BILL NUMBER: SB 51 INTRODUCED
BILL TEXT
INTRODUCED BY Senator Ducheny
JANUARY 8, 2007
An act to add Part 6.44 (commencing with Section 12699.70) to
Division 2 of the Insurance Code, relating to health care coverage.
LEGISLATIVE COUNSEL'S DIGEST
SB 51, as introduced, Ducheny. San Diego Health Care Connection
Demonstration Project.
Existing law, the County Health Initiative Matching Fund,
establishes a program administered by the Managed Risk Medical
Insurance Board and the State Department of Health Care Services.
Under existing law, a local entity may apply to the board to obtain
funding from the County Health Initiative Matching Fund for health
care coverage for persons meeting specified criteria.
This bill would establish the San Diego Health Care Connection
Demonstration Project. The bill would require the board to contract
with San Diegans for Healthcare Coverage, Inc., a private nonprofit
corporation, to provide local project operations to assist employers
in San Diego County with providing health care benefits to employees
with full-time employment, as defined. The bill would specify various
components of the project, including, but not limited to,
establishing a premium assistance program and criteria for
participation in the project by employers and employees and an
essential benefits package consisting of health care benefits and
dental coverage to be offered by participating health care service
plans. The bill would require the department to secure any federal
waivers required for the project by June 30, 2008, and to establish
data collection and reporting procedures. The bill would require the
board to submit an annual report to the Legislature on the progress
and outcomes of the project. The bill would require the board to
submit a report, on or before January 1, 2011, to the Legislature
regarding the feasability of expanding the project to persons with
part-time employment, as defined.
The bill would declare that due to the unique circumstances
pertaining to San Diego County that it is intended to remedy, a
general statute within the meaning of specified provisions of the
California Constitution cannot be made applicable and a special
statute is necessary.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. This act shall be known and may be cited as the San
Diego Health Care Connection Demonstration Project.
SEC. 2. (a) The Legislature finds and declares all of the
following:
(1) Approximately 25 percent of adults in California were without
health care coverage at some time during the year 2003, and it is
estimated that more than 75 percent of that population was employed
or part of a family with an employed member.
(2) Fewer employers are able to offer health care coverage to
their employees, and fewer low- to modest-wage employees are able to
pay for their share of coverage when it is offered. As a result, the
percentage of Californians covered by employer-sponsored health care
coverage is declining, and the percentage of those without health
care coverage is increasing.
(3) Research studies report that employees of small businesses and
those in low-wage jobs are less likely to be enrolled in
employer-sponsored health care coverage and are significantly more
likely to be without health care coverage. Research also shows that
low-income individuals with private health care coverage with
traditional deductibles and copayment amounts have the same health
outcomes as those without health care coverage because they are
reluctant to obtain care because of the out-of-pocket expenses under
their health plan or policy.
(4) Research studies report that those without health care
coverage are significantly more likely to be admitted to a hospital
for an avoidable hospital condition and are in poorer health upon
admission than those with health care coverage. Many of those without
health care coverage ultimately become eligible for that coverage
through government programs due to their medical condition, sometimes
resulting in poorer outcomes and higher costs to the public.
(5) There are currently "three-share" programs, including state
reinsurance of private coverage, in place or being implemented
through federal waiver in other states to address the issues of
growing uninsured, decreasing affordability of health care coverage,
and declining employer-sponsored health care coverage.
(6) In San Diego County, a unique and diverse collaboration of
consumer, business, labor, health care provider, health plan, and
local government representatives have worked to reach consensus and
identify tradeoffs necessary to expand health care benefits to
employed persons who are without health care coverage and to reduce
the number of residents in the region without that coverage. One
critical strategy that has been identified is a partnership with the
business community to focus on the uninsured through the workplace.
(b) It is the intent of the Legislature to establish the San Diego
Health Care Connection Demonstration Project that will include a
premium assistance program to allow employed persons without health
care coverage and employers to enroll in a basic benefits plan at
actuarially established commercial premiums appropriate to the
benefit package. It will also include a resource center and programs
to provide education, outreach, eligibility services, and enrollment
in the premium assistance program as well as eligibility screening
and referral for other private and public health care benefits
programs. The San Diego Health Care Connection Demonstration Project
is also intended to test key elements of health reform models, to
estimate potential savings to the state resulting from its operation,
and to test interest and participation by employers and uninsured
employees.
