Calif. Exchange Granted Secrecy

By MICHAEL R. BLOOD, Associated Press 1:37 a.m.May 9, 2013LOS ANGELES — A California law that created an agency to oversee national health care reforms granted it broad authority to conceal spending on the contractors that will perform most of its functions, potentially shielding the public from seeing 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 Barack 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 was 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 was established as a private, nonprofit corporation, and in New Mexico.

The Maryland 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 may 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 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 was "necessary" to protect "powers and obligations to negotiate on behalf of the public."

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

He said, in essence, lawmakers are saying they need it because they need it, with no details or evidence to support it. The Legislature should have answered the questions, "Why couldn't the exchange do its job without this secrecy? What's the worst that could happen?" Francke said.

Exchange spokesman Dana Howard said the agency complies with state law but declined to discuss in detail how it determines what is public and what is not.

"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.

It's routine in government to keep bids secret until contracts are awarded, so one vendor does not 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 that are allowed 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.

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