BILL ANALYSIS
AB 1801
Page 1
Date of Hearing: April 23, 2002
ASSEMBLY COMMITTEE ON HEALTH
Helen Thomson, Chair
AB 1801 (Pacheco) - As Amended: April 11, 2002
POLICY QUESTIONS :
1)Should the Commission on Health Care Cost Review (CHCCR) be
created?
2)Should the CHCCR be required to study and analyze the
potential cost or savings to the private sector and state and
locally-funded health care programs resulting from proposed
legislation that affects the operation of a health care
service plans?
3)Should the CHCCR consist of five members, with three members
appointed by the Governor and two legislative appointments?
SUBJECT : Commission on Health Care Cost Review.
SUMMARY : Creates the Commission on Health Care Cost Review
(CHCCR), and requires it to study and analyze the potential cost
or savings resulting from any proposed legislation that affects
the operation of a health care service plan, the impact of
proposed legislation on persons in this state without health
care coverage, and public policies affecting health care costs
and access to health care coverage in California. Specifically,
this bill :
1)Creates the CHCCR, and requires the CHCCR to study and analyze
the following issues:
a) The potential cost or savings to the private sector, the
Public Employees' Retirement System, other retirement
systems funded by the state or by a local government, the
state Medi-Cal program and the Healthy Families Program
resulting from any proposed legislation that affects the
operation of a health care service plans;
b) The impact of proposed legislation on persons in this
state without health care coverage; and
c) Public policies affecting health care costs and access
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to health care coverage in California.
2)Requires CHCCR to consist of 5 members, appointed as follows:
a) 3 appointed by the Governor;
b) 1 member appointed by the Senate Committee on Rules; and
c) 1 member appointed by the Speaker of the Assembly.
3)Requires each member to serve a term of two years, and
requires members of the CHCCR to serve without compensation
but to receive per diem and expenses, as defined.
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4)Requires CHCCR to annually report its findings to the fiscal
committees of the Legislature and the Department of Finance.
5)Requires CHCCR to appoint an executive director who serves at
the pleasure of CHCCR. Requires all other employees of CHCCR
to be made in accordance with the civil service laws.
EXISTING LAW
1)Establishes various programs relating to health policy and
planning in this state, including the Advisory Committee on
Managed Health Care and the Clinical Advisory Panel in the
Department of Managed Health Care (DMHC).
2)Licenses and regulates health care services plans under the
Knox-Keene Act through the DMHC. Licenses and regulates
health insurers through the Department of Insurance (DOI).
3)Requires health plans and health insurers to provide coverage
for certain benefits and services, some of which are required
for group and individual coverage, others of which are limited
to group coverage.
FISCAL EFFECT : Unknown.
COMMENTS :
1)PURPOSE OF THIS BILL . According to the author, this bill
would establish an independent, non-partisan Commission on
Health Care Cost Review to advise legislators and state
officials regarding the potential effects of legislation
affecting the health care delivery system in California.
CHCCR would estimate the cost impact of proposed legislation
to public health programs, including Medi-Cal and Healthy
Families, health insurance provided to state employees through
CalPERS, and the impact on health insurance premiums paid by
private employers.
2)BACKGROUND . This session, the Legislature is considering over
30 bills affecting health plans, ranging from the types of
benefits and services health plans are required to provide,
the amount in fees health plans pay for licensure by the DMHC,
the type of information that is required on health plan cards,
the timeliness and method of payment to health care providers,
the contract terms between health plans and providers, the
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ability of interested parties to sue health plans for
violations of the Knox-Keene Act, the use of arbitration in
health plan contracts, the ability of "medically uninsurable"
individuals to obtain health insurance coverage in the
individual market, the geographic accessibility standards for
health plans in rural areas with few HMOs, the health plan
grievance process for resolving disputes with enrollees,
whether the requirements placed on health plans selling to
small employers should be expanded, the use of health plans to
expand access to health care for the uninsured and tax
incentives for the purchase of health insurance.
According to material from the American Association of Health
Plans a dozen states have enacted laws requiring the review of
the effects of proposed health benefit mandate legislation.
Included in the background material provided by the author is
information on Washington and Pennsylvania's laws. The
Pennsylvania Health Care Cost Containment Council (PHC4)
reviews proposed mandated health benefits when requested by
the Secretary of Health or appropriate committee chairs in the
Pennsylvania Legislature. According to public reports on
PHC4's web site, it analyzed the following fourteen
legislative proposals:
SB 779 - Prostate Specific Antigen Test
SB 1291 - Dental Anesthesia
HB 854 - Low Protein Modified Food Products
HB 1832 - Temporomandibular Joint Dysfunction
SB 1094 - Contraception Drugs and Devices
HB 656 - Diabetes and Hearing Aids
HB 1873 - Hepatitis B Immunization
SB 39 - Cancer Prevention and Early Detection
SB 499 - Home Health Care
SB 590 - Acupuncture Reimbursement
SB 938 - Universal Newborn Hearing Screening
SB 1057 - Osteoporosis
SB 1183 - Infertility Diagnosis Treatment
SB 1198 - Cancer Clinical Trials
3)SUPPORT . The California Association of Health Plans (CAHP)
writes in support that it believes the creation of the CHCCR
is critical in California as the economic circumstances now
confronting purchasers in California make it necessary and
appropriate. CAHP states that the increasing number of
mandated benefit bills, in addition to the mandates already
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contained in existing law, coupled with an increase in health
insurance premiums due to medical care inflation and the
strengthened bargaining position of providers, threatens the
ability of individuals and employers to purchase health
insurance. CAHP writes the CHCCR would be an independent body
to review and make recommendations on proposed benefit
mandates, and that other states' review bodies have provided
systematic and independent reviews that have better informed
the policy debates on the costs and benefits of proposed
benefit mandates.
