BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 1526|
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THIRD READING
Bill No: AB 1526
Author: Monning (D)
Amended: 6/20/12 in Senate
Vote: 21
SENATE HEALTH COMMITTEE : 8-0, 6/27/12
AYES: Hernandez, Harman, Alquist, Anderson, Blakeslee,
DeSaulnier, Rubio, Wolk
NO VOTE RECORDED: De León
SENATE APPROPRIATIONS COMMITTEE : 5-2, 8/16/12
AYES: Kehoe, Alquist, Lieu, Price, Steinberg
NOES: Walters, Dutton
ASSEMBLY FLOOR : 75-0, 5/30/12 - See last page for vote
SUBJECT : California Major Risk Medical Insurance Program
SOURCE : Author
DIGEST : This bill permits the Managed Risk Medical
Insurance Board (MRMIB) to remove the annual and lifetime
limits on benefits in the Major Risk Medical Insurance
Program (MRMIP), and requires MRMIB to exclude the cost
attributable to the removal of the annual and lifetime
limits from the subscriber's MRMIP premium contribution,
and allows MRMIB to accept documentation from specified
health care providers of an individual's pre-existing
condition for the purpose of establishing eligibility for
MRMIP.
CONTINUED
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ANALYSIS :
Existing law:
1. Establishes MRMIP, administered by MRMIB, to provide
major risk medical coverage to residents who have been
rejected for coverage by at least one private health
plan, or if the only private health coverage that the
applicant can secure would:
A. Impose substantial waivers or provide limited
coverage that MRMIB determines would leave a
subscriber without adequate coverage for medically
necessary services; or
B. Offer coverage only at an excessive price, which
MRMIB determines is significantly above standard
average individual coverage rates.
2. Sets the premium subscribers in MRMIP pay at 125 to
137.5 percent of the standard average individual rate
the enrollee would pay for comparable coverage.
3. Establishes, through MRMIP regulation, an annual benefit
limit of $75,000 and a lifetime benefit limit of
$750,000 (the annual and lifetime benefit limits exclude
coverage above the dollar thresholds).
This bill:
1. Permits MRMIB to remove annual and lifetime limits on
MRMP benefits.
2. Requires MRMIB to exclude the cost attributable to the
removal of the annual and lifetime limits from the
subscriber's MRMIP premium contribution.
3. Permits MRMIB, in determining eligibility for MRMIP, to
accept documentation satisfactory to MRMIB from a
licensed physician, physician assistant, or nurse
practitioner, or, if designated by MRMIB, other health
care professional, to verify the applicant's preexisting
medical condition.
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4. Establishes in the State Treasury the Major Risk Medical
Insurance Reconciliation Fund.
5. Requires remittances received by MRMIP on or after
January 1, 2013, from participating health plans as a
result of reconciliation based on the actual claim costs
of subscribers for prior fiscal years to be deposited in
the Fund.
6. Requires moneys in the Fund to be available for any
authorized purpose upon appropriation by the
Legislature.
7. Deems the adoption and re-adoption of regulations by
MRMIB to implement the changes made by this bill as
urgent and necessary to avoid serious harm to the public
peace, health, safety, or general welfare, and exempts
MRMIB from the requirement that it describe facts
showing the need for immediate action and from review by
the Office of Administrative Law.
Background
MRMIP . Although most Californians obtain health insurance
through their employer, many Californians do not have
access to employer-sponsored health coverage and cannot buy
private health insurance because they have a pre-existing
medical condition. Since 1991, California has operated a
high-risk pool known as MRMIP to provide the medically
uninsurable with health coverage. Premiums paid by
individuals receiving coverage are supplemented with state
Proposition 99 tobacco tax revenues to fund coverage
through the program. There are two major private health
plans that voluntarily participate in MRMIP, Blue Cross and
Kaiser and one local health plan, Contra Costa Health Plan.
MRMIP premiums vary based on the age and region of the
subscriber and the health plan they choose. For example,
in Sacramento County, the 2012 premiums for a person age
50-54 are $594 per month for the Kaiser Permanente HMO
plan, and $1,112 per month for the Blue Cross PPO. MRMIP
can only enroll the number of people that MRMIB's
contracted actuaries, Pricewaterhouse-Coopers, estimate can
be served with the funds available. The current enrollment
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cap is 8,000 individuals. As of March 2012, MRMIP had
6,051 individuals receiving coverage in the program. In
January 2011, MRMIP surveyed 395 subscribers who
disenrolled from MRMIP. Of the 115 individuals who
responded to the survey, 52 individuals (45%) indicated the
reason for disenrollment was that they could not afford the
MRMIP costs. The Governor's January proposed 2012-13
Budget for MRMIP is $43 million.
