BILL ANALYSIS
SB 2
Page 1
PROPOSED CONFERENCE REPORT NO. 1 - September 9, 2003
SB 2 (Burton and Speier)
As Amended June 23, 2003
Majority vote
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|SENATE: |25-14|(June 4, 2003) |ASSEMBLY: |45-30|(July 7, 2003) |
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SENATE CONFERENCE VOTE : 2-1 ASSEMBLY CONFERENCE VOTE :2-1
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|Ayes:|Burton, Alpert |Ayes:|Frommer, Cohn |
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|Nays:|Aanestad |Nays:|Pacheco |
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Original Committee Reference: HEALTH
SUMMARY : Enacts the Health Insurance Act of 2003 to provide
health coverage to specified individuals (and in some cases
their dependents) who do not receive job-based coverage and who
work for large and medium employers, as defined. Imposes a fee
on employers, as specified, and makes available a credit against
that fee for employers who provide coverage. Specifically, the
conference committee amendments delete this bill's provisions,
and instead:
1)Create the State Health Purchasing Program (Program) to be
managed by the Managed Risk Medical Insurance Board (MRMIB)
and require MRMIB to arrange for coverage of enrollees and
dependents, if applicable, by establishing a purchasing pool.
2)Define "enrollee" as a person who works at least 100 hours per
month for any individual employer and has worked for that
employer for three months. Define "dependent" as the spouse,
domestic partner, minor child of a covered enrollee, or adult
child who is dependent on the enrollee, as specified by MRMIB.
Exclude from the definition of "dependent" a dependent who is
provided coverage by another employer or who is an eligible
enrollee as a consequence of that dependent's employment
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status.
3)Require large employers (those with 200 or more employees) and
medium employers (those with 20 to 199 employees) to pay a fee
to the Employment Development Department (EDD) in an amount
determined by MRMIB to be necessary to pay for health care for
all enrollees and, if applicable, their dependents. Require
the fee paid by a large employer to be based on the number of
enrollees and dependents and require the fee paid by a medium
employer to be based on the number of enrollees.
4)Apply to large employers on January 1, 2006, and to medium
employers on January 1, 2007, with an exemption for medium
employers with 20 to 49 employees unless a tax credit,
applicable to those employers and in the amount of 20% of the
net employer cost of the fee, is enacted.
5)Create the State Health Purchasing Fund with a continuous
appropriation to MRMIB and authorize MRMIB to expend from the
Fund employer fees and enrollee contributions. Require MRMIB
to negotiate contracts with health care service plans (health
plans) and health insurers (insurers). Require MRMIB to
administer the Program in a manner that assures that the fees
collected pursuant to this bill are sufficient to fund the
Program. Grant MRMIB emergency regulatory authority, as
specified.
6)Require EDD to waive the fee of an employer that provides
proof of coverage for eligible enrollees, and their
dependents, if applicable. Require proof of coverage to be
demonstrated by any of several means including coverage
meeting the minimum requirements for health care service plans
and group health insurance, as specified.
7)Prohibit coverage of an enrollee or dependent to be contingent
on payment of the fee by the employer of that enrollee.
Prohibit an employer from designating an employee as an
independent contractor or from reducing an employee's hours
for the purpose of avoiding its obligations under this bill.
Provide for a penalty of 200% of any amount that should have
been paid in the case of a non-complying employer.
8)Provide for an enrollee contribution of up to 20% of the fee
and cap the contribution from low wage workers at 5% of wages,
as specified.
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9)Require MRMIB to establish required deductibles, copayments,
and coinsurance, including total annual out-of-pocket costs,
applicable to coverage provided under the Program.
10) Require MRMIB to contract only with insurers and health
plans that make reasonable efforts to contract with safety net
providers, as specified.
11)Require MRMIB to develop and utilize appropriate cost
containment measures to maximize the cost-effectiveness of
health care coverage offered under the Program.
12)Prohibit employers from seeking to obtain information
concerning income or other eligibility requirements for public
programs regarding an employee or family member, except for
information otherwise known to the employer regarding the
employee's employment status. Prohibit MRMIB from requiring
employers to obtain such information.
13)Require that enrollees, who receive coverage through the
Program and are qualified for Medi-Cal or Healthy Families
(HFP) and who choose to provide information to Medi-Cal and
HFP, be enrolled in Medi-Cal or HFP, if deemed eligible, and
be charged premiums, copays, deductibles, and coinsurance in
accordance with the requirements of Medi-Cal and HFP. Grant
MRMIB the authority to make any necessary repayments of
enrollee contributions to persons whose coverage is provided
under this provision and to delegate to the Department of
Health Services (DHS) the authority to repay such
contributions.
