BILL ANALYSIS
AB 1602
Page 1
( Without Reference to File )
CONCURRENCE IN SENATE AMENDMENTS
AB 1602 (John A. Perez)
As Amended August 20, 2010
Majority vote
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|ASSEMBLY: |49-26|(June 1, 2010) |SENATE: |21-13|(August 24, |
| | | | | |2010) |
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Original Committee Reference: HEALTH
SUMMARY : Enacts the California Patient Protection and
Affordable Care Act (PPACA) to implement the federal PPACA in
California. Clarifies the powers and duties of the board
governing the California Health Benefit Exchange (Exchange)
relative to the administration of the Exchange, determining
eligibility and enrollment in the Exchange, and arranging for
coverage under qualified carriers. Makes this bill's provisions
contingent upon the enactment of SB 900 (Alquist), which creates
the Exchange and establishes its governance.
The Senate amendments :
1)Delete provisions in the Assembly version of this bill that
would have:
a) Prohibited group or individual health care service plans
or health insurers (collectively carriers) from
establishing lifetime or unreasonable annual limits on the
dollar value of benefits;
b) Required carriers to provide minimum coverage for
specified preventive services;
c) Prohibited carriers from imposing preexisting condition
exclusions for enrollees or insureds under 19 years of age;
and,
d) Prohibited the limiting age for dependent health care
coverage to be less than 26 years of age.
2)Conform California law to provisions the federal PPACA related
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to state Exchanges.
3)Further clarify the powers and duties of the board governing
the Exchange relative to the administration of the Exchange,
determining eligibility and enrollment in the Exchange, and
arranging for coverage under qualified carriers, including
requiring the board to:
a) Establish the Small Business Health Options Program,
separate from the activities of the board related to the
individual market, to assist qualified small employers in
facilitating the enrollment of their employees in coverage
offered through the Exchange in the small employer market
in a manner consistent with PPACA;
b) Determine criteria and process for eligibility,
enrollment, and disenrollment of enrollees and potential
enrollees in the Exchange and coordinate that process with
the state and local government entities administering other
health care coverage programs, including the State
Department of Health Care Services, the Managed Risk
Medical Insurance Board, and California counties, in order
to ensure consistent eligibility and enrollment processes
and seamless transitions between coverage;
c) Require, as a condition of participation in the
Exchange, carriers to fairly and affirmatively offer,
market, and sell in the Exchange at least one product
within each of the five levels of coverage contained PPACA.
Permit the board to require carriers to offer additional
products within each of those five levels of coverage;
d) Conduct an annual audit and to prepare a written report
on the implementation and performance of the Exchange
during the preceding fiscal year, which is to be
transmitted to the Legislature and Governor, and to be
posted on its Web site; and,
e) Ensure that the establishment, operation, and
administrative functions of the Exchange do not exceed the
combination of federal funds, private donations, and other
non-General Fund moneys available for this purpose.
4)Authorize the California Health Facilities Financing Authority
(CHFFA) to provide a working capital loan of up to $5 million
to assist in the establishment and operation of the Exchange,
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but specifies that CHFFA is not required to provide a loan to
the Exchange under any circumstances. Require, prior to CHFFA
providing a loan to the Exchange, that a majority of the board
of the Exchange be appointed and demonstrate that federal
planning and establishment grants are insufficient or will not
be released in a timely manner to allow the Exchange to meet
necessary federal requirements. Require repayment of any such
loan by June 30, 2016.
5)Require coordination between the Exchange, the county human
services departments that administer Medi-Cal eligibility, and
the Managed Risk Medical Insurance Board, including
development of case transfer and referral procedures between
the Exchange and those entities and the development of
procedures for enrollment into the Exchange by the human
services departments and the board of individuals who apply
for eligibility to those entities, to the extent allowed or
required by federal law.
6)Exempt from the California Public Records Act records of the
Exchange that reveal:
a) The deliberative processes, discussions, communications,
or any other portion of the negotiations with entities
contracting or seeking to contract with the Exchange,
entities with which the Exchange is considering a contract,
or entities with which the Exchange is considering or
enters into any other arrangement under which the Exchange
provides, receives, or arranges services or reimbursement;
and,
b) The impressions, opinions, recommendations, meeting
minutes, research, work product, theories, or strategy of
the board or its staff, or records that provide
instructions, advice, or training to employees.
7)Require Exchange contracts, except for the portion that
contains the rates of payment, to be open to inspection one
year after their effective dates. Requires amended contracts
to be open to inspection one year after the effective date of
the amendment.
8)Require the board, effective January 1, 2016, and if there are
unencumbered funds in the California Health Trust Fund that
are equal or are more than the operating budget, to reduce the
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charges imposed on participating carriers during the following
fiscal year, as specified.
9)Require carriers that do not participate in the Exchange,
commencing January 1, 2014, and with respect to plan contracts
that cover hospital, medical surgical benefits, to offer at
least one standardized product that has been designated by the
Exchange in each of the four levels of coverage contained in
PPACA. Prohibit anything in this bill from requiring a
carrier that does not participate in the Exchange to offer
standardized products in the small employer or individual
market if it does not sell products in that market.