FISCAL EFFECT : Appropriation: Yes Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee:
One-time costs of about $16 million (Proposition 99
funds) in 2013 due to elimination of annual and lifetime
benefit caps.
On average over the last year, the program has seen about
150 new enrollees per month. Assuming that the changes
to the enrollment process in the bill speed the
enrollment process by one month, costs would be about
$100,000 (Proposition 99 funds) in 2013.
Minor costs to change program eligibility and cost
sharing rules (Proposition 99 funds).
SUPPORT : (Verified 8/20/12)
AARP
American Cancer Society
American Federation of State, County and Municipal
Employees, AFL-CIO
California Academy of Physician Assistants
California Managed Risk Medical Insurance Board
California Podiatric Medical Association
Health Access California
Kaiser Permanente
Western Center on Law and Poverty
OPPOSITION : (Verified 8/20/12)
Department of Finance
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ARGUMENTS IN SUPPORT : MRMIB writes this bill will
substantially improve access to comprehensive health
coverage for individuals with pre-existing conditions by
eliminating two significant inequities in MRMIP that do not
exist in the federally funded PCIP with which it shares a
target population. MRMIB writes that, although less than
1% of MRMIP subscribers reach the annual or lifetime
benefit limits, each year, those who do are very sick and
in immediate need of medical services. They risk either
being unable to access medical care or incurring debt as a
result of receiving needed health care. In addition, in
order to maintain coverage for the following benefit year,
individuals who reach the annual benefit limit must
continue paying subscriber contributions in addition to all
of their other health care bills, when they can afford it
least. By requiring MRMIB to calculate the subscriber
contribution amount without including any increased costs
attributable to removing the lifetime and annual benefit
limits, this bill would significantly improve MRMIP
benefits without decreasing affordability. MRMIB states
allowing it to accept licensed health care provider letters
as proof of a pre-existing medical condition will avoid
unnecessary delays in obtaining coverage. Additionally,
MRMIB states this bill will also significantly increase
administrative efficiencies by further aligning MRMIP's
benefits and eligibility requirements with those of PCIP,
with which it shares an application. Finally, MRMIB states
this bill will be cost-neutral to the state as MRMIB is
required by law to administer MRMIP within the funds
appropriated by the state budget and the ACA's MOE Ýhigh
risk pool] requirement for receipt of federal funds for
PCIP requires California to maintain at least a $31.8 MRMIP
appropriation. MRMIB indicates its staff currently
estimates that the benefit improvements can be achieved
within the current appropriation.
ARGUMENTS IN OPPOSITION : The Department of Finance (DOF)
writes that this bill will have a limited benefit relating
to the removal of the annual and lifetime benefit caps, as
this bill takes effect January 1, 2013, and MRMIP enrollees
will become eligible for commercial coverage through the
California Health Benefit Exchange effective January 1,
2014. In addition, DOF state actual cost reconciliation
remittances from plans may be insufficient to cover costs.
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DOF states MRMIB has not released sufficient information
regarding the projection of the amount of remittances
available to fund the increased annual and lifetime limits,
making a detailed analysis of the ability of such funds to
cover the costs of this proposal impossible. DOF states
that if plan remittances are insufficient to cover the
increased costs associated with this bill, additional
pressures on limited state resources could be created since
this bill prohibits premium increases to fund the
elimination of the annual and lifetime benefit caps,
requiring them to be funded almost solely by the
Proposition 99 tobacco tax, a declining source of revenue.
ASSEMBLY FLOOR : 75-0, 5/30/12
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Beall,
Bill Berryhill, Block, Blumenfield, Bonilla, Bradford,
Brownley, Buchanan, Butler, Charles Calderon, Campos,
Carter, Cedillo, Chesbro, Conway, Cook, Davis, Dickinson,
Eng, Feuer, Fong, Fuentes, Furutani, Beth Gaines,
Galgiani, Garrick, Gatto, Gordon, Grove, Hagman, Hall,
Harkey, Hayashi, Roger Hernández, Hill, Huber, Hueso,
Huffman, Jeffries, Jones, Knight, Lara, Logue, Bonnie
Lowenthal, Ma, Mansoor, Mendoza, Miller, Mitchell,
Monning, Morrell, Nestande, Nielsen, Norby, Olsen, Pan,
Perea, V. Manuel Pérez, Portantino, Silva, Skinner,
Smyth, Solorio, Swanson, Torres, Wagner, Wieckowski,
Williams, Yamada, John A. Pérez
NO VOTE RECORDED: Donnelly, Fletcher, Gorell, Halderman,
Valadao
CTW:m 8/20/12 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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