BILL ANALYSIS
SENATE COMMITTEE ON BANKING, FINANCE,
AND INSURANCE
Senator Jackie Speier, Chair
AB 1586 Koretz Hearing Date: June 15, 2005
As proposed to be amended
Fiscal: No
Urgency: No
VOTES:Asm. Health (5/03/05): 8-0/ Pass
Asm. Floor (5/16/05): 41-27/ Pass
SUMMARY
Would prohibit life and disability insurers from failing to
offer policies because of an applicant's sex, as specified, and
would apply this definition to the existing prohibition on sex
discrimination by health plans
DIGEST
Existing law
1. Provides for the regulation of health plans by the
Department of Managed Health Care (DMHC) and for the
regulation of life and disability insurers by the Department
of Insurance (DOI);
2. Prohibits a health plan from refusing to enter into a
contract, canceling a contract, or refusing to renew or
reinstate a contract because of the contracting party's
race, color, national origin, ancestry, religion, sex,
marital status, sexual orientation, or age;
3. Prohibits a health plan from modifying a contract or
subjecting the benefits or coverage of any contract to
limitations, exceptions, exclusions, reductions, copayments,
coinsurance, deductibles, reservations, or premium, price or
charge differentials or other modifications because of the
race, color, national origin, ancestry, religion, sex,
marital status, sexual orientation, or age of any
contracting party;
AB 1586 (Koretz), Page 2
4. Specifically allows a health plan to set premium, price, or
charge differentials because of the sex or age or any
individual when based on objective, valid, and up-to-date
statistical and actuarial data;
AB 1586 (Koretz), Page 3
5. Prohibits a life or disability insurer from failing or
refusing to accept or issue an application for insurance,
and from issuing or canceling insurance, for reasons that do
not equally apply to individuals of every race, color,
religion, national origin, ancestry, or sexual orientation;
6. Defines, in sections of the Penal Code, the Government Code
, and the Education Code "gender" as sex, including a
person's gender identity and gender related appearance and
behavior whether or not stereotypically associated with the
person's assigned sex at birth.
This bill
1. Would, for the purposes of the law that already prohibits
health plans ' discrimination based on sex, define "sex" as
"a person's gender identity and gender related appearance
and behavior whether or not stereotypically associated with
the person's assigned sex at birth."
2. Would add "sex" as defined above as a criteria upon
which life and disability insurers would be prohibited from
basing decisions regarding the issuance, offer, or
cancellation of a policy.
COMMENTS
1. Purpose of the bill . To prohibit health plans and life and
disability insurers from denying insurance coverage -
including coverage for specific services - solely because
the insured is a transgender individual.
2. Background . Over the past several years, the state has
passed a number of laws that add "gender" to lists of
criteria that cannot be used to discriminate among people in
employment and housing, hate crime, and other contexts. The
definition of "gender" used in these laws includes "gender
identity and gender related appearance and behavior whether
or not stereotypically associated with the person's assigned
sex at birth." People whose gender identity does not
correspond to their sex assigned at birth can be described
as "transgender," and so these laws are commonly thought of
as specifically protecting transgender individuals from
discrimination.
Generally speaking, this bill would prohibit health plans
AB 1586 (Koretz), Page 4
and life and disability insurers from basing coverage
decisions solely on the fact that an applicant is
transgender.
Health plans (i.e., HMOs) are currently prohibited from
refusing to issue a contract because of the race, color,
national origin, ancestry, religion, sex, marital status,
sexual orientation, or age of a contracting party. In
addition, plans cannot modify the terms of a contract or
subject its benefits to any limits or prices because a
contracting party belongs to any of these classes. However,
health plans can use sex and age as criteria for premium,
price, or charge differentials as long as they correspond to
objective and valid actuarial data.
Life and disability insurers - like health plans - are
currently prohibited from discriminating among applicants
based on certain criteria, but - unlike health plans - "sex"
is not one of these prohibited criteria for life and
disability insurers. Similarly, "sex" is not one of the
criteria that insurers are prohibited from using in pricing
their policies.
This bill would add "sex" as a prohibited criteria for life
and disability insurers' coverage decisions, aligning it
with the law applying to health plans. However, the bill
would not add "sex" as a prohibited criteria for higher
rates, premiums, or charges (i.e., it would appear to allow
life and disability insurers to use sex as a risk factor in
pricing policies.)
Second, the bill would define "sex" in both laws to include
a person's transgender identity.
3. Support . According to the author, this bill is necessary to
prevent health plans and insurers from discriminating
against transgender people in the following 2 ways:
First, the author states that health plans and insurers
decline to enroll applicants solely because of their
transgender status. According to the author, this is
particularly a problem in the individual health insurance
market.
In support of this contention, the author presents two
denial-of-enrollment letters from two different health
AB 1586 (Koretz), Page 5
plans. In one letter, the health plan writes, "The
information we received indicates you are taking Estradiol
to change your gender and have elevated triglycerides. We
regret we are unable to approve coverage for applicants who
have these conditions."
In the second letter, the health plan lists the following
reason for denial: "Gender identity disorder of adolescent
or ADU treated with testosterone." According to the author,
this second health plan contract excluded coverage for any
treatment related to gender identity disorder, including
hormones; because the coverage for testosterone was already
excluded (and the plan would not have incurred a cost
because of it), the author contends that the true reason for
such a denial is discrimination against transgender
individuals rather than medical underwriting based on valid
actuarial data.
