Kim Belshé: The Challenges of Change in Health Care Webinar

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0:05 Kim Belshe: … a consumer advocate, this is an extraordinary time. Our state is one of the leading states nationally, in the effort to transform its healthcare financing and delivery system, and do so in a way that at least over time achieves better health, better care, and lower costs – something that the former head of the Centers for Medicare and Medicaid, Don Berwick, characterized as the triple aim. In just 314 days, 4 hours and 14 minutes, the major components of the Affordable Care Act are going to take effect, and new coverage will begin. Protections will begin for millions of Californians and tens of millions of Americans. A key component of the Affordable Care Act is the health benefit exchange that we call in California “Covered California.”

0:59 KB: How many of you have heard of “Covered California?” Not bad. Hopefully by the end of today, this lecture, you will all raise your hand and have something to say about Covered California. What is Covered California? It is a new online marketplace for individuals and small businesses, where they will go to shop, compare health plans and purchase a health plan that meets their needs in terms of cost, in terms of quality, in terms of service. It’s also the place that those people with incomes within a certain range, people who are low or moderate income are able to go to receive a monthly tax credit so that the plan that they choose through Covered California is affordable for them. We were the first state in the nation to put into place the law to create a health benefit exchange, what we now, again call Covered California because our policymakers understood in 2010 and I think continue to see today the potential of an exchange to change, if not transform how we go about issues involving healthcare coverage, healthcare quality and healthcare cost. So an opportunity to really effect change and over time really drive transformation more broadly.

2:13 KB: So, it’s as a member of the Covered California board that I am here. I’m wearing that hat to share with you some of my thoughts about how to launch and lead change in the context of the Affordable Care Act. And I want to begin, first to give – uh, there we go – make sure I get that right – I want to start by talking about some of the operational requirements of establishing this new marketplace, Covered California. So, practically speaking, what do we have to do to lead and launch – launch and lead the kind of change that is contemplated? Secondly, I’m going to talk about how these changes and the potential – how we go about these changes and the potential of Covered California to really contribute it to broader transformations in terms of coverage, financing and delivery.

3:00 KB: Third, I want to highlight some of the perils that are attendant with both practical and more far-reaching policy change, before closing with a few observations about some of the imperatives for leading change in a public sector context. As Rich suggested, the better part of my career has been in positions of public sector leadership. And from my experience, principally in state service, I know that the efforts to lead change in a public sector context is not for the faint of heart. So I want to begin with a quote that was early from President Obama’s tenure, and he said, quote, “By the time something reaches my desk, that means it really is hard – it’s really hard because if it were easy, somebody else would have [inaudible] …means that you’ve got some very big difficult, sticky contradictory issues to be wrestled with.” Close quotes. You know, leading and launching a change in any sector in any context is challenging in the best of circumstances, but I think it’s particularly difficult, based upon my experience in the context of public sector leadership, because in many respects, government jobs are designed to be hard.

4:10 KB: Tony Sauer, my former colleague then, and now the Director of the Department of Rehabilitation has heard, you know, me talk about this in terms of government is where the hard issues come because if issues can be solved in the marketplace, if issues can be solved through private transactions, if issues can be solved anywhere but government, that’s where they’re going to be solved. And so the issues that come to government are by definition, you know, these very big, difficult, sticky, contradictory issues where there’s inherently some difficult, competing perspectives, viewpoints, ideologies, values and so forth. So I was validated in kind of a policy, geeky kind of way when the President made this comment because it really underscored for me how tough public sector leadership and public sector change is, just given the very nature of the issues with which it is tasked with wrestling.

5:01 KB: I can think of few issues that are more big, sticky and contradictory than issues involving our healthcare costs, coverage and quality challenges. They are absolutely very, very difficult and challenging. They are ones that cannot be solved exclusively in the marketplace. These are issues where government does and must play an important role. The difficulty, the sensitivity, the challenges of leading change as it relates to healthcare financing, coverage and delivery, I think is very well evidenced by the generations of fits and starts with which reform efforts have occurred. By the series of false starts and failed efforts at both the Federal and State level. Yet here, where we are here today in California, we are implementing the largest transformation in our healthcare system since 1964. And this, I can assure you, is not for the faint of heart.

5:58 KB: So Covered California is a really good example of an organization, an effort that really is at the heart of these big, sticky, contradictory issues. We recognize that we have an important role to play in terms of leading and launching change and transformation in California’s healthcare system. Our vision reflects our aspirations. Our vision is to contribute to improving the health of all Californians by assuring their access to affordable, high-quality coverage. And we recognize all, not because we will cover all, but because we understand our place in the broader ecosystem or fabric of coverage and care, so to speak. At its core, our mission – the “what we do” is about expanding coverage. But we also recognize that how we expand coverage, how we go about being a purchaser in the marketplace, can make a broader contribution by empowering consumers and by stimulating improvements in terms of how healthcare is delivered and organized at the provider level. So advancing these broader goals of affordability, quality and health equity.

7:11 KB: We have a series of values that we have articulated as a board. It begins with the consumer who is front-and-center in everything we do, in all that we do, and it ends with accountabil – it ends with results and accountability, not only for the number of people who are insured, but also for our contribution to advancing our goals around quality, affordability and health equity.

7:38 KB: So who are the people – I apologize for turning around. I want to make sure I’m seeing the right slide that you are. So, to begin, who is our target population? Basically, the people we are focusing on in terms of the Covered California marketplace – it’s about 5.3 million individuals. And these folks are divided into two principle categories. First, about 2.6 million people who –and I should say broadly of those 5.3 million people – these are folks who don’t have access to affordable, employer-based coverage and who aren’t eligible for Medicaid or what we call MediCal in California, which is principally for lower income individuals. And under federal law, the new federal law, there will be a single income standard drawn for all individuals below 138% of poverty, which is about $32,000 for a family of four.

