BILL ANALYSIS Ó ------------------------------------------------------------ |SENATE RULES COMMITTEE | AB 792| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ THIRD READING Bill No: AB 792 Author: Bonilla (D), et al. Amended: 8/24/12 in Senate Vote: 21 SENATE HEALTH COMMITTEE : 5-3, 6/29/11 AYES: Hernandez, Alquist, De León, DeSaulnier, Wolk NOES: Strickland, Anderson, Blakeslee NO VOTE RECORDED: Rubio SENATE JUDICIARY COMMITTEE : 3-2, 7/5/11 AYES: Evans, Corbett, Leno NOES: Harman, Blakeslee SENATE APPROPRIATIONS COMMITTEE : 5-2, 8/16/12 AYES: Kehoe, Alquist, Lieu, Price, Steinberg NOES: Walters, Dutton ASSEMBLY FLOOR : 50-26, 6/1/11 - See last page for vote SUBJECT : Health care coverage: California Health Benefit Exchange SOURCE : Health Access California DIGEST : This bill requires a court, upon the filing of a petition for dissolution of marriage, nullity of marriage, or legal separation on and after January 1, 2014, to provide a specified notice informing the petitioner and respondent that they may be eligible for reduced-cost CONTINUED AB 792 Page 2 coverage through the Exchange or no-cost coverage through Medi-Cal. Senate Floor Amendments of 8/24/12 delete the notice requirements related to COBRA and Cal-COBRA, apply the notice requirements in other provisions of the bill to group health plans and health insurers, and establish a "no later than date" for the regulators to develop the notice. ANALYSIS : Existing federal law: 1.Requires, under the federal Patient Protection and Affordable Care Act (PPACA) (Public Law 111-148), as amended by the Health Care Education and Reconciliation Act of 2010 (Public Law 111-152), each state, by January 1, 2014, to establish an American Health Benefit Exchange (AHBE) that makes qualified health plans available to qualified individuals and qualified employers. If a state does not establish an AHBE, the federal government administers the AHBE. Federal law establishes requirements for the AHBE, for health plans participating in the AHBE, and defines who is eligible to receive coverage in the AHBE. Among other duties, the AHBE is required to inform individuals of eligibility requirements for the Medicaid program (Medi-Cal in California), the Children's Health Insurance Program (the Healthy Families Program, or HFP, in California), or any applicable state or local public program. The AHBE is required if, through screening of the application, the AHBE determines that such individuals are eligible for any such program, to enroll such individuals in such program. 2.Allows through PPACA, effective January 1, 2014, eligible individual taxpayers whose household income equals or exceeds 100%, but does not exceed 400% of the federal poverty level (FPL), an advanceable and refundable tax credit for a percentage of the cost of premiums for coverage under a qualified health plan offered in the Exchange. PPACA also requires a reduction in cost-sharing for individuals with incomes below 250% of the FPL, and a lower maximum limit on out-of-pocket expenses for individuals whose incomes are between 100% and 400% of the FPL. Legal immigrants with household AB 792 Page 3 incomes less than 100% of the FPL who are ineligible for Medicaid because of their immigration status are also eligible for the premium tax credit and the cost-sharing reductions. 3.Requires, through PPACA, numerous changes to Medicaid, including expanding eligibility to adults without minor children with incomes equal to or less than 133% of the FPL, disregarding (or not counting) an additional 5% in income (making the Medicaid income eligibility effectively 138% of the FPL), eliminating the asset test and switching to a new method for calculating income known as modified adjusted gross income (MAGI) for certain populations. 4.Requires, through PPACA, each individual (with specified exceptions), and any dependent of the individual, to maintain minimum essential coverage, provides exemptions from the individual mandate (such as for affordability, hardship, and for individuals with incomes below the income tax filing threshold), and establishes penalties for violations. Existing state law: 1.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 (QB) upon a qualifying event without evidence of insurability. Requires the QB, upon election, to be able to continue his or her coverage under the group benefit plan. This body of law is known as Cal-COBRA. 2.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 QB experiencing a qualifying event in firms with 20 or more employees) and state law conversion coverage options. 3.Regulates the distribution of unemployment compensation or disability benefits by the Employment Development Department (EDD). AB 792 Page 4 4.Sets forth procedures related to a petition for dissolution of marriage, nullity of marriage, or legal separation, or a petition for adoption. 5.Establishes the Exchange in state government, and specifies the duties and authority of the Exchange. Requires the Exchange 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. This bill requires a court, upon the filing of a petition for dissolution of marriage, nullity of marriage, or legal separation on and after January 1, 2014, to provide a specified notice informing the petitioner and respondent that they may be eligible for reduced-cost coverage through the Exchange or no-cost coverage through Medi-Cal. Background Federal health care reform makes numerous changes to reduce the number of uninsured Americans. According to estimates in a recent study in the health policy journal Health Affairs by Peter Long and Jonathan Gruber, PPACA will provide health insurance for an additional 3.4 million people in California in 2016. The authors state this will mean that nearly 96% of documented residents of California under age 65 will be insured. The authors estimate enrollment in Medi-Cal is expected to increase by 1.7 million people, while 4.0 million people are expected to enroll in the state's Exchange. Employer-sponsored insurance and spending on health insurance will decline slightly. The authors conclude that low-income households