SEC. 3. Part 6.44 (commencing with Section 12699.70) is added to
Division 2 of the Insurance Code, to read:
PART 6.44. San Diego Health Care Connection Demonstration
Project
12699.70. The San Diego Health Care Connection Demonstration
Project is hereby established.
12699.71. The following definitions apply for purposes of this
part:
(a) "Board" means the Managed Risk Medical Insurance Board.
(b) "Department" means the State Department of Health Care
Services.
(c) "Full-time employment" means employment with a single employer
of an average of 20 or more hours each week.
(d) "Part-time employment" means employment of less than an
average of 20 hours each week with a single employer.
(e) "Project" means the San Diego Health Care Connection
Demonstration Project.
(f) "SDHCC" means San Diegans for Healthcare Coverage, Inc., a
private nonprofit corporation.
(g) "Providing employer" means an employer that is currently
providing health care coverage to employees or has provided health
care coverage within the six months prior to application for
enrollment in the project.
(h) "Nonproviding employer" means an employer that does not
currently provide health care coverage to employees and has not
provided health care coverage within the six months prior to
application for enrollment in the project.
12699.72. (a) The board shall contract with SDHCC to provide
local project operations.
(b) The Legislature finds that the provision of local project
operations is a new state function pursuant to Section 19130 of the
Government Code.
(c) The contract awarded pursuant to this section is exempt from
the competitive bidding requirements of the Public Contract Code.
(d) Notwithstanding any other provision of law, a member of the
SDHCC board of directors shall not be deemed to be interested in a
contract entered into by the state and the SDHCC if all of the
following conditions are satisfied:
(1) The member was appointed to represent the interests of
physicians, health care practitioners, hospitals, pharmacies, health
plans, advocates, or other health care organizations.
(2) The contract authorizes the member or the organization the
member represents to provide services under the project.
(3) The contract contains substantially the same terms and
conditions as contracts entered into with other individuals or
organizations the member was appointed to represent.
(4) The member does not influence or attempt to influence the
SDHCC or another member of the SDHCC board to recommend that the
state or SDHCC enter into the contract in which the member is
interested.
(5) The member discloses the interest to the SDHCC board and
abstains from voting on any recommendation on the contract.
(6) The SDHCC notes the member's disclosure and abstention in its
official records.
12699.73. (a) The project shall assist employers doing business
in San Diego County with providing health care benefits to their
employees with full-time employment.
(b) The project shall consist of the following components:
(1) Establishment of a premium assistance program. The program
shall include eligibility criteria such as employment status, average
number of hours worked each week, and family income categories of 0
to 199 percent of the federal poverty level and 200 to 299 percent of
the federal poverty level and establishment of the employee share of
the monthly premium cost at a fixed monthly amount equal to
approximately 1 to 2 percent of the employee's monthly gross family
income for health care benefits. The health care benefit premium for
eligible employees under 300 percent of the federal poverty level
shall be funded by employees, employers, and the state.
(2) Establishment of a basic essential benefits package to be
offered by participating health care service plans to participants in
the premium assistance program to include the following:
(A) Health care benefits, including medically necessary inpatient
and outpatient diagnostic and treatment services, primary and
specialty physician services, a three-tier prescription drug program,
rehabilitation services, skilled nursing facility care for up to 30
days per year, mental health up to 20 visits and 20 inpatient days
per year for nonserious mental illness and without limit for serious
mental illness, chemical dependency services including inpatient
services as medically appropriate to remove toxic substances from the
system and up to 20 outpatient visits per year, and vision services
to include routine eye examinations and lenses every two years. For
the premium assistance program, the employee may select the basic
essential benefits package or may select a health care benefit option
of equal or greater benefits and higher cost, with the difference in
cost to be paid by the employee.