8:28 KB: So who is our target population? About 2.6 million people who will qualify for tax credits if they purchase coverage through the exchange. These are people who have incomes between that 138% of poverty line and 400% of poverty. That’s about $88-$89,000 for a family of four. But our target population is also 2.7 million people who are not eligible for subsidies, but people who – come January 1 – will enjoy vast new protections in terms of guaranteed access to insurance, regardless of their pre-existing conditions or health status, and who will be able to access this new marketplace with new protections for purchasing coverage. We also – because of our broad vision around improving the health of all Californians in our goal of doing everything we can to ensure that all eligible Californians become insured, we also are mindful of the roughly 2.4 million Californians that we anticipate will be newly eligible for the Medicaid program as a result of that expansion that will bring the income level up to 138 – uh, a hundred and thirty-eight percent of poverty, as I said.

9:32 KB: So what do we know about these folks? We know that they are very, very diverse in any number of different ways. Nearly half of all the subsidy-eligible people through Covered California will be Latino. We know that a significant percentage of our target population has a primary language other than English. We know that the subsidy-eligible population is spread throughout the state, reflecting a mix of rural, urban and suburban communities. We have populations that will be hard to reach because of issues of language, issues of information, issues of any number of – lack of appreciation for coverage, and we’ll have populations that are hard to move because they view themselves as healthy and they’re not that worried about the tax penalty, so we’ve got some significant outreach challenges that I’ll talk about in a moment that we need to be thinking about and working through.

10:25 KB: Ultimately though, as I said, our goal is to get every Californian who is eligible for coverage enrolled, and to do so in a way that advances some long-sought social policy objectives, not only about the goals, the social policy goal of coverage, but also our social policy goals around quality, around affordability and health equity. The changes that are required in terms of policy and practice are not going to come simply. They’re not going to come overnight. This will not happen, come 314 days and five hours and two minutes. It’s not going to happen overnight, but what we at the exchange leadership level are working through is asking ourselves this question over the course of the past two years is, “What are the essential building blocks that have to be put in place to operationalize the exchange, to meet its near-term objectives in terms of being compliant with federal and state law, it’s doing everything we can to maximize enrollment and establishes a foundation upon which broader, longer-term transformation can occur.

11:35 KB: So I want to talk about – excuse me – there we go. So, four essential building blocks that are really critical to the success of Covered California. These represent the must-do’s – indeed these represent the absolutely “gotta do’s” and you gotta get ‘em right. We’ve got to offer – and I’ll talk about these in a bit more detail, but very quickly, we have to offer a product that our target population wants to buy, that they can afford, and that they value. Secondly, we need to execute an outreach and marketing activity – set of activities that reflect the diversity, the extraordinary diversity of the populations we seek to reach. We need to build an enrollment system that is smooth, that is efficient, that is consumer-centered, and we have to establish an Information Technology platform that is functional, that is efficient and is on time. These building blocks, each in their own different ways involve an extraordinary amount of operational challenge and complexity. They all offer great promise in terms of dramatically changing how we approach coverage and care delivery, as well as how we can contribute to improving individual and population health. All of them offer some faultlines, some political perils, if you will, that are attendant with rethinking how we organize and deliver services and extend coverage and move through transitions and transformations of both our public and private systems of care. But most fundamentally, these are the building blocks that really represent the foundation upon which longer-term or transformative – transformative change really can occur.

13:12 KB: So I want to talk – touch upon the key components of these building blocks and give you a sense of the scope, complexity, the consequence of the kind of changes that Covered California is launching as a part of the Affordable Care Act. And the first building block is absolutely Job One, which is affordability. We need to be able to put on our virtual shelves products that are affordable, and products that people value and view as high quality. The plans that will be offered through Covered California, this new marketplace, are called qualified health plans, or QHPs. One of the many new acronyms introduced by the federal Affordable Care Act.

13:57 KB: The work we are doing to put affordable quality products on our shelves are moving very quickly on a variety of different fronts. We have issued a solicitation, for example, to determine how many plans might potentially be interested in participating in the exchange, and got a terrific amount of feedback. We’ve developed a model contract that will be applied across all the different plans. We’ve established standards for benefits that will be offered, but the thing I want to emphasize here about this piece of our essential building block is that the federal law establishes some minimum requirements, and they’re significant requirements to become a qualified health plan or a QHP. So federal standards to be certified including, you know, demonstration of adequate provider networks, quality improvement strategies, quality measurement reporting systems, marketing efforts and so forth.

14:48 KB: But California has done something differently. Our state policymakers, our policy leaders extended to the exchange board some very important tools that go above and beyond federal law that are principally grounded in an interest in enabling us as a board to advance these goals around affordability and quality in very meaningful ways. So there are two examples I want to highlight for you. First is our board has the authority to be an active purchaser. And what does that mean? That means we have the ability to establish state-specific goals and standards to determine what plans we’re going to contract with. We – statewide – or excuse me, nationwide there are seventeen states that are establishing state-based exchanges. Of those 17 states, only 8 have authorized their boards to be an active purchaser or a selective contractor. And of those 8, only a handful are actually doing it. We are going to be an active purchaser that selectively contracts, and we intend to contract with health plans that demonstrate a commitment to our principles, our goals in terms of promoting wellness and prevention, in terms of assuring access to services for the diverse array of people that we will be serving.

16:01 KB: That demonstrate a commitment to affordability. So these are the principles that our board adopted about six – seven months ago and these are the principles that will guide and inform our active purchasing, our selective contracting with plans that meet not only the federal standards but meet California goals around care design, payment reform – all anchored in our goals of affordability and quality.

