BILL ANALYSIS                                                                                                                                                                                                    Ó






                             SENATE JUDICIARY COMMITTEE
                             Senator Noreen Evans, Chair
                              2011-2012 Regular Session


          AB 792 (Bonilla)
          As Amended June 30, 2011
          Hearing Date: July 5, 2011
          Fiscal: Yes
          Urgency: No
          EDO
                    

                                        SUBJECT
                                           
              Health Care Coverage: California Health Benefit Exchange

                                      DESCRIPTION  

          This bill would require the disclosure of information on health 
          care coverage through the California Health Benefit Exchange 
          (Exchange), under specified circumstances, upon the filing of a 
          petition for dissolution of marriage, nullity of marriage, legal 
          separation, adoption, or an application for unemployment or 
          disability benefits.  This bill would require the court or 
          department to provide these individuals with a specified notice 
          of their possible eligibility to enroll in the Exchange.  This 
          bill would require health plans, health insurers, and employers, 
          for their insured, employees or dependents who have experienced 
          a death, loss of employment or a reduction in hours, divorce or 
          the loss of dependent status that results in a loss of health 
          insurance, to transfer information to the Exchange, in 
          accordance with all state and federal privacy laws, and to 
          initiate an application for enrollment in the Exchange if the 
          individual consents in writing.  This bill would also require 
          the individual who is declining coverage from the Exchange to do 
          so in writing. 

                                      BACKGROUND 

          In 2010, landmark legislation, the federal Patient Protection 
          and Affordable Care Act (PPACA), was signed in to law by 
          President Obama.  Among other things, PPACA requires each state 
          to establish a Health Benefit Exchange by January 1, 2014 which 
          would make health plans available to qualified individuals and 
          employers.  The goal of PPACA is ensure that all Americans have 
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          health insurance coverage. 

          Currently, when a person loses health insurance benefits due to 
          a loss of job or change in familial status, he or she is 
          eligible for the Consolidated Omnibus Budget Reconciliation Act 
          more commonly known as COBRA.  COBRA gives workers and their 
          families who lose their health benefits the right to choose to 
          continue group health benefits provided by their group health 
          plan for limited periods of time under certain circumstances.  
          Under COBRA, participants are generally required to pay the 
          entire premium for a temporary period of time (i.e. until they 
          find a new job).  COBRA outlines how employees and family 
          members may elect this continued coverage and also requires 
          employers and plans to provide notice of this extended coverage.

          This bill, sponsored by Health Access California, would, among 
          other things, require courts to give notice to individuals 
          filing a petition for dissolution of marriage or a petition for 
          adoption of their potential eligibility for health insurance 
          coverage through the California Health Benefit Exchange. 

          This bill was heard in the Senate Committee on Health on June 
          29, 2011 and passed out of that committee on a 5-3 vote.  This 
          analysis is limited to the provisions of this bill related to 
          the Family Code which falls within this Committee's 
          jurisdiction. 


                                CHANGES TO EXISTING LAW
           
           1.Existing law  provides for certain procedural provisions when 
            petitioning the court for dissolution of marriage, nullity of 
            marriage, or legal separation.  Existing law provides that 
            certain general provisions be met when filing a petition for 
            adoption of an unmarried child. (Fam. Code Sec. 2020 et seq. 
            and 8600 et seq.)

             This bill  would provide that upon filing a petition for 
            dissolution of marriage, nullity of marriage, or legal 
            separation, on or after January 1, 2013, the court must 
            provide the following notice: "In March of 2010, the federal 
            government passed National Health Care Reform. Because of 
            this, effective January 1, 2014, you may become eligible for 
            reduced-cost comprehensive health care coverage through the 
            California Health Benefit Exchange. To learn more, visit 
            www.healthexchange.ca.gov or call 1- (insert number)."
                                                                      



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          2.Existing law  , Cal-COBRA, requires health plans and health 
            insurers that provide coverage to small employers with 2 to 19 
            eligible employees to offer continuation coverage to a 
            qualified beneficiary upon a qualifying event without evidence 
            of insurability.  Existing law requires the qualified 
            beneficiary, upon election, to be able to continue his or her 
            coverage under the group benefit plan.  (Health & Saf. Code 
            Sec. 1366.20.)  

