As part of an ongoing series on insurance markets, the California HealthCare Foundation (CHCF) today released three issue briefs on health insurance regulation in California. Two of the briefs bring into focus the rules that apply when health coverage is purchased by small employers or by individuals. The third brief describes the overall framework for regulation of health insurance in California, including how federal ERISA requirements compare with regulation by the state Departments of Managed Health Care and Insurance.

According to Marian Mulkey, program officer for CHCF, "The business of health insurance in California is subject to a complex patchwork of federal and state rules and regulations. Different rules apply depending on whether insurance coverage is purchased directly by individuals or on behalf of a group, as in job-based health insurance. Consumer protections vary depending on the type of product purchased and the way that it is funded. These briefs help to simplify and clarify these complex rules."

Rules Governing California's Small Group Health Insurance Market describes the rationale for having special rules that apply to the small group health insurance market, summarizes California's small group market rules, and puts these rules in the broader context of other market forces.

• Small group market rules seek to balance the health insurance carrier goal of avoiding adverse selection with the broader social goal of allowing small groups access to coverage.
• California law affords several key protections including guaranteed issue, rating protections, portability, and fair marketing provisions. When individuals buy health coverage on their own, they have limited protections, especially if they do not have recent coverage under a group plan. Rules Governing California's Individual Health Insurance Market underscores the need for consumers to avoid breaks in coverage whenever possible.
  Highlights from the brief include:
• An overview of the differences between individual and group insurance;
• Basic rules for individual coverage including limits on pre-existing conditions, guaranteed renewability, and protections for higher-risk individuals who maintain individual coverage; and
• Rules when changing from group to individual coverage, including COBRA and Cal-COBRA, HIPAA, and conversion coverage. Regulatory Oversight of Health Insurance in California highlights federal ERISA rules and key California laws regulating health coverage. It also outlines how the different regulatory schemes significantly affect the legal protections available to consumers covered by different types of plans.
  Highlights from the brief include:
• Pertinent highlights of the federal ERISA law and California laws regulating employee health benefit plans; and
• An examination of the impact of different regulatory frameworks in the areas of solvency standards, mandated benefits, and dispute resolution. All three issue briefs are available through the links below. Additional related resources (Making Sense of Managed Care Regulation in California; Regulation of ERISA Plans: The Interplay of ERISA and California Law; and Independent Medical Review Experiences in California, Phase II: Cases Including Medical Necessity) can be found on www.chcf.org.

  About the Authors

  Deborah Reidy Kelch conducted the analysis for Rules Governing California's Individual Health Insurance Market and Regulatory Oversight of Health Insurance in California. Kelch is an independent health researcher and president of Kelch Associates Consulting.

  Debra L. Roth conducted the analysis for Rules Governing California's Small Group Health Insurance Market. At the time of writing, Roth was an attorney and health care policy consultant with Ruderman and Roth in Sacramento.