BILL ANALYSIS Ó
AB 1461
Page 1
GOVERNOR'S VETO
AB 1461 (Monning)
As Amended August 24, 2012
2/3 vote
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|ASSEMBLY: |50-27|(May 29, 2012) |SENATE: |23-12|(August 29, |
| | | | | |2012) |
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|ASSEMBLY: |51-27|(August 31, | | | |
| | |2012) | | | |
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Original Committee Reference: HEALTH
SUMMARY : Reforms California's health insurance market for
health care service plans (health plans) licensed by the
Department of Managed Health Care (DMHC) to implement
requirements on health plans to guarantee health plan contracts
without preexisting condition requirements during initial,
annual and special enrollment periods and limits the ability of
health plans to base premium rates only on age, geography, and
family size, as specified, for individual products in the
California Health Benefit Exchange (Exchange) and the commercial
market. Makes the enactment of this bill contingent upon the
enactment of SB 961 (Ed Hernandez). Specifically this bill :
1)Authorizes DMHC to waive or modify specified requirements
associated with uniform benefit disclosures for the purpose of
resolving duplication or conflict with federal requirements,
as specified. Requires DMHC to implement this provision in a
manner that preserves disclosure requirements that exceed or
are not in direct conflict with federal requirements. Permits
implementation through all-plan letters until January 1, 2015.
2)Authorizes the DMHC and the California Department of Insurance
(CDI) to develop a model notice to be provided to all
applicants for coverage for dependent child coverage to be
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provided to applicants and all enrollees renewing coverage
between January 1, 2013, and January 1, 2014.
3)Clarifies the provisions in California law that shall prevail
in the event specified provisions associated with guaranteed
issue and rating factors are repealed. Tie this bill's
guaranteed issue and rating provisions to those same
requirements in the Patient Protection and Affordable Care Act
(ACA), meaning if those ACA provisions are repealed the
California provisions would also be repealed.
4)Revises the definition of child, as specified, and defines
registered domestic partner, as specified. Includes a
registered domestic partner as a dependent.
5)Requires a plan to allow a subscriber to add a dependent to
the subscriber's plan at the option of the subscriber during
an open enrollment period.
6)Provides for special enrollment triggering events such as
being released from incarceration, a health plan substantially
violating a material provision of the contract, gaining access
to new plans because of a permanent move, and when an
individual is receiving services from a contracting provider,
as specified, and that provider is no longer participating in
the health plan.
7)Allows an individual to apply for coverage up to 60 days after
a triggering event consistent with the Exchange.
8)Prohibits a health plan from requiring an individual applicant
or his or her dependent to fill out a health assessment or
medical questionnaire prior to enrollment, and from acquiring
or requesting information that relates to a health
status-related factor from the applicant or his or her
dependent or any other source prior to enrollment of the
individual.
9)Establishes 19 geographic rating regions, and requires DMHC,
in collaboration with the Exchange and the CDI to review the
regions by 2017.
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10)Defers the establishment of age bands and family categories
to the federal government.
11)Establishes a reporting requirement to inform individual's in
grandfathered plans about coverage options that will be
available on or before October 1, 2013.
12)Requires this bill to be implemented, except as otherwise
indicated, to the extent it meets or exceeds the requirements
set forth in the ACA and any rules, regulations, or guidance
issued pursuant to that law.
13)Makes technical and clarifying changes.
14)Amends an Insurance Code provision in SB 961 to be consistent
with this bill.
15)Make this bill's enactment contingent upon the enactment of
SB 961.
AS PASSED BY THE ASSEMBLY , this bill reformed California's
health insurance market (both for health insurers and health
plans) for individual purchasers and implemented provisions of
the ACA prohibiting preexisting condition exclusions, requiring
guaranteed issuance of products, establishing statewide open and
special enrollment periods, and limiting premium rating factors
to age, geography, and family size.
FISCAL EFFECT : According to the Senate Appropriations
Committee:
1)One-time costs of about $370,000 to the DMHC to adopt
regulations, review health plan filings, and respond to
consumer questions (Managed Care Fund).
2)One-time costs of about $600,000 to the CDI insurers more than
health plans. Therefore, there will be greater workload to
adopt regulations and review changes to insurance policies.
Amendments to this bill apply this bill's provision to
licensees of the DMHC, with the exception of one provision.
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COMMENTS : According to the author, this bill is necessary to
implement provisions of the ACA in California's individual
health insurance market. California has a history of strong
consumer protections in its insurance market for small group
purchasers but California's individual market has been referred
to the "wild west of health insurance," with little or no
restrictions on health insurers in terms of their ability to
deny coverage based on preexisting conditions and from charging
higher rates based on health status, employment, or any other
factor. The ACA limits the factors plans can use to determine
premium rates, eliminates the use of preexisting condition
exclusions and requires plans to issue and renew policies for
willing purchasers. The rules established in this bill will
affect plans operating in the Exchange and in the outside
commercial insurance market for individual purchasers. For
consistency and to ensure a balanced mix of health risk inside
the Exchange, the author is attempting to keep the rules for the
commercial market outside the Exchange the same, as much as
possible, as inside the Exchange.
GOVERNOR'S VETO MESSAGE :
I realize how important it is to align our individual
health insurance market rules with the federal Patient
Protection and Affordable Care Act. This bill got
almost all the way there. Unfortunately, the measure
failed to adequately link our state reforms to the
federal law.
The Affordable Care Act requires insurers to provide
health coverage to all individuals regardless of their
health status. This mandate on insurers is balanced by
the mandate on individuals to obtain health coverage,
with federal subsidies available to help lower-income
people purchase it.
Without the strong foundation that federal law
provides, a state-level mandate on insurers alone
could encourage healthy people to wait until they got
sick or injured before purchasing coverage. This would
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lead to skyrocketing premiums, making coverage more
unaffordable.
I look forward to working with the Legislature to
correct this problem and adopt the remaining essential
provisions of this bill.
Analysis Prepared by : Teri Boughton / HEALTH / (916) 319-2097
FN: 0005980