16:26 KB: A second example where our board gave us – excuse me – the Legislature gave us some special authority is the ability to standardize benefits, and this is something our staff colleagues just announced last week. This is the idea of offering on the shelves effectively, standardized benefits, similar benefits. The only change will be, effectively, in what the plan will cover in terms of what percentage of expenses will be borne by the health plan versus the consumer, something called actuarial value in insurance jargoning – jargon terms. But the important point for standardizing benefits is about empowering consumers, about giving consumers information about health plans that have the same benefits, but information about costs and quality and services, so that consumers are making apples-to-apples comparisons, looking at cost and quality as opposed to trying to read the fine print in the evidence of coverage to understand what’s missing, or what are they missing in terms of really understanding what is or is not in the benefit plan. So standardizing benefits is about consumer empowerment, and is about forcing health plans to compete, not on the basis of which plans can modify their benefits in such a way to either encourage good risk or distract bad risk. But it’s about competing on the basis of quality and cost, rather than risk selection.

17:48 KB: In some respects, our success, the success of Covered California, will be shaped in large part by the choices our board makes in terms of what qualified health plans we do business with. We are very clear as a board that notwithstanding our long-term vision around delivery system transformation that Job One in the first year or two is not about a perfect delivery system. Job One is about affordability. It’s about affordability for the consumer and laying a foundation that supports consumer choice and supports care design and payment reform over time.

18:26 KB: A second area which we absolutely have to get right in terms of essential building blocks is executing an effective outreach and marketing campaign to maximize enrollment. Now, you all read the newspaper, you follow the news. You know the environment, the context in which we are moving forward with implementation of this piece of federal health reform is a very challenging context. There’s a lot of misinformation about what health reform is and is not. There’s a lot of confusion. There’s some outright myth. We also know that buying insurance is not something that people get up in the morning and say, “Gee whiz, it’s open enrollment. Lucky me! We get to buy insurance.” It is a grudge buy. It makes people grumpy, so the context is really, really challenging. We have, obviously a social policy interest, from a social policy objective of maximizing coverage, we also need business interest because we want the largest, most diverse risk pool possible to ensure stability in the marketplace and affordability broadly. Because if the only people who know about Covered California really make the effort to get educated and go through an enrollment system and enroll are people who have health conditions and health issues, then that will be very destabilizing and disrupting, not only for people in Covered California but really in the market more broadly. So to do this well it’s not enough to have affordable quality products. Our research tells us that we have a lot of significant barriers we need to overcome, given the diversity of our target audience, given this context of misinformation, misunderstanding and outright myth. So it’s really going to require us to lead an effort that is comprehensive, statewide and multi-faceted in nature in terms of outreach and education. It means that we need to have a Web portal that represents a one-stop shop along the lines of Amazon for books or Zappos for shoes. And we get that insurance is a lot more complicated than buying a book or buying a pair of shoes, but that is our vision. That is our aspiration in terms of the kind of consumer experience we want to create in advance. It means language appropriate outreach and education about this new marketplace called Covered California, and the new coverage options that will be made available to millions of Californians come January 1. And to do it in thirteen different languages. That is California. That is our target audience. It involves innovative media strategies that aren’t just about paying for ads, whether it be for the broad market or a target market. It means being creative in terms of how to drive coverage and how to drive content. Something that’s very controversial, indeed, we’ve been called before Congress because part of our media plan by our Ogilvy and Mather worldwide Partner is to look for ways to try to introduce issues or storylines in public television, you know, commercial television, around insurance, around Obamacare, etc. Some members of Congress thought that was a really questionable use of public funds. It’s an idea still in development but the research shows that when you can introduce issues into the narrative of entertainment, people listen. People pay attention. It affects how people think. So again, just an example of some of the range of to-do’s on the out- being creative on the outreach and education side.

21:45 KB: Third essential building block. It’s around enrollment. You know, it’s not enough to have an affordable product, it’s not enough to educate people and do outreach. We need to have systems and processes that facilitate the enrollment of people, actually connecting them to coverage. So that means building upon existing networks, existing distribution channels, existing resources to reach and educate this extraordinarily diverse set of consumers about the new law, about the new coverage options, about the new responsibilities because remember, for most people, you will – come January 1 of 2014 – people will have to buy insurance that meets minimum qualifications or pay a penalty.

22:32 KB: Enrollment also means developing – using the data we’ve collected to develop and execute strategies that reach people in their homes and communities. Where they shop and pursue entertainment, where they go to school, where they shop, where they pray, and do so in a way that provides the kind of support people need. Now we are developing that Web portal, that online approach but we also recognize that a lot of people are going to need one-on-one, in-person assistance, so we are training – we will be training tens of thousands of what we call assisters, who will be trained and certified to enroll consumers in Covered California’s products and programs.

23:14 KB: And finally, we need to stand up a customer service center that will have the capacity to field about 400,000 calls a month, everything ranging from, “So, what is Obamacare?” or “What is Covered California?” Or, “I thought you were going to call yourselves Avocado or I Want Insurance.” But to help people get – have information, get connected to coverage, retain that coverage once enrolled and to help support their retention in that coverage.

23:42 KB: Now, the good news is that I’m not really going to say anything about the content of this slide. I share this slide – this – this represents CalHEERS, which is another acronym that you will never really need to know to move forward successfully in life, whether you are leading or purchasing or whatever, but this reflects CalHEERS, it’s the California Health Eligibility Enrollment and Retention System, which is our IT platform, Information Technology platform that provides the infrastructure for our eligibility system. It’s this system, this platform that will enable consumers to get connected to coverage via multiple pathways, whether it be through that online application, through the phone, over the mail, through the community, to get connected to coverage and to have their eligibility to be determined in real time. I share this with you, like I say, not to tell you anything about it, but really to underscore that this IT platform is technologically, extraordinarily complex. It is, from a time perspective, enormously ambitious in terms of needing to operationalize this computer system in a very short number of months, and it is totally critical to providing the foundation of the work we are doing for Covered California, as well as our partner, the Department of Healthcare Services, which administers the MediCal program. So, to recap, in terms of practically what do we have to do, over the course of the next 10 months, the leadership of the exchange with our staff that are working truly 24/7, we have to activate this CalHEERS Enrollment system as well as other IT efforts. We need to select and contract with these qualified health plans that will be offering considerable consumer choice throughout the many regions of California. We need to develop the small business exchange, also known as SHOP. We need to implement a community education and outreach program throughout California’s communities, working with hundreds of community-based organizations. We need to launch a comprehensive outreach and education campaign that ensures that everyone, when asked the question, “What is Covered California?”, they actually know what it is in terms of the new marketplace, offering new affordable high-quality coverage choices or insurance choices. We need to recruit and train tens of thousands of these on-the-ground, community-based assisters. We need to put forward, unveil our Web portal eligibility system, and we need to open our customer service center. All that needs to be done, really within the course of the next six or seven months.