4)DATA ON HEALTH INSURANCE IN CALIFORNIA . The California
Employer Health Benefits Survey (CEHBS) is a joint product of
the Kaiser Family Foundation and the Health Research and
Educational Trust. Findings in the 2001 survey (below) are
based on a random sample of 846 interviews with employee
health benefit managers in private firms in California. Also
included in the last row is data on the CalPERS Health
Benefits Program on Basic Plan premium increases for HMOs.
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--------------------------------------------------------------
| | 1999 | 2000 | 2001 |
|--------------------------------------+--------+-------+------|
|% of California Businesses Offering | 48% | 60% | 66% |
|HI* | | | |
|--------------------------------------+--------+-------+------|
|HI Premium Increases From Previous | 4.8% | 6.0% | 9.9% |
|Year in California | | | |
|--------------------------------------+--------+-------+------|
|Change in the Consumer Price Index in | 3.5% | 2.8% | 4.3% |
|California** | | | |
|--------------------------------------+--------+-------+------|
|Average Monthly Premium for | | | |
|Employer-Sponsored HI | $171 | $192 |$197 |
|by Plan Type-Single | | | |
|--------------------------------------+--------+-------+------|
|Average Monthly Worker Contribution | $ | $ | |
|for HI - Single | 21 | 20 |$ 21 |
|--------------------------------------+--------+-------+------|
|Average Monthly Employer Contribution | $150 | $172 |$176 |
|for HI - Single | | | |
|--------------------------------------+--------+-------+------|
|Average Monthly Premium for | | | |
|Employer-Sponsored HI | $458 | $492 |$521 |
|by Plan Type - Family | | | |
|--------------------------------------+--------+-------+------|
|Average Monthly Worker Contribution | $117 | $113 |$114 |
|for HI - Family | | | |
|--------------------------------------+--------+-------+------|
|Average Monthly Employer Contribution | $341 | $379 |$407 |
|for HI - Family | | | |
|--------------------------------------+--------+-------+------|
|CalPERS Health Benefits Program Basic | 7.3% | 9.7% |9.2% |
|Plan Premium | | | |
|Increases - HMOs | | | |
--------------------------------------------------------------
* HI = Health Insurance as of May-August of the particular
year.
** Calculated on an annual basis from April to April of each
year.
5)QUESTIONS AND COMMENTS .
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a) This bill requires CHCCR to annually report its findings
to the fiscal committees of the Legislature and the
Department of Finance. How timely should the analyses
prepared by CHCCR be available to the Legislature when it
is considering legislation affecting health care service
plans? Should it be provided to the policy committees, in
addition to the fiscal committees? Should it be available
prior to consideration of the proposed legislation in a
legislative policy committee? Will the analyses be
published with the CHCCR's findings and a proposed
recommendation to the Legislature?
b) This bill requires CHCCR to study and analyze the
potential cost or savings resulting from any proposed
legislation that affects the operation of a health care
service plan. What should be the scope of CHCCR's review
of legislation? Should it be limited to benefit mandates
or should it examine all legislation affecting health care
service plans? Should it also examine legislation
affecting health insurers regulated by DOI?
c) Should the CHCCR also analyze whether services required
under legislative proposals are considered medically
necessary, in addition to the criteria contained in this
bill related to cost? Should CHCCR's analysis include
information from clinical studies, cost estimates from
health plan actuaries, information on existing coverage for
the benefit under consideration, and a demographic analyses
of the population affected?
d) This bill is silent on how CHCCR would be funded. How
should CHCCR be funded? Should it be contingent on receipt
of private funding? The state's General Fund? Through
health plan assessments?
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e) Under this bill, the five members of the CHCCR are
appointed by the Governor and the Legislature for two year
terms, but the background and expertise of the appointments
are not specified in the bill. Should the membership of
the CHCCR be required to have expertise or knowledge in
certain areas? For example, should the CHCCR include a
clinician, an actuary, a health care economist, a consumer
representative, a representative from the employer
community who purchases health benefits, and a
representative from labor?
f) Should the statute provide a broader outline of the
scope of duties of CHCCR, the authority of CHCCR and how
frequently CHLLR will meet?
REGISTERED SUPPORT / OPPOSITION :
Support
California Association of Health Plans
Opposition
None on file.
Analysis Prepared by : Scott Bain / HEALTH / (916) 319-2097