BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 2244
                                                                  Page  1

          Date of Hearing:   April 20, 2010

                            ASSEMBLY COMMITTEE ON HEALTH
                              William W. Monning, Chair
                     AB 2244 (Feuer) - As Amended:  April 5, 2010
           
          SUBJECT  :  Health care coverage.

           SUMMARY  :  Prohibits, effective January 1, 2011 for children and  
          January 1, 2014 for adults, a health care service plan or health  
          insurer (collectively carriers) notwithstanding any other  
          provision of state law or regulation, carriers from excluding or  
          limiting coverage due to any preexisting condition.  Prohibits a  
          carrier contract or policy from limiting or excluding coverage  
          for a child by type of illness, treatment, medical condition, or  
          accident.  Specifically,  this bill  :   

          1)Provides that, until January 1, 2014, only the following age  
            categories can be used in determining premium rates for  
            carriers: under age five; age five-15; and, age 15-19.  

          2)Prohibits carrier premium rates from varying more than two to  
            one for children.

          3)Requires carriers to base rates for individuals and children  
            using only the following family size categories: single;  
            married couple; one adult and child or children; and, married  
            couple and child or children.

          4)Requires a carrier that operates statewide to use the  
            geographic regions, as specified, in determining rates for  
            individuals and children.  Requires that nothing in this bill  
            be construed to require a carrier to establish a new service  
            area or to offer health coverage on a statewide basis, outside  
            of the carrier's existing service area.

          5)Requires, effective January 1, 2011 for children and January  
            1, 2014 for adults, carriers to offer coverage any person that  
            seeks coverage. 

          6)Prohibits, effective January 1, 2011 for children and January  
            1, 2014 for adults, notwithstanding any other provision of  
            state law or regulation, carriers from excluding or limiting  
            coverage due to any preexisting condition.  Excludes coverage  
            for which an employer makes any contribution, contracts or  








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            policies for coverage of Medicare services pursuant to  
            contracts with the United States government, Medicare  
            supplement, Medi-Cal contracts with the State Department of  
            Health Services, Healthy Families, long-term care coverage, or  
            specialized carrier contracts or policies.

          7)Requires, effective January 1, 2010 for children and January  
            1, 2014 for adults, a carrier to fairly and affirmatively  
            offer, market, and sell all of the carrier's contracts and  
            policies that are offered and sold to individuals.  

          8)Prohibits, effective January 1, 2011 for children and January  
            1, 2014 for adults, a carrier from rejecting an application  
            for a carrier contract or policy.  

          9)Prohibits a carrier, or solicitor, directly or indirectly,  
            from:

             a)   Encouraging or directing an individual or responsible  
               party for a child to refrain from filing an application for  
               coverage with a carrier because of the health status,  
               claims experience, industry, occupation of the individual  
               or child, or geographic location provided that it is within  
               the carrier's approved service area; and,
             b)   Encouraging or directing individuals or children to seek  
               coverage from another carrier because of the health status,  
               claims experience, industry, occupation of the individual  
               or child, or geographic location, provided that it is  
               within the carrier's approved service area.

          10)Prohibits a carrier from, directly or indirectly, entering  
            into any contract, agreement, or arrangement with a solicitor  
            that provides for or results in the compensation paid to a  
            solicitor for the sale of a carrier contract or policy to be  
            varied because of the health status, claims experience,  
            industry, occupation, or geographic location of the individual  
            or child.  Prohibits this from applying to a compensation  
            arrangement that provides compensation to a solicitor on the  
            basis of percentage of premium, provided that the percentage  
            does not vary because of the health status, claims experience,  
            industry, occupation, or geographic area of the individual or  
            child.

          11)Prohibits, effective January 1, 2011, a carrier contract or  
            policy that covers a child from establishing rules for  








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            eligibility, including continued eligibility, of an  
            individual, or dependent of an individual, to enroll under the  
            terms of the carrier plan or policy based on specified health  
            status-related factors.  

          12)Requires, effective January 1, 2014, the provisions in 1) to  
            11) above to apply to all individuals and children obtaining  
            coverage with no contribution from an employer.