(B) Dental coverage, including a dental benefit plan to be
provided by dental health plans that includes preventive, diagnostic,
and basic dental services including minor prosthetic services and
repairs. For the premium assistance program, the employee may select
the basic dental coverage, or a preferred provider organization (PPO)
basic dental coverage of equivalent cost to the basic dental
coverage, or may select dental coverage of equal or greater benefits
and higher cost with the difference in cost to be paid by the
employee.
(C) The amount of copayments under the basic essential benefits
package shall be based upon family income categories. The amount of
annual copayments for health care benefits and dental coverage for an
employee with a gross family income less than 300 percent of the
federal poverty level shall not exceed 7 percent of the employee's
gross annual family income.
(3) Establishment of criteria for participation by employers and
employees in the project, including, but not limited to, the
following:
(A) Criteria for nonproviding employers, requiring them to
contribute 30 percent of the premium expense in the first and second
years of participation in the project, 40 percent of the premium
expense in the third year of participation in the project, 50 percent
of the premium expense in the fourth year of participation in the
project, and 60 percent of the premium expense in the fifth year of
participation in the project.
(i) SDHCC may reduce the percentage of employer share of the
premium expense for the fifth year of participation to no less than
50 percent if project retention falls below 80 percent of
participating employers upon employer transition into the fifth year
of participation.
(ii) An employer that terminates participation in the project, and
later wishes to reenroll, must reenroll at the premium contribution
level appropriate to the year of enrollment as measured from the
first month of first enrollment as if enrollment had not been
terminated or lapsed.
(iii) A participating employer may elect to contribute to a
dependent spouse's health care benefits and, if eligible, the
dependent spouse shall be enrolled through the premium assistance
program.
(B) Criteria for providing employers, requiring them to enroll
through a participating project health care service plan and
contribute to premiums at their current or previous contribution
levels including, as applicable, both employees and dependents. This
contribution amount shall be not less than 60 percent of the premium
expense.
(C) Criteria for all participating employers to do all of the
following:
(i) Enroll a minimum of 70 percent of all eligible employees in
group health care benefits through a participating health care
service plan and notify SDHCC and participating health care service
plans of eligible enrollees no later than 60 days from the effective
date of eligibility. For purposes of this subparagraph, eligible
employees are those not covered by other creditable private or public
health care coverage.
(ii) Establish a waiting period for enrollment of not less than 30
days, and not more than 90 days, from the first of the month
following hire or eligibility for health care benefits.
(iii) Utilize SDHCC administrative procedures and systems for
enrollment and disenrollment, and agree to and participate in project
evaluation. If funding for the employer share of an uninsured
dependent spouse is available from the employer or through other
sources, the dependent spouse may be enrolled in the premium
assistance program.
(D) Criteria for employees to participate in the project if they
meet family income criteria, are not currently enrolled in Medi-Cal
or another public program with a share of cost less than 2 percent of
gross monthly income, and do not have or have not had health care
coverage for a period of six months prior to enrollment. The project
shall establish exceptions to prior health care coverage restrictions
if the reasons were outside of the employee's control, including,
but not limited to, loss of employment or loss of eligibility for
public program coverage. Participating employees who become eligible
for long-term Medi-Cal or Medicare due to a medical condition during
the course of project participation shall be required to complete an
eligibility application and the eligibility process and, if certified
eligible with a share of cost less than 2 percent of gross monthly
income, shall be disenrolled from the project. For the purposes of
this subparagraph, SDHCC and participating health care service plans
shall be exempt from Section 1373 of the Health and Safety Code
prohibiting plan contracts from providing an exemption because of an
applicant's entitlement to Medi-Cal benefits.
(4) Establishment of participation criteria and administrative
procedures for health care service plans and dental health plans,
including approval to provide commercial group health care benefits
or dental coverage for both small and large employers in San Diego
County, agreeing to offer the basic essential benefits package
established by the project for employees under 300 percent of the
federal poverty level, offering their portfolio of group benefit
plans for employees over 300 percent of the federal poverty level,
and allowing the employer to select up to two benefit plans for
employees over 300 percent of the federal poverty level, complying
with project enrollment processes and systems, establishing
reinsurance and administrative procedures and evaluation processes,
applying small group rules and protections to the project, and
agreeing to automatic annual rate adjustments over the life of the
program subject to adjustments for demonstrated participating
employee expenses exceeding annual rate adjustments by a specified
level. For the purposes of project evaluation, participating health
care service plans shall provide summary and enrollee level data to
the project.
