Gov. Jerry Brown signed legislation Tuesday stripping broad secrecy provisions from the state agency overseeing health care reform in California, which gave it the power to potentially shield from the public how hundreds of millions of dollars are spent.
The Democratic governor signed the bill on the same day online insurance marketplaces that are at the heart of President Barack Obama's health care overhaul went into business around the country.
The bill was drafted after an Associated Press investigation in May revealed that the agency known as Covered California was granted broad authority to conceal spending on the contractors that will perform most of its functions. AP found the degree of privacy granted the agency was unique among states attempting to establish their own health exchanges, and explicit exclusions from open-records laws might run afoul of the state constitution.
The new law lifts secrecy provisions for contracts involving marketing, public relations, consulting and other services, although some restrictions from public disclosure remain in place for contracts with large health plans.
"This measure is important to guarantee transparency," Republican Sen. Bill Emmerson, a bill sponsor, said in a statement. "It is imperative that Covered California is properly subject to the Public Records Act just like other state agencies."
In August 2010, when California was sprinting to become the first state to embrace the most extensive health care changes since Medicare, state lawmakers gave the new agency the authority to keep all contracts private for a year and the amounts paid secret indefinitely.
An AP review of the 16 other states that have opted for state-run marketplaces showed 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 new law, which takes effect immediately, scraps the indefinite ban on releasing rates of pay.
The new law would mirror in part the state's longstanding Healthy Families program, providing a one-year delay in release of contracts only with large health plans and a three-year delay for rates of pay with only those firms, which state officials argue is needed to protect fair competition.
All other contracts would be pulled under state open-records laws, rather than exempted from them.
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.
Some open-government advocates believe all restrictions should be lifted, including for large health plans.
Currently, it's not clear how many contracts Covered California has executed, for how much or with whom.
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.
The Maryland Legislature subjected its exchange to the state's public information act, but protected some types of commercial and financial information.