BILL ANALYSIS
SENATE HEALTH
COMMITTEE ANALYSIS
Senator Sheila J. Kuehl, Chair
BILL NO: AB 8
A
AUTHOR: N??ez
B
AMENDED: July 3, 2007
HEARING DATE: July 11, 2007
8
FISCAL: Appropriations
CONSULTANT:
Hansel/Park/Dunstan/Patterson/cjt
SUBJECT
Health care coverage: employers and employees
SUMMARY
Requires employers to spend 7.5 percent of S ocial S ecurity
wages on health care expenditures for full-time and
part-time workers and their dependents, or pay an
equivalent fee to a newly created California Health Trust
Fund (Fund). Creates the California Cooperative Health
Insurance Purchasing Program (Cal-CHIPP), a state
purchasing pool , to provide health coverage to employees of
employers who opt to pay into the Fund. Requires employees
whose employers opt to pay into the Fund to enroll in
Cal-CHIPP , unless they demonstrate coverage through other
means, as specified. Establishes Medi-Cal and Healthy
Families Program benchmark plans, and provides premium
assistance subsidies for specified employees. Expands
eligibility for Medi-Cal and Healthy Families coverage for
low-income children and parents. Establishes various
health cost containment measures and insurance market
reforms.
CHANGES TO EXISTING LAW
Employer requirements:
Existing law requires employers to pay unemployment
insurance (UI) taxes on the first $7,000 of wages per
Continued---
STAFF ANALYSIS OF ASSEMBLY BILL 8 (N??ez) Page
2
employee each year. Existing law also requires employers
to pay an annual employment training tax of 0.1 percent on
the first $7,000 of each employee's wages, and to withhold
state disability insurance contributions and personal
income taxes from each employee's wages. Tax payments and
employee withholdings are remitted to the Employment
Development Department (EDD) in varying frequencies
depending upon the size of the employer's payroll.
Public health insurance programs:
Existing federal law establishes the Medicaid program,
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. Existing federal law establishes the State
Children's Insurance Fund (SCHIP) which provides a fixed
allocation for each state that can be used to match state
expenditures for state health insurance programs. Existing
federal assistance programs, including Medicaid and SCHIP,
are limited to U.S. citizens and selected legal immigrants.
Existing federal law provides specific guidance for
determining eligibility for Medicaid and SCHIP while
preserving flexibility for states to administer these
programs according to state needs.
Existing federal law, the Deficit Reduction Act (DRA),
permits states to vary the benefit packages they offer to
some groups of Medicaid and SCHIP beneficiaries. Existing
federal law allows states, subject to federal approval, to
require most children and parents to enroll in "benchmark"
benefit packages that are not required to provide all the
benefits covered by states' existing Medicaid programs.
The DRA allows states flexibility to modify premiums,
copayments, and coverage in benchmark plans, with
exceptions for certain beneficiaries, as specified.
Existing state law establishes the Medi-Cal program,
California's Medicaid program, which is administered by the
Department of Health Services (DHCS).
Existing state law establishes the Healthy Families
program, which is administered by the Managed Risk Medical
Insurance Board (MRMIB) to provide low-cost insurance,
including health, dental, and vision coverage, to children
STAFF ANALYSIS OF ASSEMBLY BILL 8 (N??ez) Page
3
who do not have such coverage and do not qualify for no
cost, full scope Medi-Cal.
Existing state law requires MRMIB to expand Healthy
Families eligibility to uninsured parents and responsible
adults under a SCHIP waiver, provided that federal
financial participation is available and state funds have
been appropriated specifically for this purpose. Existing
state law also provides for state-only Medi-Cal and Healthy
Families programs, which are funded solely by the state and
which serve immigrants who are not eligible for federal
assistance programs.
Existing state law sets income eligibility for children in
Medi-Cal at 200 percent of the federal poverty level (FPL)
for infants to age one, 133 percent of the FPL for children
ages one through five, and at 100 percent of the FPL for
children ages six through nineteen.
Existing state law authorizes the County Health Initiative
Matching Fund, administered by MRMIB, to fund local health
coverage programs for children of families with incomes
between 250 and 300 percent of FPL by using local funds as
the state match to draw down SCHIP dollars.
Health insurance regulation
Existing law provides for the regulation of private health
care service plans by the Department of Managed Health Care
(DMHC), and health insurance policies by the California
Department of Insurance (DOI). Existing law requires all
health care service plans licensed by the DMHC to provide
basic health care services.
Small employer protections
Existing law requires health care service plans and health
insurers to fairly and affirmatively offer, market, and
sell all of the plan's or insurer's health care plans that
are sold to small employers, defined as an employer having
between 2 and 50 eligible employees, with certain
exceptions. Existing law requires all health care service
plan contracts, and health insurance plans offered to small
employers, to be renewable by all eligible employees or
dependents except for specified reasons.
Existing law restricts permissible risk categories for
STAFF ANALYSIS OF ASSEMBLY BILL 8 (N??ez) Page
4
small employer plans to age, geographic region and family
size, as specified. Existing law requires an eligible
employee's premium to be determined based on the rate
applicable to the employee's risk category, plus an
adjustment factor of not more than, and not less than, ten
percent.
Medical loss ratios
Existing law prohibits health care service plans from
expending excessive amounts of the payments they receive
for providing services on administrative costs, as defined.
Existing regulations further provide that the definition
of administrative costs shall take into consideration such
factors as the plan's stage of development, and if
administrative costs exceed 15 percent for an established
plan, or 25 percent for a plan in a development phase, the
plan may be required to justify its administrative costs
and/or show that it is taking effective action to reduce
administrative costs.
Existing law requires the Commissioner to withdraw approval
of an individual or mass-marketed policy of disability
insurance if the Commissioner finds that the benefits
provided under the policy are unreasonable in relation to
the premium charged. Existing regulations define a
standard of "reasonableness" for the ratio of medical
benefits to the premium charged for individual health
insurance, and sets this ratio at 70 percent, as of July 1,
2007.
Medical underwriting and preexisting condition exclusions
Existing law requires all applications for individual
health coverage, issued by health care service plans and
insurers, that include health-related questions, to base
those questions on medical information that is reasonable
and necessary for medical underwriting purposes.
Existing law requires all full-service health care service
plans and health insurance policies in the individual
market to have written policies, procedures, or
underwriting guidelines establishing the criteria and
process under which the plan makes its decision to provide
or to deny coverage to individuals applying for coverage
and sets the rate for that coverage. Existing law requires
health care service plans and health insurers to file with
STAFF ANALYSIS OF ASSEMBLY BILL 8 (N??ez) Page
5
the appropriate regulatory authority a general description
of those criteria, policies, procedures, or guidelines.
Existing law requires health care service plans and health
insurers that offer coverage to individuals to limit
preexisting condition exclusions (where coverage for a
certain medical condition is excluded) to no longer than 12
months, and requires health care service plans and health
insurers to credit the time during which a person had
individual coverage from another plan or insurer towards
that preexisting condition exclusion, provided that no more
than 62 days elapse between the time of termination of
prior coverage and the time when eligibility for new
coverage begins. Existing law allows health care service
plans and health insurers that do not invoke preexisting
condition exclusions to impose a waiting period of up to 60
days. Existing law prohibits the application of
preexisting condition exclusions to certain individuals and
conditions.
Guaranteed issue and renewability in the individual market
Existing federal and state laws require health care service
plans and health insurers in the individual market to issue
coverage to "federally eligible defined individuals,"
defined as a person who has had 18 months of prior group
coverage, is not eligible for coverage under a group health
plan, Medicare, or Medi-Cal, was not terminated from his or
her most recent coverage for nonpayment of premiums or
fraud, and who has exhausted any COBRA or Cal-COBRA
benefits. Existing federal and state laws allow
individuals to retain group health coverage for a period of
time when experiencing a qualifying event, as defined.
Existing law also requires health care service plans and
health insurers to allow employees or members whose group
coverage was terminated by the employer to convert to
non-group or conversion coverage.
Existing law requires all individual benefit plans to be
renewable by all eligible individuals or dependents except
for nonpayment of premiums, as well as fraud or intentional
misrepresentation, among other reasons.
This bill:
Employer pay-or-play option
The bill would, by January 1, 2010, require each employer,
STAFF ANALYSIS OF ASSEMBLY BILL 8 (N??ez) Page
6
as defined, to spend 7.5 percent of Social Security wages
on health care expenditures for full-time and part-time
employees, as specified, and, if applicable, their
dependents, or pay a fee in an equivalent amount to the
Fund. The bill would define employer health care
expenditures as any amount paid by an employer to, or on
behalf of, its employees and their dependents, if
applicable, to provide health care or health-related
services or to reimburse the costs of those services,
including, but not limited to, contributions to Health
Savings Accounts (HSAs), specified unreimbursed employee
health care costs, healthy lifestyle programs, on-site
health fairs and clinics, financial incentives to
participate in health screens or other wellness activities,
disease management programs, purchasing health care
coverage, and care provided by health care providers
employed by, or under contract to, the employer.
The bill would allow MRMIB to adjust the employer health
care expenditure amounts and would require MRMIB to prepare
a statement by October 31 of each year establishing the
rate for the following year.
The bill would require employees of employers electing to
pay fees to a newly created California Health Trust Fund to
enroll in a health plan offered through Cal-CHIPP.
Employees that have individual coverage that is in effect
on January 1, 2010, or other coverage under a public
program or other group coverage, would be exempt from this
requirement. Employers would be required to advise all
employees of the requirement to participate in a health
plan offered by Cal-CHIPP, and to give employees the choice
of declining coverage offered through Cal-CHIPP if the
employee certifies they have other health coverage. The
employer would also be required to advise employees of the
right to apply to MRMIB to determine eligibility for a
subsidy if the employee's family income is at or below 300
percent of the FPL.
