Calif. new health plan's expenditures secret

| Thursday, May 9, 2013, 6:54 p.m.

LOS ANGELES — A California law that established an agency to oversee national health care reforms has granted it broad authority to conceal spending on contractors that will perform most of its functions — potentially shielding the public from knowing how hundreds of millions of dollars are spent.

The degree of secrecy afforded Covered California appears unique among states attempting to establish their own health insurance exchanges under President Obama's signature health law.

An Associated Press review of the 16 other states that have opted for state-run marketplaces shows the California agency is given powers that are the most restrictive in what information is required to be made public.

In Massachusetts — the state that served as the model for Obama's health overhaul — the Health Connector program is specifically covered by open-records laws. The same is true in Idaho, where its exchange is a private, nonprofit corporation; New Mexico's plan also is public information.

Maryland's Legislature subjected its exchange to the state's public information act, but protected some types of commercial and financial information.

In California, the explicit exclusions from open-records laws might run afoul of the state constitution, said Terry Francke, head of Californians Aware, a group that promotes government transparency.

If the Legislature wants to limit access, the state constitution requires that it produce findings that demonstrate the need for shielding information from the public. In the bill that authorized the exchange, the Legislature devoted two sentences to address that issue. It argued the cloaked spending is “necessary” to protect “powers and obligations to negotiate on behalf of the public.”

The provisions are vulnerable to being declared unconstitutional, according to Francke.

He said that lawmakers are saying they must have secrecy on spending because they need it — with no details or evidence to support it

Francke said the Legislature should answer the questions: “Why couldn't the exchange do its job without this secrecy? What's the worst that could happen?”

Exchange spokesman Dana Howard said the agency complies with state law but declined to discuss in detail how it determines what is deemed public.

“I'm not going to go down item by item, about how it is and what kinds of meetings and what was talked about,” he said.

Governments routinely keep bids secret until contracts are awarded so that one vendor doesn't get an unfair advantage over others. After a bid is awarded, contracts generally become fully public.

In setting up the California exchange, lawmakers gave it the authority to keep all contracts private for a year and the amounts paid secret indefinitely.

“Except for the portion of a contract that contains the rates of payment, contracts entered into pursuant to this title shall be open to inspection one year after their effective dates,” reads the code specifying what exchange records are exempt from public disclosure.

According to agency documents, Covered California plans to spend nearly $458 million on outside vendors by the end of 2014 — covering lawyers, consultants, public relations advisers and other functions.

Other exchange records permitted to be kept secret include those that reveal recommendations, research, strategy of the board or its staff, or those that provide instructions, advice or training to employees. Minutes of the board meetings also are exempt from disclosure.

The indefinite ban on releasing rates of pay to companies and individuals receiving contracts also goes beyond exemptions for other state health programs, such as Healthy Families, which withholds rates of pay from disclosure for up to four years, but not permanently.

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