BILL ANALYSIS Ó AB 792 Page 1 Date of Hearing: May 3, 2011 ASSEMBLY COMMITTEE ON JUDICIARY Mike Feuer, Chair AB 792 (Bonilla) - As Amended: April 14, 2011 As Proposed to be Amended SUBJECT : Health Care Coverage: California Health Benefit Exchange KEY ISSUE : Should health plans, health insurers, employers, and certain government entities, under certain circumstances, disclose information about benefits under the California Health Benefit Exchange to persons who are likely eligible for those benefits? FISCAL EFFECT : As currently in print this bill is keyed fiscal. SYNOPSIS Among other things, the federal Patient Protection and Affordable Care Act (PPACA) requires each state, by January 1, 2014, to establish a Health Benefit Exchange that makes qualified health plans available to qualified individuals and employers. In addition, it generally mandates that all persons have some form of health coverage. State legislation enacted last year began the process of complying with federal law by creating and setting forth the powers and duties of the California Health Benefit Exchange. This bill is in many ways a follow-up to last year's legislation in that it seeks to ensure maximum participation in the Exchange by requiring various private and public entities to notify persons who would likely qualify for benefits under the Exchange and, conversely, to notify the Exchange about persons who might be eligible. This bill passed out the Assembly Health Committee on a 13-6 vote. It is sponsored by Health Access California and is supported by a broad array of medical, labor, and consumer groups. There is no known opposition to the bill. The author committed to several amendments in the Assembly Health Committee to be taken in this Committee. These amendments are reflected in the mock-up and in this analysis. SUMMARY : Requires the disclosure of information on health care coverage through the California Health Benefit Exchange AB 792 Page 2 (Exchange) under specified circumstances, by health care service plans, health insurers, employers, employee associations, the Employment Development Department, and family courts, to an individual or to the Exchange, as specified, in order to encourage maximum participation in the Exchange. Specifically, this bill : 1)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 with a specified notice regarding potential eligibility for health care coverage through the Exchange. Requires family courts to provide that same notice to petitioners upon the filing of a petition for adoption. 2)Requires health care service plan contracts and insurance policies, except as specified, 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, to transfer information to the Exchange in order to initiate application for enrollment for a former employee or former dependent of the employee. Requires the plan or insurer to obtain consent of the enrollee or subscriber, as specified. If the individual declines consent, the plan or insurer shall not transfer any information regarding that individual to the Exchange. Imposes substantially the same requirements on a plan or insurer that provides medical and hospital coverage to an individual. 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 or subscriber 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 with certain information, including the name or names, most recent address, and any other information, in a manner prescribed by the Exchange, regarding a former employee or individual who chose not to continue coverage. AB 792 Page 3 5)Requires, between January 1, 2012 and December 31, 2013, a health plan or insurer to notify certain 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 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. 6)Requires, after January 1, 2014, a health plan or insurer to notify 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. 7)Requires EDD to provide information about coverage opportunities through the Exchange to 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. 8)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. 9)Requires an individual, in order to decline health care coverage from the Exchange under the provisions of this bill, to notify the Exchange in writing within 63 calendar days of the date of termination of coverage. EXISTING LAW : 1)Provides for the regulation of health plans by the Department of Managed Health Care, under provisions of the Health & Safety Code, and for the regulation of health insurers by the AB 792 Page 4 Department of Insurance, under provisions of the Insurance Code. 2)Requires, under the federal Patient Protection and Affordable Care Act (PPACA), each state, by January 1, 2014, to establish an American Health Benefit Exchange that makes qualified health plans available to qualified individuals and employers. (Public Law 111-148.) 3)Establishes, in accordance with PPACA, the California Health Benefit Exchange (Exchange) and specifies the powers and duties of its governing board relative to determining eligibility for enrollment in the Exchange, arranging for coverage under qualified health plans, and facilitating the purchase of qualified health plans through the Exchange by qualified individuals and small employers. (Government Code Section 100500 et seq.) 4)Imposes specified requirements on health plans and health insurers that provide coverage under an employer-sponsored group plan subject to requirements under COBRA or Cal-COBRA, as defined, and imposes specified requirements on employers or employee associations to notify current and former employees, and their dependents, about options for continuation or conversion of coverage. (Health & Safety Code Sections 1373.6 and 1373.621; Labor Code Section 2800.2.) 5)Provides for the distribution of unemployment compensation or disability benefits by Employment Development Department (EDD). (Unemployment Insurance Code Sections 301-336.) 6)Sets forth procedures related to a petition for dissolution of marriage, nullity of marriage, or legal separation, or a petition for adoption. (Family Code Sections 2000-2452 and Sections 8500-9212.) COMMENTS : Signed into law by President Obama on March 23, 2010, the federal Patient Protection and Affordable Care Act (PPACA) is arguably the most comprehensive effort to extend health coverage to American citizens since the landmark Medicare and Medicaid programs of the 1960s. Among other things, PPACA requires each state, by January 1, 2014, to establish a "Health Benefit Exchange" that makes qualified health coverage plans available to qualified individuals and employers. PPACA also generally mandates that everyone have health insurance. Last AB 792 Page 5 year, AB 1602 (Chapter 655, Statutes of 2010) and SB 900 (Chapter 659, Statutes of 2010) established the structures and duties of the California Health Benefit Exchange (Exchange) to comply with the mandate on the states. This bill seeks to facilitate compliance with the individual mandate by providing information to persons most likely to be eligible for benefits under the Exchange. Under specified circumstances, especially when some "life changing circumstance" occurs - such as a divorce, adoption, or loss of employment-based insurance - the bill would require various public and private entities to provide information about the Exchange to certain individuals