The bill would require employers to notify EDD within
specified timelines, of their election to pay fees to
Cal-CHIPP or to make the specified health care
expenditures. The election of a participating employer to
pay a fee in lieu of making expenditures would be locked in
for at least two calendar years. Employers, who opt to
STAFF ANALYSIS OF ASSEMBLY BILL 8 (N??ez) Page
7
make health care expenditures in lieu of paying a fee to
the pool, would not be able to rejoin the pool for a
minimum of two years. The bill would require employers to
remit employer fees to EDD to be deposited into the Fund.
The bill would require EDD to provide MRMIB with
identifying information for employees eligible for
Cal-CHIPP for whom an employer has elected to pay a health
care fee.
The bill would require all employers to adopt and maintain
a cafeteria plan to allow employees to pay for health
insurance premiums on a pre-tax basis.
California Cooperative Health Insurance Purchasing Program
(Cal-CHIPP)
The bill would require MRMIB to establish and administer a
health coverage purchasing program referred to as
Cal-CHIPP. The bill would give MRMIB broad authority to
administer Cal-CHIPP, including to determine eligibility
and enrollment criteria, determine participation
requirements for enrollees, develop standards for coverage
and negotiate rates for coverage, determine premium
schedules and administer subsidies to low-income employees,
and maintain enrollment and expenditures to ensure that
expenditures do not exceed the amount of revenue available
to the Fund.
The bill would provide that in order to be eligible to
enroll in Cal-CHIPP, an individual must be an employee, or
a dependent of an employee, of an employer who has elected
to pay fees to the Fund. The bill would also provide that
eligible employees and their dependents receiving coverage
through a Medi-Cal or Healthy Families benchmark plan are
eligible for a benchmark plan or policy under Cal-CHIPP.
The bill would require that Cal-CHIPP enrollees have a
choice of health plans that provide comprehensive health
care coverage that meet Knox-Keene standards and also
provide prescription drug benefits. MRMIB would be
required to develop and offer at least three uniform
benefit plan designs to Cal-CHIPP enrollees, which include
varying benefit levels, deductibles, co-payments, and
annual limits on out-of-pocket expenses. The bill would
also require one of the benefit designs to be a Healthy
Families benchmark plan, and another to be a Medi-Cal
benchmark plan. All of the benefit plan designs would be
STAFF ANALYSIS OF ASSEMBLY BILL 8 (N??ez) Page
8
required to include enrollee cost-sharing levels that
promote prevention and health maintenance such as physician
office visits, diagnostic laboratory tests, and medications
to manage chronic disease.
The bill would authorize MRMIB to provide subsidies for
eligible enrollees with household incomes at or below 300
percent of the FPL. The bill would prohibit premiums paid
by enrollees with household incomes at or below 300 percent
of the FPL from exceeding 0 to 5 percent of household
income, depending on income, after taking into account tax
savings realized by the enrollee through a cafeteria plan.
The bill would also authorize MRMIB to adjust premiums to
ensure that revenue in the Fund derived from employee
contributions is sufficient to pay for the cost of coverage
provided through Cal-CHIPP.
In determining deductibles and co-payments, the bill would
require MRMIB to consider whether the costs would deter an
enrollee or dependents from obtaining appropriate and
timely care, and their impact on an enrollee's ability to
afford health care services. The bill would require MRMIB
to require plans offered by Cal-CHIPP to use efficient
practices to improve and control costs, including
preventive care, standardized billing practices, promotion
of health information technology, and care management for
chronic disease. The bill would require MRMIB to negotiate
with Medi-Cal managed care plans to obtain affordable
coverage for eligible employees, to implement the
requirements for a benchmark plan or policy, and to
maximize federal funds for Cal-CHIPP.
The bill would require MRMIB to provide information on plan
quality and cost effectiveness to Cal-CHIPP enrollees, and
to annually publish and disseminate to all employers,
information regarding health plan choices available in
Cal-CHIPP. Additionally, MRMIB would be required to
establish a working group to develop recommendations to the
Legislature, by January 1, 2009, on broadening access to
Cal-CHIPP by self-employed individuals.
The bill would provide MRMIB permanent emergency regulatory
authority to issue rules and regulations relating to the
administration of Cal-CHIPP.
STAFF ANALYSIS OF ASSEMBLY BILL 8 (N??ez) Page
9
Insurance market reforms
Individual insurance market reforms
This bill would require, effective July 1, 2008, every
full-service health care service plan or insurer that
offers, markets, and sells health plan contracts or health
insurance in the individual market, and conducts medical
underwriting, to use a standardized health questionnaire
developed by MRMIB. This bill would prohibit a health care
service plan and a health insurer from excluding a
potential enrollee or insured on the basis of an actual or
expected health condition, type of illness, treatment,
medical condition, or accident, or for a preexisting
condition, except as provided by MRMIB in the paragraph
below.
This bill would require MRMIB to establish a list of
serious health conditions or diagnoses making an applicant
automatically eligible for Major Risk Medical Insurance
Program (MRMIP), and consult with the DMHC Director and
Insurance Commissioner to identify common health plan and
insurer underwriting criteria. The bill would require
MRMIB to develop a standardized health questionnaire that
provides for objective evaluation of a person's health
status by assigning a discrete measure, such as a system of
point scoring, to each person, and is designed to identify
the three to five percent of persons who are the most
expensive to treat if covered under an individual plan or
policy. The bill would require MRMIB to obtain
certification from an actuary that the questionnaire is
designed to identify the three to five percent of persons
referenced above. The bill would require the questionnaire
to be designed to collect only the information necessary to
identify if a person is eligible for MRMIP.
This bill would prohibit a health care service plan and
health insurer that is also participating in Cal-CHIPP from
charging a standard rate, with reference to subscribers of
any age, family size, and geographical region, that is less
than the plan or insurer's rate for the same benefit plan
design sold through Cal-CHIPP.
This bill would require every full-service health plan and
health insurer to offer, market, and sell all of the
uniform benefit plan designs made available through
Cal-CHIPP to purchasers in each region and in all
STAFF ANALYSIS OF ASSEMBLY BILL 8 (N??ez) Page
10
individual and group markets where the plan or insurer
offers, markets and sells health plan contracts or health
insurance policies.
Mid-market reforms
This bill would, effective July 1, 2008, apply existing
requirements relating to the offering, marketing, and
selling of health care service plan contracts and insurer
health benefit plans to small employers (2-50 eligible
employees) including guaranteed renewal, use of risk
adjustment factors, and other requirements, to all plan
contracts and benefit plans offered to employers with 250
or fewer eligible employees. The bill would allow a health
care service plan or health insurer to develop health care
coverage benefit plan designs to fairly and affirmatively
market only to medium employer groups of 51-250 eligible
employees. The bill would prohibit the use of a risk
adjustment factor in a plan contract or policy offered to
employers with 250 or fewer eligible employees beginning
three months after MRMIB notifies DMHC and DOI that
enrollment in Cal-CHIPP will commence. The bill would
require health plans and health insurers to comply with
this requirement on or before Cal-CHIPP enrollment
commences.
Healthy Families and Medi-Cal benchmark plans
This bill would require every group health care service
plan or health insurer offering a contract or policy that
is issued, amended, or renewed on or after July 1, 2008, to
collect premium contribution amounts made by a contracted
employer or group policyholder or subscriber for each
enrolled group member and dependent, as specified.
The bill would require every health care service plan or
health insurer offering a group health plan contract or
policy that is issued, amended, or renewed on or after July
1, 2008, to provide, as one coverage option of each group
contract or policy, a Healthy Families benchmark plan and a
Medi-Cal benchmark plan so that employees eligible for
Healthy Families or Medi-Cal may enroll in one of those
benchmark plans. The bill would require Healthy Families
and Medi-Cal benchmark plans to be provided at a rate
negotiated with, and approved by, MRMIB, and would require
health care service plans and health insurers to collect
the employer's applicable premium contribution for
STAFF ANALYSIS OF ASSEMBLY BILL 8 (N??ez) Page
11
employees, and if applicable, their dependents, and credit
that amount toward the cost of that benchmark plan. For
employees, and, if applicable, dependents, who have elected
to enroll in a Healthy Families or Medi-Cal benchmark plan,
the bill would allow a health care service plan or health
insurer, in lieu of offering these benchmark plans, to
transmit the employer's applicable premium contribution to
MRMIB to count toward the premium cost of a Healthy
Families or Medi-Cal benchmark plan in Cal-CHIPP. The bill
would require health plans and insurers to include, in its
evidence of coverage, notice of the ability of employees
and dependents with family incomes at or below 300 percent
of the FPL to enroll in Medi-Cal or Healthy Families
coverage through the benchmark plan, with instructions on
how to apply for coverage. This bill would exempt Medicare
supplement, vision-only, dental-only, CHAMPUS supplement,
hospital-indemnity, hospital-only, accident-only, and
specified disease insurance, and would allow DMHC and DOI,
in consultation with MRMIB, to issue emergency regulations
until January 1, 2014, to implement these provisions.
Individual insurance market reforms - structured market
The bill would require the DMHC Director and Commissioner,
by January 1, 2010, to jointly adopt regulations governing
five classes of individual health benefit plans that each
health care service plan and health insurer participating
in the individual market would be required to offer. The
bill would require the Director and Commissioner, within 90
days of the adoption of regulations, to jointly approve
five classes of individual health benefit plans for each
health care service plan and health insurer participating
in the individual market, with each class having an
increased level of benefits beginning with the lowest
class. Within each class, the Director and Commissioner
would be required to jointly approve one baseline HMO and
one baseline PPO product. The bill would require that the
classes of benefits reflect a reasonable continuum between
the class with the lowest level of benefits and the class
with the highest level of benefits and permit reasonable
benefit variation that will allow for a diverse market
within each class. The bill would require the classes of
benefits to be enforced consistently between health plans
and health insurers in the same marketplace regardless of
licensure.
