Gov. Arnold Schwarzenegger on Thursday signed seven major health care-reform bills, including legislation establishing a Web-based insurance exchange that will allow consumers to comparison-shop for coverage.
The governor's action makes California the first state to implement an oversight board for insurance exchange marketplaces since the new federal health care law was enacted earlier this year. Massachusetts implemented its exchange prior to reform.
"For national reform to succeed, it will be up to the states to make it work, and California is moving forward on reforms that will provide affordable and quality health care insurance," Schwarzenegger said in a statement.
The two companion bills, SB900 and AB1602, will promote competition in the health insurance marketplace that will drive down costs and provide consumers with a wider range of options, said Assembly Speaker John Perez, D-Los Angeles, the author of AB1602.
Several insurance companies have pushed for limits on the costs the exchange could impose on their industry, including the state's largest for-profit insurer, Anthem Blue Cross. A spokeswoman for the company declined to comment on the new laws Thursday evening.
Edwin Garcia, a spokesman for Kaiser Permanente, called the exchange "a promising and important part of health care reform" that would make coverage more affordable for millions of low- and middle-income Californians and small business owners. Kaiser insures about 6.5 million people in the state, Garcia said.
The exchange will be up and running in the nation's most populous state by 2014, when the federal reforms are scheduled to take effect. Between now and then, a five-member exchange board and staff will lay the groundwork to enroll Californians in the program and select qualified health plans to participate.
Schwarzenegger will appoint two members of the board before his term ends and the Legislature will appoint the rest.
"This will really give us a leg up and put us in a leadership role in the nation," said Betsy Imholz, health advocate for Consumers Union, a major supporter of the reform package. "It's a big job for California to set this up and do it right, and now we can take the time to set up a really model exchange that other states can look to."
Additional bills signed Thursday prohibit insurers from denying coverage to children because of a pre-existing condition; allow young adults to stay on their parents' health care plans until age 26; and prevent insurance companies from canceling coverage except in cases of fraud or misrepresentation.
Schwarzenegger previously vetoed eight bills that sought to expand the range of services covered by health plans and place more scrutiny on insurance rate changes.
Some of the rejected measures would contribute to skyrocketing health care costs, while others were unnecessary because of existing state laws or the upcoming federal legislation, the Republican governor said in his veto messages.
Schwarzenegger has long supported the concept of universal health coverage, and in 2007 proposed a $14.7 billion overhaul of California's health care market -- an effort that failed in part because of concerns over cost.
When fully enacted, the new federal law will require most Americans to carry insurance or pay a fine. More than 46 million Americans are currently uninsured, including more than 6.7 million Californians, according to the Henry J. Kaiser Family Foundation.
Republican lawmakers have argued that the federal government should take full responsibility for creating the exchange and that a state-run program could turn into an unaccountable bureaucracy.
Critics also have raised concerns that the exchange will further deplete the state's general fund when California is already grappling with a $19 billion deficit.
The California Chamber of Commerce issued an analysis earlier this month concluding that the cost could exceed $1 billion annually. But Schwarzenegger said Thursday that the program's preliminary planning stage would be federally funded.
After 2014, the exchange would be self-supporting from fees paid by participating health plans and insurers, the governor said.
Twenty states have signed on to a lawsuit seeking to block federal health care reform, and a Florida judge is scheduled to hear arguments on the issue in December.
California's Republican gubernatorial hopeful, Meg Whitman, and GOP Senate challenger Carly Fiorina have both said they want to repeal the law.
Rounding out the health care legislation approved Thursday were a bill mandating at least 60 days written notice before insurers implement any changes to premium rates or coverage, and another requiring health plans to cover certain preventive services without imposing cost-sharing.