26:23 KB: So I share the operational requirements associated with creating this new marketplace. You know, the practical implications of what we have to do to underscore the scope, the complexity, the ambition and the import to get this right and to get it right on time. And while the “what we are to do” is extraordinarily challenging and complicated and important, I want to talk now a little bit about the “how we are moving forward with these new state and federal requirements” because it’s in the “how.” It’s in terms of not just the mechanical building blocks, but really the substantive foundations upon which we will be moving forward that offers the most promise for really advancing broader, longer-term, more transformative change in our healthcare system.

27:12 KB: So here I want to call out a handful of what I would characterize as the transformative opportunities. And I would begin by noting that as part of the values I noted at the front end in terms of our vision, our mission and our underlying values, one of the values we identified as a board was to be a catalyst for change for California’s healthcare system. We really wanted to underscore that we understood that if not immediately, at least over time, we have an opportunity to use our role in the marketplace to advance that triple aim of better health, better care, and lower cost. And that by using that purchasing clout we have an opportunity to really stimulate new strategies for connecting people to coverage, for changing the way that care is organized and delivered to places with a higher emphasis, for example on primary care and prevention. To reduce health disparities. So we made a distinction between the practical and the immediate and the long-term aspirations about broader more far-reaching change in terms of the organization and delivery of healthcare.

28:20 KB: So what are some of those – as we think about being a catalyst – what are some of the catalytic opportunities, if you will? Four I would touch on here. And first is contrib- to contribute to what is a really important paradigm shift that is fundamental to the Affordable Care Act, and that is a national social policy goal of near-universal coverage. That is an extraordinary change from where we had been for generations, where access to coverage was dependent upon you either having employer-based coverage, the financial means to pay for it on your own, or meeting some very narrow categorical or income requirements to qualify for our public programs, such as MediCal or Healthy Families for Children. So this paradigm shift of near universal coverage for all is extraordinarily important, and for us to be successful, it means that together we need to be creating what I would characterize as a culture of coverage, where insurance is something that is affordable, accessible, valued and expected. And that isn’t going to happen overnight. But the exchange, Covered California, has a very important role to play in terms of creating, you know, this broader community norm around insurance coverage, facilitating people’s access to affordable coverage choices. And really underscoring – it’s not just an obligation, it is something that is valued and expected.

29:42 KB: Another opportunity where I think we have an opportunity over time to really be transformative is to connect people to coverage in different ways, and that’s about – that requires really transforming our eligibility and enrollment systems. You know, historically, enrolling in our state’s Medicaid program or our other public programs has been very labor-intensive, very paper-intensive, often requiring for generations, really people needing to go to a county welfare office. Well, the world is changing. And we at the exchange have a really important role transform enrollment systems to be far more consumer-centered. We, as I noted, want to make our system easy, smooth, customer-friendly and minimize the burdens that are erected for consumers because again, the goal is not to push people away from coverage because they’re not eligible, but it’s to connect people with the right coverage for which they are eligible. So offering these multiple pathways to coverage, which in policy wonk jargon is often referred to as “the no-wrong-door policy” is profoundly important because it is grounded in the consumer. Not grounded in the state or county bureaucracy. So this idea of a customer-centered, seamless, smooth eligibility enrollment system is really a dramatic change in terms of how consumers experience public coverage programs. It also represents a very important change in terms of how our county partners have interacted, because to date we have roughly 27,000 county eligibility workers, which is a very significant workforce, which is required for very paper- and labor-intensive processes.

31:29 KB: Well, “no-wrong-door” also includes telephone applications and it involves online, self-service applications, so we have on opportunity to partner with counties in new ways and really transform not only the consumer experience but also to change the way we do business with our county partners.

31:46 KB: A third area where the exchange has an opportunity over time to really make some meaningful changes is to change the orientation of both coverage and care to be more squarely grounded in the consumer. I touched a moment ago – just now –on the enrollment experience and really having the enrollment strategy be reflective of what works for the consumer as opposed to what works for a state or county worker.

32:13 KB: Another example would be standardizing benefits, which I touched on briefly a moment ago, but I want to underscore how we are characterizing this policy approach that we are taking to standardize benefits. We are one of only two states that has made that policy decision, with Massachusetts being the other state, and they came to decide to standardize benefits only after having four or five years of experience with their state-based reform effort. But we characterize standardizing benefits as a game changer. Why? Because it is about empowering consumers. It’s about unleashing consumer choice and doing so in a way that is anchored in health-plan competition on cost and quality not on risk selection. And we think this is an incredibly important policy choice that our board has made that has the power to be very transformational in terms of changing the nature of competition and leveling the playing field among plans.

33:12 KB: A third area around consumer-centered approaches is on care redesign. As a part of our selective contracting, we are saying there are certain attributes to our plan partners that plans are going to need to meet for us to do business with them. And that includes showing us different care design models and investments in infrastructure and payment reform strategies with the provider networks that reflect a very clear, patient centeredness, whether it be through patient-centered medical homes, accountable care organizations, all the different types of delivery system models that are emerging that are fundamentally grounded in the consumer and what their care needs are in terms of getting them the right care at the right time by the right provider.