STAFF ANALYSIS OF ASSEMBLY BILL 8 (N??ez) Page
12
The bill would require the Director and Commissioner, in
approving the five classes of plans, jointly to: 1)
determine that the plans provide reasonable benefit
variation and allow a diverse market; and 2) require that
benefits within each class are standard and uniform across
all health care service plans and health insurers, or are
actuarially equivalent across all health care service plans
and health insurers. The bill would require health care
service plans and health insurers to discontinue offering
and selling plans other than those within the five approved
classes in the individual market at the same time that they
are required to guarantee issue plans within the five
approved classes.
This bill would allow individuals to purchase a plan from
one of the five classes of approved plans on a guaranteed
issue basis. The bill would allow an individual or
subscriber, on behalf of himself, herself or for all
dependents, to change plans or classes according to
specified criteria. The criteria would include allowing
individuals to change plans within the same class of
benefits or move up one class of benefits annually in the
month of the subscriber's birth; allow a subscriber to move
up to a higher class of benefits at significant life
events, as specified, or move to a lower class of benefits
at any time. The criteria would allow a dependent child to
terminate coverage under a parent's plan and select his or
her own account, within the same class of benefits,
following his or her 18th birthday.
The bill would require individuals applying for coverage in
the individual market to provide health information, as
required by the standardized health status questionnaire,
to assist health care service plans and health insurers in
identifying those in need of disease management. The bill
would prohibit health care service plans and health
insurers from using the information to decline coverage or
to limit an individual's choice of plans, except as
provided by MRMIB to identify those persons with serious
health conditions or diagnoses that make the applicant
automatically eligible for MRMIP. The bill would require
that plans become effective within 31 days after the
receipt of the individual's application, questionnaire, and
premium payment.
This bill would require all health benefit plans to be
STAFF ANALYSIS OF ASSEMBLY BILL 8 (N??ez) Page
13
renewable to all individuals and dependents unless the
subscriber does not make the premium payments, or the plan
or insurer withdraws from the individual market, as allowed
by rules and requirements jointly approved by the Director
and Commissioner.
This bill would allow a health care service plan or health
insurer to rate its entire portfolio according to expected
costs or other market considerations, but would require the
rate to be set in relation to the balance of the portfolio
as certified by an actuary. The bill would require each
benefit plan to be priced to reflect the difference in
benefit variation or effectiveness of a provider network,
as determined by the health care service plan or health
insurer, but prohibit rate adjustment based on risk
selection. The bill would require health care service
plans and health insurers to use the same rating factors
for age, family size and geographic location for each plan,
and would allow rates to vary only by age of the
subscriber, family size, and geographic rate regions, as
determined by the Director and Commissioner, and health
improvement discounts, as specified. The bill would
require the Director and Commissioner to take into
consideration the age, family size, and geographic region
rating categories applicable to small group contracts and
policies. The bill would provide that the first term of
each plan contract or policy issued shall be from the
effective date through the last day of the month
immediately preceding the subscriber's next birthday.
The bill would exempt individual health plan contracts for
Medicare, Medi-Cal contracts, Healthy Family contracts,
high risk pool contracts, Medicare supplement policies,
long-term care policies, specialized health plan contracts,
or contracts issued to individuals who secure coverage from
Cal-CHIPP.
Medical loss ratios and disclosures
The bill would require the Director and Commissioner to
adopt regulations by July 1, 2008, to define
"administrative costs" and "health care services" so that
at least 85 percent of aggregate dues, fees and other
period payments (of full-service health plans) or health
insurance premium revenue (of health insurers) are spent on
health care services. This bill would exempt Medicare
STAFF ANALYSIS OF ASSEMBLY BILL 8 (N??ez) Page
14
supplement contracts, vision-only, dental-only,
CHAMPUS-supplement insurance, hospital indemnity,
hospital-only, accident-only, or specified disease
insurance from these requirements.
The bill would require health care service plans and health
insurers, when presenting a plan for examination or sale,
to disclose in writing the ratio of premium costs to health
services paid (for health plans), or incurred claims to
earned premiums (for health insurers) for the preceding
fiscal (health plans), or calendar (health insurers) year
to individuals and groups of all sizes, and not only for
individuals or groups consisting of 25 or fewer
individuals, as current law specifies.
Public program eligibility
This bill would make all children who are residents of
California eligible for the Healthy Families and Medi-Cal
programs, if they are otherwise eligible, even if the
children do not meet the federal citizenship and
immigration status requirements for eligibility
This bill would raise income eligibility for the Healthy
Families program from 250 percent to 300 percent of the
FPL. This bill would set Healthy Families premiums for
those with family incomes greater than 250 percent but not
exceeding 300 percent of the FPL at $16 to $22.50 per month
per child with a maximum of $48 to $67.50 per month per
family. This bill provides that the increase in income
eligibility must be implemented after June 30, 2008 and
only to the extent funds are appropriated for those
purposes. This bill would require MRMIB, by July 1, 2008,
subject to federal approvals and financial participation,
to expand Healthy Families eligibility to uninsured parents
and adults responsible for children enrolled in the Healthy
Families program under the terms of the federal Deficit
Reduction Act and require the coverage be provided through
a Healthy Families benchmark plan. This bill would also
require that a child eligible for Healthy Families who is a
dependent of an employee of an employer paying into the
fund shall be provided coverage through a Healthy Families
benchmark plan.
This bill would increase the maximum family income for
Medi-Cal eligibility for families and children over six
STAFF ANALYSIS OF ASSEMBLY BILL 8 (N??ez) Page
15
years of age from 100 percent of the FPL to 133 percent of
the FPL, thereby establishing a uniform eligibility
requirement to all Medi-Cal eligible children over age one.
This bill would also provide that children who are
dependents of an employee obtaining coverage from the pool
shall be provided coverage through a Medi-Cal benchmark
plan.
This bill would require DHCS to seek federal approval for a
Medi-Cal expansion, through a Medi-Cal benchmark plan, for
parents and other caretaker relatives with a household
income at or below 300 percent of the FPL, provided that
federal financial participation is available. The bill
requires that the benchmark plan be equivalent to Healthy
Families Coverage. This bill also requires that an asset
test shall not be required for eligibility determination
for this expansion group.
This bill would streamline the "deprivation test" under
federal law, which requires, as a condition of eligibility,
that a child be deprived of parental support, which means a
parent is absent, working, deceased, or unemployed.
(Absent deprivation, a family may still be ineligible if
both parents are present and working, even if the family is
otherwise eligible by their income under certain
circumstances.)
The bill would provide MRMIB permanent emergency regulatory
authority to adopt and readopt regulations relating to
Medi-Cal and Healthy Families benchmark plans. This bill
also provides MRMIB permanent emergency regulatory
authority over the Healthy Families program.
Evaluation of effects of reforms
The bill would require the Secretary of the California
Health and Human Services Agency (CHHS), using an advisory
body comprised of members appointed by the Governor, Senate
President Pro Tempore, and Speaker of the Assembly, to
assess and report to the Legislature on various effects of
reforms contained in this bill, including the
sustainability and solvency of Cal-CHIPP, the effect on
employers and employment and employer-based health
coverage, the cost, affordability and availability of
health care, the insurance market, the health care delivery
infrastructure, and the impact on the county safety net.
STAFF ANALYSIS OF ASSEMBLY BILL 8 (N??ez) Page
16
Other provisions
This bill would authorize MRMIB to develop rules and
contracting strategy for entities contracting or seeking to
contract with the board in closed session, and exempt MRMIB
from requirements to disclose specified information
relating to such contracting strategy. This bill would
enact enhanced privacy protections for Healthy Families'
applicants, subscribers, or household members, as
specified. The bill would also require CHHS to develop
pay-for-performance models and best practice standards for
the care of patients with high-cost chronic diseases, to be
implemented by state health care programs. The bill would
also declare legislative intent that all health care
providers participate in an Internet-based personal health
record system accessible by patients, and that all health
insurers and providers adopt standard electronic medical
records by January 1, 2012.
FISCAL IMPACT
According to the Assembly Appropriations Committee analysis
of a prior version of the bill, this bill would result in
net annual GF savings of $380 million based on the
following costs and savings:
a) Annual Cal-CHIPP costs of $7.4 billion, offset by
revenues in the Fund consisting of employer fees ($5
billion), employee fees ($2.8 billion), and federal
matching payments ($640 million) for low-income individuals
eligible for public coverage.
b) Annual savings of $950 million ($370 million GF) to
Medi-Cal and HFP due to a net movement of individuals from
public programs.
c) Annual increase of $1.8 billion ($880 million GF) to
provide premium assistance to low-income workers eligible
for public programs under the bill.
d) Annual reduced GF revenues of $110 million due to a
STAFF ANALYSIS OF ASSEMBLY BILL 8 (N??ez) Page
17
reduction of state personal income tax collections
associated with employee use of Section 125 plans.
The Assembly Appropriations Committee also states that this
bill would impose unknown annual administrative costs to
the Managed Risk Medical Insurance Board (MRMIB), the
Employment Development Department (EDD), local human
services departments and other public entities to provide
administrative support pursuant to the requirements of this
bill.
BACKGROUND AND DISCUSSION
According to the author, AB 8 encompasses a comprehensive
approach to reforming California's broken health care
system based on the principle of shared responsibility
between government, individuals, and employers. The author
states that AB 8 contains major reforms of the insurance
industry, expansion of public health care programs, cost
containment, measures to improve health care quality, and
provisions to strengthen the private health care market.
Uninsured Californians
According to the California Health Care Foundation (CHCF),
approximately 6.6 million people are uninsured in
California, and the number of uninsured continues to rise
as employer-sponsored health insurance declines. Although
families with incomes below the poverty level are most
likely to be uninsured, more than 30 percent of the
uninsured have family incomes of more than $50,000. Nearly
75 percent of uninsured children are in families where the
head of the household has a full-time job. CHCF also
reports that Latinos represent more than half of
California's uninsured population and are more likely to be
uninsured than any other ethnic group. Of the total number
of uninsured, 20 percent are Asian, 18 percent are African
American, and 13 percent are Caucasian.
