Releases & Statements

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SACRAMENTO – AB 1602 by Assembly Speaker John A. Pérez (D-Los Angeles), which establishes the California Health Benefits Exchange where individuals and small businesses will be able to claim the federal tax credits provided under federal health reforms, was approved today by the California State Senate. The bill is expected to pass a concurrence vote in the Assembly and be sent to the Governor this week.

“In addition to a reformed individual market where no one can be denied coverage, the health reforms enacted by the President and Congress provide significant premium subsidies and tax credits to help Californians buy quality, affordable health coverage. I wrote AB 1602 to make sure California are able to benefit from this federal funding as quickly and efficiently as possible,” Pérez said. “As we have been on so many issues, I am proud California will be one of the nation’s leaders in implementing health care reform.”

Federal health reform tasks the states with establishing new, organized marketplaces where individuals and small businesses can more readily identify and compare coverage choices, purchase value-based coverage, and access premium credits and cost sharing subsidies. AB 1602 enacts these key changes, and sets in motion the necessary duties of the California Health Benefits Exchange to ensure California can quickly use the federal planning dollars and commence operations by January 1, 2014.

AB 1602:

  • Sets out the responsibilities of the Exchange, both for the individual market and the small group market, and the ground rules for participating in it, including the ability of the Exchange to selectively contract with plans to get the best combination of choice, quality, value, and customer service.
  • Establishes several of the requirements for the Exchange that are provided for in the federal law, including an Internet based website for presenting health plan options in a standardized, easy to understand format where an individual’s cost sharing, including premiums and any co-pays or deductibles are available, as well as an online calculator to determine federal tax credits, subsidies and the actual cost of coverage.
  • Sets out the responsibility to administer exemptions to the individual mandate, and creates the Small Business Health Options Program where small businesses can claim their federal tax credits.
  • Makes implementation of the bill contingent upon the board of the Exchange making a detailed finding that it must share with the Department of Finance and the Joint Legislative Budget Committee that sufficient resources exist or will exist to operate the Exchange.
  • Establishes the California Health Trust Fund, which will consist of the federal start-up grants that commence next month and plan assessments beginning in 2014. There is no General Fund funding. The Exchange can only have one year’s operating expense in its reserve, similar to the regulatory boards under the Dept. of Consumer Affairs or must reduce the level of the assessment it charges.
  • Requires the Exchange to annually report to the Legislature on its activities, expenses; is subject to an annual audit; must post its budget and the salaries of its executive staff on the Exchange website.

Click here to view the attached fact sheet for more information.

Website of Speaker John A. Pérez:

CONTACT: Shannon Murphy (916) 319-2408