BILL ANALYSIS
SB 54
Page 1
Date of Hearing: June 23, 2009
ASSEMBLY COMMITTEE ON HEALTH
Dave Jones, Chair
SB 54 (Leno) - As Introduced: January 15, 2009
SENATE VOTE : 24-14
SUBJECT : Health care coverage: pricing.
SUMMARY : Prohibits, on or after January 1, 2010, health plans
and health insurers from charging a premium, price, or charge
differential for health care coverage because of the sex of the
prospective subscriber, enrollee, policyholder, or insured.
Specifically, this bill :
1)For health plans licensed under the Knox-Keene Health Care
Service Plan Act of 1975 (Knox-Keene), repeals the ability of
plans to charge differential premium rates for sex in
individual contracts, where premium rate differences are based
on objective, valid, and up-to-date statistical and actuarial
data.
2)For health insurers offering coverage under the Insurance
Code, prohibits health insurance policies issued, amended, or
renewed on or after January 1, 2010, from being subject to
premium, price, or charge differentials because of the sex of
any individual, even if that premium, price, or charge
differential is based on statistical and actuarial data or
sound underwriting practices as otherwise permitted in law.
Defines sex for the purposes of this bill to mean gender as
currently defined in law.
EXISTING LAW :
1)Provides for the regulation of health plans by the Department
of Managed Health Care (DMHC) under Knox-Keene and regulation
of disability insurers selling health insurance (health
insurers) by the California Department of Insurance (CDI)
under the Insurance Code.
2)Prohibits, under Knox-Keene, a health plan from refusing to
contract, canceling, or declining to renew or reinstate any
health plan contract because of the race, color, national
origin, ancestry, religion, sex, marital status, sexual
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orientation, or age of any contracting party, prospective
contracting party, subscriber, enrollee, member, or otherwise.
3)Prohibits, in Knox-Keene, modification of benefits, coverage,
or the inclusion of any limitations, exceptions, exclusions,
reductions, copayments, coinsurance, deductibles,
reservations, premium, price, or charge differentials because
of the race, color, national origin, ancestry, religion, sex,
marital status, sexual orientation, or age of any contracting
party, prospective contracting party, subscriber, enrollee,
member, or otherwise.
4)Establishes in Knox-Keene, for individual coverage, an
exception to 3) above for premium, price or charge
differentials because of the sex or age of any individual,
when based on objective, valid, and up-to-date statistical and
actuarial data.
5)Prohibits life and disability insurers, including health
insurers, from using race, color, religion, sex, national
origin, ancestry, or sexual orientation in determining whether
to offer insurance.
6)Prohibits life and disability insurers, including health
insurers, from using race, color, religion, national origin,
ancestry, or sexual orientation as a condition or risk for
which a higher rate, premium, or charge may be required to be
paid by an insured, but does not include sex in the prohibited
list of conditions or risks.
7)Authorizes in the Insurance Code, for life and disability
policies, including health insurance, premium, price, or
charge differentials because of the sex of the individual when
based on objective, valid, and up-to-date statistical and
actuarial data or sound underwriting practices.
FISCAL EFFECT : According to the Senate Appropriations
Committee, pursuant to Senate Rule 28.8, negligible state costs.
COMMENTS :
1)PURPOSE OF THIS BILL . The author of this bill states that
women seeking health insurance in the individual market should
have the same protections from gender discrimination as those
whose health benefits are provided by their employers.
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According to the author, access to health care saves lives and
the affordability of health insurance should not be determined
by gender. The author notes that current gender-based price
differentials vary dramatically, between 0% to 48%, calling
into question whether these rates are tied to actuarial
differences or are merely arbitrary. For many women, the
higher premiums charged under gender rating make affordable
health insurance out of reach. The author argues that
uninsured women are less likely to obtain preventive care, and
are therefore more likely to seek treatment only when their
health problem has become an emergency and is more costly to
treat. This leads to worse patient outcomes, costs public
hospitals more, and burdens already over-crowded emergency
rooms. Finally, the author points out that existing law
already prohibits insurers from charging discriminatory
premiums based on race, color, national origin, ancestry,
religion, marital status, and sexual orientation, regardless
of any cost differences among these groups.
2)BACKGROUND . Currently, ten other states prohibit gender
rating of individual health insurance rates, while two others
limit it. Federal and state laws prohibit employers from
charging men and women different rates for employer-sponsored
health insurance. Existing California law also specifically
precludes gender rating for employer groups of 2-50 employees.
Gender discrimination in housing, employment, and other
public accommodations and services is prohibited under the
California Fair Employment and Housing Act and the Unruh Civil
Rights Act.
The California HealthCare Foundation (CHCF), which tracks
individual market trends, reports that gender-based health
insurance rates first began to show up in California-based
products in a noticeable way in coverage starting in mid-2007.
A preliminary review of market rates by CHCF in February 2009
found that, among California plans, rate differentials between
men and women ranged from no difference to 26% more. CHCF
found that rate differentials exist even in policies without
maternity coverage and for both Knox-Keene and Insurance Code
products.
