BILL ANALYSIS AB 2244 Page 1 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. AB 2244 Page 2 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 AB 2244 Page 3 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 AB 2244 Page 4 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; AB 2244 Page 5 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. AB 2244 Page 6 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 AB 2244 Page 7 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 FN: 0004614