BILL ANALYSIS Ó
------------------------------------------------------------
|SENATE RULES COMMITTEE | AB 1526|
|Office of Senate Floor Analyses | |
|1020 N Street, Suite 524 | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
------------------------------------------------------------
THIRD READING
Bill No: AB 1526
Author: Monning (D)
Amended: 8/24/12 in Senate
Vote: 21
PRIOR VOTES NOT RELEVANT
SUBJECT : California Major Risk Medical Insurance Program
SOURCE : Author
DIGEST : This bill allows the Managed Risk Medical
Insurance Board (MRMIB) to further subsidize the premium
contributions paid by the Major Risk Medical Insurance
Program (MRMIP) subscribers from January 1, 2013, to
December 31, 2014.
Senate Floor Amendments of 8/24/12 delete provisions
allowing the MRMIB to remove the annual and lifetime limits
on coverage in the MRMIP and instead to allow MRMIB to
further subsidize the premium contributions paid by MRMIP
subscribers from January 1, 2013, to December 31, 2014.
(See analysis section for details of amendment.)
ANALYSIS : Existing law establishes the MRMIP that is
administered by the MRMIB to provide major risk medical
coverage to residents who have been rejected for coverage
by at least one private health plan, as specified.
Existing law creates the Major Risk Medical Insurance Fund
and continuously appropriates the fund to MRMIB for the
CONTINUED
AB 1526
Page
2
purposes of MRMIP.
Existing law requires MRMIB to establish program
contribution amounts for each category of risk for each
participating health plan and requires that these amounts
be based on the average amount of subsidy funds required
for the program as a whole, to be determined in a specified
manner. Existing law authorizes participating health plans
to charge subscriber contributions that do not exceed the
difference between its plan rate and the program
contribution amounts for a category of risk. Existing law
requires the program to pay program contribution amounts to
participating health plans from the Major Risk Medical
Insurance Fund.
This bill, for the period commencing January 1, 2013, to
December 31, 2013, inclusive, additionally authorizes the
MRMIP to further subsidize subscriber contributions based
on a specified percentage of the standard average
individual risk rate for comparable coverage, as specified.
This bill prohibits the amount of any subsidy provided to
subscribers from affecting the calculation of premiums for
certain products. Because this bill removes a restriction
limiting the expenditure of money available under an
existing appropriation from a continuously appropriated
fund, this bill makes an appropriation.
This bill also provides that if regulations are adopted and
readopted, those regulations by MRMIB to implement the
changes made to MRMIP enacted by this bill are deemed to be
an emergency and this bill exempts MRMIB from describing
facts showing the need for immediate action and from review
by the Office of Administrative Law.
This bill allows the MRMIB to further subsidize the premium
contributions paid by the MRMIP subscribers from January 1,
2013, to December 31, 2014.
Specifically the August 24, 2012 amendments:
1. Delete provisions in this bill that allow MRMIB to
remove the annual and lifetime limits from MRMIP and
that require MRMIB to exclude the cost attributable to
the removal of those limits from the amount individuals
AB 1526
Page
3
enrolled in MRMIP pay in premiums.
2. Delete provisions in this bill allowing MRMIB to accept
documentation satisfactory to MRMIB from a physician,
physician assistant, nurse practitioner, or other health
care professional (if designated by MRMIB) verifying the
applicant's pre-existing medical condition (which makes
the person eligible for MRMIP).
3. Permit MRMIB, for the period from January 1, 2013, to
December 31, 2014, to further subsidize MRMIP subscriber
contributions so that the amount paid by each subscriber
is below 125% of the standard average individual risk
rate for comparable coverage but no less than 100% of
the standard average individual risk rate for comparable
coverage.
4. Require, for purposes of calculating premiums for the
products listed below, MRMIP subscriber contributions to
be construed to mean subscriber contributions without
the additional subsidies permitted by 3):
A. Standard benefit plans that former MRMIP
subscribers are enrolled in under a pilot program
that limited enrollment in MRMIP to 36 months and
that required MRMIP subscribers to pay 10% above
MRMIP rates with the costs in excess of those amounts
split between the state and MRMIP-contracting health
plans.
B. Health care service plan contracts and health
benefit plans provided through a preferred provider
organization (PPO) for federally eligible defined
individuals (known as HIPAA individual market
coverage after the federal law) who have a right to a
guaranteed issue individual health insurance product
under federal law and in which state law prohibits
the premiums and premium increases from exceeding
average MRMIP premiums and ties premium increases to
MRMIP premium increases.
C. Conversion coverage required to be offered by
health plans and health insurers (conversion coverage
is offered when a group plan is discontinued);
AB 1526
Page
4
conversation premiums, by statute, are tied to HIPAA
individual market coverage.
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
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
Unknown with latest amendments.
SUPPORT : (Verified 8/27/12)
AARP
AFSCME, AFL-CIO
American Cancer Society
AB 1526
Page
5
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
CTW:k 8/27/12 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
**** END ****