According to the author, the second way that health plans
and insurers discriminate against transgender individuals is
by denying coverage for medically necessary services.
According to the author, this problem occurs because while
transgender enrollees may identify themselves as a certain
sex, they may still need medical services typically given to
members of the opposite sex only. For example, a
transgender individual identifying himself as a man may
still need gynecological services. A health plan that
automatically denies coverage of gynecological services for
men as inappropriate could then deny appropriate and
medically necessary services for transgender enrollees. The
author refers to this problem as a lack of coverage for
"gender incongruent procedures."
4. Opposition . Opponents state that this bill is vague and
overbroad and could have consequences beyond the stated
intent of the author.
First, opponents state that modifying the meaning of "sex"
in existing nondiscrimination provisions could be
interpreted by a court as a mandate of coverage for sex
reassignment surgery (genital altercation). Opponents
suggested language to specify that the bill would not
require coverage of this surgery, but the author has not
agreed to take this amendment.
Second, regarding the denial of coverage for services that
AB 1586 (Koretz), Page 6
do not appear to match the gender of the enrollee, opponents
state that such denials are part of automated processes that
health plans use to screen for mistakes and fraud in medical
treatment; opponents are concerned that this bill would
prevent their use of automatic "edits" based on sex.
Opponents suggested language to address this problem by
allowing medical providers - with patient permission - to
disclose to the health plan their patients' transgender
status and by requiring plans to base coverage decisions in
those instances on physical condition and medical history.
The author has not agreed to take this amendment. According
to the author, health plans could elect to implement such
procedures at their own discretion and do not need statutory
direction to do so.
Third, opponents state that they agree with the author that
denial of enrollment based solely on an applicant's
transgender status is not acceptable. However, opponents
believe that "health plans and insurers should be allowed to
review the application of an individual who happens to be
transgender in the same manner that an application from any
other person is reviewed, which includes consideration of
their health history as it may relate to future claims, and
to make coverage and premium decisions accordingly." The
author has not agreed that clarifying language on this point
is necessary: "The author does not agree that the proposed
language is necessary since the authority to review health
histories for the purpose of medical underwriting is well
established in code. Health plans and insurers want to
codify their current practice as it relates to gender
identity, and transgender advocates fear that the health
plans' proposed amendments would provide a legal basis for
discrimination that does not currently exist in law."
Fourth, the Association of California Life and Health
Insurance Companies (ACLHIC) notes that this bill as
proposed to be amended would affect the practices of all
life and disability insurers even though the author has
identified problems only in the health insurance market
(health insurance is a subset of disability insurance).
5. Questions .
a. Is this bill a mandate for any particular type of
medical care, despite language that does not
explicitly require a type of care?
AB 1586 (Koretz), Page 7
AB 1586 (Koretz), Page 8
6. Prior Legislation .
AB 1999 (Kuehl), Chapter 933, Statutes of 1998, defined
"gender" in the Penal Code as this bill proposes to do in
the Health and Safety and Insurance Codes.
AB 537 (Kuehl, et al), Chapter 587 Statutes of 1999, defined
"gender" in the Education Code as this bill proposes to do.
AB 196 (Leno), Chapter 164, Statutes of 2003, amended the
California Fair Employment and Housing Act (FEHA) to refer
to the definition of "gender" established in the Penal Code
under AB 1999.
POSITIONS
Support
39 individuals
Access Institute of Research
AFSCME
AIDS Legal Referral Project
Asian and Pacific Islander American Health Forum
Asian and Pacific Islander Wellness Center
Being Alive South Bay
Bienstar Human Services, Inc.
California Medical Association
California National Organization for Women
California Psychological Association
California State Commission on the Status of Women
California State Employees Association
Castro-Mission Health Center and Special Programs for Youth
Equality California (Sponsor)
Filipino Task Force on AIDS
First Congregational Church of Long Beach
Gay and Lesbian Adolescent Social Services, Inc.
Gay and Lesbian Community Services Center of Orange County
Gay and Lesbian Medical Association
Gay-Straight Alliance
Gender.org
Gray Panthers
Harvey Milk Lesbian, Gay, Bisexual, Transgender Democratic Club
Lambda Legal
Lambda Letters Project
Lavender Youth Recreation and Information Center
Metropolitan Community Church Los Angeles
AB 1586 (Koretz), Page 9
Ministry In Action Commission, St. Mark's United Methodist
Church of Sacramento
National Center for Lesbian Rights
Orange County Transgender Coalition
Parents, Families and Friends of Lesbians and Gays
Parents, Families and Friends of Lesbians and Gays - Central
Coast Chapter
Planned Parenthood Affiliates of California
San Francisco Democratic Party
San Francisco Labor Council, AFL-CIO
San Francisco Lesbian, Gay, Bisexual, Transgender Community
Center
San Francisco Lesbian, Gay, Bisexual, Transgender Pride
Celebration Committee, Inc.
Southern California Nevada Conference - United Church of Christ
Stonewall Democratic Club of Greater Sacramento
STOP AIDS Progect
The Center - San Diego County
Transgender Law Center
Tri-City Health Center
UNITE HERE Local 11
Oppose
Association of California Life and Health Insurance Companies
California Association of Health Plans
Health Net
Kaiser Permanente
Traditional Values Coalition
Consultant: Soren Tjernell. 916-651-4102.