33:54 KB: And the final area I would call out in terms of where we have an opportunity over time to really be transformative is in encouraging new delivery systems and models of care. We, for very long in our state, less so in our state than nationwide, but even in our state, you know, we have had a service based business model in healthcare that in many respects, encourages and rewards utilization. And the shift that we are seeing in the marketplace, which is being accelerated under the Affordable Care Act is to more of a value-based approach to healthcare, where health plans and providers are incentivized and rewarded not for the number of services that are provided, but by how well health is managed, how well health is improved and how healthy their populations generally are. You know, redesigning the business model for health plans redesigning systems of care by providers is a really good example of an undertaking that will take time. It is also an example of reforms that the exchange, Covered California alone is not going to be able to drive. We will be a large purchaser. As I said, our target population is about 5.3 million people. It could be smaller. It could be larger. But even with large purchasing clout, we’re not going to be able to beat the head – beat over the heads of the health plans to deliver lower rates. We might be able to do that on a one-time basis, but true affordability is going to occur by realigning incentives among health plans and providers with a much clearer focus on outcomes as opposed to utilization. And while we are a large purchaser, I really believe over time that transformative potential is for the exchange not just on its own but what it does in partnership and alignment with the other providers, excuse me, with other purchasers and providers to come up with some very common care redesign and payment reform strategies that advance these goals around realignment – excuse me- the alignment of incentives among doctors, hospitals and other providers, and really provides financial incentives and rewards for health improvement, care coordination and so forth.

36:12 KB: As we think about the practical, the potential there is also the perils the pitfalls associated with policy change. When we advance change in an environment that is politically and ideologically divisive, where there is a lot of significant state and federal fiscal constraint, where social policy change is complicated at best, for which there are not simple solutions that can easily be put forward, advancing change in that kind of context is hard, and there are, as one might say, fault lines. Fault lines, in my mind, in some respects remind me of the adage of where you stand depends upon where you sit. So, you know, and if and where I sit now is as a member of the Covered California board, but some of the fault lines or the perils and pitfalls I would share this evening is, one is overreaching. One is overreaching. The exchange, Covered California in California is viewed as having considerable promise and potential. As I’ve shared not only in terms of expanding coverage but at least over time, driving in partnership with others broader changes in our healthcare financing and delivery system. You know, aligning those incentives in a way to focus more on health management, health improvement and health outcomes. But one man’s really good idea, you know, is another man’s kind of extraneous ornament. And there is a concern that the exchange will become a Christmas tree, where everyone’s good idea gets tacked on and ultimately gets so laden down that it can’t operationalize its critical work in the near term and potentially compromises this longer term, more transformative change that I spoke to briefly a moment ago. So, in my mind, if the exchange endeavors to be all things to all people, the Christmas tree will be laden down and ultimately, I think we will sacrifice our ability to achieve both short-term and longer-term goals for the people in California.

38:22 KB: A second fault line is coverage. Because one man’s success in maximizing enrollment of every eligible Californian comes at the expense of someone who’s got to pay for that. And so while the majority of the expanded coverage costs are borne by the federal government, there are also state costs. And Governor Brown and the Legislature have been, and Governor Brown in particular, has been a very, very clear fiscal steward of the State General Fund. He’s very clear about how important financial responsibility is for the state budget, and I think very rightly so. But at the same time we also know that even with considerable federal funding, there will be new costs and those costs could be considerable, particularly for those people who today are eligible for Medicaid, but who for a variety of reasons have not enrolled. Because we are going to be so extraordinarily successful with our marketing and outreach and simplified enrollment systems, a lot of those folks are going to come in. That is positive from a social policy perspective, but the costs could be in the hundreds of millions of dollars, which is a serious state concern.

39:31 KB: Streamlined enrollment. The good news is there is no wrong door. There is multiple pathways to coverage. There is a self-service application and phone service where you don’t have to go to a county welfare office. You don’t have to go to a county-based organization. So one man’s really terrific “no-wrong-door” policy, including that online application, also represents a perceived, if not real threat to the 27,000 jobs that currently are held by county eligibility workers. So the world is changing. That’s a tension, a fault line, and one where the exchange is working in close partnership with the Department of Healthcare Services and with the counties, to partner with the counties in new and innovative ways that are grounded in performance standards and accountability provisions. But that’s a very real tension that is an impact in terms of some of the work we’re doing.

40:19 KB: Delivery system reform. One man’s terrific idea for cost containment is a direct assault on someone else’s revenue stream. This has been one of the fundamental tensions in delivery system reform for many, many years. And so the challenge has been, you know, how to advance different types of organized, coordinated care models that don’t come at the sacrifice of one provider, but rather create incentives so that hospitals, physicians and other providers are incentivized to work together and together to improve outcomes for the people they serve and to benefit financially from that.

40:58 KB: The final fault line I would call out with a “to be determined” are the residually uninsured. Who are the residually uninsured? That’s a really important question and one that in my judgment isn’t getting much attention, too. And the exchange again, we’re about coverage. You say, “Well, why is she talking about the residually uninsured?” You know, again, our vision is to improve the access – the health of all Californians by assuring their access to affordable quality care. We understand that at the end of the day, notwithstanding all of our efforts around education, outreach, enrollment, quality affordable products, there will still be people who are uninsured. Now the popular wisdom seems to be – or assertion – is that this will be overwhelmingly undocumented immigrants. And it’s simply not the case. The research that has been done underscores that of those who are estimated to remain uninsured, and it could be as high as 3 million people – we have roughly 7 million people who are uninsured today – and under optimistic scenarios, which means aggressive outreach and enrollment, and streamlined eligibility systems, the estimates are it could be as high as 3 million people who remain uninsured. And of those three million people, roughly two-thirds – close to three-quarters, are legal residents or citizens. So, the overwhelming majority are people who are with legal status.

