BILL ANALYSIS Ó
AB 792
Page 1
Date of Hearing: April 26, 2011
ASSEMBLY COMMITTEE ON HEALTH
William W. Monning, Chair
AB 792 (Bonilla) - As Amended: April 14, 2011
SUBJECT : Health care coverage: California Health Benefit
Exchange.
SUMMARY : Requires, between January 1, 2012 and December 31,
2013, a notification to be provided to employees, members,
former employees, spouses, or former spouses about purchasing
coverage in the individual market and the consideration of
pre-existing conditions by health plans and insurers. Requires,
after January 1, 2014, a notification to be provided to
employees, members, former employees, spouses, or former spouses
(in the case of group coverage) and to individuals, dependents,
or former dependents (in the case of individual coverage),
informing that person about coverage opportunities through the
California Health Benefit Exchange (Exchange) and that an
application for such coverage has been made. Specifies the
exact language to be included in the notifications. Requires
health plans and insurers, employers and employee associations,
and the Employment Development Department (EDD) to provide to
the Exchange information, including the name or names, most
recent address, and any other information in its possession and
that the Exchange may require in a manner to be prescribed by
the Exchange, regarding specified individuals who are losing
health care coverage. Specifically, this bill :
1)Requires health care service plan (health plan) contracts,
except for a specialized health plans, and health insurance
policies that are issued, amended, delivered, or renewed after
January 1, 2014, that provide medical and hospital coverage
under an employer-sponsored group plan for an employer subject
to COBRA, or an employer group for which the plan is required
to offer Cal-COBRA coverage, including a carrier providing
replacement coverage to further offer the former employee or
former dependent of an employee the opportunity to continue
benefits.
2)Requires health plan contracts, except for a specialized
health plans, and health insurance policies that are issued,
amended, delivered, or renewed after January 1, 2014, that
provide medical and hospital coverage to an individual to
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further offer notice, 60 days in advance of renewal,
amendment, or any change in rate, of the opportunity to
continue benefits, and to further offer the individual or
former dependent of an individual the opportunity to continue
benefits.
3)Requires health plans, insurers, employers, employee
associations, and other entities, at the time a contract or
policy is issued, amended, delivered, or renewed on or after
January 1, 2012, to obtain the consent of the enrollee/insured
to provide the minimum necessary information to the Exchange
in the event that the individual or dependent ceases to be
enrolled or covered.
4)Requires health plans and insurers, to provide to the Exchange
information, including the name or names, most recent address,
and any other information in its possession and that the
Exchange may require in a manner to be prescribed by the
Exchange, regarding the former employee or individual who
chose not to continue coverage and any dependents covered.
Requires EDD to provide this information in the case of
individuals who file a new claim for unemployment
compensation. Provides that the sharing of this information
initiates an application for enrollment in coverage through
the Exchange. Requires the Exchange to seek approval from the
United States Department of Health and Human Services to
transfer the minimum information necessary to initiate an
application for enrollment for coverage through the Exchange.
5)Requires, between January 1, 2012 and December 31, 2013, a
notification to be provided to employees, members, former
employees, spouses, or former spouses about purchasing
coverage in the individual market and the consideration of
pre-existing conditions by health plans and insurers.
Specifies the exact language to be contained in the
notification. Requires this notification to also be provided
by an employer, employee association, or other entity
otherwise providing hospital, surgical, or major medical
benefits to its employees or members to employees, members,
former employees, spouses, or former spouses. Sunsets a
provision in existing law that requires employers, employee
associations, or other entities to provide a specific notice
about declining COBRA coverage effective January 1, 2012.
6)Requires, after January 1, 2014, a notification to be provided
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to employees, members, former employees, spouses, or former
spouses (in the case of group coverage) and to individuals,
dependents, or former dependents (in the case of individual
coverage), informing that person about coverage opportunities
through the exchange and that an application for such coverage
has been made. Specifies the exact language to be included in
the notification.
7)Requires EDD to provide an individual who files a new claim
for disability benefits, whether or not he or she is eligible
for benefits, a notification informing him or her about
coverage available through the Exchange. Specifies the exact
language to be included in the notification.
8)Requires family courts, upon the filing of a petition for
dissolution of marriage, nullity of marriage, or legal
separation, to provide to the petitioner and the respondent
the a specified notice regarding potential eligibility for
health care coverage through the Exchange. Requires family
courts to provide that notice to petitioners upon the filing
of a petition for adoption. Specifies the exact language to
be included in the notice.
9)Requires an individual, in order to decline health care
coverage from the Exchange under the provisions of this bill,
to do so by notifying the Exchange in writing within 63
calendar days of the date of termination coverage.
EXISTING LAW :
1)Provides for the regulation of health plans by the Department
of Managed Health Care and for the regulation of health
insurers by the Department of Insurance.