            Existing law  requires employers, employee associations, or 
            other entities to notify its current and former employees or 
            members and dependents of federal COBRA continuation coverage 
            (which requires continuation coverage be offered to qualified 
            beneficiary experiencing a qualifying event in firms with 20 
            or more employees) and state law conversion coverage options.  
            (Health & Saf. Code Sec. 1373.6 et. seq.)

             This bill  would require these entities to obtain the written 
            consent of the enrollee to provide the minimum necessary 
            information to the Exchange in the event that the individual 
            or dependent ceases to be enrolled in coverage.  This bill 
            prohibits these entities from transferring any information 
            regarding the individual to the Exchange if the individual 
            does not provide his or her consent.  This bill provides that 
            consent may be obtained at the time of the qualifying event.

             This bill  would define "qualified beneficiary" to mean "any 
            individual who, on the day before the qualifying event, is an 
            enrollee in a group benefit plan offered by a health care 
            service plan and has a qualifying event, as defined."
             
             This bill  would define a "qualifying event" to mean any of the 
            following events that would result in a loss of coverage under 
            the group benefit plan to a qualified beneficiary:
                 the death of the covered employee;
                 the termination of employment or reduction in hours of 
               the covered employee's employment;
                 the divorce or legal separation of the covered employee 
               from the covered employee's spouse;
                 the loss of dependent status by a dependent enrolled in 
               the group benefit plan; or
                 with respect to a covered dependent only, the covered 
               employee's entitlement to benefits under Medicare.

             This bill  would require individual health plans and insurers 
                                                                      



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            to provide to the Exchange information regarding previously 
            covered individuals and any dependents who chose not to renew 
            individual coverage.  This bill would require the information 
            provided to 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.  This bill requires the 
            information to be provided in a manner consistent with a 
            specified provision of PPACA dealing with procedures for 
            determining eligibility for the Exchange and consistent with 
            other state and federal medical privacy laws.
             
            This bill  would provide that the person for whom an 
            application has been initiated by the transfer of information 
            shall be given the opportunity to provide informed consent to 
            use the transferred information to commence eligibility 
            determination and complete enrollment as well as the 
            opportunity to correct any transferred information or provide 
            additional information before a final eligibility 
            determination is made.  If the individual fails to consent or 
            fails to respond to the opportunity to consent within a 
            reasonable period of time, that failure to consent or to 
            respond timely shall be construed as discontinuing the 
            application.  

          1.Existing law  regulates the distribution of unemployment 
            compensation or disability benefits by the Employment 
            Development Department (EDD).  (Umemp. Ins. Code Secs.  1326 
            et. seq. and 2701 et. seq.)  
                 
              This bill  would require EDD to provide notice to individuals 
            filing a new claim for unemployment compensation or disability 
            benefits that an application for health care coverage through 
            the Exchange has been made for them, that they are not 
            required to accept coverage, and that Exchange coverage will 
            be based on their income.

             This bill  would require EDD, on and after January 1, 2014, 
            when an individual, files a new claim for unemployment 
            compensation, to provide to the Exchange the name, address, 
            and any other identifying information that is in the 
            possession of EDD as the Exchange may require, in a manner to 
            be prescribed by the Exchange.  

             This bill  would require a notice to be provided, effective 
            January 1, 2013, to individuals that they may be eligible for 
                                                                      



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            reduced-cost coverage through the Exchange when an individual 
            files a new claim for disability benefits.  
           
          2.Existing law  establishes the Exchange in state government, and 
            specifies the duties and authority of the Exchange.  Existing 
            law requires the Exchange to be governed by a board that 
            includes the Secretary of the Health and Human Services Agency 
            and four members with specified expertise who are appointed by 
            the Governor and the Legislature.  (Gov. Code Sec. 100500 et. 
            seq.)  
           
             This bill  would require the Exchange to seek approval from 
            California and Federal Departments of Health and Human 
            Services to transfer the minimum information necessary to 
            initiate an application for enrollment through the Exchange.  
            This bill requires the provision of this information to 
            initiate an application for enrollment in coverage through the 
            Exchange.

           3.Existing law  provides for several classes of coverage 
            including group plans and individual plans.  Existing law 
            allows, until January 1, 2014, health plans and health 
            insurers in the individual market to decline to cover 
            individuals applying for individual health coverage, with 
            specified exceptions, such as a disability insurer that covers 
            hospital, medical, or surgical expenses under an individual 
            health benefit plan may not, with respect to a federally 
            eligible defined individual desiring to enroll in individual 
            health insurance coverage, decline to offer coverage to, or 
            deny enrollment of, the individual or impose any preexisting 
            condition exclusion with respect to the coverage.  (Ins. Code 
            Sec. 10785.)