10)Make the provisions of this bill contingent upon the
enactment of SB 900 (Alquist), which creates the Exchange and
establishes its governance.
AS PASSED BY THE ASSEMBLY , this bill enacted the California Act
to implement reforms under the PPACA in California. Prohibited
carriers from establishing lifetime or unreasonable annual
limits on the dollar value of benefits. Required carriers to
provide minimum coverage for specified preventive services.
Prohibited carriers from imposing preexisting condition
exclusions for enrollees or insureds under 19 years of age.
Prohibited the limiting age for dependent health care coverage
to be less than 26 years of age. Created the Exchange for the
purchase of health care coverage, and specified the duties and
responsibilities of the Exchange. Required the board of the
Exchange to facilitate the purchase of qualified health plans
through the Exchange by qualified individuals and qualified
small employers by January 1, 2014. Created the California
Health Trust Fund as a continuously appropriated fund.
FISCAL EFFECT : According to the Senate Appropriations
Committee:
Fiscal Impact (in thousands)
Major Provisions 2010-11 2011-12 2012-13 Fund
Exchange initial start-up costs likely in the millions of
dollars General/*
annually through January 1, 2014
Federal
Ongoing Exchange likely to start January 1, 2014,
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in the Special**
administration tens of millions of dollars annually
*Unspecified amount of federal funds available likely in 2011;
General Fund pressure if total expenses not met by federal funds
grant
**California Health Trust Fund-fully supported with consumer
premiums
COMMENTS : On March 23, 2010, President Obama signed the PPACA
(Public Law 111-148), as amended by the Health Care and
Education Reconciliation Act of 2010 (Public Law 111-152).
Among other provisions, the new law makes statutory changes
affecting the regulation of and payment for certain types of
private health insurance. Each state is required to establish
an American Health Benefit Exchange and a Small Business Health
Options Program Exchange by 2014 for individuals and small
employers with 50 to 100 employees; after 2017, states have the
option of opening the small business exchange to employers with
more than 100 employees. States can opt to provide a single
exchange for individuals and small employers. Groups of states
can form regional exchanges or states can form more than one
in-state exchange, but the exchanges must serve a geographically
distinct area. While the individual and small-group markets
will not be replaced by the exchanges, the same market rules
will apply inside and outside the exchanges. Premium subsidies
can be used only for plans purchased through the exchanges. If
the federal HHS determines in 2013 that a state will not have an
exchange operational by 2014, HHS is required to establish and
operate an exchange in the state. In 2017, states will have the
opportunity to opt out of the federal requirements to establish
insurance exchanges through a five-year waiver; if they are able
to demonstrate that they can offer all residents coverage at
least as comprehensive and affordable as that required by this
bill.
Federal responsibilities. HHS' responsibilities with respect to
the exchanges include: establishing certification criteria for
"qualified health plans" that will be sold through the
exchanges; requiring such plans to provide the essential
benefits package; requiring that the licensed insurance carriers
issuing plans offer at least one qualified health plan at the
silver and gold levels and meet marketing requirements; ensuring
a sufficient choice of providers; and, ensuring that essential
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community providers are included in networks, are accredited on
quality, implement a quality improvement strategy, use a uniform
enrollment form, present plan information in a standard format,
and provide data on quality measures. The HHS Secretary will
develop a rating system for qualified health plans and a model
template for an exchange's Internet portal, and determine an
initial and open enrollment period as well as special enrollment
periods for people under varying circumstances. The HHS
Secretary is also required to establish procedures under which
states may allow brokers to enroll individuals in qualified
health plans and assist them in applying for subsidies. Such
procedures may include the establishment of rate schedules for
broker commissions paid by health plans offered through the
exchange.
State responsibilities. The state exchanges will be required to
certify qualified health plans, operate a toll-free hotline and
Web site, rate qualified health plans, present plan options in a
standard format, inform individuals of the eligibility
requirements for Medicaid (Medi-Cal in California) and the
Children's Health Insurance Program (Healthy Families in
California), provide an electronic calculator to calculate plan
costs, and grant certifications of exemption from the individual
requirement to have health insurance. Exchanges will be
required to be self-sustaining by 2015 and will be allowed to
charge assessments or user fees to participating health
insurance issuers or otherwise generate funding to support their
operations. The exchanges also will award grants to
"navigators" who will educate the public about qualified health
plans, distribute information on enrollment and subsidies,
facilitate enrollment, and provide referrals on grievances.
Navigators may include trade and professional organizations,
farming and commercial fishing organizations, community and
consumer-focused nonprofit groups, chambers of commerce, unions,
or licensed insurance agents or brokers.
Qualified employers purchasing through the exchange. Employers
that are qualified to offer coverage to employees through the
Exchange may provide premium support for a level of coverage
(bronze, silver, gold, platinum) and employees may choose a plan
within those levels.
Analysis Prepared by : Melanie Moreno / HEALTH / (916)
319-2097
AB 1602
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FN: 0006697