(A) The project shall develop, negotiate, and execute contracts
and operating policies and procedures with health care service plans
that meet participation criteria to ensure access within San Diego
County.
(B) Contracts and operating procedures shall include adverse
selection enrollment protections including quarterly retroactive
premium payment adjustments based upon the actual age group of
enrollees compared to the age groups utilized to establish average
project premium levels. Those adjustments shall be calculated 60 days
after the quarter and payment adjustments made within 30 days of
adjustment calculations.
(C) Small business insurance rules and protections shall apply to
the program, including guaranteed issue and renewability subject to
annual rate adjustments.
(D) Qualifying events for special enrollment shall include
official SDHCC notification to uninsured employees working for an
employer offering health care coverage through a participating health
plan. Those employees shall have 30 days from the date of
notification to apply for the project.
(5) Establishment of administrative and financial policies and
procedures to include, but not be limited to, the following:
(A) Information resources for the project and for other private
and public health care coverage.
(B) An outreach program to provide employers and employees with
education and eligibility screening and enrollment for the project
and for other private and public health care coverage programs.
(C) Linkages and partnerships with local government agencies,
business associations, economic development councils, workforce
partnerships, brokers, professional associations, and community-based
organizations to identify, accept referrals from and refer to, and
coordinate with existing resources. The project shall facilitate
enrollment of eligible children in public programs, including
enrollment of eligible children in the Healthy Families Program, with
subscriber premium payments through payroll deduction to maximize
continuity of health care benefits.
(D) Health plan contracts, broker policies and procedures, premium
collection and premium distribution policies, reinsurance program
policies and procedures, and other procedures and processes necessary
to implement the project.
(E) Accounting and financial reporting policies and other
procedures and processes necessary for the financial management of
the project.
(F) Operating policies, procedures, and processes necessary to
operate the project, including contracts with third-party
administrators as necessary for premium collection and distribution
and reinsurance administration.
(G) Data collection and reporting procedures to identify, report
on, and evaluate project activities, impacts, and estimated offsets
to state public program expenditures.
12699.74. The department, working in coordination with the board
and SDHCC, shall perform the following functions for the project:
(a) Develop, pursue, and secure any federal waivers necessary to
implement the project. Submission of the federal waiver shall be
completed on or before June 30, 2008.
(b) Establish data collection and reporting procedures to identify
and report on project activities, impacts, and estimated offsets to
state public program expenditures.
12699.75. The board, in conjunction with SDHCC, shall evaluate
the feasibility of including employees with part-time employment in
the project. The board shall submit a report on this matter to the
Legislature on or before January 1, 2011.
12699.76. The project shall establish, monitor, and continuously
evaluate critical success indicators and outcomes for its programs
and operations, including the number of employers and employees
participating in it, their benefit status, and services provided to
them, including those employees and dependents identified as eligible
for public program coverage at the time of enrollment. On or before
January 1, 2009, and annually thereafter, the board shall submit a
report to the Legislature on the progress and outcomes of the
project, including the number of employees participating in it and
other health care coverage programs and the estimated offsets to
other state program expenditures resulting from the project.
12699.77. Any funding for this project shall supplement and not
supplant appropriations for existing health programs administered by
the state and county and funded by federal, state or county dollars
or any combination of federal, state and county dollars.
SEC. 4. The Legislature finds and declares that due to the unique
circumstances applicable within the County of San Diego with respect
to its significant population of low-income residents without health
care coverage, the existence of San Diegans for Healthcare Coverage,
Inc., and the collaborative agreement among diverse constituency
groups within the county to pursue the San Diego Health Care
Connection Demonstration Project, a statute of general applicability
cannot be made applicable within the meaning of subdivision (b) of
Section 16 of Article IV of the California Constitution.