42:16 KB: Who are these people? A significant percentage of them are actually eligible for MediCal, no-cost or low-cost, or exchange – subsidies through the exchange. So, that underscores this issue of “hard to move.” For many of the people who are going to be eligible for almost free or very low cost, affordable coverage, many of them are younger and they think they’re invulnerable, and the estimates suggest that’s going to be a hard population to move, but those are the “yummy, yummy lives” as we say. We want them in our pool to help spread a good risk and we want to make sure we offer an affordable product. We know a good percentage of the people who remain uninsured are the people with limited English proficiency, again speaking to some of the hard-to-reach populations and outreach challenges.

42:57 KB: The policy and practice decisions that we the board, our staff undertake, will have implications for whether that number of residually uninsured is 3 million, 2 million, or what have you. So that’s a responsibility we take very seriously.

43:11 KB: I put this issue up on the fault line list because I think it’s a very important and very sensitive issue that policy makers are going to need to grapple with, and it’s a difficult conversation for leaders to have because a significant percentage of those who remain uninsured are in fact undocumented immigrants, and that is not a policy conversation that most elected officials are comfortable, frankly, having. But it is a conversation that needs to be had in terms of understanding who will be – remain uninsured – where does responsibility rest for that population? How will their care be financed? And most importantly, how do we ensure that the safety net system, our public hospitals, our clinic system, etc, that they have sufficient resources and capacity to continue to serve those who remain uninsured, while at the same time offering themselves up as a competitive choice for all the people they see today, who will become newly insured come 2014.

44:06 KB: So the fault lines – these are just a few – they are not insurmountable, though for many years, it was these kinds of fault lines in terms of the threat of reform to the business models of different provider groups; the challenges from a budget perspective of expanding coverage; issues about what to do with illegal immigrants or the undocumented immigrant population, and so on. It’s these types of fault lines that represented significant barriers in the past to moving forward with reform, and so I’ve always loved this quote by a friend and colleague, Len Nichols, who is one of those super smartpants policy folks and GW University, where he said, you know, “Change is impossible when it comes to healthcare, but it is necessary.” And I think that captures it well. We have had so many years of false starts and reversals, but we are fortunate to be here in California and to be part of a nation-leading effort to transform our healthcare delivery system, both in terms of expanding coverage, as well as advancing broader system transformation in terms of how care is organized, financed and delivered.

45:21 KB: The board and staff have absolutely found a change to be challenging to be sure, but we have endeavored to lead in a couple of ways I want to underscore in my closing comments that reflect not just the mechanics and the policy opportunities, but I want to note in closing some of the key leadership imperatives that I’ve observed in our work.

45:45 KB: It begins with process and approach. I have found that when you’re leading in times of difficulty and challenge, when you’re working on issues of extraordinary complexity, for which there are not simple, straightforward solutions, a good default is always data, evidence and information. And so we have endeavored mightily, under the leadership of our Executive Director, Peter Lee, to be an evidence-based organization. And that isn’t always long-term, empirical research and analysis, but it’s the best available information, the best research, the best data possible. Let’s have a debate about the facts. So, that’s been an important part of the approach we’ve taken to leading during this time of change and complexity. We’ve also found – and this is a – these are truths from my leadership roles I would note broadly – is, you know, it’s better to be advancing change when you are in partnership with others. And indeed, issues of the complexity of healthcare coverage, cost and quality are not the kind of issues that any one entity would – whether it be Covered California, the Department of Healthcare Services, regulatory bodies, private providers, etc. none of us can solve alone. So in the context of state government, we have found the imperative – an important imperative is to work in alignment and to work collaboratively as much as possible with our state partners, recognizing that we’re part of this broader ecosystem both in terms of public partners as well as with our private partners.

47:16 KB: A third kind of process imperative that I found in my leadership jobs and particularly now is about being accessible and engaging stakeholders. We have undertaken an extraordinary amount of effort in terms of getting out of Sacramento and meeting with community leaders and providers and others as well as our meeting are in public session and available by website. We have very specific stakeholder workgroups across the diversity of issues. I can tell you, the stakeholder community, they have rolled up their sleeves. They have been an important part of this effort in terms of informing and guiding important and time-sensitive and complicated issues.

47:59 KB: And finally transparency. I’m a big believer in “shine your light on a problem,” and you know, by definition, as I said at the start, government problems are hard, knotty-with-a-k, types of problems. And so the more transparency, the more sunshine, the better. Our board is a public board. We meet in public session. Our meetings are streamed live. It provides a degree of transparency, accessibility, and frankly, I believe shared ownership for the work we are doing. People characterize our meetings as fun and entertaining. I’m not really sure what to take of that, given how serious our work is, but I often say, you know, you can tell very clearly that we haven’t orchestrated this behind closed doors because people are seeing in real time the board grappling with big, complicated and difficult issues and it’s through that public input and transparency that the decisions are better made, better informed and more broadly owned.

48:56 KB: Finally, I’ve found that certain orientations serve one well in public leadership positions. A thick skin is very, very handy because again, these are issues by definition where there’s conflict and disagreement. There are winners and losers as much as we endeavor to find common ground and consensus, but there are a lot of grumpy people with whom we interact and it’s important that one have a thick skin. It’s also important that one bring patience to leading and advancing social policy change and innovation in the public context. I really do believe that California would not be where it is today in terms of leading the implementation nationally of Covered California and health reform in many respects had it not been for the fact that we went through reform in 2007 as some of you may recall, and we failed. But through that failure, we learned a lot about how to structure and approach comprehensive reform. We gathered data. We learned from our own experience. We built political coalitions, and we were able to move forward very quickly in 2010.

50:02 KB: It requires an orientation that is adaptable and open to change, and to reconsidering long-standing roles and responsibilities and contributions. We’ve been lucky with Covered California. We’re starting from scratch, so we are not recreating ourselves. The Department of Healthcare Services, which oversees MediCal – MediCal has been a huge program for a couple of generations. And under the leadership of Toby Douglas, Secretary Diana Dooley, and Governor Brown that is a program – the Department – that is reinventing itself to be a very different type of entity that is focused on outcomes, health management, health improvement rather than just paying fee-for-service for the people in the MediCal program. So rethinking roles and responsibilities and contributions.