          13)Requires the carriers, after an individual or the responsible  
            party for a child submits a completed application form for a  
            carrier contract or policy, within 30 days, to notify the  
            individual or responsible party for a child of actual premium  
            charges for that carrier contract or policy.  Requires the  
            individual or responsible party for a child to have 30 days in  
            which to exercise the right to buy coverage at the quoted  
            premium charges. 

          14)Requires that when an individual or the responsible party for  
            a child submits a premium payment, based on the quoted premium  
            charges, and that payment is delivered or postmarked,  
            whichever occurs earlier, within the first 15 days of the  
            month, coverage under the carrier contract or policy becomes  
            effective no later than the first day of the following month.   
            Requires that when that payment is neither delivered nor  
            postmarked until after the 15th day of a month, coverage  
            becomes effective no later than the first day of the second  
            month following delivery or postmark of the payment.

          15)Requires that during the first 60 days after the effective  
            date of the carrier contract or policy, the individual or  
            responsible party for a child to have the option of changing  
            coverage to a different carrier contract or policy offered by  
            the same carrier, as specified.

          16)Prohibits, effective January 1, 2011 for children and January  
            1, 2014 for adults, a carrier from excluding coverage for  
            someone who would otherwise be entitled to health care  
            services on the basis of an actual or expected health  
            condition.  Prohibits a carrier contract or policy from  
            limiting or excluding coverage by type of illness, treatment,  
            medical condition, or accident. 

          17)Requires all carrier contracts or policies, offered to an  
            individual or child, to provide to subscribers and enrollees  








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            at least all basic health care services, as specified.

          18)Prohibits a carrier from being required to offer coverage, or  
            accept coverage applications, in the following cases: 

             a)   To an individual or child, if the individual or child  
               who is to be covered by the carrier contract or policy does  
               not work or reside within the carrier's approved service  
               areas; 
             b)   Within a specific service area or portion of a service  
               area, if the carrier reasonably anticipates and  
               demonstrates to the satisfaction of regulators that it will  
               not have sufficient health care delivery resources to  
               ensure that health care services will be available and  
               accessible because of its obligations to existing enrollees  
               or insureds.  Prohibits a carrier that cannot offer  
               coverage because it is lacking in sufficient health care  
               delivery resources from offering coverage in the area until  
               the carrier notifies regulators that it has the ability to  
               deliver services and certifies that it will enroll all  
               individuals requesting coverage in that area, unless the  
               plan has met the requirements, as specified.  Requires that  
               nothing in this bill be construed to limit the regulator  
               authority to develop and implement a plan of rehabilitation  
               for a carrier whose financial viability or organizational  
               and administrative capacity has become impaired;
             c)   To an individual or child that, within 12 months of  
               application for coverage, disenrolled from a carrier  
               contract or policy offered by the carrier; and,
             d)   A carrier's regulator approves a certification, as  
               specified, that the number of eligible employees and  
               dependents enrolled exceeds 10% of the total enrollment of  
               the carrier in California as of December 31 of the  
               preceding year for self-funded plans or 8% of the total  
               enrollment of the carrier in California as of December 31  
               of the preceding year non-self-funded plans.  Prohibits, if  
               that certification is approved, the carrier from offering  
               coverage to small employers during the remainder of the  
               current year.  

          19)Permits regulators to require a carrier to discontinue the  
            offering of contracts or policies or acceptance of  
            applications from any individual or child upon a determination  
            that the carrier does not have sufficient financial viability  
            or organizational and administrative capacity to ensure the  








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            delivery of health care services to its enrollees, as  
            specified.  

          20)Requires all contracts and policies to be renewable at the  
            option of the enrollee, with specified exceptions.  

          21)Requires, effective January 1, 2011 and only for coverage for  
            children, the premium to be determined for an eligible child  
            in a particular risk category after applying a risk adjustment  
            factor to the carrier's standard risk rates, as specified.  

          22)Requires, in connection with the offering coverage for  
            children, each carrier to make a reasonable disclosure, as  
            part of its solicitation and sales materials, regarding rates,  
            guaranteed issue, benefit plan designs, service areas, 

          23)Requires carriers to prepare a brochure that summarizes all  
            of its carrier contracts or policies offered to children and  
            to make this summary available to any responsible party for a  
            child and to solicitors upon request, as specified.  Requires  
            carriers to prepare a more detailed evidence of coverage, as  
            specified, and make it available to responsible parties,  
            solicitors, and solicitor firms upon request.  Requires  
            carriers to provide, upon request, and as specified standard  
            risk rates.  Requires carriers to provide copies of the  
            current summary brochure to all solicitors and solicitor firms  
            contracting with the carrier, as specified.