will experience substantial financial benefits, but families at the highest income levels will pay more. FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes Local: Yes According to the Senate Appropriations Committee, the August 17 amendments remove the requirement on EDD to furnish notices and reduce the costs of the bill accordingly. There would continue to be cost avoidance to AB 792 Page 5 the extent that individuals who would have otherwise enrolled in state programs such as Major Risk Medical Insurance Program, Access for Infants and Mothers Program, the Preexisting Condition Insurance Program, and the AIDS Drug Assistance Program, purchase health care coverage through the Exchange. Additionally, there would continue to be significant costs to the extent that individuals, upon application to the Exchange, are found eligible for state programs such as those listed above or Medi-Cal or the Healthy Families Program. SUPPORT : (Verified 8/27/12) Health Access California (source) 100% Campaign American Federation of State, County and Municipal Employees California Labor Federation California Medical Association California Pan-Ethnic Health Network California Primary Care Association California Rural Legal Assistance Foundation Congress of California Seniors Consumers Union Contra Costa County Board of Supervisors Having Our Say National Association of Social Workers, California Chapter Service Employees International Union Unitarian Universalist Legislative Ministry Action Network-California United Nurses Associations of California/Union of Health Care Professionals Western Center on Law and Poverty OPPOSITION : (Verified 8/27/12) Association of California Life and Health Insurance Companies California Association of Health Plans California Association of Health Underwriters ARGUMENTS IN SUPPORT : This bill is sponsored by Health Access California (HAC), which writes that this bill would create mechanisms to maximize enrollment in coverage of AB 792 Page 6 those who face life changes such as loss of a job or loss of dependent coverage due to loss of a spouse. HAC states that any Californian can become uninsured because of a change in life circumstance (such as aging-off coverage, losing or switching a job, divorce, death or moving), yet state policy does relatively little to help people stay on coverage other than to require the provision of a notice of their ability to continue coverage. HAC states that, in 2014, every one of these individuals is eligible for coverage either in the Exchange or Medi-Cal, yet no mechanism exists to connect these individuals to coverage. HAC states that less than half the uninsured are uninsured for less than a year, almost a quarter of the uninsured for are uninsured one to two years, and the remaining third are uninsured for more than two years. The design of the Exchange and redesign of Medi-Cal/Healthy Families needs to into take account the need to serve the short-term uninsured as well as providing long-term coverage in order to keep Californians covered and healthy. HAC states this bill would connect to people to the Exchange by providing notice in 2012 and 2013 that low-cost or no-cost coverage will be available through the Exchange and Medi-Cal effective 2014. Beginning in January 1, 2014, this bill would require insurers and health plans to initiate enrollment into the Exchange as well as COBRA for COBRA-qualifying events, including loss of employment-based coverage, loss of coverage due to loss of a spouse or parent and other COBRA qualifying events. HAC concludes that in 2014, there is no reason why losing one's job or getting divorced should mean losing health coverage as millions of Californians will be eligible for coverage through the Exchange or Medi-Cal, and this bill will help those Californians get coverage when they need it and when the law requires it. ARGUMENTS IN OPPOSITION : This bill is opposed by the California Association of Health Plans and the Association of California Life and Health Insurance Companies (ACLHIC). ACLHIC states that this bill requires an insurer to obtain the consent of its insureds to share their information with the Exchange, yet provides no direction as to how to meet that obligation if the individual is simply nonresponsive. ACLHIC states that, in a day of heightened privacy concerns, many individuals may be reluctant to give consent AB 792 Page 7 to share their personal information, and ACLHIC is concerned about potential liability to the insurer that is required to obtain and maintain this information. ACLHIC states this bill should be amended to provide protection to the insurer that forwards such information to the Exchange in accordance with the requirements of the bill. ACLHIC also argues this bill requires insurers to send multiple and duplicative notices to an insured of their right to enroll in the Exchange with every change in the insured's coverage, and that this bill should be amended to include its required notice with Cal-COBRA notices in the manner that they are currently required to be sent to insured individuals. ACLHIC states this would be consistent with all other notices of coverage rights, and would not only be cost effective, but less confusing to the insured. ASSEMBLY FLOOR : 50-26, 6/1/11 AYES: Alejo, Allen, Ammiano, Atkins, Beall, Block, Blumenfield, Bonilla, Bradford, Brownley, Buchanan, Butler, Charles Calderon, Campos, Carter, Cedillo, Chesbro, Davis, Dickinson, Eng, Feuer, Fong, Fuentes, Furutani, Galgiani, Gordon, Hall, Hayashi, Roger Hernández, Hill, Huber, Hueso, Huffman, Lara, Bonnie Lowenthal, Ma, Mendoza, Mitchell, Monning, Pan, Perea, Portantino, Skinner, Solorio, Swanson, Torres, Wieckowski, Williams, Yamada, John A. Pérez NOES: Achadjian, Bill Berryhill, Conway, Cook, Donnelly, Fletcher, Beth Gaines, Gatto, Grove, Hagman, Halderman, Harkey, Jones, Knight, Logue, Mansoor, Miller, Morrell, Nestande, Nielsen, Norby, Olsen, Silva, Smyth, Valadao, Wagner NO VOTE RECORDED: Garrick, Gorell, Jeffries, V. Manuel Pérez CTW:n 8/27/12 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END **** AB 792 Page 8