal and state officials when it comes to putting some law & order into how the health care industry has systematically ratcheted up the costs of health care since there used to be a thing called a house call?!

    If my thought process is too simplistic I’m also pretty sure that legislators in their totality – Republicans and Democrats alike! – have been way too simplistic in tackling a very complicated issue. But this is the deal these days – you can see how politics on both sides are being DUMBED DOWN to accommodate the American people. Just look at each and every political commercial this season: The commercials are simplistic sound bites designed to appeal to the stupidest constituency imaginable.

    • Curt, you said: “How many health insurance brokers do you know who are serving in Congress? I suspect there are far more doctors in Congress and thus far more ability to DEFLECT an inept Congress from the real cost drivers in our health system – HEALTH CARE SERVICES! I simply can’t locate anything in this landmark legislation that will help put a cap on skyrocketing healthcare costs.”

      According to the NYT, July 11, 2009, 16 Doctors serve in Congress. “11 are Republicans and 5 are Democrats.” These are the most current #s I could find. No Insurance Agents/Brokers to be found. Not surprising, however, Lawyers or those from the Legal profession are very well represented: It is estimated that 60% of those serving in the House are representatives from the Legal profession, and 40% of those in the Senate.

      Does any one besides me have no doubt as to why the only profession that has not been subject to Reform, or to be held to the standards expected of Doctors, Insurance Agents, CPAs, etc. are Lawyers? How will we ever pass Torte Reform when such a huge, overwhelming percentage of our Congress comes from the Legal Profession? D or R, they protect each other as do Hyenas if another species of animal tries to get in on their kill.

      As far as the HCR Legislation controlling health care costs, you can’t find anything because there really isn’t anything; but consider, we, Americans, were told that the cost of the new legislation would be around $900Billion, BUT, we weren’t told that the CBO later explained that they could only cite numbers based on the number in that they were given. Garbage in, garbage out. HHS and CMS, which administrate Medicare, said that the $500Billion being stolen (my word, that’s what it is) was unlikely to happen, as no sitting Congress would be stupid enough to risk having the Senior population turn on them…we are an aging society. That is one half the cost of ObamaCare. Another $17Billion has already being added to the HCR Legislation’s cost as part of the Small Business Bill (which may or may not go through) is allegedly going to set a “size meter” on those small businesses who must report all Medical Costs Covered by the small employer to the IRS on a special 1099 form, as it will put too many small businesses, out of business. Big huge Duh! The news yesterday that upon McDonald’s announcing that they would cancel all mini-med coverage for 30,000 of their employees, followed up by Obama’s announcement that he would leave it up to Sebelius as to whether or not she wants to grant those companies offering mini-medical, like McDonald’s, Staples, Home Depot, and who knows how many others exemptions from the Law (that’s it, just make up the law as you go along…”Mr. Prospect, I don’t think you’re getting enough benefits for the premiums you’ll be paying, so I’m going to just give you double what the company wants to give you”), will result in how many Billions of dollars again added to the real cost of this legislation. AND, remember, no getting any pharmaceuticals from Canada on the cheap…that’s part of the deal Obama struck with Big Pharma behind closed opaque doors to get Big Pharma to shut up about HCR. It was only a few months ago that we were told that health care costs would, n fact, be increasing, though only at a low 1%, though I’ll wager that we will see a far higher increase in health care costs, and may already be witnessing a far higher increase…it takes time to analyze the data in, to provide less inaccurate data out.