14)Prohibit this bill from being construed to diminish or
otherwise change existing protections in law for persons
eligible for public programs, as specified. Require MRMIB to
consult with organizations representing the interests of
enrollees, particularly those who may be covered by public
programs
15)Extend existing small group market reforms, which currently
apply to employers with two to 50 employees, to all medium
employers covered by this act, effective January 1, 2006,
except as specified.
16)Prohibit a health care service plan or a health insurer from
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offering, delivering or selling a contract or policy to an
employer covered by the provisions of this bill unless the
contract or policy meets the following requirements:
a) The employer is responsible for the cost of health care
coverage except as follows:
i) An employer may require a potential enrollee to pay
up to 20% of the cost of the coverage unless the wages of
the potential enrollee are less than 200% the federal
poverty level (FPL). For enrollees making a contribution
for family coverage and whose wages are less than 200% of
FPL for a family of three, the applicable enrollee
contribution is not permitted to exceed 5% of wages. For
enrollees making a contribution for individual coverage
and whose wages are less than 200% of FPL for an
individual, the applicable enrollee contribution shall
not exceed 5% of wages.
ii) A medium employer may require an enrollee to
contribute more than 20% of the cost of coverage if both
of the following apply:
(1) The coverage provided by the employer includes
coverage for dependents; and,
(2) The employer contributes an amount that
exceeds 80% of the cost of the coverage for an
individual employee.
iii) If an employer chooses to purchase more than one
means of coverage for potential enrollees and, if
applicable, dependents, the employer may require a higher
level of contribution from potential enrollees so long as
one means of coverage meets the standards in i) above;
and,
iv) An employer may purchase health care coverage that
includes additional out-of-pocket expenses, such as
copayments, coinsurance or deductibles. In reviewing
enrollee or subscriber share of premium, copayments,
deductibles and other out-of-pocket costs, the Department
of Managed Health Care and the Department of Insurance
are required to consider those permitted by MRMIB in
operating the Fund.
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b) The contract includes prescription drug coverage with
out-of-pocket costs for enrollees consistent with a) iv)
above.
17)Require all health plans and insurers that provide coverage
to employers under this bill to make reasonable efforts to
contract with safety net providers, as specified.
18)Prohibit insurers from selling specified supplemental or
other limited coverage health insurance policies to employers
providing coverage pursuant to this bill, except when sold as
a supplement to coverage that complies with this bill.
19)Require that MRMIB, to the maximum extent possible, ensure
that persons who are either covered or eligible for HFP will
retain the same amount, duration and scope of benefits that
they currently receive or are currently eligible to receive,
including dental, vision and mental health benefits. Require
MRMIB to consult stakeholders in implementing this
requirement.
20)Require MRMIB to develop an HFP premium assistance program as
permitted under federal law to reduce state costs and maximize
federal financial participation (FFP) by providing health care
coverage to eligible individuals through a combination of
available employer-based coverage and a wraparound benefit
that covers any gap between employer-based coverage and
benefits provided by HFP.
21)Require, if federal approval of a premium assistance program
cannot be obtained, that MRMIB in consultation with
stakeholders explore alternatives so that individuals eligible
for HFP will retain the same benefits that they currently
receive including vision, dental and mental health benefits.
22)Require employers to provide information to all newly hired
and existing employees regarding the availability of Medi-Cal
coverage for low- and moderate-income employees, including the
availability of Medi-Cal premium assistance as well as
Medi-Cal coverage for persons receiving coverage through the
Fund. Require EDD, in consultation with DHS and MRMIB, to
develop a simple, uniform notice containing such information.
23)Require DHS to implement a Medi-Cal premium assistance
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program to reduce state costs and maximize allowable FFP by
paying the premium for employer-based health care coverage
available to persons who are eligible for Medi-Cal, providing
a wraparound benefit in combination with employer-based health
care coverage that covers any gap between the employer-based
health care coverage and the benefits provided by Medi-Cal.
Require DHS to seek all state plan amendments and federal
approvals as necessary to maximize the amount of any FFP
available.
24)Require DHS, six months prior to implementation of the
Program, to notify Medi-Cal enrollees of its implementation,
the categories of enrollees covered, the requirements of the
Program, the availability of Medi-Cal coverage for those
persons, including the availability of a premium assistance
program for those persons eligible for Medi-Cal who are also
covered by employer-based coverage. Require, three months
prior to the implementation of each phase of the Program, that
those enrollees who are Medi-Cal beneficiaries be offered the
opportunity to enroll in a Medi-Cal premium assistance
program.
25)Require DHS to convene a stakeholder group to develop a plan
to accomplish the following objectives:
a) Provide that enrollees and dependents who receive
coverage consistent with this bill and who are enrolled in
Medi-Cal retain the same benefits and do not incur greater
cost-sharing that those beneficiaries currently are
entitled to;
b) Maximize continuity of care for enrollees and, if
applicable, dependents who receive coverage consistent with
this bill and who are enrolled in Medi-Cal; and,
c) Streamline and simplify requirements for Medi-Cal
beneficiaries for whom Medi-Cal coverage is secondary.