             This bill  would require, on and after January 1, 2014, group 
            health plans, health insurers, employers, employee 
            associations, or other entities otherwise providing hospital, 
            surgical or major medical benefits to its employees or 
            members, to provide notification to employees, members, former 
            employees, dependents, or former dependents that because the 
            individual is no longer enrolled in employer coverage:
                 that an application for coverage through the Exchange 
               has been made;
                 that the individual is not required to accept coverage 
               from the Exchange; and, 
                 that if the individual is low income, he or she may 
               qualify for Medi-Cal.
                                                                      



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             This bill  would require, from January 1, 2012, until December 
            31, 2013, group health plans, employers, employee associations 
            and other entities providing hospital, medical, surgical or 
            major medical benefits to its employees or members, to provide 
            a notification to qualified beneficiaries to examine their 
            coverage options before declining coverage, that individual 
            policies require a review of an individual's medical history 
            that can result in a higher premium or denial of coverage, and 
            that children under 19 years of age cannot be denied 
            individual coverage based on medical history, but may pay a 
            higher premium depending on medical history.
             
            This bill  would require employers, employee associations, 
            other entities providing medical benefits, health plans, and 
            health insurers to transfer information to the Exchange in 
            order to initiate an application for enrollment in the 
            Exchange for a former employee or former dependent of an 
            employee consistent with other state and federal medical 
            privacy laws.  

             This bill  would require these entities to provide to the 
            Exchange information regarding the former employee and any 
            dependents covered, including the name or names, most recent 
            address, and any other information that is in the possession 
            of the these entities that the Exchange may require, in a 
            manner to be prescribed by the Exchange.  

             This bill  would require the information to be provided in a 
            manner consistent with a specified provision of the federal 
            PPACA dealing with procedures for determining Exchange 
            eligibility.

             This bill  would require a disclosure to be provided to such 
            individuals that an application for coverage through the 
            Exchange has been made, that the individual is not required to 
            accept coverage from the Exchange, and that coverage through 
            the Exchange will be based on income.

                                        COMMENT
           
          1.  Stated need for the bill  
          
          The author writes:
          
            The idea of what this bill attempts to do has not been done in 
                                                                      



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            the state or in the nation before.  This is a completely new 
            idea; however this bill is in line with the current COBRA 
            practice. 

            . . .this bill attempts to address future problems by ensuring 
            seamless transition for individuals who go through life 
            changing situations.  In 2014 and thereafter, a component of 
            the federal Affordable Care Act institutes an individual 
            mandate provision, which requires everyone to have insurance.  
            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. 

            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.  ÝThis bill] 
            will ensure Californians are provided notices and that they 
            are pre-enrolled into either the Exchange or Medi-Cal.

          The sponsor of the bill, Health Access California, writes, "any 
          Californian can become uninsured because of a change in life 
          circumstance, yet state policy does relatively little to help 
          people stay on coverage.  Today when somebody loses their job, 
          they get a COBRA notice.  Today when someone loses a spouse 
          through divorce or death, they get a COBRA or HIPPA notice.  
          Today when a young adult ages off of their parents' coverage, 
          they don't even get a notice . . . COBRA is not a solution for 
          many people: only 20% of those eligible take COBRA, both because 
          of the cost of coverage and because the precipitating event 
          (loss of job, loss of a spouse) often results in a loss of 
          income."

          In support of the bill, the California Medical Association (CMA) 
          writes, "CMA physicians support mechanisms to streamline health 
          coverage enrollment for eligible individuals and strongly 
          support expanding coverage to California's uninsured through 
          state-based health insurance exchange that provides competition 
          between plans that offer quality care and access through robust 
          provider networks.  After 2014, individuals who lose health 
          coverage due to a difficult life event will still have an 
          obligation to obtain health insurance.  ÝThis bill] will make 
          that process easier and help ensure continuity of care during a 
          stressful time in a person's life."

          Also in support, American Federation of State, County, and 
                                                                      



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          Municipal Employees (AFSCME) writes, "under health reform, many 
          people will be eligible for subsidized coverage only when they 
          have lost their job, gotten divorced, or faced another change in 
          life that probably resulted in a loss of income.  ÝThis bill] 
          will help people enroll in subsidized coverage by providing 
          notice of the availability of coverage and in some instances 
          pre-enrolling them in coverage.  This improves federal health 
          reform by helping people stay covered."
          
