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California poised to become the first state to establish health insurance exchange under federal health care reform

by Adrienne Verrilli, published

Last week, the California legislature passed two bills to establish the California Health Benefit Exchange, positioning the state to become the first in the nation to establish a health insurance exchange that allows individuals and small businesses to purchase health insurance. The law is expected to be signed into law by Governor Schwarzenegger before the legislative session ends August 31. This move comes of the heals of a report released last week by the UCLA Center for Health Policy Research that showed that the number of uninsured Californians jumped to 8.4 million - 24.3 percent of population - up from 6.4 million in 2007.

The California Health Benefit Exchange is expected to provide the details on each plan offered in the exchange that is hosted on a website. The website will have a feature that allows consumers to compare plans. It will also have a toll free number available to provide information on the plans. As required by federal law, the California exchange will make plans available in five categories from "platinum-level" to catastrophic covered. The website will also included links so that Californians can see if they are eligible, and potentially obtain, federal subsidies to help pay for the health insurance coverage. It is estimated that 8.3 million people will be eligible for coverage.

Other details of the health insurance exchange are as follows:

- Businesses with up to 100 employees can purchase health insurance through the exchange. States have the option to raise that number beginning in 2017.

- Tax credits for sole proprietors and certain small business.

- A new oversight board will govern the exchange that will include the power to choose which plans are eligible to be included in the exchange.

It is important to note that while California will likely be the first state to set-up the first health insurance exchange, it will be just that - set up. In fact, the exchange won't be operational until 2014.

Meanwhile, the California insurance regulatory just approved increase in health insurance rates for Anthem Blue Cross that are expected to going to affect October 1 and impact more than 800,000 individual Californians. The average rate hike will be 14 percent, but may go as high as 20 percent.

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