Gov. Arnold Schwarzenegger is deciding whether to sign legislation that would create the “California Health Benefit Exchange,” a key piece of federal health care reform. This is the perfect time, therefore, to clear the air about what the exchange will and won’t do. A clear-eyed account of the facts about the exchange shows it to be the exact kind of moderate solution that the governor has pushed for throughout his tenure, one that combines a concern for the public good with the power of the private market.
The exchange will be a new state agency that will set up two health insurance purchasing pools, one for individuals and one for small businesses. Only people taking advantage of subsidies or tax credits will be required to purchase through these marketplaces. To be successful, though, the exchange will have to compete for and win a significant chunk of the business of people buying health insurance without financial assistance, particularly in the small-business market. Continue reading