3)NATIONAL WOMEN'S LAW CENTER REPORT . The National Women's Law
Center (NWLC) 2008 report Nowhere to Turn: How the Individual
Health Insurance Market Fails Women detailed their
investigation of gender discrimination in health insurance
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premiums and other obstacles to coverage for women. The NWLC
report found huge variations in premiums charged to women and
men for identical health plans (the vast majority of which do
not cover maternity benefits). In this nationwide study, some
insurers charged men and women the same prices, while others
charged women as much as 140% more than men. NWLC concluded,
"This discriminatory and arbitrary practice creates
substantial financial barriers for women seeking to obtain the
health care they need; as such, the use of gender rating
should be abandoned." In the report, NWLC pointed out that 40
years ago, the insurance industry voluntarily abandoned the
practice of using race as a rating factor, despite their
position that it was actuarially based. California already
prohibits insurers from charging higher premiums based on
race, color, national origin, ancestry, religion, marital
status, and sexual orientation, regardless of any cost
differences among these groups.
4)HEALTH CARE FOR WOMEN . According to an April 2007 report by
The Commonwealth Fund (TCF), Women and Health Coverage: The
Affordability Gap, men and women face similar challenges with
regard to health insurance, but women face unique barriers to
becoming insured. On average, women have lower incomes than
men and therefore have greater difficulty paying premiums.
Women are also less likely than men to have coverage through
their employer and more likely to obtain coverage through
their spouses. Women are more likely than men to have higher
out-of-pocket expenses, require more services, and therefore
are in greater need of comprehensive coverage. TCF found that
women are more likely to need health care services throughout
their lifetimes. According to TCF, women's reproductive
health needs require them to get regular check-ups, whether or
not they have children, and women of all ages are more likely
than men, 60% versus 40%, to take regular prescription
medicines. TCF found that women are more likely than men to
have difficulty obtaining needed health care (43% compared to
30%). Finally, TCF found that, whether insured or not, women
are more likely than men to have problems paying for their
health care. Nearly two of five women (38%) report medical
bill problems, compared with 29% of men.
The United States Preventive Services Task Force (USPSTF)
recommends numerous preventive services for both men and
women, as well as pregnant women and children, and complying
with the guidelines would necessitate that women access more
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health care services than men. Many USPSTF recommendations,
such as aspirin for the primary prevention of cardiovascular
events and screening for high blood pressure, colorectal
cancer, diabetes, tobacco use, obesity, human immunodeficiency
virus (HIV), and depression, apply to both men and women.
However, the USPSTF recommends an additional seven preventive
services specifically for women who are not pregnant that are
not recommended for men, such as screening for osteoporosis
and breast, cervical, and ovarian cancers and screening for
chlamydia and gonorrhea, two sexually transmitted infections
that often have no obvious symptoms but can cause long-term
complications and serious harm to the babies of infected
women.
5)INDIVIDUAL MARKET . According to CHCF, the individual health
insurance market in California serves approximately 2.6
million people, and is the primary potential source of
coverage for California's 6.6 million uninsured. The vast
majority of individual subscribers are women. As a growing
number of employers are reducing or eliminating health
insurance for employees due to tough economic times, many of
their employees will seek health insurance on the individual
market. According to the Kaiser Family Foundation (KFF), 6%
of women nationally are using individually purchased coverage
as their primary source of health care coverage. KFF also
reports that the individual insurance market can be a
difficult place to buy coverage, especially for people who are
in less-than-perfect health. Access to and the cost of
coverage is very much dependent on a person's health status,
age, place of residence, and other factors. Common
circumstances leading people to seek such individual coverage
include self-employment, early retirement, working part-time,
divorce or widowhood, or "aging off" a parent's policy.
6)SAN FRANCISCO LAWSUIT . In February 2009, the City and County
of San Francisco (San Francisco) filed a complaint for
declaratory and injunctive relief against the State of
California, the Director of DMHC, and the Insurance
Commissioner, asking the Superior Court to declare that the
existing provisions of Knox-Keene and the Insurance Code
allowing rate differentials based on sex discriminate on the
basis of sex, deny women their right to equal protection under
the California Constitution, and thus are void and
unenforceable. In the filing, San Francisco alleges that it
is legally obligated to provide medical services to persons
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without insurance and bears these costs at San Francisco
General Hospital, Laguna Honda Hospital, and the networks of
community clinics.
