BILL ANALYSIS                                                                                                                                                                                                    




                   Senate Appropriations Committee Fiscal Summary
                           Senator Christine Kehoe, Chair

                                           1826 (Huffman)
          
          Hearing Date:  8/2/2010         Amended: 5/28/2010
          Consultant: Katie Johnson       Policy Vote: Health 5-2
          _________________________________________________________________ 
          ____
          BILL SUMMARY:  AB 1826 would require health care service plans  
          and health insurers that cover outpatient prescription drug  
          benefits to provide coverage for a drug that has been prescribed  
          for the treatment of pain. The bill would prohibit health plans  
          and insurers from requiring the subscriber or enrollee to first  
          use an alternative prescription drug or an over-the-counter  
          drug, as specified.
          _________________________________________________________________ 
          ____
                            Fiscal Impact (in thousands)

           Major Provisions         2010-11      2011-12      2012-13     Fund
                                                                  
          MRMIB programs           $1,050     $2,100   $2,100General/*
          increased costs                                        Federal/
                                                                 Special

          Medi-Cal increased costs $4,050     $8,100   $8,100General/**
                                                                 Federal
          *Healthy Families: 35 percent General Fund; 65 percent federal  
          funds
          AIM: 35 percent Proposition 99 tobacco taxes and premiums; 65  
          percent federal funds
          MRMIP: 40 percent Proposition 99 tobacco taxes; 60 percent  
          subscriber premiums
          **Medi-Cal: 50 percent General Fund; 50 percent federal funds
          _________________________________________________________________ 
          ____

          STAFF COMMENTS: This bill meets the criteria for referral to the  
          Suspense File.
          This bill would require health care service plans and health  
          insurers that cover outpatient prescription drug benefits to  
          provide coverage for a drug that has been prescribed for the  
          treatment of pain and would prohibit health plans and insurers  
          from requiring an individual to first use an alternative  
          prescription drug or over-the-counter drug, as specified. Costs  










          to the California Department of Insurance and the Department of  
          Managed Health Care to continue to provide oversight of the  
          insurance industry would be minor and absorbable.

          According to an analysis performed by the California Health  
          Benefits Review Program (CHBRP) on this bill, there would be  
          annual costs of up to $2.1 million to the Healthy Families  
          Program (Healthy Families), the Access for Infants and Mothers  
          (AIM) program, and the Major Risk Medical Insurance Program  
          (MRMIP). Since Healthy Families has roughly 800,000 enrollees to  
          AIM and MRMIP's 7,000 enrollees each, the majority of the costs  
          would be Healthy Families'. CHBRP estimated an annual cost of  
          $8.1 million to Medi-Cal managed care plans. Amendments were  
          made to the bill after the publication of the CHBRP analysis to  
          address cost concerns relating to the bill being construed to  
          prohibit generic drug substitutions. However, costs to both the  
          Healthy Families Program and Medi-Cal would remain largely  
          unchanged. This bill would exempt the California Public  
          Employees Retirement System (CalPERS).