2)Requires, under the federal Patient Protection and Affordable
Care Act (PPACA), each state to, by January 1, 2014, establish
an American Health Benefit Exchange that makes qualified
health plans available to qualified individuals and employers.
3)Establishes the Exchange within state government, specifies
the powers and duties of the Exchange governing board relative
to determining eligibility for enrollment in the Exchange and
arranging for coverage under qualified health plans, and
requires the board to facilitate the purchase of qualified
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health plans through the Exchange by qualified individuals and
small employers by January 1, 2014.
4)Existing law imposes specified requirements on health plans
and health insurers that provide medical and hospital coverage
under an employer-sponsored group plan for an employer or
employee association subject to requirements under COBRA or
Cal-COBRA, as defined, and imposes specified requirements on
those employers or employee associations to notify its current
and former employees or members and dependents of continuation
coverage and conversion coverage options upon specified
events.
5)Provides for the distribution of unemployment compensation or
disability benefits by EDD.
6)Sets forth procedures related to a petition for dissolution of
marriage, nullity of marriage, or legal separation, or a
petition for adoption.
FISCAL EFFECT : This bill has not yet been analyzed by a fiscal
committee.
COMMENTS :
1)PURPOSE OF THIS BILL . According to the author, in 2014 and
thereafter, a component of the PPACA institutes an individual
mandate provision, which requires everyone to have insurance
and that this bill helps ensure that Californians comply with
the individual mandate even when they are faced with life
changing situations such as filing for unemployment, divorce,
adoption, and loss of employment-based coverage. The author
also states that this bill ensures the design of the Exchange
and redesign of Medi-Cal take into account the need to serve
short-term uninsured as well as provide long-term coverage;
and that it will help ensure Californians are provided notices
and that they are automatically enrolled into either the
Exchange or Medi-Cal. The author contends that the
auto-enrollment process and notices are essential to ensure
that when life changing situations occur, people are aware of
their health care options. The author states that this
auto-enrollment process is not final until the individual
accepts the coverage. The individual maintains the discretion
to decline coverage.
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2)PPACA . It is estimated that 4.7 million California children
and adults who were uninsured during some part of 2009 will be
eligible for health coverage under PPACA. Among other
provisions, PPACA requires, as of January 2014, that states
include all adults with income up to 133% of the federal
poverty level (FPL) in its Medicaid Program (Medi-Cal in
California) and provides enhanced federal matching assistance
funds. PPACA establishes a new eligibility category for all
non-pregnant, non-Medicare eligible childless adults under age
65 who are not otherwise eligible for Medicaid and requires
minimum Medicaid coverage at 133% FPL based on modified gross
income with a special adjustment of 5% to bring effective
income eligibility to 138% FPL. Eligibility is to be
determined without assets or resource tests. In addition,
PPACA requires the establishment of Health Insurance Exchanges
for individuals and small groups who want to enroll in a
qualified health plan. California exercised the option to
establish the Exchange. Effective January 2014, individuals
with income of 100% but not more than 400% of FPL
(approximately $29,000 to $88,000 for a family of four) will
receive a refundable tax credit for a percentage of the cost
of premiums that are purchased through the Exchange.
3)THE EXCHANGE . California was the first state in the nation to
enact legislation creating a health benefit exchange under
PPACA. AB 1602 (John A. Pérez), Chapter 655, Statutes of
2010, and SB 900 (Alquist), Chapter 659, Statutes of 2010,
established the Exchange as an independent public entity
governed by a five-member executive board. According to
California's health care reform Website
(www.healthcare.ca.gov), the Exchange will enhance competition
and provide the same advantages available to large employer
groups by organizing the private insurance market, including a
more stable risk pool, greater purchasing power, more
competition among insurers and detailed information about the
price, quality, and service of health coverage. The Exchange
will also support consumer choice by making comprehensive
information about health plans available in an objective,
easy-to-understand format, including: a Website that provides
standardized comparison information on qualified health plan
benefit plans/options; a calculator for applicants to compare
costs across plan options; a Web-based eligibility portal to
help link individuals to health coverage options available to
them; and, a toll-free consumer assistance hotline. Health
insurance products offered through the Exchange must be
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available in the same form to consumers purchasing coverage
outside the Exchange. All health plans and insurers
participating in the Exchange must offer all Exchange plans at
the federally designated bronze, silver, gold, and platinum
levels. Catastrophic plans will only be available through
health plans and insurers participating in the Exchange, but
will be available both inside and outside the Exchange.
The federal government awarded California $1 million to fund
preliminary planning efforts related to the development of an
exchange. Additional federal implementation grants are
expected to be announced in the spring of 2011. After 2014,
the Exchange must be self-supporting from fees paid by health
plans and insurers participating in the Exchange.
4)RELATED LEGISLATION . AB 43 (Monning) requires the Department
of Health Care Services, by January 1, 2014, to establish
eligibility for Medi-Cal benefits for any person who meets the
requirements of a new Medicaid eligibility category added by
PPACA, in effect expanding Medi-Cal coverage to persons with
income that does not exceed 133% of FPL. AB 43 is set to be
heard in the Assembly Health Committee on April 26, 2011.
