BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 2244
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           CORRECTED  - 06/02/2010 Technical change (Member name)

          ASSEMBLY THIRD READING
          AB 2244 (Feuer)
          As Amended April 27, 2010
          Majority vote 

           HEALTH              11-6        APPROPRIATIONS      12-5        
           
           ----------------------------------------------------------------- 
          |Ayes:|Monning, Ammiano, Carter, |Ayes:|Fuentes, Ammiano,         |
          |     |Caballero, Eng, Hayashi,  |     |Bradford,                 |
          |     |Hernandez, Jones, Bonnie  |     |Charles Calderon, Coto,   |
          |     |Lowenthal,                |     |Davis,                    |
          |     |V. Manuel Perez, Salas    |     |Monning, Ruskin, Skinner, |
          |     |                          |     |Solorio,                  |
          |     |                          |     |Torlakson, Torrico        |
          |     |                          |     |                          |
          |-----+--------------------------+-----+--------------------------|
          |Nays:|Fletcher, Conway,         |Nays:|Conway, Harkey, Miller,   |
          |     |Emmerson, Gaines, Smyth,  |     |Nielsen, Norby            |
          |     |Audra Strickland          |     |                          |
          |     |                          |     |                          |
           ----------------------------------------------------------------- 
           SUMMARY  :  Prohibits, effective January 1, 2011 for children and  
          January 1, 2014 for adults, a health care service plan or health  
          insurer (collectively 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.









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          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  
            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  








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               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  
            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 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. 

          13)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.

          14)Requires that during the first 60 days after the effective  








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            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.

          15)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. 

          16)Requires all carrier contracts or policies, offered to an  
            individual or child, to provide to subscribers and enrollees  
            at least all basic health care services, as specified.

          17)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; and,

             c)   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.  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;









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          18)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  
            delivery of health care services to its enrollees, as  
            specified.  

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

          20)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.  

          21)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 and service areas. 

          22)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.
          23)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.  

          24)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.








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          25)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  
            writing, specifying the reasons that the carrier contract is  
            not in compliance with the requirements, as specified.

          26)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.  

          27)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.

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

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

          30)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  :   According to the Assembly Appropriations  
          Committee:

          1)Fee-supported (health plan fees) special fund costs of  
            $600,000 to $700,000, combined, the Department of Managed  
            Health Care and the California Department of Insurance to  
            establish regulation related to the requirements of this bill.  
            Absorbable on-going workload to each department to continue  
            oversight of the individual insurance market. 

          2)Unknown, potentially significant state savings in excess of  








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            tens of millions of dollars to the extent this bill reduces  
            enrollment in or reimbursements by Medi-Cal, Healthy Families,  
            or the California Children's Services (CCS) programs. Because  
            this bill increases the availability of private health  
            insurance to children with pre-existing health conditions,  
            children and families may rely less on publicly funded health  
            programs. For example, California currently spends about $2  
            billion (all funds) on the CCS program. Some of these costs  
            will likely shift to private health coverage.

           COMMENTS  :  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 because of a pre-existing condition.

          On March 23, 2010, President Obama signed the Patient Protection  
          and 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.
           

          Analysis Prepared by  :    Tanya Robinson-Taylor / HEALTH / (916)  
          319-2097 


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