The cost of health care
According to CHCF, health care spending in California
reached $169 billion in 2004, or 11 percent of the state's
economy. Current projections indicate that health care
spending could exceed 20 percent of the gross domestic
STAFF ANALYSIS OF ASSEMBLY BILL 8 (N??ez) Page
18
product by 2025. According to a recent survey by the
Kaiser Family Foundation, one in four Americans say their
family had a problem paying for health care sometime during
the past year, and 28 percent say someone in their family
has delayed health care in the past year. Studies show
that, compared to persons with health insurance, people
without health insurance are more apt to postpone seeking
care because of cost, more apt to fail to fill
prescriptions due to cost, more apt not to receive
preventive care, and more apt to have trouble paying
medical bills. Because they are uninsured, reports show
that individuals are often billed for hospital care at the
hospital's full charges, which are typically three to four
times higher than the costs paid by insurance plans.
Employer-sponsored and individual health coverage
The CHCF reports that approximately 40 percent of uninsured
workers are employed by small businesses, and the number of
uninsured workers in mid-size firms continues to rise.
From 1999 to 2005, premiums for employer-provided health
insurance in California increased by 112 percent, while the
general cost of living increased by 29 percent. Average
premium increases in California in 2006 were 8.7 percent,
more than twice the California inflation rate of 4.2
percent, and higher than the national increase rate of 7.7
percent. At the same time, of employers offering any kind
of health insurance coverage, over one-third, and nearly
half of employers with less than 200 employees, experienced
premium increases of over 10 percent.
A recent study by the CHCF found that small group and
individual health coverage in California are becoming less
affordable due to rising premiums and increasing cost
sharing. According to the study, small group premiums paid
by employers in California increased 53 percent between
2003 and 2006, with their actuarial value remaining fairly
steady, paying for roughly 83 percent of medical expenses
across the three-year period. Individual health coverage
premiums rose 23 percent between 2003 and 2006, but the
actuarial value of the coverage declined significantly,
paying for 75 percent of medical costs in 2003, but only 55
percent in 2006.
Nearly 90 percent of working age adults who lacked employer
coverage and attempted to obtain it in the individual
STAFF ANALYSIS OF ASSEMBLY BILL 8 (N??ez) Page
19
market over the past three years were rejected either for
health reasons or for past prescription drug use, or found
it too expensive to obtain coverage, according to a recent
study. Other studies indicate that individual insurers
reject 12 to 18 percent of the applications they receive.
Related legislation and proposals
Various health care reform bills and proposals have been
introduced this year with the goal of significantly
expanding health care coverage in the state. Governor
Schwarzenegger's health care coverage proposal and SB 48
(Perata) each have several elements in common with AB 8,
including proposals to create a state purchasing pool,
employer pay-or-play requirements, public program
expansions, and insurance market reforms.
Governor Schwarzenegger's health care coverage proposal
would require all individuals to have a minimum level of
health insurance coverage for themselves and their
dependents. Under the proposal, employers with 10 or
more employees would be required to spend 4 percent of
Social Security wages on health care expenditures for
their employees or pay an equivalent amount to the state
to fund coverage provided through a statewide purchasing
pool. All employers would be required to provide
cafeteria plans. The governor's proposal would require
health plans and insurers to maintain an 85 percent
medical loss ratio, guarantee issue of plans in the
individual market, and use modified community ratings to
determine rates.
Under the proposal, eligibility for the Medi-Cal and
Healthy Families programs would be expanded, and federal
citizenship and immigration status requirements relating
to program eligibility for children would be eliminated.
The proposal would also establish a "bright line" of
eligibility for public coverage programs that would shift
adults with incomes higher than 100 percent of the FPL
from Medi-Cal to the purchasing pool, and children to
Healthy Families. It also would eliminate the Access for
Infants and Mothers (AIM) program and the Managed Risk
Medical Insurance Program (MRMIP), thereby shifting
medically uninsurable individuals to the purchasing pool.
The proposal would also increase Medi-Cal provider
rates, impose an assessment on health care providers and
STAFF ANALYSIS OF ASSEMBLY BILL 8 (N??ez) Page
20
hospitals, and redirect county and other health safety
net funds to finance the proposed provisions. The
proposal would also implement several new programs and
initiatives related to health prevention, promotion, and
wellness.
SB 48 (Perata) would have required all taxpayers with a
specified income to have a minimum health coverage policy,
and also would have required employers to spend 7.5 percent
of Social Security wages on health care for full-time and
part-time workers and their dependents, or pay an
equivalent fee to a state fund. The bill would have created
the Connector, a state purchasing pool. Employees whose
employers opt to pay into the trust fund could receive
health coverage through the Connector. The bill would also
have expanded eligibility for Medi-Cal and Healthy Families
coverage for low-income children and parents, and would
have established various insurance market reforms.
These provisions have been amended out of the bill.
SB 840 (Kuehl) would establish a single-payer universal
health care system that provides all California residents
with comprehensive health insurance including a choice of
doctors and hospitals. The bill would consolidate federal,
state, and local monies currently being spent on health
care services into a health care trust fund, and would
require employers to contribute a percentage of payroll
toward employee health care costs and individuals to
contribute a percentage of income into the health care
trust fund; these contributions would replace premiums now
paid to insurance companies. The bill would contain
long-term growth in health care spending through savings on
administrative overhead, increased emphasis on preventive,
primary, and chronic care, and using statewide purchasing
power to negotiate discounts on drugs and durable medical
equipment. This bill is currently in the Assembly
Appropriations Committee.
SB 32 (Steinberg)/AB 1 Laird would expand eligibility for
the Medi-Cal and Healthy Families program by allowing
children with family incomes at or below 300 percent of the
FPL to qualify for the program and would delete the
specified citizenship and immigration status requirements.
The bill would allow applicants to self-certify income and
asset values for the purposes of establishing eligibility
STAFF ANALYSIS OF ASSEMBLY BILL 8 (N??ez) Page
21
for Healthy Families, and would create the Healthy Families
Buy-In Program to make coverage available to children whose
household income exceeds 300 percent of the FPL. This bill
would also establish the Medi-Cal Presumptive Eligibility
Program, which would provide a child who meets specified
eligibility requirements with benefits identical to
full-scope benefits under the Medi-Cal program with no
share of cost, until the child's eligibility is determined
for the Medi-Cal or Healthy Families programs. These are
identical bills. AB 1 is being heard July 11 in Senate
Health while SB 32 is in Assembly Appropriations Committee.
SB 236 (Runner) would declare legislative intent to create
the Cal CARE program, designed to make health care more
affordable and accessible in the state through incentives
for hospitals and the private sector to increase the number
of primary care clinics as a means to increase access to
health care services in rural and medically underserved
areas, and to provide lower cost alternatives to receiving
care in emergency rooms. The bill would also declare
intent to provide incentives to employers who offer health
care to their employees, as well as tax benefits to
individuals who purchase health care coverage. The bill
would also declare legislative intent to redirect
Proposition 10 funds to children's health care initiatives,
and would shift costs for health care provided to
undocumented immigrants to the federal government. This
bill is in Senate Rules awaiting referral to a policy
committee.
AB 2 (Dymally) would extend, until June 30, 2008, the
Guaranteed Issue Pilot (GIP), administered by the MRMIB,
which provides health insurance coverage to medically
uninsurable individuals who have exhausted their 36 months
of eligibility for the MRMIP, and, effective July 1, 2008,
reforms and restructures the MRMIP. The bill would secure
additional funding for MRMIP by requiring all health plans
and insurers in the state to share in the costs of the
program, either as a participating health plan in MRMIP or,
in lieu of participation, by paying a fee to the state to
support MRMIP program costs. This bill is set for hearing
in the Senate Health Committee on July 11, 2007.
AB 1554 (Jones) would require health care services plans
and health insurers to receive approval from the DHMC or
STAFF ANALYSIS OF ASSEMBLY BILL 8 (N??ez) Page
22
DOI to increase premiums, co-payments, coinsurance
obligations, and deductibles. The bill would require both
departments to notify the public of, and hold hearings on,
applications from plans or insurers to increase rates.
This bill is set for hearing in the Senate Health Committee
on July 11, 2007.
Prior legislation and proposals
SB 840 (Kuehl, 2006) contained provisions substantially
similar to those provided in SB 840 of the current session.
This bill was vetoed.
SB 1414 (Migden, 2006) would have required employers with
10,000 or more employees to spend a specified percentage of
their payroll on employee health insurance benefits or make
specified payments to the state. This bill was vetoed.
AB 772 (Chan, 2006) would have created the California
Healthy Kids Insurance Program to expand Medi-Cal and
Healthy Families eligibility by allowing children in
families with incomes up to 300 percent of the FPL to
qualify, streamlining children's enrollment into Medi-Cal
and Healthy Families by relying on income determinations
made by other public assistance programs, and by
simplifying annual renewals by allowing self-certification
of eligibility. The bill would also have provided grants
to local children's health initiatives. This bill was
vetoed.
Massachusetts Health Care Reform Act (Chapter 58 of the
Commonwealth Acts of 2006) requires all residents who are
18 years of age or older to have health insurance, if
coverage is "affordable," a term not defined in the
statute. The Act establishes a state purchasing pool known
as the "Connector" to provide coverage options for persons
without access to employer-provided coverage and employers
with 50 or fewer workers. The Act requires employers with
more than 10 employees to make a "fair and reasonable"
contribution towards employee health coverage or pay an
assessment to the state of up to $295 per worker, per year.
The Act also requires employers with more than 10
employees to establish Section 125 plans, or under
specified circumstances, be assessed a "free rider
surcharge." The plan enacted a number of Medicaid reforms,
STAFF ANALYSIS OF ASSEMBLY BILL 8 (N??ez) Page
23
including expanding eligibility for children in the state's
Medicaid program from 200 to 300 percent of the federal
poverty level, expanding enrollment caps for Medicaid
coverage for specified persons, and increasing payment
rates for Medicaid providers and subsidies for public
coverage. The Act also merges the individual and small
group insurance markets and applies modified community
rating requirements for the combined market.
