BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  AB 792
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          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 








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          (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. 









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          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 








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            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 








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          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. 









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           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 








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          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 








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          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 








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          Analysis Prepared by  :    Thomas Clark / JUD. / (916) 319-2334