      Regarding your comment about Democrats and Republicans being alike, politically corrupt and/or inept, I agree 100%. I have been a Registered D (1970 through 1974) and just when Richard Nixon was being “hung” for Watergate, the Chairman of the King County, WA Democratic Party asked me to run for the Central Committee, and then told me I didn’t need to campaign, it was already fixed. I resigned the next day, furious. In 1993 I became a Registered R, when chairing the campaign for the man who was to become the Chairman of the WA State Legislature’s House Health Committee. I remained a member until my guy quit after three terms, and then resigned from the Rs in disgust. I have been an “independent” ever since, and after reading and listening to John Avlon, a columnist for The Daily Beast who wrote the book “Wingnuts” about both sides of the aisle, became a “John Avlon independent”, a Fiscal Conservative and Social Liberal. I find it interesting that the GOP, who should run away with this election, seems to be doing their best to lose it due to the Extremes they are allowing to run the GOP. I view the Ds as Anarchistic Corruption, and the Rs as Focused Corruption, though these days the Rs seem to be almost as “all over the map” as are the Ds. One thing of which I’m convinced, the Rs are far too schizophrenic to walk away with the mid-term elections, though the mood of the electorate is so angry toward Congress period, that they may pick up control of the House (goodbye Nancy Pelosi).

      Finally, Alan really gave an excellent analysis of the CA HC Exchange legislation the Governator signed yesterday. I’m convinced that this gov is spending too much time with a “Kennedy” for anyone’s good in CA. Unfortunately (or maybe not), we spend half the year based out of Palm Springs, and half Seattle. I don’t know that any of CA insurance laws will apply to us, but I do know that if it doesn’t start in CA, it does in Washington. And both meet in Oregon (there’s a real socialistic state). Then it moves east. Our Legislature and Governor in Washington are very liberal in party and politics. Thanks Arnold. I know what’s coming to Washington now.

      Alan stated the problem well when he addressed the issue of “Non-licensed” people being able to help the public to “Negotiate” through this legislation and choose what they need via the Exchanges. This ludicrous legislation can be amended to correct some of the negative results, however, amending already “made law” is not an easy task, takes tremendous volunteer efforts to change (via CAHU and NAHU, and other AHUs I would imagine if they are concerned that their states may adopt the CA model). Those of you who belong to CAHU had better be ready to spend serious time in Sacramento, lobbying those legislators who may be sympathetic to the role of the “Licensed Agent/Broker”, and before that it would be wise to spend time and wear out shoe leather to help them get elected or reelected. Whether on this coast or that other one, or anywhere in between, Politics is nasty stuff. It will be important to learn how to “play the game” if you have hopes of passing or amending any legislation. No one can do a better job of “showing you how” than Alan Katz. Alan was Chairman of the Legislative Council for a long time for NAHU, before becoming its President, no mean feat in itself.

      Sorry for this really long post. You posted a lot of stuff to talk about, Curt.


    • JimK said

      Although I do not reside in California, I have a question on the California Exchange Committee’s authority to omit Carriers from participation in the State Exchange: If a Carrier meets the Federally Mandated criteria for acceptance in a State based exchange, how is it possible for an individual State to exclude this Carrier?

      This actually leads me to another question, which may, in fact answer my first question: Can a State impose a higher qualifying standard for inclusion in the State based exchange?

      Finally, the following has absolutely nothing to do with the subject matter presented:

      I am not a legal scholar and this is just an observation, but I believe that the Key Provision of Mandatory Coverage to be reinforced via the tax code will be ruled unconstitutional, thus gutting a key funding provision of the PPACA.

      In Virginia, the Federal Government’s appeal for Summary Judgment was denied; the following links provide both sides of the argument. Although, I have not reviewed each submission thoroughly, I have read portions of the caselaw cited and believe Virginia’s case is more persuasive, especially in light of the current composition of the Supreme Court.
      However, while not cited by either Party, it is possible that Kelo v The City of New London Ct may be dispositive on the Supreme Court’s ultimate ruling (Public taking for the benefit of a Private enterprise in furtherance of the Public Good (Affirmed 5-4)). Then again, maybe the fact that this case was not cited just underscores my lack of knowledge about the law.

