BILL ANALYSIS Ó
AB 1526
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 1526 (Monning)
As Amended August 24, 2012
Majority vote
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|ASSEMBLY: |75-0 |(May 30, 2012) |SENATE: |32-3 |(August 30, |
| | | | | |2012) |
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Original Committee Reference: HEALTH
SUMMARY : Allows the Managed Risk Medical Insurance Board
(MRMIB) to further subsidize the premium contributions paid by
individuals receiving coverage in the Major Risk Medical
Insurance Program (MRMIP) from January 1, 2013, to December 31,
2013.
The Senate amendments:
1)Permit MRMIB, for the period from January 1, 2013, to December
31, 2013, to further subsidize MRMIP subscriber contributions
so that the amount paid by each MRMIP subscriber is below
125%, but no less than 100%, of the standard average
individual risk rate for comparable coverage.
2)Clarify that the increased subsidy is not to be construed to
affect the subsidies or subscriber contributions permitted for
other specified plans, health care contracts or coverage.
3)Delete the provision that added documentation, satisfactory to
MRMIB, from a specified licensed health care professional, to
verify an applicant's pre-existing medical condition to those
circumstances that fulfill the eligibility requirement that an
applicant demonstrate an inability to obtain private health
insurance.
4)Delete the authorization for MRMIB to remove annual or
lifetime benefit limits on coverage provided through MRMIP and
requires any associated costs from the calculation of the
subscriber's contribution to be excluded from the premium.
5)Delete provisions that created the Major Risk Medical
Insurance Reconciliation Fund and required all remittances
received on or after January 1, 2013, from participating
AB 1526
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health plans to be deposited in the fund and to be available
for appropriation by the Legislature, but prohibits the fund
from being used to pay for increase program costs resulting
from the elimination of the annual or lifetime benefit limits.
AS PASSED BY THE ASSEMBLY , this bill eliminated the limits on
lifetime and annual benefits on coverage in MRMIP and revised
eligibility documentation.
FISCAL EFFECT : According to the Senate Appropriations Committee
analysis of the previous version of this bill:
1)One-time costs of about $16 million (Proposition 99 funds) in
2013 due to elimination of annual and lifetime benefit caps.
2)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.
3)Minor costs to change program eligibility and cost sharing
rules (Proposition 99 funds).
COMMENTS : This bill is needed to allow MRMIB to reduce the
premiums in MRMP to more closely align MRMIP premiums with
premiums in the federally subsidized Pre-Existing Condition
Insurance Program (PCIP). The premiums in the PCIP program are
significantly lower than in MRMIP (although MRMIP has a lower
deductible) and in some cases, approximately 1/2 to 1/4 of those
in the MRMIP. The most common reason MRMIP subscribers
disenroll from MRMIP coverage is the inability to afford the
program's premiums. In January 2011, MRMIP surveyed 395
subscribers who disenrolled from MRMIP, and 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 program costs.
In addition, for states to be eligible to run a PCIP, the state
must agree to not reduce the annual amount the state expended
for the operation of its high-risk pool (known as a maintenance
of effort or MOE). While California's MOE requires the state to
maintain funding for MRMIP at $31.8 million during the time PCIP
is in operation, MRMIP enrollment has gradually declined since
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PCIP has been in effect, and current MRMIP enrollment (5,971) is
over 2,000 individuals less than the program's 8,000 person
enrollment cap. In addition, these funds were originally Prop
99 funds or premium payments that were designated for a very
specific purpose - the MRMIP program. Directing the funds to
other purposes runs the risk of using Prop 99 inappropriately
and using subscriber premiums for other programs. Because
current state law requires premiums to be set based on at least
125% of the standard rate in the private market for a similar
level of benefits, MRMIB cannot reduce MRMIP premiums without
this bill.
This bill was substantially amended in the Senate but the
subject was heard in the Assembly policy committee. The
amendments taken were based on comments in the analysis prepared
by the Department of Finance that suggested reducing premiums as
an alternative to eliminating the lifetime and annual cap on
benefits as this bill did in the Assembly version.
Analysis Prepared by : Marjorie Swartz / HEALTH / (916)
319-2097
FN: 0005869