50:48 KB: Finally, focus and a long view. I think we have been able to make the progress we have had – have made at Covered California is by recognizing that indeed we cannot be all things to all people. While we may have aspirations to be a catalytic force for broad system transformation that that in some respects is going to have to wait. Job One in the short term – and this has been our focus – is on standing up the exchange and putting those essential building blocks in place, not only because they are critical to the functional operation of Covered California, which will open its doors come fall, with coverage starting January 1, but because those foundations are really critical to supporting and sustaining more broad-based reform over the longer term. And so it’s that long view I want to close with.

51:38 KB: That in terms of the work we are doing, yes it is focused on the short term but we have endeavored as leaders to bring a long view and prepare today for really the broader, more transformational change that will come tomorrow. Our success will, come 2014, I can assure you, be measured in a very limited way. It will be measured by how many people are covered. And we will judge our success that way as well, but in my mind, the real contribution that Covered California has to make is not only in terms of expanding the number of people who are insured, important as that is, it’s really about these broader systems changes. It’s about forcing greater transparency into our healthcare system. It’s about empowering consumers with information and choice as it relates to cost and quality and service. It’s about ending the profitability that we have seen associate with risk – selecting risk as opposed to spreading risk. And it will be seen by our ability to contribute to employing incentives that really are grounded in rewarding health improvements and cost reductions and greater efficiency in terms of our healthcare system. So I am delighted to be here at USF. I’m delighted to be here as a member of the Covered California board. I am particularly pleased to be here as a resident of the State of California that notwithstanding the perils and pitfalls that is social policy change, notwithstanding the headaches and heartaches that have been for many years meaningful change in terms of coverage, cost and quality. We are a leader. We are stepping up. We are doing so with a very clear eye towards what we need to do in the near term for the people of our state, but even more with a focus on stimulating longer-term improvements, so eager for your thoughts and questions and appreciate your – so how many of you have heard of Covered California? There we go! And in 314 days, our doors will be open, so stay tuned.

53:48 [Applause.]

53:56 KB: And that’s where you can find out more information about Covered California dot com, and that is our website. For those individuals who are eager to learn more about the Affordable Care Act, about the health benefit exchange, new coverage options, what it means for consumers and small businesses. For those of you who are total policy geeks and want to really understand the nuts and bolts of government organizations, we have a separate website for the health benefit exchange. That’s the formal term of the organization that is actually overseeing Covered California, and we have a listserv, so if you like to be kept apprised of the extraordinarily exciting and important work that is unfolding throughout your communities and statewide, I would encourage you to join our listserv.

54:44 KB: Yes, ma’am?

54:44 Audience member 1: [inaudible]

54:50 KB: Ok, so why is that?

54:51 AM1: [inaudible]

55:02 KB: Oh. Ok. That’s not good.

55:05 AM1: [inaudible]

55:17 KB: Terrific.

55:18 AM1: [inaudible]

55:24 KB: Well, we appreciate your engagement and what you’re – what’s your name? Christine? – is referring to is we – our board meets in executive session in the morning to talk about contracting issues and personnel issues, those are the only two issues we can meet in private session, executive session, and it’s true. We sometimes run a little bit over, so it’s – sorry to hear that it’s now betting games about when we’re going to start, and Avocado was one of a number of names that was raised. Some of you may have heard, as a potential name and I as one board member being the curious sort that I am, said, “So, how will we make the decision?”You know, there were like 12 different names initially suggested, one of which was Avocado, and I saw Avocado and so I said – so what will be the process. What will be the role of the board and one of our staff said, XY or Z, and I said, “Because I’m rather drawn to Avocado.” I was making a joke. It ended up being on the front page of the New York Times. I received unsolicited emails from people I didn’t even know. I heard from friends who I went to college with, who live in Europe, saying, “I like Avocado.” It was very interesting. We did – I attended the focus groups, and Avocado actually was really, really well received. Really well received, and when we – when people were told, well – initially they would say, “Well, Avocado!” We said, “Well, you buy an Apple, right? You have a BlackBerry?” And people were like, “Ah!”It was fun and catchy but we ultimately concluded that we just didn’t have time to establish a brand. And I don’t know, I mean, so we’re calling the Avocado board to session? It sounded more like an agricultural product so –

57:05 AM: [inaudible]

57:11 KB: I brought an avocado, and I dressed in my avocado suit, and I wore my avocado glasses, and unfortunately all my colleagues – the point I was trying to make actually with the board was, I said, “I’m rather drawn to Avocado, but I’m not the target audience.” The board is not the target audience. That point seemed to be lost on most people, so I continued to have fun with Avocado, so thank you for bringing that up. Yes?

57:35 AM: [inaudible]

57:59 KB: Oh, yay. So you have a good sense of how challenging it is to talk to people about insurance and help them understand it in a way that applies to their lives, and what they care about in terms of quality and their provider network?

58:14 AM: [inaudible]

58:36 KB: Well, I think you are absolutely right and you know, it just underscores the point I was making about the culture of coverage. That you know, I know the individual mandate piece of the Affordable Care Act got a lot of attention and a lot of folks kind of react very viscerally to that, but when you talk with people about what the law requires as well as what the law offers, it creates a very different context, and the focus groups have been enormously positive, in terms of people being really eager when they’re told about the new marketplace, about their new coverage options, when they learn what the benefits will cover, as well as what the out-of-pocket costs will be based upon your income, people are like eager, but it’s going to require all of us to be a part of creating this community norm where people sign up, and it’s our job to make it available, to make it affordable, but it’s really all of our part to help people that you know who – you know – the majority – when you look at who’s uninsured, a lot of adult students. Everyone here probably knows some young adults or older students who are uninsured and they’re going to have even more options come 2014.