The Massachusetts plan's individual mandate took effect on
July 1, 2007, and approximately 130,000, or one-third, of
the state's uninsured residents obtained coverage by this
date. The remaining uninsured residents will have until
December 31, 2007 to obtain coverage without facing
penalties. The Connector's board, which is charged with
defining "affordable" coverage vis-?-vis the individual
mandate, estimates that approximately 60,000 individuals
are currently exempt from the insurance requirement because
they will not qualify for subsidies, and cannot afford
other coverage options.
San Francisco Health Care Security Ordinance (2006)
requires employers with 20 or more employees to spend a
minimum amount per hour per employee on health care
services, with certain exceptions. Employers could spend
this amount on various health care services for its
employees, including, but not limited to, health insurance,
contributions to public programs for the uninsured, health
savings accounts, or direct reimbursements to employees for
health expenses. The Ordinance also establishes a new
Health Access Program, focused on prevention services, to
replace the city's current system for providing health care
to the uninsured. This ordinance was adopted by San
Francisco in 2006.
SB 921 (Kuehl, 2004) also contained provisions
substantially similar to those provided in SB 840 of the
current session. This bill was held in the Assembly.
SB 2 (Burton and Speier, Chapter 673, Statutes of 2003)
would have required California employers with 50 or more
employees to pay a fee to the state to provide health
coverage for employees or to directly provide the health
coverage to employees (and dependents for larger
employers). The bill defined minimum required coverage, and
required employers to contribute at least 80 percent of the
STAFF ANALYSIS OF ASSEMBLY BILL 8 (N??ez) Page
24
costs of coverage and employees to contribute up to 20
percent of the costs, with a cap for low-wage earners. The
bill established a purchasing pool to provide coverage for
employees, expanded small group market reforms to cover
employers with 51-199 employees, and included a premium
assistance program for individuals eligible for Medi-Cal or
Healthy Families. SB 2 was overturned in a November 2004
referendum initiative.
Arguments in support
The 100% Campaign and PICO California state that
approximately 763,000 California children do not have
health coverage, and that this bill contains provisions
that will significantly expand health coverage for all
children throughout the state. The Insure the Uninsured
Project (ITUP) states that this bill would increase
coverage throughout the state, including coverage for all
children, implement shared responsibility, implement health
insurance market reforms that will simplify medical
underwriting, expand the high-risk pool, require standard
uniform benefit designs, and ensure guaranteed issue.
Support if amended
The California Labor Federation (CLF) supports this bill if
it is amended to include cost containment measures relating
to health care price and quality transparency, bulk
prescription drug purchasing, creation of a public
insurance option, and state oversight of health insurance
rates. The CLF proposes expanding affordability
protections in the purchasing pool to include all health
care costs associated with premiums, deductibles and
co-pays, and states that the limits on cost sharing should
apply to all workers, and not only those below 300 percent
of the FPL. CLF states that AB 8 should be amended to
guarantee that health care contributions from employers to
multi-employer union trust funds are credited as health
expenditures, and to categorize employees on a quarterly
basis rather than a weekly basis, using a threshold of 360
hours per quarter to separate full-time and part-time
workers. CLF contends that the bill should clarify the
considerations MRMIB should use when increasing employer
fees, and ensure a fair balance between employer fees and
employee contributions. CLF also asserts that under the
bill, undocumented immigrants should qualify for premium
STAFF ANALYSIS OF ASSEMBLY BILL 8 (N??ez) Page
25
subsidies, and that the bill should create a new program to
provide premium support to individuals between jobs as well
as to early retirees.
The Service Employees International Union (SEIU) seeks
further amendments to this bill to require employer
contributions to be adjusted over time to sufficiently
cover health care costs, and limit all employee health care
costs to no more than five percent of wages. SEIU opposes
requiring working families to go through "welfare-style"
eligibility screening for premium assistance, and suggests
additional cost containment measures, such as increased
transparency of health care costs, bulk prescription drug
purchasing, public oversight of health insurance premiums,
and the creation of a public insurer to compete on cost and
quality both inside and outside of the pool. SEIU also
suggests amendments to increase Medi-Cal reimbursement
rates for hospitals.
Health Access seeks amendments to AB 8 to limit the share
of cost that employees must pay, based on a percentage of
their wages, and to regulate insurance coverage plans and
policies so that enrollee out-of-pocket costs would not
exceed an affordable percentage of wages. Health Access
states it seeks amendments to regulate rates in the
individual market to improve affordability, and supports
reinsurance as an approach to create incentives for
insurers to compete based on price and quality. Health
Access also suggests various cost-containment measures
similar to those proposed by SEIU, and proposes that the
bill contain provisions to ensure that low and moderate
income Californians have access to preventive care through
low cost-sharing requirements.
The California Association of Public Hospitals and Health
Systems (CAPH) states that, given the current strains on
the health care system, AB 8 should include provisions that
would provide investments in the health care delivery
system's capacity in order to meet future demand.
The California Budget Project (CBP) states that AB 8 lacks
provisions needed to guarantee affordability, and, in
particular, does not limit copayments, deductibles or other
out-of-pocket costs, which could make health care
increasingly unaffordable as costs rise over time. CBP
STAFF ANALYSIS OF ASSEMBLY BILL 8 (N??ez) Page
26
also states that health savings account (HAS) contributions
should not count toward employer health care expenditures,
because they would encourage employers to provide
high-deductible plans to their workers. CBP states that
these types of plans do not provide health care that all
Californians can afford to use, and may lead to a long-term
erosion of comprehensive job-based coverage.
The California Medical Association (CMA) asserts that the
bill's public coverage expansions build on the foundation
of a dysfunctional Medi-Cal program that maintains the
lowest physician participation rate of any Medicaid program
in the nation. The CMA states that adding more enrollees
to the program, without a rate increase, will exacerbate
problems. The CMA also expresses concerns regarding the
bill's provisions regarding pay-for-performance measures,
and states that patient choice should be protected and
disincentives for caring for hard to treat patients should
not be created.
Kaiser Permanente (KP) supports the bill's coverage
expansion and insurance market reform provisions, but
expresses concerns about the bill's provisions that defer
responsibility to MRMIB to determine health conditions that
would limit an individual's eligibility for coverage
through the high-risk pool. KP asserts that this approach
may create an unsustainable individual market, to the
extent regulators do not accurately value the additional
risk a given condition may reflect. KP recommends
provisions wherein all plans and insurers would be required
to accept a predetermined percentage of applicants, with
the remaining percent automatically eligible for coverage
through the high risk pool. KP asserts that this approach
will achieve AB 8's intent, but will also preserve
competition among health plans and insurers.
Arguments in opposition
The California Nurses Association (CNA) and the National
Nurses Organizing Committee state that AB 8 does not
achieve universal coverage, and contains an employer
mandate that will run afoul of ERISA. The organizations
oppose the bill's provisions relating to pay for
performance, and state that the bill's cost containment
measures will not result in lower premiums. The
organizations also question whether the scope of the
STAFF ANALYSIS OF ASSEMBLY BILL 8 (N??ez) Page
27
high-risk pool would be adequate to properly treat
individuals with serious illnesses.
The California Chamber of Commerce (Chamber), and the
National Federation of Independent Business (NFIB) state
that this bill would impose a tax on small employers who
cannot afford to provide health care coverage. The Chamber
states that the bill gives an unelected volunteer board the
right to increase the health care payroll tax as needed to
cover the costs of the proposal, that the payroll tax will
have to be increased substantially beyond what most
employers pay in health care costs today, and that employer
mandates threaten jobs and slow economic growth.
Additionally, the NFIB states that the employer mandate may
drive entrepreneurs to other states to start new
businesses, negatively impacting the state's economic
competitiveness.
The California Restaurant Association (CRA) states that the
employer mandate will have a disproportionate impact on
small, low-margin, labor-intensive businesses, like most
restaurants, many of which have already been priced out of
the health insurance market. The CRA also states that the
bill's compliance and reporting requirements for employers
seem onerous for small businesses.
The California Grocers Association (CGA) states that the
bill places an unfair burden on employers by failing to
include a mandate on individuals to purchase health care.
The CGA states that the bill gives MRMIB unfettered
authority to raise employer fees with no transparency, and
does little to incentivize healthy behaviors.
The California Manufacturers and Technology Association
(CMTA) states that the goal of health care reform should be
to make health care services available at a reasonable
price, and to give health care providers incentives and
tools to reduce costs and improve quality of care. CMTA
argues that employers should continue to voluntarily offer
health care coverage, and that costs of coverage for the
safety net population should be fairly imposed on a broad
basis, not targeted at employers. CMTA opposes an employer
mandate that would raise costs for smaller suppliers and
remove flexibility in coverage terms and conditions.
The California Taxpayers' Association (Cal-Tax) states that
STAFF ANALYSIS OF ASSEMBLY BILL 8 (N??ez) Page
28
AB 8 results in uncontrolled spending, and is likely to
cost far more than anticipated. Cal-Tax states that new
mandates on employers to finance health care reform will
hurt the economy, and extended discussion about universal
health care will deter investors from coming to the state.
The Howard Jarvis Taxpayers Association (HJTA) states that
the Legislature should focus on providing HSAs, decreasing
mandates, and using the free market to provide greater
access to care. The HJTA states that this bill imposes a
tax on employers and should require a two-thirds vote for
passage. The HJTA also contends that the bill would
violate federal ERISA laws, and contends that the bill
should not include provisions for health care for children
of illegal immigrants. The organization argues that health
care for undocumented children will serve as a magnet for
illegal immigrants to collect a new benefit to which they
are not entitled.