          2. Bill would require courts to provide notice of potential 
            eligibility for health coverage when filing a petition for 
            dissolution of marriage or adoption  

          Under existing law the court is required to provide certain 
          notifications to individuals filing for dissolution of marriage 
          or a petition for adoption.  This bill would also require the 
          courts to provide individuals with notice of their potential 
          eligibility for health coverage under the California Health 
          Benefit Exchange. 
           
           Due to certain life events, including a loss of job or change in 
          familial status, some people are left without health insurance 
          coverage.  Most employer-sponsored health insurance plans give 
          employees the option of covering a spouse or domestic partner.  
          Proof of marriage or registration of domestic partnership is 
          generally required.  So, if for example, one spouse is covered 
          by another spouse's employer-sponsored health insurance and the 
          couple decides to file for dissolution of marriage, the 
          non-employee spouse would likely lose his or her coverage.  
          Currently, the spouse losing coverage would be eligible for 
          COBRA.  However, COBRA can be cost prohibitive for most 
          individuals.  Most health plans are several hundred if not in 
          the thousands of dollars per month.  COBRA does not take into 
          consideration the applicant's income, and many of these life 
          changing events include a significant decrease in income.  As a 
          result many people do not take advantage of this benefit.  In 
          fact, it is estimated that only 20% of those eligible for COBRA 
          actually enroll in COBRA.  

          Also, according to a recent University of California study, "not 
          all workers are eligible for COBRA.  Only workers employed by 
          firms with at least 20 employees are eligible under the federal 
          COBRA law, though California has expanded COBRA to smaller 
          businesses with 2 to 19 employees.  According to the 
          Commonwealth Fund (2009), 5 percent of current workers would not 
          be eligible for federal COBRA benefits upon loss of their job 
                                                                      



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          because they work for a small business.  Additionally, 
          eligibility for COBRA coverage is time limited, expiring after 
          18 to 36 months, depending on the qualifying event." (Maximizing 
          Health Care Enrollment through Seamless Coverage for Families in 
          Transition: Current Trends and Policy Implications (March 2011) 
          by Ken Jacobs, Laurel Lucia, Ann O'Leary, and Ann Marie 
          Marciarille.)

          Additionally, when a person or persons file a petition for 
          adoption, this bill would require the court to give this notice 
          of potential coverage.  This is important because when someone 
          is taking a child under their care through adoption, health 
          insurance is an important component of providing for a child.  
          This bill seeks to ensure that all individuals are aware that 
          they may be eligible for health insurance in accordance with the 
          federal PPACA, which requires all Americans to have health 
          insurance coverage beginning January 1, 2014.  
           
          Support  : American Federation of State, County and Municipal 
          Employees, AFL-CIO (AFSCME); California Labor Federation; 
          California Medical Association; California Pan-Ethnic Health 
          Network; California Primary Care Association; California Rural 
          Legal Assistance Foundation; Children NOW; Children's Defense 
          Fund California; Congress of California Seniors; Consumers 
          Union; Contra Costa County Board of Supervisors; Having Our Say; 
          Latino Health Alliance; 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  :  Association of California Life & Health Insurance 
          Companies; California's Association of Health Underwriters

                                        HISTORY
           
           Source  :  Health Access California

           Related Pending Legislation  :  AB 714 (Atkins) would, among other 
          things, require notification about benefits under California 
          Health Benefit Exchange to individuals who have ceased to be 
          enrolled in various public health programs, including Healthy 
          Families, Access for Infants and Mothers, and the California 
          Major Risk Medical Insurance Program.  

                                                                      



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           Prior Legislation  :

          AB 1062 (Perez, Chapter 655, Statutes of 2010) established the 
          structures and duties of the California Health Benefit Exchange 
          (Exchange) to comply with the mandate on the states.  

          SB 900 (Alquist, 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.  


           Prior Vote  :

          Senate Committee on Health (Ayes 5, Noes 3)
          Assembly Floor (Ayes 50, Noes 26)
          Assembly Committee on Appropriates (Ayes 11, Noes 6)
          Assembly Committee on Judiciary (Ayes 7, Noes 2)
          Assembly Committee on Health (Ayes 13, Noes 6)

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