BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
1826 (Huffman)
Hearing Date: 8/12/2010 Amended: 5/28/2010
Consultant: Katie Johnson Policy Vote: Health 5-2
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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.
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Fiscal Impact (in thousands)
Major Provisions 2010-11 2011-12 2012-13 Fund
Increased premiums in about $12 million annually in cost
General
exchange pressure commencing January 1, 2014
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STAFF COMMENTS: SUSPENSE FILE. AS PROPOSED TO BE AMENDED.
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).
The proposed author's amendments would exempt Medi-Cal and
Healthy Families from the provisions of this bill, which would
eliminate the costs to those programs.
However, there could continue to be costs to the state
commencing January 1, 2014, to the extent that these provisions
are not included in the "essential benefit package" defined by
federal health care reform. The Patient Protection and
Affordable Care Act
Page 2
AB 1826 (Huffman)
(ACA) requires states, commencing January 1, 2014, to pay for
the difference in premiums for all benefit mandates that plans
and insurers in the state exchange are required to cover per
state statute that are not included in the essential benefit
package. According to CHBRP, these provisions would cause
premiums charged by health plans and insurers to increase $12.3
million in the private insurance market. There would be General
Fund cost pressure in a similar amount commencing January 1,
2014.