59:52 Male: Yes, uh, I have a question. Let’s see. How will you monitor those businesses that associate with you? How will you monitor them to make sure that they are following your standards, providing the care that they guarantee? And second question that I have. Back in 2008 or 2009, the Bill Moyers Journal had a number of doctors on and he said that all of this is – they advocate the single-payer model, which was apparently passed twice in California but vetoed twice by Governor Schwarzenegger. If this fails, is there going to be a way to transition to a single-payer model?

1:00:41 KB: Well, I’ll start with the second question first. Our focus is on the success of Covered California and the success of reform more broadly, so you know, that’s where all of our energy and attention and focus is invested. You know, as a matter of federal policy, the framework that was approved and the framework we are implementing is not single-payer. It is also not a exclusively market-based strategy. It has the happy virtue in my mind of bringing both – together both market-based aspects of reform and actually the exchange is a very market-oriented concept with a clear role and set of responsibilities for government, such as through the regulatory framework, as well as the public program expansions. On your first question, it’s a really, really important question. And it allows me to make an important distinction in terms of the role of the Covered California exchange as a purchaser selecting health plans to offer on our virtual shelves and the role of our regulatory entities. In California, because we’re always special and different, we have not one but two regulatory authorities. The Department of Managed Healthcare, which oversees what typically is referred to as HMOs, and then the California Department of Insurance, which has a separate constitutional officer, which oversees what are typically referred to as Preferred Provider programs. – PPOs. So we are very clear. We are a purchaser. We will enter into business relationships, contracts as I said, we will model contracts that will apply to all of our QHP plan partners, but the oversight, from a regulatory perspective will continue to rest with the Department of Insurance and the Department of Managed Healthcare. So when I talked about some of the imperatives for our approach for leading change, it is in close collaboration not only with other purchasers, such as the Department of Healthcare Services for MediCal, or CalPERS for state employees, it is also with our regulatory authorities. But we – it’s been a major – probably the most sensitive – among the more sensitive issues that the board has raised, is “How are we assured that we are purchasing adequate provider capacity?” So if I’m entering into a relationship with you, you are my qualified health plan partner, you are going to have to demonstrate to the regulators that you can meet both state and federal network adequacy standards. And we will be looking to the regulatory entities to enforce that. We’re going to probably have some additional requirements to give us some assurance, but we’re not going to be a regulator. We’ve got two existing regulators, we don’t need a third.

1:03:18 KB: Yes?

1:03:18 Female: Thank you so much for your comments. It was very –I learned a lot! I have a question, though about the Navigator training. You have a slide up there that said that you’re going to be certifying navigators or –

1:03:31 KB: Assisters

1:03:31 Female: Assist – right

1:03:33 KB: Because California’s different. We don’t call them navigators, like every other state. We call them assisters.

1:03:36 Female: So, what is the deployment strategy you have for that, and how are you going to train up all these folks?

1:03:41 KB: Um, a great question and it’s part of the excitement of everything we have an opportunity to do. Also, it’s kind of sobering in terms of the amount of work we have to do. We, as I said in my comments, our goal is to recruit, train and certify tens of thousands of assisters. Now California has some experience. How many of you have ever heard of the “Healthy Families” program? OK. Early in the tenure of the Healthy Families program, when the state had a few more resources, we had what were called certified application assisters, CAAs. These are individuals. We had thousands. I don’t know if we had tens of thousands, but they were trained and certified to sell both – er, uh –offer coverage through both MediCal and the Healthy Families program. And they were paid about $50 or so for every enrollment. It’s the exact same model, but on steroids. And it’s going to be a big undertaking. We have a terrific contractor that’s doing a lot of the legwork, but it’s one where we have evidence it works. It reflects what we know from our data, about the diversity of the people to be served, and we want to bring individual assistance in language and communities and it’s going to be through the assisters. We will be contracting with community-based organizations as opposed to individuals, so we are eager to be developing partnerships with a lot of different community based organizations. And it’s not just CBOs. I mean, a whole diversity of folks can sign up and become assisters. So, we made a couple of distinctions – final point – is those individuals who have a financial interest in someone’s enrollment – so, if you are a provider or a health plan, you can be an assister, but you can’t be compensated. Actually, I’m not even sure if you can be an assister. We made one exception for clinics, but we’re very mindful of steerage and conflict of interest. Generally, these are people outside of the healthcare system. Yes, sir?

1:05:42 Male 2: Hi. Are you talking about the entire California exchanges or some subset of that?

1:05:49 KB: When you say, “the entire California exchanges”-

1:05:51 Male 2: Well for example, I’ve heard whispers that some employer groups might, you know, stop giving coverage to their employees and give them a stipend to go to the exchanges. Is that within the scope of what you showed on the slide of the constituents

1:06:05 KB: Well, we oversee a statewide exchange, the health benefit exchange which we call Covered California. Eligibility for Covered California as I said, is principally those individuals who do not have affordable, employer-based coverage or are not eligible for Medicaid, as well as certain small businesses. So there’s a separate health benefit exchange, which is called The Shop, for small businesses, but I think you’re raising a related but important point, which is this question of, “So how will employers respond?” You know, the Affordable Care Act imposes new responsibilities on many individuals to purchase insurance. There’s also new responsibility on employers to offer affordable coverage. And those employers that are above a certain size, if they fail to offer affordable coverage, and that is defined as, you know, the cost to the employee, as a percentage of their household income, if an employer doesn’t offer affordable coverage, then that employer will pay a penalty. And so, well questions – some employers say, “Hmm. Maybe I’ll just pay the penalty, and I’ll pay some money to my ” – or some will say, “I just may pay a penalty.” Others will say, “I’m just no longer going to provide insurance, and I will pay a stipend or whatever to my employee.” So, there’s all sorts of gaming and it’s hard to anticipate today exactly what may unfold. You know, employers offer insurance to their employees for a variety of different reasons.—”

1:07:35 [Audio stops. Noise]