Oppose unless amended
The California Association of Health Underwriters (CAHU)
opposes the bill unless it is amended to replace the
provisions relating to the purchasing pool with a subsidy
system for those in need, in order to allow the competitive
insurance market to manage adverse selection. CAHU
contends that the medical loss ratio provisions are
counterproductive to the competitive market, and will
result in increased costs. Additionally, CAHU opposes the
bill's provisions to phase out rate bands in the small
group market, and proposes expanding rate bands as well as
expanding the size of the small group market in order to
maintain low rates.
PacifiCare states that the bill's proposals to reduce the
cost of health care by regulating administrative and
medical spending does not address the factors that drive
increases in medical costs and premiums. PacifiCare also
states that the need to propose changes to the mid-size
group market rules is unclear, and that applying small
group rules to larger employers will increase premiums
across most small group plans and eliminate product and
premium flexibility.
Concerns
AARP states that guaranteed issue is not sufficient without
STAFF ANALYSIS OF ASSEMBLY BILL 8 (N??ez) Page
29
some type of restriction on premium rates. AARP proposes
amending AB 8 to include a rate-regulation model which
would phase in rate restriction requirements over a
five-year period. AARP proposes that for the first two
years, persons paying the highest rates pay no more than
400 percent of the lowest rate. For the next three years,
the maximum differential is 300 percent, and after the
fifth year, is 200 percent higher than the lowest rate.
The California Association for Health Services at Home
(CAHSAH) states that employees of home health agencies and
hospices generally work part time and/or for multiple home
care employers. CAHSAH states that ,because of this
employment trend, the home health care and hospice industry
may be adversely affected by AB 8 if the bill does not
include a minimum floor of hours an employee must work for
employers to be subject to the pay or play requirement.
CAHSAH states that they are concerned that the bill does
not contain a mechanism to ensure that one employer does
not become disproportionately impacted by the employer
mandate if their employees are working for more than one
employer. CAHSAH expresses concerns that the employer
mandate may drive employers into misclassifying home health
care workers as independent contractors, and suggests that
the exemption should be reinstated for employers with less
than two workers, with an annual payroll of $100,000 or
less, or new businesses of less than three years.
The California School Employees Association (CSEA) states
that this bill should establish a baseline for adequate
benefit levels, so as to reduce possibilities for employers
to provide cheap and inadequate coverage to their
employees, and that the bill should not leave it up to EDD
to determine the number of hours a part-time employee would
need to work to get coverage. CSEA contends that AB 8
should include additional cost containment provisions
relating to hospital regulation, physician practice
guidelines, transparency, drug safety and effectiveness.
CSEA states that AB 8 does not account for Taft-Hartley
joint labor-management trust funds, and that union
employers who contribute to the trust funds, are already
meeting the 7.5 percent threshold for health expenditures,
but may not receive credit for those expenditures under the
bill.
Blue Shield of California and Blue Cross of California
STAFF ANALYSIS OF ASSEMBLY BILL 8 (N??ez) Page
30
state that, despite the bill's provisions relating to the
high-risk pool, AB 8's requirement for guaranteed issue in
the individual market would result in adverse selection and
higher premiums if the requirement is not coupled with an
individual mandate. Blue Shield expresses concerns over
MRMIB's authority to increase employer fees as it deems
appropriate, and states that the bill will not achieve true
universal coverage, which should be the goal of health care
reform. Blue Cross states that health care reform measures
should encourage voluntary participation by employers to
provide coverage to employees. Blue Cross also states that
the bill's medical loss ratio requirement may actually
result in higher premiums, reduce consumer choice, and
reduce quality, because a cap on administration costs
discourages insurers from developing low-cost products,
participating in high-cost markets, and from spending on
some elements of administration which may provide benefits
to consumers and control costs.
The Alzheimer's Association states that guaranteed issue
requirements cannot be adequately funded without an
individual mandate, and that health care reform plans must
provide affordable coverage to all with pre-existing
conditions regardless of their employment status. The
Association suggests that the bill should specify a maximum
percentage of income that health care out-of-pocket costs
cannot exceed, and that the bill ensure that minimum
coverage levels include secondary and tertiary prevention
services, which would allow those with Alzheimer's and
other chronic illnesses to be covered for ongoing treatment
and disease management costs.
The Having Our Say Coalition states that the bill should
expressly address issues specific to communities of color,
specifically increasing culturally and linguistically
competent services and supporting practices aimed to
reducing health disparities and building healthy
communities. The Having Our Say Coalition recommends
amendments to the bill that would ensure consumer
participation on behalf of communities of color in the
development of health benefit designs and reporting
requirements, and increasing accessibility for
limited-English-proficient insureds by providing
information in specified languages.
STAFF ANALYSIS OF ASSEMBLY BILL 8 (N??ez) Page
31
PRIOR ACTIONS
Assembly Floor: 47-32
Assembly Appropriations:12-5
Assembly Health: 12-5
COMMENTS AND QUESTIONS
1. Similarities to SB 48 (Perata). This bill is similar
to SB 48 (Perata), which was passed by this committee on
April 25, 2007. On July 3, 2007, AB 8 was amended to
incorporate many of SB 48's provisions, including those
that limit premium costs for employees under 300 percent of
the FPL to 0 to 5 percent of family income, give MRMIB the
authority to adjust the employer fees, phase out risk
adjustment factors in the mid-size group insurance market,
and require MRMIB to ensure that health plans contracting
with the pool implement specified cost controls as well as
to negotiate with Medi-Cal managed care plans. SB 48
contained a mandate for taxpayers with incomes above 400
percent of the FPL to maintain a minimum level of coverage,
which is not contained in AB 8. AB 8 formerly contained a
provision that would have exempted specified small
businesses from the employer mandate, but that provision
has been removed from the bill, consistent with SB 48's
provisions.
2. Several elements of proposal still being developed.
Staff understands that the author is working on several
provisions of the bill, and that the bill will be
subsequently amended to address several issues raised by
supporters and opponents, including:
a. Adjusting the bill's definition of part-time worker,
for whom employers must make health care expenditures or
pay fees to the state, to an hours-per-quarter measure
instead of an hours-per-week measure, to include seasonal
and intermittent employees.
b. Adding provisions to expand, streamline, improve the
timeliness of, and improve public access to reporting of
hospital, medical group, and physician health care cost,
utilization, and outcome data, to assist purchasers in
STAFF ANALYSIS OF ASSEMBLY BILL 8 (N??ez) Page
32
making better decisions.
c. Clarifying the fees, fines and penalties that would
apply to employers who do not meet the bill's requirements.
d. Clarifying the procedures under which employers would
make the election to pay-or-play, and the timelines by
which employers would commence paying fees, and by which
employee coverage through the pool would begin.
e. Expanding the number of benefit plan designs available
in Cal-CHIPP.
Additionally, John Gruber, Ph.D., of the MIT Department of
Economics, is conducting modeling that will provide revised
estimates of the number of Californians covered by the
revised proposal, as well as estimates of cost-sharing for
employees and their dependents, and overall costs of the
proposal.
3. Potential fiscal and legal issues. AB 8 relies on many
of the same fiscal and legal assumptions as the Governor's
health insurance proposal and SB 48 do, including that the
pay-or-play provisions of the proposal will withstand legal
challenge under ERISA, that federal funds will be available
for the costs of many of the employees who receive coverage
through Cal-CHIPP, and those related to proposed expansion
of eligibility for the Healthy Families program, that the
assumed costs of providing coverage through the Cal-CHIPP
are accurate and that, with cost containment practices,
future cost growth can be moderated, and that the
pay-or-play structure proposed by the bill will not
encourage employers with employees who have higher medical
costs to shift coverage to the purchasing pool. To the
extent that any of these assumptions is not borne out,
implementation of several sections of the bill could be
held up or become more costly than that projected.
4. MRMIB governing structure may need to be revised.
MRMIB was initially created in 1990 with a broad mandate to
advise the Governor and the Legislature on strategies for
reducing the number of uninsured persons in the state. The
responsibilities of MRMIB have grown over the years, most
notably in 1997, with the creation of the Healthy Families
STAFF ANALYSIS OF ASSEMBLY BILL 8 (N??ez) Page
33
program. MRMIB is comprised of seven members. Three are
appointed by the Governor and confirmed by the Senate, one
is appointed by the Assembly and one by the Senate, with
each serving four year terms. The Secretary of Business,
Transportation, and Housing and the Secretary of Health and
Human Services serve, but do not vote. Given that AB 8
would greatly expand MRMIB's role in terms of administering
health coverage programs and establishing policy affecting
the private health insurance market, it may be appropriate
to consider expanding and altering the MRMIB governing
structure to make it more broadly representative of the
range of groups that will be impacted by its decisions.
5. Cost sharing requirements fall heavily on some workers.
Under AB 8, the level of premiums and other cost-sharing
measures for employees who enroll in benchmark plans (those
with incomes below 300 percent of the FPL who document
citizenship) would be limited to those permitted in the
Medi-Cal and Healthy Families programs. The bill would
additionally provide that, in no case can the premiums for
employees with incomes below 300 percent of the FPL exceed
five percent of their income, after taking into account the
value of tax savings from using Section 125 plans to pay
the premiums. For workers with incomes above 300 percent
of the FPL, the bill provides no specific cost sharing
protections. According to research compiled by the
California Budget Project, nationally, the median level of
premium and other out-of-pocket costs for single job-based
coverage paid by workers with incomes above 300 percent of
FPL in 2005 ranged from 2 to 3 percent of family income,
while the median costs for premiums and out-of-pocket costs
for job-based family coverage ranged from 3 to 5 percent of
income. In the small group health insurance market in
California, 75 percent of workers with individual coverage
spend less than 5 percent of their incomes on premiums and
other out-of-pocket expenses. In order to ensure that
total cost sharing for workers and dependents receiving
coverage through the purchasing pool is reflective of the
costs most employees face in the general marketplace, and
to ensure that employees and their dependents both take up
and utilize the coverage that is provided through the
purchasing pool, a recommended amendment would be to limit
the share of costs borne by workers and dependents,
including premium contributions and deductibles, for
individual coverage, to five percent of wages, and for
STAFF ANALYSIS OF ASSEMBLY BILL 8 (N??ez) Page
34
family coverage to five percent of family income.
