BILL ANALYSIS
SB 1163
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Date of Hearing: August 4, 2010
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
SB 1163 (Leno) - As Amended: June 23, 2010
Policy Committee: Health Vote:13-5
Urgency: No State Mandated Local Program:
Yes Reimbursable: No
SUMMARY
This bill increases the availability of information about health
coverage denials, premium increases, and insurer rate filings.
Specifically, this bill:
1)Expands current law notification requirements about individual
health insurance market coverage denials to the small and
large group health insurance markets. Notifications are
required to include information about reason for denial and
detail about pending premium increases.
2)Increases the time health plans and insurers (carriers) are
required to provide advance written notice of changes in
premiums for individual health coverage from 30 days to 180
days. Requires carriers to include specified detail in rate
filings such as product types, rate increases, and changes in
benefits.
3)Requires carriers to submit detailed data until January 1,
2014 to the California Department of Managed Health Care
(DMHC), the California Department of Insurance (CDI), and the
Managed Risk Medical Insurance Board (MRMIB) regarding
coverage denials.
4)Requires DMHC and CDI to conform to federal health reform
requirements contained in the Patient Protection and
Affordable Care Act (PL-111-148) related to premium rate
review, including providing a summary of consumer inquiries
and complaints and developing mechanisms by which to monitor
and report about health insurance rate filings in the
state-administered health exchange that will become
operational January 1, 2014 per requirements of federal law.
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5)Requires DMHC and CDI to apply for grant funding from the
federal government for the purposes of rate review consistent
with the requirements of federal law, rules, and guidance.
Requires additional costs and expenses associated with rate
reviews to be supported by fees, as specified.
FISCAL EFFECT
1)Increased costs of $2 million, combined, to the Department of
Managed Health Care (DMHC) and the California Department of
Insurance (CDI) to comply with the increased reporting and
oversight requirements established by this bill. These costs
would likely be supported through a combination of federal
funding and fee-supported (health carrier fees) special funds.
California recently applied to the federal government for
funding to comply with rate review requirements.
2)The federal government has allocated $250 million over a
five-year period to support state efforts with regard to rate
review.
COMMENTS
1)Rationale . This bill is sponsored by Health Access and
supported by a variety of consumer and labor groups. The
author and sponsor indicate recent changes related to federal
health reform have opened opportunities for California to
increase the transparency of health coverage underwriting and
pricing.
Supporters indicate under current law there is a lack of
reliable information on how many Californians are denied
coverage for pre-existing conditions, or how often rates are
increased significantly because of changes in health status.
The increased availability of information required in this
bill will aid in the transition to federal health reform over
the next several years, including reporting by California to
the federal government about rate increases, the availability
of coverage in a temporary high risk pool, and the guarantee
issue of health insurance that will be required in several
years.
2)Background . Current law requires carriers that deny health
coverage to an applicant in the individual insurance market to
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provide the specific reason for the decision in writing. This
bill expands this requirement to the small and large group
insurance markets. This bill increases the notifications about
premium increases from 30 to 180 days to better allow
individuals and families to plan accordingly. Current law
contains numerous requirements for health carriers with regard
to underwriting and related approaches. This bill increases
the availability of such information by making it public.
3)Related Legislation . AB 2578 (Jones), pending in the Senate,
establishes detailed rate regulation, effective January 1,
2012, of California health plans and insurers under the
jurisdiction of DMHC and CDI.
Analysis Prepared by : Mary Ader / APPR. / (916) 319-2081