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Obama administration approves California health benefit exchange

January 3, 2013 12:00:00 AM PST
The federal government approved California's plan to run its own health insurance market. It's part of the state's effort to meet the national health care reform law. So what does this mean for you?

Federal officials are watching California with interest: It's the biggest state implementing President Obama's health care overhaul.

Pamela Malone, a student, wishes she had health insurance. She says a community clinic isn't giving her adequate orthopedic care.

"Hopeless," said Malone. "Sometimes it's so frustrating and I don't know what to do."

An answer for Malone and millions of other uninsured Californians may be a year away under the federal Affordable Care Act.

The Obama administration just gave approval for California and six other states to begin setting up a health benefits exchange, an online marketplace called Covered California where consumers can buy private coverage.

"This decision is a big milestone. This says that the federal government has looked at what we've done, had looked at our plans and says we're good to go," said Peter Lee, executive director of the California Health Benefit Exchange.

The approval opens the door for health insurance companies to start bidding for a place on the exchange.

Plans are supposed to be affordable because they'll be competing for more customers, even those with pre-existing conditions.

Depending on the income level, federal subsidies will available to help many low- and middle-income Californians pay for the mandated coverage.

"We do know you will get as good or better price through Covered California, whether you get a subsidy or not, as you would possibly get anywhere in the market," said Lee.

Asked if it would be good coverage, Lee replied: "It's going to be great coverage."

Though prices are still unknown, skeptics worry about the cost of mandated coverage and how much the financial penalties will be for those who don't have insurance and chose not to get it.

"Let's say insurance is $221 a month. The penalty is $90 a month. Think about it," said healthcare advocate Randy Hicks. "Think about what you would rather pay."

But Pamela Malone is crossing her fingers the exchange will cover her medical needs.

"I have hope that it will," she said. "I have hope in our government."

Out of the more than 7 million uninsured Californians, the state hopes to expand coverage to at least 2 million through the exchange. The hope is to get the online enrollment going by October so that coverage can start January 1, 2014.