Suggested amendments:
On page 65, lines 18 - 25:
(b) Notwithstanding subdivision (a), the amount of the
premium paid by an employee with a household income at or
below 300 percent of the federal poverty level shall not
exceed 0 to 5 percent of the household income, depending on
the income, after taking into account the tax savings the
employee is able to realize by using the cafeteria plan
made available by his or her employer pursuant to Chapter
11 (commencing with Section 19900) of Part 10.2 of Division
2 of the Revenue and Taxation Code.
(b) (1) Notwithstanding subdivision (a), the maximum amount
an employee shall be required to pay in total health care
contributions, if they elect to cover only themselves,
including the share of premium, deductibles, coinsurance,
copayments, and total out-of-pocket costs, for a benefit
design plan offered by the program, shall be five percent
of the employee's wages.
(2) Notwithstanding subdivision (b), the maximum amount an
employee shall be required to pay in total health care
contributions, if they elect family coverage, including the
share of premium, deductibles, coinsuranace, copayments,
and total out-of-pocket costs, for a benefit design plan
offered by the program, shall be five percent of the
employee's family income.
6. Minimum coverage standards for employer market are not
specified. The bill does not establish minimum standards
for coverage or benefits in the employer group market. This
could encourage employers to drop coverage that they
currently offer, given that the coverage offered by the
purchasing pool is likely to be more generous and the cost
to the employer less than they are currently paying. A
suggested amendment would be to try to ensure greater
parity between the coverage provided in the purchasing pool
and in the employer market, in terms of benefits and
enrollee cost sharing, to reduce this effect.
Suggested amendments:
STAFF ANALYSIS OF ASSEMBLY BILL 8 (N??ez) Page
35
On page 29, after line 31, and on page 48, between lines 26
and 27 insert:
_____. All group health care service plan contracts and
group health insurance plan contracts offered in
California, shall meet all of the following:
(1) Provide basic health benefits as defined in Health and
Safety Code, Section 1345 plus prescription drugs;
(2) Limit deductibles to no more than $2,000 per individual
or $4,000 per family;
(3) Provide preventive care services, which shall not be
subject to a deductible, consisting of, but not limited to:
(A) Periodic health evaluations, such as annual physicals.
(B) Routine prenatal and well-child care.
(C) Child and adult immunizations.
(D) Tobacco cessation programs.
(E) Obesity weight-loss programs.
(F) Screening services, including screening services for
cancer, heart and vascular diseases, mental health
conditions, substance abuse, obstetrical and gynecological
conditions, and vision and hearing disorders.
(4) Limit the amount paid by an enrollee or subscriber for
co-payments and coinsurance to not more than 30 percent of
the rate negotiated or charged for the service furnished to
the enrollee or subscriber by a participating plan
provider.
7. Bill lacks benchmark for cost sharing between employers
and employees. As drafted, AB 8 gives no guidance to MRMIB
as to what share of the cost of the coverage provided
through the purchasing pool should come from employers,
through the fees they elect to pay, and through premium
contributions from workers. A recommended amendment would
be to direct MRMIB, in adjusting employer health care
expenditure levels and workers' premium contributions, to
consider the relative costs typically borne by employers
and employees in the employer market. According a 2006
CHCF survey, the average percentage of premiums paid by
workers in California for individual coverage was 16
STAFF ANALYSIS OF ASSEMBLY BILL 8 (N??ez) Page
36
percent in 2006, and 27 percent for family coverage.
On page 65, line 17, after the period, insert:
In making this determination, the board shall take into
account the costs of health care typically paid for by
employers and employees in California, as determined
through valid employer and household surveys.
8. Adjustment of health care fee and premium contribution
levels. The bill gives MRMIB authority to adjust both the
employer health care fees and the employee premium
contribution amounts, but provides specific direction to
MRMIB to adjust premium contributions in order to ensure
that revenue derived is sufficient to pay for the cost of
health coverage. Recommended amendments would be to leave
MRMIB with authority to adjust premium contribution levels,
but to delete the provisions directing them to do so to
ensure sufficient revenue, and to require that any
adjustments be proposed at least 30 days in advance and
acted on in a public meeting.
Suggested language:
On page 65, lines 12 - 17:
12699.204. (a) The board may adjust premiums , after
providing public notice of the adjustments for not less
than 30 days, at a public meeting of the board. to ensure
that the revenue in the fund derived from employee health
coverage contributions is sufficient to pay for the cost of
health care coverage provided through this part when
combined with federal fundsand the funds available pursuant
to subdivision (b) of Section 2200 of the Labor Code .
9. Additional employee protections. Staff suggest
amendments to establish penalties for employers who change
employee job classifications or hours worked to avoid their
payment obligations, hold employees harmless if their
employers do not pay fees that they are otherwise required
to pay, clarify that employers may, but are not required
to, pay some or all of the employee contribution, provide
that information obtained by EDD and MRMIB can only be used
for purposes of administering and enforcing the act, and to
clarify that employees whose employers elect to pay into
STAFF ANALYSIS OF ASSEMBLY BILL 8 (N??ez) Page
37
the fund, and who have other forms of coverage, may elect
to enroll in Cal-CHIPP.
a. Page 77, between lines 2 and 3, insert:
(c) It shall be unlawful for an employer to designate an
employee as an independent contractor or temporary
employee, reduce an employee's hours of work, or terminate
and rehire an employee if a purpose for the action is to
avoid the employer's obligations under this part.
(d) Nothing shall preclude an employer from paying some or
all of the employee contribution that is otherwise required
by Section 12699.204 of the Unemployment Insurance Code.
b. Page 67, between lines 16 and 17, insert:
(c) Coverage of an eligible employee and, if applicable,
dependents shall not be contingent upon payment of the fee
required by Division 1.2 of the Unemployment Insurance Code
to this part by the employer of that enrollee or, if
applicable, dependents.
c. On Page 64, before line 1:
(18) Share information obtained pursuant to this act with
the Employee Development Department solely for the purpose
of the administration and enforcement of this act.
d. On Page 77, between lines 25 and 26:
Add subdivision (x) to Section 1095 of the Unemployment
Insurance Code as follows:
(x) To provide information obtained in the administration
and enforcement of the California Health Care Reform and
Cost Control Act with the Managed Risk Medical Insurance
Board for the sole purpose of the administration of the
act.
e. Page 70 line 39 through page 71, line 12:
2203. An employee working for an employer that elects,
STAFF ANALYSIS OF ASSEMBLY BILL 8 (N??ez) Page
38
pursuant to Section 2200, to pay an equivalent amount in
lieu of making health care expenditures shall be required
to enroll in the California Cooperative Health Insurance
Purchasing Program pursuant to Part 6.45 (commencing with
Section 12699.201) of Division 2 of the Insurance Code to
receive coverage from a participating health plan
contracting with the board through the program. However, an
employee is exempt from this requirement , but may choose to
enroll in the California Cooperative Health Insurance
Purchasing Program , if the employee is able to demonstrate
that the employee is covered by individual coverage that
is in force on the effective date of this section, a public
program, or other group health care coverage, such as an
employer-sponsored retiree health plan or group coverage
made available by an employer to the employee's spouse that
also covers the employee.
10. Protections for Medi-Cal benchmark plan enrollees.
Staff recommends additional amendments to clarify that
enrollees in Medi-Cal benchmark plans retain all the rights
and responsibilities that they would otherwise have under
that program.
Suggested amendments:
a. Page 33, lines 3-6:
(4) "Medi-Cal benchmark plan" shall mean coverage
equivalent to coverage provided through the Medi-Cal
program (Chapter 7, (commencing with Section 14000) of Part
3 of Division 9 of the Welfare and Institutions Code),
including due process rights and consumer protection
including, but not limited to, notice of change of action,
screening for eligibility for other eligibility categories
should an individual lose coverage, right of appeal, right
to avail themselves of the appeal process offered to other
Medi-Cal beneficiaries, and confidentiality protections.
b. Page 51, lines 30-33:
(4) "Medi-Cal benchmark plan" shall mean coverage
equivalent to coverage provided through the Medi-Cal
STAFF ANALYSIS OF ASSEMBLY BILL 8 (N??ez) Page
39
program (Chapter 7 (commencing with Section 14000) of Part
3 of Division 9 of the Welfare and Institutions Code),
including due process rights and consumer protection
including, but not limited to, notice of change of action,
screening for eligibility for other eligibility categories
should an individual lose coverage, right of appeal, right
to avail themselves of the appeal process offered to other
Medi-Cal beneficiaries, and confidentiality protections.
c. Page 62, lines 4-7:
(4) "Medi-Cal benchmark plan" shall mean coverage
equivalent to coverage provided through the Medi-Cal
program (Chapter 7 (commencing with Section 14000) of Part
3 of Division 9 of the Welfare and Institutions Code),
including due process rights and consumer protection
including, but not limited to, notice of change of action,
screening for eligibility for other eligibility categories
should an individual lose coverage, right of appeal, right
to avail themselves of the appeal process offered to other
Medi-Cal beneficiaries, and confidentiality protections.
d. Page 32, lines 26 - 31:
(f) Employees and dependents receiving coverage through the
Medi-Cal program or Healthy Families Program pursuant to
this section shall make premium payments, if any, as
determined by the board, and pay other cost sharing
amounts, that do not exceed premium payments and cost
sharing levels for enrollment in those programs required
under the applicable state laws governing those programs.
