BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                      



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          |SENATE RULES COMMITTEE            |                  AB 1761|
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                                 THIRD READING


          Bill No:  AB 1761
          Author:   John A. Pérez (D), et al.
          Amended:  8/14/12 in Senate
          Vote:     21

           
           SENATE HEALTH COMMITTEE  :  9-0, 6/20/12
          AYES:  Hernandez, Harman, Alquist, Anderson, Blakeslee, De 
            León, DeSaulnier, Rubio, Wolk

           SENATE APPROPRIATIONS COMMITTEE  :  7-0, 8/13/12
          AYES:  Kehoe, Walters, Alquist, Dutton, Lieu, Price, 
            Steinberg

           ASSEMBLY FLOOR  :  74-0, 4/26/12(Consent) - See last page for 
            vote


           SUBJECT  :    California Health Benefit Exchange

           SOURCE  :     Author


           DIGEST  :    This bill prohibits an individual or entity from 
          holding himself, herself, or itself out as representing, 
          constituting, or otherwise providing services on behalf of 
          the Exchange unless that individual or entity has a valid 
          agreement with the Exchange to engage in those activities.

           ANALYSIS  :    Existing law:
           
           1.Requires, under the federal Patient Protection and 
            Affordable Care Act (ACA), as amended by the Health Care 
                                                           CONTINUED





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            Education and Reconciliation Act of 2010, each state, by 
            January 1, 2014, to establish an American Health Benefit 
            Exchange that makes qualified health plans available to 
            qualified individuals and qualified employers.  If a 
            state does not establish an Exchange, the federal 
            government administers the Exchange.  The ACA establishes 
            requirements for the Exchange and for health plans 
            participating in the Exchange, and the ACA defines who is 
            eligible to receive coverage in the Exchange.

          2.Allows, under the ACA and effective January 1, 2014, 
            eligible individual taxpayers, whose household income 
            equals or exceeds 100 percent, but does not exceed 400 
            percent, 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.  The ACA also 
            requires a reduction in cost sharing for individuals with 
            incomes below 250 percent of the FPL, and a lower maximum 
            limit on out-of-pocket expenses for individuals whose 
            incomes are between 100 and 400 percent of the FPL.  
            Legal immigrants with household incomes less than 100 
            percent 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.Defines, under the Insurance Code, unfair methods of 
            competition and unfair and deceptive acts or practices in 
            the business of insurance.  Makes any person who engages 
            in any unfair method of competition or any unfair or 
            deceptive act or practice liable to the state for a civil 
            penalty to be fixed by the Insurance Commissioner, not to 
            exceed $5,000 for each act or, if the act or practice was 
            willful, a civil penalty not to exceed $10,000 for each 
            act. 

          4.Permits, under the Knox-Keene  Health Care Service Act of 
            1975 (Knox-Keene Act), the Director of the Department of 
            Managed Health Care (DMHC) to require that solicitors and 
            solicitor firms and principal persons engaged in the 
            supervision of solicitation for plans of solicitor firms 
            to meet such reasonable and appropriate standards with 
            respect to training, experience, and other qualifications 
            as the Director finds necessary and appropriate in the 







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            public interest or for the protection of subscribers, 
            enrollees, and plans. 

          5.Prohibits plans, solicitors, solicitor firms, or 
            representatives from using or permitting the use of any 
            advertising or solicitation which is untrue or 
            misleading, or any form of evidence of coverage which is 
            deceptive. 

          This bill:

          1.Prohibits an individual or entity from holding himself, 
            herself, or itself out as representing, constituting, or 
            otherwise providing services on behalf of the Exchange 
            unless that individual or entity has a valid agreement 
            with the Exchange to engage in those activities. Makes 
            any individual or entity who aids or abets another 
            individual or entity in violation of this prohibition to 
            also be in violation of this prohibition.

          2.Makes it an unfair business practice under the Knox-Keene 
            Act for a solicitor or solicitor firm to hold himself, 
            herself, or itself out as representing, constituting, or 
            otherwise providing services on behalf of the Exchange 
            unless the solicitor or solicitor firm has a valid 
            agreement with the Exchange to engage in those 
            activities.

          3.Makes it an unfair business practice for a health plan to 
            hold itself out as representing, constituting, or 
            otherwise providing services on behalf of the Exchange 
            unless the plan has a valid agreement with the Exchange 
            to engage in those activities.

          4.Makes it an unfair method of competition and an unfair 
            and deceptive act or practice in the business of 
            insurance, under the Insurance Code, to hold oneself out 
            as representing, constituting, or otherwise providing 
            services on behalf of the Exchange without a valid 
            agreement with the Exchange to engage in those 
            activities. 

