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IHPS Publication

An Implementation and Alternative Scenario Analysis of California's Health Insurance Act of 2003 (SB2)

Authors: IHPS and RAND

April 2005

In spring 2004, the California HealthCare Foundation (CHCF) selected the Institute for Health Policy Solutions (IHPS), in collaboration with the RAND Corporation, to conduct an in-depth implementation study and analysis of California's landmark "pay-or-play" legislation: The Health Insurance Act of 2003 (SB 2). Although it was subsequently overturned by a narrow margin in a November 2004 referendum, the passage of the legislation provided a unique opportunity to assess and to evaluate the implementation issues and challenges presented by coverage expansions for workers and families.

SB 2 would have required certain California employers to either "pay" the state a fee, which the state would use to cover specified workers and dependents, or "play" by covering their workers directly through employer-sponsored coverage. Our study focused principally on the viability of the State Health Purchasing Program (SHPP)-the purchasing pool SB 2 would have established to serve as the coverage vehicle for the workers of "pay" employers.

More generally, the study is intended to assist decision-makers in the design of manageable, effective and sustainable coverage expansions for workers and their families. Much of the analysis can help inform a range of alternative approaches involving one or more of the important features of SB 2: employer-financed coverage (and related ERISA issues); health insurance purchasing pools; premium subsidies for low-income populations; and/or individual mandates.

The Executive Summary summarizes the findings of this research. The larger main report presents the findings in detail. Several Supplements explore particular issues in greater detail.

Project Reports:
Full Report
Executive Summary
Scenario Simulation Model: Data Sources and Database

Scenario Simulation Model: Methodology
Complete Results of Scenario Simulation Modeling
Benefit Design Considerations for SB2
Cost Management Strategies and Examples for the Pool
ERISA Implications for State "Pay or Play" Employer-Based Coverage
Risk Adjustment Methods and Their Relavance to "Pay or Play"
Health Care Quality Measurements and Monitoring Features to Consider
Stakeholder and Key Informant Interviews
"Snapshot" of SB2's Effect on Employers & Employees
Methodology for SB2 Snapshot

This report was made possible by a grant from the California HealthCare Foundation.


Executive Summary
( 78K KB)
Link to all relevant publications.