          24)Requires every solicitor or solicitor firm contracting with  
            one or more carriers to solicit enrollments or subscriptions  
            from responsible parties for children, notify and advise the  
            responsible party of specified information related to rates  
            and benefit design.  

          25)Requires solicitors to, prior to filing an application for a  
            responsible party for a child for a particular contract or  
            policy, to provide the child's responsible party with  
            specified information about benefits, evidence of coverage,  
            and rates.

          26)Requires, at least 30 business days prior to offering,  
            renewing, or amending a contract or policy, carrier to file a  
            notice of material modification with regulators, as specified.  
             Requires any regulatory action to disapprove, suspend, or  
            postpone the carrier's use of a carrier contract to be in  








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            writing, specifying the reasons that the carrier contract is  
            not in compliance with the requirements, as specified.

          27)Requires, prior to making any changes in the risk categories,  
            risk adjustment factors, or standard risk rates filed with  
            regulators, carriers to file as an amendment a statement  
            setting forth the changes and certifying that the carrier is  
            in compliance, as specified.  

          28)Permits periodic changes to the standard risk rate that a  
            carrier proposes to implement over the course of up to 12  
            consecutive months to be filed in conjunction with the  
            certified statement, as specified.

          29)Requires each carrier to maintain at its principal place of  
            business all of the information required to be filed with  
            regulators.

          30)Requires each carrier to make available to regulators, on  
            request, the risk adjustment factor used in determining the  
            rate for any particular child.

          31)Permits the Department of Managed Health Care Director or the  
            California Department of Insurance Commissioner to issue  
            regulations that are necessary to carry out the purposes of  
            this bill, as specified. 

           FISCAL EFFECT  :   This bill has not yet been analyzed by a fiscal  
          committee.

           COMMENTS  :  

           1)PURPOSE OF THIS BILL.   According to the author, the newly  
            enacted federal health care reform law prohibits use of  
            pre-existing condition exclusions for children in the  
            individual market.  The author maintains there was a dispute  
            between insurers and the federal government about whether the  
            new federal law requires guaranteed issue and this bill would  
            clarify that for California.  According to the author, the new  
            federal law also does not specifically address rating rules in  
            the individual market prior to 2014 or prohibit insurers from  
            refusing to sell to entire market segments.  The author  
            maintains that this bill will align California law with the  
            federal health care reform law and will ensure that children  
            cannot be denied health insurance coverage or be charged more  








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            because of a pre-existing condition.

           2)FEDERAL HEALTH CARE REFORM  .  On March 23, 2010, President  
            Obama signed the Patient Protection and Affordable Care Act  
            (the Affordable Care Act); P. L. 111-148, as amended by the  
            Health Care and Education Reconciliation Act of 2010; P. L.  
            111-152.  Among other provisions, the new law prohibits group  
            health plans or individual health insurance carriers from  
            imposing any preexisting condition exclusion on coverage.  The  
            rollout of the law begins with children.  On September 23,  
            2010, insurers will no longer be able to exclude children with  
            preexisting conditions from being covered by their family  
            policies.  For current policies, that means insurers will have  
            to rescind pre-existing-condition exclusions.  Insurers will  
            not have to take the same steps for adults until January 2014.

          According to a March 28, 2010 New York Times news article, just  
            days after the President signed the Affordability Act, there  
            was a dispute over the language in the law regarding the  
            pre-existing conditions coverage provisions.  The New York  
            Times article stated that while insurers agreed that health  
            insurance carriers offering individual or group coverage were  
            unable to impose preexisting condition exclusions beginning in  
            September, insurers initially disagreed that the law required  
            them to write insurance  at all  for the child or family,  
            providing what they call in the insurance world "guaranteed  
            issue" until 2014.