           Background
           







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          During the 2009-10 Session, the Legislature passed and 
          then-Governor Schwarzenegger signed into law two bills 
          establishing the California Health Benefit Exchange.  SB 
          900 (Alquist), Chapter 659, Statutes of 2010, established 
          the Exchange as an independent public entity within state 
          government and requires the Exchange to be governed by a 
          board composed of the Secretary of the California Health 
          and Human Services Agency, or his or her designee, and four 
          other members appointed by the Governor and the Legislature 
          who meet specified criteria.  AB 1602 (John A. Pérez), 
          Chapter 655, Statutes of 2010, specifies the powers and 
          duties of the Exchange relative to determining eligibility 
          for enrollment in the Exchange and arranging for coverage 
          under qualified health plans and establishes requirements 
          for health plans in and outside the Exchange.

          According to estimates in a recent study in the health 
          policy journal Health Affairs by Peter Long and Jonathan 
          Gruber, the ACA will provide health insurance for an 
          additional 3.4 million people in California in 2016. The 
          authors state this will mean that nearly 96 percent of 
          documented residents of California under age 65 will be 
          insured.  The authors estimate 4 million people are 
          expected to enroll in the state's Exchange. 

          At some point following the signing of those bills into law 
          and when the Exchange began having public board meetings, 
          Google searches for the California Health Benefit Exchange 
          identified a website operated by a private company of 
          health benefit consultants and brokers, instead of the 
          official site maintained by the Exchange.  When the 
          Exchange begins offering health coverage, people going to 
          such a website to purchase coverage could end up paying 
          more for health coverage as the state-administered Exchange 
          is the only place where consumers can purchase individual 
          coverage with premium and cost-sharing subsidies and a 
          lower out-of-pocket maximum.

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  Yes   
          Local:  Yes

          According to the Senate Appropriations Committee:

           The Department of Managed Health Care indicates that it 







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            may incur enforcement costs in the tens of thousands 
            (Managed Care Fund).

           Enforcement costs to the Department of Insurance are 
            expected to be minor (Insurance Fund).

           Enforcement costs to the California Health Benefit 
            Exchange are expected to be minor (federal funds).

           SUPPORT  :   (Verified  8/14/12)

          ACCESS Women's Health Justice
          California Association of Health Underwriters
          California Black Health Network
          California Chiropractic Association
          California Immigrant Policy Center
          California Pan-Ethnic Health Network
          California Rural Legal Assistance Foundation
          California Teachers Association
          Children Now
          Children's Defense Fund California
          The Children's Partnership
          Having Our Say Coalition 
          Health Access California
          Insurance Brokers and Agents of the West
          National Association of Insurance and Financial Advisors of 
          California
          United Ways of California
          Western Center on Law and Poverty

           ARGUMENTS IN SUPPORT  :    Western Center on Law & Poverty 
          (WCLP) writes in support that there are websites using the 
          Exchange name when in fact they are run by private 
          entities.  WCLP states Californians need a trusted place to 
          go for reliable information about their health coverage 
          options, and only the Exchange itself and those entities 
          with whom it contracts should be permitted to hold itself 
          out as the Exchange.  The Insurance Brokers and Agents of 
          the West, the California Association of Health Underwriters 
          and the National Association of Insurance and Financial 
          Advisors of California write this bill is an important 
          element to help to deter unauthorized persons or entities 
          from conducting misleading advertising or solicitations.  
          Health Access California states that almost from the moment 







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          that the Exchange was created, there have been misleading 
          websites put up by agents and brokers that appear to be the 
          official website of the Exchange, and this bill takes the 
          simple step of saying that only an individual or entity 
          with a valid, in-force agreement with the Exchange can hold 
          themselves out as acting on behalf of the Exchange. 


           ASSEMBLY FLOOR  :  74-0, 4/26/12
          AYES:  Achadjian, Alejo, Allen, Ammiano, Atkins, Beall, 
            Bill Berryhill, Block, Blumenfield, Bonilla, Bradford, 
            Brownley, Buchanan, Butler, Charles Calderon, Campos, 
            Carter, Chesbro, Conway, Cook, Davis, Dickinson, 
            Donnelly, Eng, Feuer, Fletcher, Fong, Fuentes, Beth 
            Gaines, Galgiani, Garrick, Gatto, Gordon, Gorell, Grove, 
            Hagman, Hall, Hayashi, Roger Hernández, Hill, Huber, 
            Hueso, Huffman, Jeffries, Knight, Lara, Logue, Bonnie 
            Lowenthal, Ma, Mansoor, Mendoza, Miller, Mitchell, 
            Monning, Morrell, Nestande, Nielsen, Norby, Olsen, Pan, 
            Perea, V. Manuel Pérez, Portantino, Silva, Skinner, 
            Solorio, Swanson, Torres, Valadao, Wagner, Wieckowski, 
            Williams, Yamada, John A. Pérez
          NO VOTE RECORDED:  Cedillo, Furutani, Halderman, Harkey, 
            Jones, Smyth


          CTW:n  8/14/12   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE

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