(August 24, 2010) With less than six days left before the end of the legislative session, the California Chamber of Commerce has identified two new “job killer” bills.

AB 1602 (Perez; D-Los Angeles) and SB 900 (Alquist; D-Santa Clara) prematurely create overly broad and expansive governance and guidelines without oversight for the state health benefit exchange, which could lead to unnecessary cost increases and limited choice for employers.

The federal Patient Protection and Affordable Care Act (PPACA) requires states to implement exchanges by 2014. SB 900 and AB 1602 are premature and well in advance of the benefit of guidance through federal regulations. Therefore, CalChamber supports the development of a framework for the exchange that allows for and facilitates thoughtful and deliberative creation and implementation of the appropriate regulatory scheme and governance for California that complies with federal regulations.

CalChamber is concerned that the governance component combined with the expansive regulatory authority for selective contracting, plan design and rate negotiation could result in limited choice, increasing costs, and harm to California employers.  There are no protections or accountability in the bills to prevent overly expansive and unnecessary regulation or taxation. 

For example, AB 1602 allows the board that would run the exchange  to adopt regulations until 2016 outside of the Administrative Procedures Act requirements and instead use the emergency rulemaking process, thus precluding consideration of public input and adequate transparency.

Furthermore, CalChamber is concerned that it will be extremely challenging to recruit qualified and interested individuals who will meet the criteria for selection as a board member. Given the prohibition on industry experience, the CalChamber is concerned that board members would lack adequate expertise. This independence without adequate expertise and oversight could also contribute to over-taxation and over-regulation within the exchange as well as in the market outside of the exchange.  A five-member board with unrestrained authority and without oversight is not in the best interest of the people of California.

Action Needed

AB 1602 and SB 900 will be considered soon by the full Senate. Please urge your senator to oppose AB 1602 and SB 900.

Staff Contact: Marti Fisher