          The Secretary of the federal Department of Health and Human  
            Services (DHHS) issued clarification in a letter to the  
            president of the America's Health Insurance Plans (AHIP)  
            stating that, "To ensure that there is no ambiguity on this  
            point, I am preparing to issue regulations in weeks ahead  
            ensuring that the preexisting condition exclusion applies to  
            both a child's access to a plan and his or her benefits once  
            he or she is in the plan."  The Secretary further noted that  
            regulations would make clear that by September, "children with  
            pre-existing conditions may not be denied access to their  
            parents' health insurance plans."  In response, AHIP's  
            president wrote to the Secretary that AHIP would accept the  
            clarification of the new law and, fully comply with it.  AHIP  
            further added that, "AHIP members would be ready to work with  
            DHHS to implement the new regulations."

           3)PRE-EXISTING CONDITIONS  .  Private health plans and insurers  








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            use "medical underwriting" to screen applicants for individual  
            health coverage and determine the individual's risk profile  
            and potential need for health care services.  Health insurers  
            typically deny coverage or charge higher rates to individuals  
            with pre-existing serious health conditions, such as cancer or  
            heart disease.  In addition, individuals with any previous  
            health service use, even for conditions that no longer exist  
            or with chronic conditions that are successfully being treated  
            (such as mental illness, diabetes, or asthma) are also often  
            denied coverage.  In many cases, other health-related factors,  
            such as being overweight or being a tobacco user can result in  
            a coverage denial.  There is limited data on the extent of  
            coverage denials in the individual health insurance market  
            because health plans and insurers are not required to report  
            the data.  A September 2006 Commonwealth Fund national survey  
            found that 89% of working-age adults who sought coverage in  
            the individual market during the past three years ended up  
            never buying a plan.  A majority (58%) found it very difficult  
            or impossible to find affordable coverage.  One-fifth (21%) of  
            those who sought to buy coverage were turned down, were  
            charged a higher price because of a pre-existing condition, or  
            had a health problem excluded from coverage.

           4)SUPPORT  .  According to the California School Employees  
            Association (CSEA), health care should be a right and not a  
            privilege.  CSEA maintains that under no circumstances should  
            a child be denied health insurance because of a preexisting  
            condition or sold insurance that does not cover preexisting  
            conditions.  PICO California and The 100% Campaign, a  
            collaborative effort of The Children's Partnership, Children  
            Now, and Children's Defense Fund state that a child in  
            California should not be denied coverage or charged more  
            because they have asthma, diabetes, or risk factors for those  
            conditions.  
           
          5)RELATED LEGISLATION. 

            AB 1887 (Villines) establishes the state temporary high risk  
            pool program in order to be eligible for high risk pool funds  
            under the Affordable Care Act.  AB 1887 is set for hearing on  
            April 20, 2010 in the Assembly Health Committee.

            AB 2345 (De La Torre) requires carriers, after January 1,  
            2011, to meet the requirements of specified provisions of the  
            federal Public Health Service Act, related to federal health  








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            care reform.  AB 2345 is set for hearing on April 20, 2010 in  
            the Assembly Health Committee.

            AB 2477 (Jones) deletes the provision that requires Mid-Year  
            Status Reports for children from January 1, 2011 to July 1,  
            2012, therefore establishes continuous eligibility for  
            children in the Medi-Cal Program.  AB 2477 is pending in the  
            Assembly Appropriations Committee.

            SB 900 (Alquist) establishes the California Health Benefits  
            Exchange within the California Health and Human Services  
            Agency and would requires the Exchange to, among other things,  
            implement specified functions imposed by the Affordable Care  
            Act.  SB 900 is set for hearing in the Senate Health Committee  
            on April 21, 2010.

            SB 1088 (Price) prohibits, with a specified exceptions, the  
            limiting age for dependent children from being less than 27  
            years of age.  SB 1088 is set for hearing in the Senate Health  
            Committee on April 21, 2010.

           REGISTERED SUPPORT / OPPOSITION  :   

           Support 
           
          Health Access California (sponsor)
          Alliance of Californians for Community Empowerment
          California School Employees Association
          Congress of California Seniors
          Consumers Union
          PICO California
          100% Campaign

           Opposition 
           
          None on file.
           
          Analysis Prepared by  :    Tanya Robinson-Taylor / HEALTH / (916)  
          319-2097