BILL ANALYSIS
AB 1887
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ASSEMBLY THIRD READING
AB 1887 (Villines)
As Amended May 28, 2010
2/3 vote. Urgency
HEALTH 17-0 APPROPRIATIONS 17-0
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|Ayes:|Monning, Fletcher, |Ayes:|Fuentes, Conway, Ammiano, |
| |Ammiano, Carter, Conway, | |Bradford, Charles |
| |Caballero, Emmerson, Eng, | |Calderon, Coto, Davis, |
| |Gaines, Hayashi, | |Monning, Ruskin, Harkey, |
| |Hernandez, | |Miller, Nielsen, Norby, |
| |Bonnie Lowenthal, Nava, | |Skinner, Solorio, |
| |V. Manuel Perez, Salas, | |Torlakson, Torrico |
| |Smyth, Audra Strickland | | |
| | | | |
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SUMMARY : Establishes the framework for the operation of
California's temporary high risk pool related to requirements of
the federal health care reform, the Patient Protection and
Affordable Care Act (PPACA) (PL-111-148). Specifically, this
bill :
1)Requires the Managed Risk Medical Insurance Board (MRMIB) to
establish a temporary high risk pool to provide health
coverage to individuals who are uninsured because of
pre-existing health conditions.
2)Requires MRMIB to apply for federal funding to support the
operation of the pool.
3)Specifies eligibility requirements for individuals accessing
coverage in the high risk pool including legal status, lack
access to coverage, and the existence of a pre-existing health
condition.
4)Requires health coverage in the pool to have an actuarial
value of at least 65%.
5)Limits premiums to 100% if the standard rate for benefits in
the commercial market.
FISCAL EFFECT : According to the Assembly Appropriations
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Committee:
1)According to preliminary information provided by the federal
government, California will receive $761 million (100%
federal) to administer a state-run high risk pool until
January 1, 2014, when broader insurance market reforms and
coverage expansions occur.
2)Funding will be used to support MRMIB workload as the pool
administrator and to provide premium support to enrollees
whose premium costs exceed a specified level. The eligibility
for the risk pool as well as the product design of the
coverage offered will determine how quickly the fixed
allocation of federal funding is spent.
3)The federal government proposes to allocate state funds based
on a formula used for the Children's Health Insurance Program,
which relies on a combination of factors including nonelderly
population, proportion of uninsured, and geographic cost
variation.
4)Under current law, California's high risk pool has only 7,000
enrollees, due to funding limitations. According to estimates,
several hundred thousand Californians may lack access to
health coverage due to pre-existing conditions. The risk pool
established pursuant to this bill may be able to support an
additional 20,000 to 25,000 enrollees.
5)Per federal requirements, premium pricing in the high risk
pool must be similar to the rates found in the individual
insurance market and cannot vary by a person's age by more
than a four to one ratio.
COMMENTS : PPACA provides coverage for over 90% of the presently
uninsured population, adopts broad-reaching reforms in insurance
practices, and makes major new investments in public health. By
2014, states are required to create health insurance exchanges
that will serve as competitive market places for individuals and
small businesses to be able to purchase health insurance
products. Insurers participating in the exchange will be barred
from discriminating based on pre-existing conditions, health
status and gender.
PPACA establishes a temporary high risk pool prior to the
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implementation of the exchange for certain individuals with
pre-existing conditions, who have not had coverage for the prior
six months and meet certain citizen or residency requirements.
According to an April 2, 2010 letter from U.S. Department of
Health and Human Services (DHHS) Secretary Sebelius, states may
choose whether and how they participate in the program. A total
of $5 billion in federal funds has been appropriated to support
the program. California has been allocated $761 million over
the life of the program. To date, twenty-nine states plus D.C.
have elected to operate their own, eighteen have elected to have
DHHS run it, two have deferred the decision and one has not
indicated. This bill establishes the framework for state
implementation.
According to the federal solicitation, states will have some
flexibility in the design of the benefit package as long the
issuer's share is not less than 65% of the total costs of the
benefit. There is also a limit on out-of-pocket expenses
($5,950 for individuals.).
California is among 35 states with an existing program for
medically uninsurable persons, the Managed Risk Medical
Insurance Program (MRMIP) to provide individual coverage through
private health plans for those whose applications for private
individual coverage are rejected by health insurers because of
the individual's health history or health status. MRMIP is
administered by MRMIB. High risk pools provide a safety net for
people who are denied coverage by private insurers for health
reasons and are considered "uninsurable." Some estimates of the
number of medically uninsurable in California range from 400,000
to 800,000 individuals.
On May 10, 2010, DHHS provided to the states that chose to run
their own pool, a solicitation for state proposals. The
solicitation stated that it is DHHS's goal to grant the
flexibility need to permit successful and expeditious
implementation of the program by states. The state submission
is due June 1, 2010, for a July 1, 2010 implementation. States
will be reimbursed for all reasonable and allowable start-up and
administrative costs, including actuarial, legal, marketing and
outreach as well as ongoing administrative costs with a cap of
10% of the total amount over the life of the program.
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Analysis Prepared by : Marjorie Swartz / HEALTH / (916)
319-2097 FN: 0004669