7)SUPPORT . The American College of Obstetricians and
Gynecologists (ACOG), District IX, (California), co-sponsor of
this bill, writes in support that the increasing number of
women losing employer coverage leaves them to seek health
coverage through the individual market. ACOG argues that
because women still have less buying power than men ($.77 to
every $1 earned by men), the higher individual rates for women
make it even more difficult for them to afford coverage. The
San Francisco Office of the City Attorney (City Attorney),
also a co-sponsor, writes in support that eliminating
gender-based pricing of individual health insurance will not
increase the price of insurance generally. The City Attorney
points out that insurance industry representatives are making
the claim that this bill will result in a substantial increase
in the cost of health insurance for all Californians even
though the industry's own data demonstrate that this claim is
false. The City Attorney notes that states that prohibit
gender-based pricing have some of the highest, and also some
of the lowest, average annual premiums; therefore,
gender-based pricing is not a key determinant of insurance
prices. The City Attorney adds that even policies excluding
maternity have price differentials ranging from no difference
between men and women for one health insurer to 35% more for
women in another. Equal Rights Advocates (ERA) writes that
current law permitting sex discrimination in health insurance
pricing denies women equal access to insurance and violates
the Constitutional guarantee that the law applies equally to
all persons. ERA asserts that, in addition to being unfair
and discriminatory, current gender-rating practices harm
women's economic well-being and result in more women in
California going without insurance. ERA points out that
because uninsured and under-insured women are less likely to
access adequate preventative services, they are more likely
than insured women to be hospitalized for avoidable health
problems, to be diagnosed at later stages of a disease, and to
forgo necessary medical care or prescription medication to
treat their health problems. ERA also argues that penalizing
women for accessing recommended prevention services is counter
productive, costly, and inherently discriminatory. Supporters
state that gender rating is currently prohibited in the group
market and this bill simply eliminates this inconsistency in
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the individual market. Supporters of this bill also argue
that the practice of gender rating is illegal in other areas
of the law and eliminating discrimination based on gender will
greatly improve access to vital health care for women.
8)OPPOSITION . The Association of California Life and Health
Insurance Companies (ACLHIC) and Aetna, oppose this bill and
state that individual market premiums are determined by
objective statistical evidence, factors typically used are
age, family size, geographic region, health status, age, and
gender. ACLHIC and Aetna make the argument that older men
(aged 50-55) utilize more health care services than women in
this age group and are therefore charged higher premiums than
women in the same age group. Opponents argue that eliminating
gender rating would likely have the unintended consequence of
raising average community rates for everyone, including
increasing the premiums for lower use, healthier individuals,
making coverage less attractive for them. Opponents suggest
that low use individuals may ultimately choose not to purchase
health insurance coverage. The California Chamber of Commerce
writes in opposition that if healthier individuals choose not
to purchase coverage, while those who need health care
services the most continue to purchase coverage, this could
increase the total risk to the purchasing pool, lead to higher
premiums for all, and ultimately increase the number of
uninsured.
9)RELATED AND PREVIOUS LEGISLATION .
a) AB 119 (Jones), pending in the Senate, prohibits health
plans and health insurers from charging a premium, price or
charge differential for health care coverage because of the
sex of the prospective subscriber, enrollee, policyholder
or insured.
b) AB 1218 (Jones), pending in the Assembly, requires
health plans and health insurers, effective July 1, 2009,
to annually submit for prior approval to DMHC and CDI any
increase in the rate charged to a subscriber or insured, as
specified, and imposes on DMHC and CDI specific rate review
criteria, timelines and hearing requirements.
c) AB 1554 (Jones) of 2008 was substantially similar to AB
1218 and would have required health plans and health
insurers, effective July 1, 2009, to annually submit for
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prior approval to DMHC and CDI any increase in the rate
charged to a subscriber or insured, as specified, and would
have imposed on DMHC and CDI specific rate review criteria,
timelines and hearing requirements.
d) AB 1586 (Koretz), Chapter 421, Statutes of 2005, defines
the term "sex," which prohibits health plans and insurers
from specified discriminatory acts, to have the same
meaning as "gender," as defined under the Penal Code,
including a person's gender identity and gender related
appearance and behavior, whether or not stereotypically
associated with the person's assigned sex at birth.
Permits premium, price, or charge differentials, unless
otherwise prohibited by law, because of the sex of any
individual when based on objective, valid, and up-to-date
statistical and actuarial data or sound underwriting
practices.
10)DOUBLE-REFERRAL . This bill has been double-referred. Should
this bill pass out of this committee, it will be referred to
the Assembly Judiciary Committee.
11)AUTHOR'S AMENDMENTS . The author intends to offer amendments
in committee to conform the provisions of this bill to AB 119
(Jones).
REGISTERED SUPPORT / OPPOSITION :
Support
American College of Obstetrics and Gynecologists, District IX
(California) (co-sponsor)
City and County of San Francisco, Office of the City Attorney
(co-sponsor)
American Federation of State, County and Municipal Employees,
AFL-CIO
California Academy of Family Physicians
California Commission on the Status of Women
California Medical Association
California School Employees Association
City of West Hollywood
Equal Rights Advocates
Health Access California
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Planned Parenthood Affiliates of California
Opposition
Aetna
Association of California Life & Health Insurance Companies
California Association of Health Plans
California Chamber of Commerce
California Association of Joint Powers Authorities
Analysis Prepared by : Deborah Kelch / HEALTH / (916) 319-2097