or, conversely, to provide the Exchange with information about potentially eligible individuals. Fundamentally, the purpose of the Exchange is to create an effective purchasing pool that will enhance the bargaining power of small businesses and individuals who, for a variety of reasons, cannot participate in group health plans and cannot afford individual policies. As is true of any insurance pool, the Exchange will be more effective and efficient if all eligible persons actually participate. This bill seeks to ensure that the Exchange will operate at maximum effectiveness by attempting to identify and notify persons most likely to qualify for benefits, especially those going through "life changing circumstances" that are often identified with loss of coverage or a change in eligibility, such as a divorce, adoption, or losing a job. To make sure that persons in these situations are aware of their possible eligibility under the exchange, this bill would do the following: Require insurers and health plans to initiate enrollment into the Exchange or the existing COBRA program when certain events occur, such as loss of employment-based coverage or loss of a spouse or parent. Require employers to provide notice to the Employment Development Department (EDD) of termination of employment. In turn, this bill would require the EDD to provide notice to the Exchange so that the Exchange can initiative an application (or pre-enroll) persons whose employment has been terminated (subject to the person's right to reject enrollment.) The bill would also require the EDD to provide appropriate notices and/or initiate applications when persons apply to the EDD for disability or unemployment benefits. AB 792 Page 6 Require courts to provide information about coverage under the Exchange to persons seeking dissolution or nullification of a marriage, a legal separation, or who are petitioning for adoption of a child. Privacy Issues Appear to Have Been Addressed : As with any measure or policy that requires disclosure of personal information - especially information about a person's health coverage and employment status - this bill raises potential privacy issues. Most notably, the "privacy rule" under the federal Health Insurance Portability and Accountability Act (HIPAA) generally prohibits the disclosure of an individual's "personal health information" - including any information that relates to payment for provision of care or any information created by a health plan or insurer - without that person's consent. (45 CFR 160.103.) However, this privacy rule is subject to many exceptions, including where such disclosure is required by law and the disclosure complies with the requirements of that law. (45 CFR 164.512(a).) Proposed amendments reflected in the mock-up and to be taken today in the Committee have added additional language to ensure that any transmission of information will comply with HIPAA. For example, amendments to the provisions that require health plans and insurers to send information to the Exchange will require that health plan contracts and insurance policies obtain the consent of the enrollee or insured's to provide "the minimum necessary information to the Exchange" and specifies that if the individual declines consent, "then the plan shall not transfer any information regarding that individual to the exchange." The amendments additionally require that any manner of transmission of information shall be consistent with the manner provided in PPACA. ARGUMENTS IN SUPPORT : Health Access California, the sponsor of this bill, argues that AB 792 will create mechanisms to maximize enrollment and participation in the California Health Benefits Exchange when in begins operation on January 1, 2014. The sponsor notes that the bill will achieve this by targeting persons who are facing "life changing circumstances" that often result in a loss of health care coverage or a change in economic status that affects eligibility. Although loss of employment is easily the most significant life-changing circumstance in this regard, others include a loss of a parent or spouse due to death or divorce, graduating from college or otherwise "aging out" of AB 792 Page 7 coverage through one's parents, or adopting a child. The sponsor notes that although all of these life changing situations cause persons to become uninsured, state policy does little to reach out to such persons or inform them about benefits for which they might be eligible. This bill, the sponsor contends, is designed to do just that. The California Labor Federation (CLF) notes that California has lost 1.4 million jobs since the recession began in 2007, creating a corresponding loss of employer-based health insurance for both the employees and dependent family members. CLF believes that "AB 792 will help Californians to access health coverage during times of transition by creating a mechanism for automatic enrollment." The Western Center on Law & Poverty (WCLP) notes that, in light of the mandates created by the new federal health care law, "it is more important than ever to educate people about subsidized health coverage programs and take steps to enroll them in that coverage." This bill, WCLP believes, "advances that goal by targeting the life transitions where people are most likely to lose coverage and requires that they be sent information about coverage options during those key transition points." The California Primary Care Association (CPCA), representing a network of over 80,000 private, non-profit community health clinics and health centers statewide, believe this bill will have a direct impact on the services that their member clinics provide by making sure their patient population is notified of their options under the California Health Benefit Exchange and Medi-Cal. CPCA adds that this bill will help to ensure continuity of care by ensuring continuity of coverage. The California Medical Association (CMA) writes that its physicians "support mechanisms to streamline health coverage enrollment for eligible individuals and strongly support expanding coverage to California's uninsured through a state-based health insurance exchange that provides competition between plans that offer quality care and access through a robust provider networks." Pending Related Legislation : AB 714 (Atkins), 2011-2012 session, requires notification about benefits under California Health Benefit Exchange to individuals who have ceased to be enrolled in various public health programs, including Healthy AB 792 Page 8 Families, Access for Infants and Mothers, and the California Major Risk Medical Insurance Program. AB 714 would also require notification about the Exchange to persons currently receiving services under certain disease-based programs, such the Aids Drug Assistance Program, the federal Ryan White HIV/AIDS Treatment Extension Act, the FamilyPACT program, and the Breast and Cervical Cancer Treatment Program. AB 714, like the bill before this Committee, seeks to create mechanisms for ensuring that persons most likely to be eligible for benefits under the Exchange will be aware of that eligibility. That bill recently passed out the Assembly Health Committee on a 13-6 vote. 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 AB 792 Page 9 Analysis Prepared by : Thomas Clark / JUD. / (916) 319-2334