Given the need to ensure the complex task of eligibility
screening and determination, including citizenship and
immigration checks, are handled expeditiously and
accurately, the board shall attempt to take advantage of
and use the existing structure for determining Medi-Cal
eligibility, including eligibility determination by
counties.
e. Page 64, between lines 3 and 4, insert:
(c) Employees and dependents receiving coverage through the
Medi-Cal program or Healthy Families Program pursuant to
this section shall make premium payments, if any, as
determined by the board, and pay other cost sharing
STAFF ANALYSIS OF ASSEMBLY BILL 8 (N??ez) Page
40
amounts, that do not exceed premium payments and cost
sharing levels for enrollment in those programs required
under the applicable state laws governing those programs.
Given the need to ensure the complex task of eligibility
screening and determination, including citizenship and
immigration checks, are handled expeditiously and
accurately, the board shall attempt to take advantage of
and use the existing structure for determining Medi-Cal
eligibility, including eligibility determination by
counties.
11. Authority to promulgate emergency regulations. The
bill grants MRMIB ongoing emergency regulatory authority to
implement both the Healthy Families program and the
Cal-CHIPP. Emergency regulations do not offer the full
opportunity for notice, public comment and public hearings
that the regulatory process normally allows. Existing law
currently gives agencies general authority to adopt
emergency regulations for specified reasons. Staff suggest
amendments to eliminate this authority for the Healthy
Families program and to provide that it does not extend to
enrollment and eligibility criteria for Cal-CHIPP.
a. Page 55, lines 9-12
12693.55. The adoption and readoption of regulations
pursuant to this part shall be deemed to be an emergency
and necessary for the immediate preservation of public
peace, health and safety, or the general welfare .
b. Page 63, lines 25 - 28:
12699.202 (15) Issue rules and regulations, as necessary.
The adoption and readoption of regulations pursuant to this
part shall be deemed to be an emergency and necessary for
the immediate preservation of public peace, health, and
safety, or the general welfare, except that this paragraph
shall not apply to regulations for enrollment and
eligibility into Cal-CHIPP.
12. Timeline for structured individual market changes.
The bill would require carriers in the individual market to
provide coverage on a guaranteed issue basis to individuals
not eligible for the high-risk pool (MRMIP) beginning July
1, 2008. Yet, regulations for a structured individual
STAFF ANALYSIS OF ASSEMBLY BILL 8 (N??ez) Page
41
market with five classes of plans may not be adopted until
January 1, 2010, possibly delaying availability of products
within the five classes until April 1, 2010. In AB 2, a
measure that also seeks to provide guaranteed issue
coverage with structured market rules in the individual
market, regulations must be adopted by September 1, 2008,
with the requirements of the structured market going into
effect January 1, 2009. Staff recommends conforming the
date on which a structured individual insurance market with
guaranteed issue should go into effect with AB 2.
a. Page 37, lines 28-31, and page 42, lines 15-19:
(identical language in Health & Safety Code and Insurance
Code)
(a) On or before September 1, 2008, January 1, 2010, the
director and the Insurance Commissioner shall jointly adopt
regulations governing five classes of individual health
benefit plans that health care service plans and health
insurers shall make available.
b. Page 38, lines 18-23, and page 43, lines 9-14:
(identical language in Health & Safety Code and Insurance
Code)
At the same time that Effective January 1, 2009, health
care service plans and health insurers participating in the
individual market are required to guarantee issue the five
classes of approved health benefit plans , . At that same
time, health care service plans and health insurers shall
discontinue offering and selling health benefit plans other
than those within the five approved classes of benefit
plans in the individual market.
13. Suggested technical amendments:
a. Page 39, lines 1-2:
(d) At significant life events, the subscriber enrollee may
move up to a higher class of benefits as follows:
STAFF ANALYSIS OF ASSEMBLY BILL 8 (N??ez) Page
42
b. Page 39, line 17-19:
1366.107. At the time an individual applies for qualifying
health coverage from a health care service plan or health
insurer participating in the individual market, an
individual shall provide
c. Page 43, lines 31-32:
(d) At significant life events, the subscriber insured may
move up to a higher class of benefits as follows:
d. Page 44, lines 7-9:
10199.107. At the time an individual applies for
qualifying health coverage from a health care service plan
or health insurer participating in the individual market,
an individual shall provide
e. Page 44, beginning line 35
? health care market, subject to rules and requirements
jointly approved adopted by the director and the Insurance
Commissioner.
f. On page 62, lines 35 -36:
(1) Determine eligibility and enrollment criteria and
processes for Cal-CHIPP, consistent with the eligibility
standards in Chapter 3.
g. On page 63, line 33, after the period, insert:
Nothing shall be construed to permit the board to limit
enrollment of persons who otherwise meet the eligibility
requirements of Chapter 3 as a means of ensuring the fiscal
solvency of the fund.
h. Page 66, lines 7-10:
(c) The board, in consultation with the Department of
Health Care Services, shall take all reasonable steps
necessary to maximize federal funding and support federal
claiming in the administration of the purchasing pool
STAFF ANALYSIS OF ASSEMBLY BILL 8 (N??ez) Page
43
created pursuant to this part.
i. Page 69, lines 25-26:
(B) Pay an equivalent amount to the fund as required by
Section 976.6 of the Unemployment Insurance Code into the
California Health Trust Fund.
j. Page 69, lines 32-33:
(B) Pay an equivalent amount to the fund as required by
Section 976.6 of the Unemployment Insurance Code into the
California Health Trust Fund.
k. Page 70, lines 32-38:
(c) Notwithstanding subparagraphs (A) and (B) of paragraph
(3) of subdivision (a), the board may adjust the health
care expenditure amounts required by those subparagraphs.
On or before October 31 of each year, the board shall
prepare a statement, which shall be a public record and
adopted in a public hearing, setting forth the adjustments
for the next calendar year and shall promptly notify the
Employment Development Department of those adjustments.
l. Page 71, line 27:
consistent with regulations adopted pursuant to Section
2200
m. Page 72, lines 24-28:
(2) "Health care expenditures" does not include a payment
made directly or indirectly for workers' compensation,
Medicare benefits, or any other health benefit cost, taxes,
penalties or assessments that the employer is required to
pay by state or federal law, other than as required by
Section 2200. For purposes of this section, penalties do
not include expenditures to meet the minimum spending
requirement.
n. Page 75, line 14:
STAFF ANALYSIS OF ASSEMBLY BILL 8 (N??ez) Page
44
4805. On and after January October 1, 2009, in addition
to other
o. Page 84, line 18, insert:
Section 14005.333. The Department of Health Care Services,
in consultation with the Managed Risk Medical Insurance
Board, shall take all reasonable steps necessary to
maximize federal funding and support federal claiming in
the administration of this Act.
p. Section 14005.33 of the Welfare and Institutions Code
is renumbered:
Section 14005.33 Section 14005.335
q. Page 24, lines 33 through 40:
(b) (1) The Secretary of California Health and Human
Services Agency shall complete or contract for the
assessment described in this section. The Secretary shall
seek a partnership and contract with independent, nonprofit
groups or foundations, academic institutions, or
governmental entities providing grants for health-related
activities, to establish and administer a program to track
and assess the effects of health care reform as set forth
in the California Health Care Reform and Cost Control Act.
The secretary may seek other sources of funding, including
grants, to fund the assessment.
r. Page 26 lines 16 through 21:
(2) An advisory body of individuals with knowledge and
expertise in health care reflecting the broad range of
interests in health policy that is chaired by the Secretary
of California Health and Human Services Agency shall guide
the assessment of health care reform. The Governor shall
appoint five members to the advisory body, the Senate
President pro Tempore Rules Committee shall appoint two
members, and the Speaker of the Assembly shall appoint two
members.
STAFF ANALYSIS OF ASSEMBLY BILL 8 (N??ez) Page
45
s. Page 39, lines 8-10, and page 43, line 39-40:
(identical language in Health & Safety Code and Insurance
Code)
(e) A dependent child may terminate coverage under a
parent's plan, and select his or her own account, within
the same class of benefits following his or her 18th
birthday.
t. Page 67, lines 8-16:
(b) Notwithstanding paragraph (2) of subdivision (a),
eligible employees and, if applicable, dependents of
eligible employees, receiving coverage through a Medi-Cal
or Healthy Families benchmark plan or policy pursuant to
paragraph (2) of subdivision (b) and paragraph (2) of
subdivision (c) of Section 1357.24 of the Health and
Safety Code or paragraph (2) of subdivision (b) and
paragraph (2) of subdivision (c) of Section 10764 are
eligible for Cal-CHIPP.
POSITIONS
Support: Amalgamated Transit Union (if amended)
American Federation of Television and Radio Arts
(if amended)
California Association of Public Hospitals (with
recommendations)
California Budget Project (if amended)
California Conference of Machinists (if amended)
California Federation of Teachers (if amended)
California Labor Federation (if amended)
Children's Health Initiative of Greater Los
Angeles
California Optometric Association
California Medical Association (if amended)
California Public Interest Research Group (if
amended)
Congress of California Seniors (if amended)
Consumers Union (if amended)
Engineers and Scientists of California, IFPTEs
Local 20 and 21(if amended)
First 5 Marin
STAFF ANALYSIS OF ASSEMBLY BILL 8 (N??ez) Page
46
Health Access (if amended)
Insure the Uninsured Project
International Longshore and Wharehouse Workers's
Union (if amended)
Kaiser Permanente (if amended)
PICO California
Service Employees International Union (if
amended)
Strategic Committee of Public Employees,
Laborers' International Union of North America
(if amended)
United Food and Commercial Workers Union, Western
States Council (if amended)
Unite Here! (if amended)
Oppose:Aetna (unless amended)
California Association of Health Underwriters
(unless amended)
California Chamber of Commerce
California Grocers Association
California Manufacturers and Technology
Association
California Nurses Association
California Restaurant Association
California Retailers Association
California Right to Life Committee
California Small Business Association
California Taxpayers' Association
Howard Jarvis Taxpayer Association
National Association of Insurance and Financial
Advisors - CA (unless amended)
National Federation of Independent Business
National Nurses Organizing Committee
Orange Chamber of Commerce and Visitor Bureau
PacificCare
- END -