Thursday, November 11, 2010 | As landmark healthcare reform begins its journey from the drawing board to reality in the United States, California will be at the forefront of the changes in how healthcare is delivered and paid for in this country.

The picture of how the sweeping federal healthcare reform act and new state laws will look at street level remains out of focus. And lawmakers, lobbyists and healthcare providers will be hashing out — and fighting over — the details of the new laws for years to come.

But what is clear is that it’s not just President Barack Obama and Gov. Arnold Schwarzenegger (and soon, Governor-elect Jerry Brown) who have a say in how Orange County residents will receive healthcare in this new age.

Local officials — especially the Orange County Board of Supervisors — will have their say too.

“It’s always when they get into the process of things,” noted Kathleen Moran, executive analyst in Supervisor John Moorlach’s office, “it gets interesting.”

The fact that Moorlach and the other supervisors have a say in some of the outcomes set in motion by Obama and backed by Schwarzenegger speaks to the depth of the changes that already are taking effect.

And the speed with which the political landscape keeps changing on healthcare — the Republican capture of the U.S. House of Representatives in this month’s elections being the latest round — only adds to the uncertainty.

Where Things Stand

The thrust of the Obama health plan is to get health insurance for virtually everyone. By 2014, almost all Americans will be required to have health insurance or face a fine, with the exception of those too poor to afford insurance.

In addition, health insurance exchanges will be established in each state — either set up by the state or by the federal government if states refuse — to offer insurance for high-risk patients and the uninsured.

California will be at the front of the line for this rollout. The Obama administration reallocated $10 billion in Medicaid funds this month to the state to expand coverage to those who make less than 133 percent of the federal poverty level, or about $14,404 a year for a single adult.

The state’s leadership role, if it goes well, could make California the poster child for successful reform. And in addition to the federal legislation, new state laws were enacted this year that are already speeding up the reform process.

The first state change affects adults with preexisting conditions that either caused insurance companies to turn them down for coverage or set the cost of insurance so high that the individuals couldn’t afford it.

A new law makes those adults eligible for coverage, and there is $761 million in federal funding to support it.

“This was kind of the first milestone,” said Marta Bortner, assistant associate secretary for Health Care Reform in the state Department of Health and Human Services.

One of the most controversial sections of the new federal law is the requirement that states set up insurance “exchanges.” The exchanges simply are a way for those who aren’t covered by insurance at work to shop for coverage.

California is among the first to get started on creating the exchanges. Effective Jan. 1, the state will begin setting up the system so that it is ready to go when the federal law takes effect in 2014.

And although local officials can’t change federal or state law, they do have a say in how it is implemented in Orange County.

The Suspense Builds

Moorlach sits on the board of CalOptima, the county program put into effect in 1993 to coordinate Medi-Cal locally.

Neither the supervisors nor the CalOptima board has yet taken a position on the areas of health reform they can affect locally. But staffers at both agencies are busy on background research, and the CalOptima board is scheduled to hold a retreat Dec. 9 to discuss all of the changes and their implications.

The speed at which everything is moving and the “steep timeline” has Moorlach concerned about “so many moving parts.”

Legally, according to both Moran and Julie Puentes, Orange County spokeswoman for the Hospital Association of Southern California, Orange County can decide not to have CalOptima participate in the insurance exchange, leaving it solely to private firms to provide the choices of coverage for those whose employers don’t offer plans.

Or, Moran said, the supervisors could decide to expand the program. What the supervisors do, she said, “that’s going to be the thing to watch.”

CalOptima insures 402,000 residents of Orange County, CalOptima Director of Government Affairs Yunkyung Kim said. And since the Great Recession began in late 2007, the numbers have been climbing. Enrollment rose 2 percent in 2008, 6 percent in 2009, 9 percent so far this year; and in 2011 it’s expected to be up 7 percent.

California Democratic Party Leader John Burton, former president pro tem of the state Senate, was a young member of the California Assembly in 1965 when the state’s adoption of federal Medicaid went through the Legislature, the last time such significant changes in healthcare occurred.

It required a special session of the Legislature to enact the state components, he said, but “there were fairly few hiccups.”

There might be more hiccups this time. There is little interest among Republicans — from Orange County to Washington — to see Obama’s healthcare reform go smoothly. Already, leaders of the new Republican majority in the U.S. House have vowed to repeal federal legislation, and local Republicans are likely to take cues from their colleagues in Washington.

“It’s a changing, moving target,” Moran said.

But the next presidential election is only two years away. And if Republicans in Washington can financially delay significant parts of the program and then win the 2012 presidential election, as well as control of Congress, they could make good on their vow to repeal health reform.

In the meantime, the action is with the Board of Supervisors. The Hospital Association and the Orange County Taxpayers Association have both urged the board to change the county law and block CalOptima from offering health insurance to those outside Medi-Cal.

Puentes said that if CalOptima begins offering health insurance to individuals who don’t get it at work, it’s possible that more than one-fourth of Orange County’s 3 million residents could be covered by government health insurance, including the Medicare program for those age 65 and up, when coverage is expanded in 2010.

Puentes said the major Hospital Association concern is that if CalOptima offers insurance to those who aren’t covered by employers, the numbers, coupled with those who receive Medicare, would be so large that hospitals couldn’t cover their expenses.

Government insurance programs of all types, she said, “don’t cover costs.” If CalOptima participated in the insurance exchange, it would bring even more people into a government-funded program.

Correction: A previous version of this story stated an incorrect percentage increase in Orange County residents insured by CalOptima so far this year.

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