26)Impose specified reporting obligations on DHS related to
Medi-Cal utilization.
27)Exempt MRMIB from disclosure under the Public Records Act for
specified activities and records related to administration of
this bill.
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28)Make provisions of this act severable with specified
exceptions. Specify methods for an employer to qualify for a
credit for amounts spent for providing health care benefits if
provisions of this bill related to proof of coverage are held
invalid.
29)Take effect only if AB 1528 (Cohn) takes effect.
AS PASSED BY THE SENATE , this bill declared the intent of the
Legislature to ensure health care coverage for working
Californians and their families.
The Assembly amendments were technical.
EXISTING LAW :
1)Establishes the Medi-Cal program, administered by DHS which
provides comprehensive health benefits to low-income children,
their parents or caretaker relatives, pregnant women, elderly,
blind or disabled persons, nursing home residents and refugees
who meet specified eligibility criteria.
2)Establishes MRMIB, which administers the Major Risk Medical
Insurance Program (MRMIP), HFP, and Access for Infants and
Mothers (AIM).
3)Establishes MRMIP, which is a health insurance purchasing pool
for persons who are unable to secure adequate private health
care coverage.
4)Establishes HFP, which provides affordable health, vision and
dental benefits to uninsured legal immigrant and citizen
children from birth to age 19 who do not qualify for
no-share-of-cost Medi-Cal and have family incomes at or below
250% of FPL. Authorizes expansion of HFP to parents with
family incomes up to 200% FPL.
5)Establishes AIM to provide low-cost health care coverage for
pregnant women and their newborns.
FISCAL EFFECT : According to information provided by the
Assembly Appropriations Committee staff:
1)Indeterminate but potentially major savings, in the hundreds
of millions of dollars annually, to state publicly funded
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health care programs such as Medi-Cal and the Healthy Families
Programs by shifting costs from state-funded health coverage
to employer-sponsored coverage.
2)Indeterminate increased administrative costs to DHS, EDD and
MRMIB to administer the provisions of this bill. DHS and EDD
have not provided an estimate of their costs but those costs
are likely to be in excess of $5 million, and MRMIB's
preliminary estimate of costs is approximately $4.8 million,
to be funded through the fee paid by employers purchasing
coverage from the pool.
COMMENTS : According to the UCLA Center for Health Policy
Research, over six million children and nonelderly adults in
California were uninsured for all or part of the year in 2001.
Although 79% of Californians were insured all year, one in five
(21%) lacked coverage for some or all of the year. Of the 6.3
million Californians who lacked insurance, over 1.3 million were
children. Over half the uninsured, 52.6%, or 3.3 million people
were uninsured for more than a year. There are substantial
disparities in coverage stability across ethnic and racial
groups. About 86% of whites and African Americans were insured
all year in 2001 compared with lower proportions for Asian
Americans and for American Indians and Alaska Natives. Latinos
are the least likely to be insured all year (64.1%) and the most
likely to be uninsured all year (22.8%). Coverage stability
varies even more by family income. Among nonelderly persons with
family incomes of at least 300% FPL, 89.9% were insured all year
compared with just 61.3% of those below poverty. Just 3.7% of
those with incomes of 300% FPL or more were uninsured all year,
less than one-sixth the proportion (24.8%) of those below
poverty.
The state estimates that in the current year, 6.5 million
children and adults are enrolled in Medi-Cal and 669,000
children are enrolled in HFP. According to UCLA, in 2001, seven
in 10 children and one in five adults who were uninsured all
year were eligible for coverage under Medi-Cal or HFP. These
eligible but unenrolled individuals included over 470,000
children and nearly 360,000 adults.
Having coverage during the year is largely a result of access to
employer-sponsored health benefits. According to UCLA, among
adult employees who were insured all year, 74.0% both worked for
an employer who offered insurance, and accepted the health
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benefits. Another 12.0% were eligible but did not accept
coverage from their own employer, often of coverage through
another family member. In contrast, among adult employees who
were uninsured all year, 67.8% work for employers who offered no
health benefits; another 17.8% had employers who offered
coverage for which they were not eligible. Only 14.4% were
eligible but did not take-up the offer. The uninsured are
overwhelmingly low- and moderate-income working families and
individuals without access to affordable coverage through
employment. Based on data from the Current Population Survey,
more than eight in ten uninsured adults and children are in
working families, including half who are in a family with at
least one adult employed full-time, full-year.
Analysis Prepared by : John Gilman / HEALTH / (916) 319-2097
FN: 0004121