RANDY PENCH / Bee file, 2010

Brad Sabatoni calibrates a lens machine at Vision Service Plan's lab in Rancho Cordova.

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Rancho Cordova's VSP threatens to leave state over health insurance decision

Published: Wednesday, Sep. 19, 2012 - 12:00 am | Page 1A
Last Modified: Tuesday, Oct. 30, 2012 - 9:52 pm

California's rollout of the federal health care overhaul, still in its infancy, has prompted one of Sacramento's most important companies to threaten to leave the state.

Vision Service Plan of Rancho Cordova is protesting a decision last month by the agency that is building California's online insurance market, a key piece of President Barack Obama's Affordable Care Act. The decision by the California Health Benefit Exchange would keep VSP from competing for a big chunk of consumers.

The exchange said it would not allow stand-alone vision plans, like those sold by VSP, to be offered through the exchange to individual customers. Such a provision would greatly limit vision services available through the exchange, since most are offered through stand-alone plans.

VSP, which employs 2,100 Sacramentans, has suggested that the exclusion could prompt the company to move its headquarters to another state. Several of VSP's allies, including area business leaders and state Senate President Pro Tem Darrell Steinberg, D-Sacramento, urged the agency this week to reconsider.

On Tuesday, the agency indicated it might back down. Without going into details, Executive Director Peter Lee said the board expects to "revisit this matter" next month.

"We want to make sure we don't foreclose any options," he said during the monthly meeting of the agency's governing board.

VSP said in a statement that it was "pleased" the agency would take another look at the issue.

The controversy offers a glimpse of the difficulties facing the Health Benefit Exchange as it tries to build an online marketplace to serve uninsured individuals and small businesses.

About 2 million uninsured Californians are expected to purchase coverage through the online market, which is set to debut in 2014. Eligible purchasers will get federal tax credits to help make the coverage affordable.

First, the agency has to plow through myriad issues to bring the market to life.

At Tuesday's meeting, for instance, the board wrestled with the problems of publicizing the marketplace to millions of uninsured Californians, many of whom don't speak English.

The agency expects to receive $40 million from Washington for community outreach, but "we won't have the resources to do everything," said board Chairwoman Diana Dooley, secretary of the California Health and Human Services Agency.

The agency is paying Ogilvy Public Relations $900,000 to help with publicity.

Even the seemingly straightforward topic of what to call the marketplace is being thoroughly vetted. Last week, focus groups in Sacramento and Los Angeles batted around names as varied as CaliHealth, Eureka, "and of course 'Avocado,' still a crowd favorite," said Chris Kelly, the agency's senior marketing adviser.

While the audience at Tuesday's meeting chuckled, board member Kim Belshé held up an avocado and said, "This is an important decision for us."

Perhaps the agency's trickiest task is shaping the contours of the marketplace itself.

Under the Affordable Care Act, coverage sold through the state exchange must include 10 "essential health benefits," including hospitalization and prescription drugs.

Last month, the exchange's board voted to let stand-alone vision care insurers such as VSP sell coverage to small businesses. But VSP, and others like it, were locked out of the market for individuals, which is expected to be larger.

Why the difference? It has to do with the federal tax subsidies: Individuals will get them, businesses won't. Letting an individual purchase eye-care insurance from a separate company would mean having to split the individual subsidies between their main insurance and their vision coverage. The agency decided that was too difficult a task to tackle, at least in the first year of operation, according to staff.

VSP, in a protest filed with the agency, said most Californians get their eye-care insurance from a stand-alone company. VSP covers 14 million Californians and a total of 58 million Americans, company President J. Robinson Lynch said in a letter to the agency.

In an opinion piece printed in the Sacramento Business Journal last month, Robinson suggested VSP might leave the state if it were left out.

"Like other successful California companies, we have been heavily solicited to relocate out of state with incentives and subsidies," he wrote. "Maybe it's time for us to choose to go where we are wanted."

Business and political leaders in the region are taking up VSP's cause.

"VSP is a valued member of our business community that we cannot afford to lose," business leaders wrote in a letter to the board. The letter was signed by the heads of the Sacramento Metropolitan Chamber of Commerce, Valley Vision, the Sacramento Area Commerce and Trade Organization, and the Sacramento Area Regional Technology Alliance.

"Aside from being a home-grown California company, VSP is a major employer of over 2,000 Sacramentans in a district struggling mightily to recover from this prolonged recession," Steinberg wrote in a letter to the board.

© Copyright The Sacramento Bee. All rights reserved.

Read more articles by Dale Kasler



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