      Click to access Mem%20in%20Opp%20to%20SJ%209-23-10.pdf

      Click to access 22%20Virginia%20-%20memo%20in%20support%20of%20motion%20to%20dismiss.pdf

      • Curt Cella said

        I’d like to offer my opinion on this Jim: What you’re seeing is the real evil that this Exchange and the legislation that set up the Exchange represents: The “rules” can be whatever the heck the 5 people running the Exchange say they are. The 5 people who will decide on everything related to the Exchange answer to nobody. Not the state insurance commissioner, not the governor, not the people. They are the law West of the Pecos Jim. The problem here is that the majority of the folks sitting on that tribunal will be democrats who have it out for the Insurance Industry as a whole and will now be ideally situated to use the Exchange as a blunt instrument to ‘exact revenge’. This tribunal will show zero mercy where the insurance companies are concerned and even less mercy to agents.

        On the flip side: I see a stampede of insurance companies leaving state markets where they don’t have ‘scale’ – which will then leave 2 or maybe 3 carriers for these Exchanges to bargain with which will leave the whole thing looking very much like your local government who deals with cable ‘companies’….with only one cable company for each community in America when was the last time you saw your cable bill go down?

        In other words, this will all come full circle with NOTHING having been done to stem the tide of rising health care costs in this country and the period on the end of that sentence is this: This is yet another failed piece of legislation out of Washington as interpreted and mangled by the absolute idiots we have in our state capital. And so shall it ever be. The End.

        • JimK said


          Thanks for the response, however your response appears contrary to my understanding of the Exchanges. In fact, even under the authority granted to the State to opt out of the PPACA, the Federal Government requires that an individual State that chooses to opt out is still required to establish a Health Insurance Exchange consistent with the guidelines established by the Federal Government. Again, if a Carrier meets this criteria under what authority may a State exchange exclude an individual Carrier.
          It is my understanding that under the ERISA guidelines, the individual State had the authority to establish its own minimum coverage requirements and the Federal Government could not authorize an individual Carrier to offer these same minimum coverage requirements for Carriers that offer coverage in more than one State. Howver, since the PPACA established minimum requirements for Exchange eligibility the ERISA argument would appear moot. I hope the preceding was not to obtuse.
          I do agree with you on the fact that the large Carriers will dominate the Exchanges.

  5. Ann H. said

    Alan, I appreciate you very much, but I see 2 qualities in your writing that are of utmost importance to me. The first is your incredible experiential knowledge. You can predict and guide us, because you’ve been through this kind of thing before. Very humbly, you cautioned that your predictions are no better than the next. Ah, but predictions from one who is EXPERIENCED and knowledgeable in his field is certainly a treasure.

    The second thing I admire about you most is your capacity to see the loopholes and frailties in the laws, and the ability to turn a lost battle into a won war. We must remember that each of these are “battles”. The goal is to win the war.

    We also need to be careful about what the “war” really is. For consumers, the goal is to have a quality health care system at an affordable price. For taxpayers & citizens, it’s the same but without excessive govt control, bureaucracy, taxation and debt. For agent/brokers, it’s the same, plus the ability to keep our careers and to continue giving high level professional advice to our clients.

    One of the next “battles” for broker/agents is surely the efforts of the NAIC and NAHU to define a limited scope for navigators. A “help desk” is what they should be. You mentioned more issues that need to be defined. That’s good! Some may call this “spin”, yet I call it good, sound information that I can build upon. That battle isn’t over, and the war surely isn’t over. It’s good to know we have room to work with regulations and future legislation to make a difference.

    • Ann, just a comment, NAHU and NAIFA, as well as other Agent Oriented associations would be good with whom to work to effect the needed change to which you refer. Regarding the NAIC, I would doubt their offering their cooperation, or even an “ear”. The National Association of Insurance Commissioners aren’t given to helping the Insurance Agent/Broker Community.

      That said, becoming involved with the CA Department of Insurance and helping to serve on any committees, and getting yourselves known as “Good guys” can help a lot. At least that’s been my experience.


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