AB 714 (Atkins) requires a notification to individuals who
have ceased to be enrolled in specified public health care
coverage programs and to individuals receiving services under
specified health programs regarding potential eligibility for
health care coverage through the Exchange. Requires specified
entities and state departments to provide the disclosure of
information, such as the name and address of each enrollee, to
specified state departments and to the Exchange. Requires the
initiation of an application for enrollment in coverage
through the Exchange and permits individuals to have the
opportunity to decline coverage by notifying the Exchange in
writing. AB 714 is set to be heard in the Assembly Health
Committee on April 26, 2011.
5)SUPPORT . Health Access California, the sponsor of this bill,
states that today when someone loses their job, gets divorced
or ages off their parents coverage, all too often they become
uninsured; and that in 2014, there is no reason why losing
your job or getting divorced should mean losing health
coverage since millions of Californians will be eligible for
coverage through the Exchange or Medi-Cal. Health Access
California contends that this bill will help those
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Californians get coverage when they need it-and when the law
requires it. SEIU California writes that in 2014, there is no
reason why losing your job or getting divorced should mean
losing health coverage when millions of Californians will be
eligible for coverage through the Exchange or Medi-Cal, and
that this bill will help those Californians get coverage when
they need it and when the law requires it.
6)DOUBLE REFERRAL . This bill is double referred. Should it
pass out of this committee, it will be referred to the
Assembly Committee on Judiciary.
7)POLICY CONCERNS .
a) This bill requires health plans and insurers to "further
offer the former employee or former dependent of an
employee the opportunity to continue benefits ?" It is
unclear what the effect of this provision is. The author
and sponsor's stated intent is to "pre-enroll" individuals
into the Exchange through the provision of disenrolled
persons to the Exchange. This language may be unnecessary.
a) This bill would require a number of agencies to provide
specified information to individuals who are losing health
care coverage. Because many of these agencies in some
cases serve the same individuals, there may be some
duplication. For example, in the case where a person
receiving employer health care coverage has been laid off
from his or her job and seeks unemployment compensation,
under this bill's provisions the Exchange will receive
information about that individual from three sources: the
health plan or insurer; the employer; and, EDD.
b) This bill requires various entities to provide
information of persons who will be losing coverage to the
Exchange. The bill also specifies that the provision of
that information initiates an application for coverage. An
individual, in order to decline health care coverage from
the Exchange under the provisions of this bill, must do so
in writing within 63 calendar days of the date of
termination coverage. Is this adequate opportunity to
decline coverage in the case where someone moves or is
exploring other coverage options? Additionally, the bill
does not provide for a process to ensure that a person
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actually receives the notice informing him or her that an
application has been initiated. Further, the notice that
is required under this bill to the individual does not
provide any information about the 63-day window to decline
coverage.
8)TECHNICAL AMENDMENTS .
a) On page 4, line 30; page 6, line16; page 7, line 28;
page 9, line 11; page 12, line 11: after "The" insert
"provision of this"
b) On page 4, line 34; page 5, line 9; page 7, line 32;
page 8, line 7; page 9, line 14; page 10, line 27; page 11,
line 12: delete "provided to" and before "notification"
insert "the health care service plans shall provide the
following"
c) On page 4, line 35; page 5, line 11; page 7, line 33;
page 8, line 9; page 9, line 16; page 10, line 28 page 11,
line14 delete "under subdivisions (a) and (b) shall also
include the following notification"
d) On page 10, line 11: after "(b)" insert:
(1) The employer, employee association, or other entity
otherwise providing hospital, surgical, or major medical
benefits to its employees or members shall provide to the
California Health Benefit Exchange information regarding
the former employee and any dependents covered under the
group coverage. The information provided shall include the
name or names, most recent address, and any other
information that is in the possession of the plan and that
the Exchange may require in a manner to be prescribed by
the Exchange.
(2) The provision of this information shall initiate an
application for enrollment in coverage within the meaning
of Section 100503 of the Government Code.
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e) On page 12, line 14 delete "(b)" and insert "(2)"
REGISTERED SUPPORT / OPPOSITION :
Support
Health Access California (sponsor)
American Federation of State, County and Municipal Employees,
AFL-CIO
California Labor Federation
California Medical Association
California Pan-Ethnic Health Network
California Primary Care Association
California Rural Assistance Foundation
Children NOW
Children's Defense Fund California
Consumers Union
Having Our Say
National Association of Social Workers
PICO California
SEIU California
The 100% Campaign
The Children's Partnership
Unitarian Universalist Legislative Ministry Action Network, CA
United Nurses Association of California/Union of Health Care
Professionals
Western Center on Law and Poverty
Opposition
None on file.
Analysis Prepared by : Melanie Moreno / HEALTH / (916)
319-2097