BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                      



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          |SENATE RULES COMMITTEE            |                   SB 222|
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                              UNFINISHED BUSINESS


          Bill No:  SB 222
          Author:   Evans (D) and Alquist (D), et al.
          Amended:  9/2/11
          Vote:     21

           
          PRIOR VOTES NOT RELEVANT 


           SUBJECT  :    Health plans:  joint ventures

            SOURCE  :     American Congress of Obstetricians & 
                      Gynecologists, 
                         District  IV
                      California Commission on the Status of Women 
                       Kaiser Permanente


           DIGEST  :    This bill requires policies in the individual 
          health insurance market to provide coverage for maternity 
          services.  

           Assembly Amendments  delete the prior version of the bill 
          related to health plans and joint ventures, and now 
          addresses maternity services for the insured.

           ANALYSIS  :     Existing Federal Law :

          1.Requires employers, under the Federal Civil Rights Act, 
            that offer health insurance, and have 15 or more 
            employees, to cover maternity services benefits at the 
            same level as other health care benefits. 

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          2.Defines, under Patient Protection and Affordable Care Act 
            (PPACA), a list of "essential health benefits package," 
            including maternal and newborn care, which health 
            insurance coverage and group health plans must provide, 
            beginning in 2014.

           Existing State Law  :

          1.Provides for the regulation of health plans by the 
            Department of Managed Health Care (DMHC) under Knox-Keene 
            Health Care Service Plan Act of 1975(Knox-Keene) and for 
            the regulation of health insurers by the Department of 
            Insurance (CDI) under the Insurance Code. 

          2.Requires health plans under Knox-Keene to cover a number 
            of basic health care services and permits DMHC to define 
            the scope of the services and to exempt plans from the 
            requirement for good cause. 

          3.Provides, under Knox-Keene, that "basic health care 
            services" include:  (a) physician services, including 
            consultation and referral; (b) hospital inpatient 
            services and ambulatory care services; (c) diagnostic 
            laboratory and diagnostic and therapeutic radiological 
            services; (d) home health services; (e) preventive health 
            services; (f) emergency health care services, including 
            ambulance and ambulance transport services and 
            out-of-area coverage; and, (g) hospice care. 

          4.Requires, under Knox-Keene, health plans to provide all 
            medically necessary basic health care services, including 
            maternity services necessary to prevent serious 
            deterioration of the health of the enrollee or the 
            enrollee's fetus, and preventive health care services, 
            specifically including prenatal care. 

          5.Prohibits health plans and health insurers from issuing 
            contracts and policies that contain a copayment or 
            deductible for inpatient hospital or ambulatory care 
            maternity services that exceed the most common amount 
            charged for the same type of care and services provided 
            for other covered medical conditions. 

          6.Prohibits health plans and health insurers providing 

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            maternity benefits for a person covered continuously from 
            conception from attaching any exclusions, reductions, or 
            limitations to coverage for involuntary complications of 
            pregnancy unless those provisions apply to all of the 
            benefits paid by the plan or insurer.

          This bill:   

          1. Requires every individual health insurance policy to 
             provide coverage for maternity services for all insureds 
             covered under the policy on or before July 1, 2012.

          2. Defines "maternity services" to include prenatal care, 
             ambulatory care maternity services, involuntary 
             complications of pregnancy, neonatal care, and inpatient 
             hospital maternity care, including labor and delivery 
             and postpartum care. 

          3. Requires the definition of "maternity services" from #2) 
             above to remain in effect until federal regulations and 
             guidance issued according to the federal health reform 
             law, the PPACA, define the scope of benefits to be 
             provided under the maternity benefit requirement and at 
             that time the PPACA definition is to apply.

          4. Exempts from the provisions of this bill specialized 
             health insurance, Medicare supplement insurance, 
             short-term limited duration health insurance, Civilian 
             Health and Medical Program of the Uniformed 
             Services-supplement insurance, or TRI-CARE supplemental 
             insurance, or hospital indemnity, accident-only, or 
             specified disease insurance. 

          5. Makes the following findings and declarations:

             A.    Health care service plans (health plans) are 
                required by the Knox-Keene to provide maternity 
                services as a basic health care benefit.

             B.    Existing law does not require health insurers to 
                provide designated basic health care services and, 
                therefore, they are not required to provide 
                coverage for maternity services.


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             C.    It is essential to clarify that all health 
                coverage made available to California consumers, 
                whether issued by health plans regulated by DMHC or 
                disability insurers who sell health insurance 
                regulated by CDI, must include maternity services.

          6. Requires that the provisions of this bill become 
             inoperative only if
             AB 210 (R. Hernández) of the 2011-12 Regular Session is 
             also enacted and takes effect.

           Background
           
          Numerous studies have shown that prenatal care pays for 
          itself by helping to minimize the prevalence and severity 
          of low- and very low-birth weight babies.  A 2004 study in 
          the  Journal of Perinatal and Neonatal Nursing  evaluated the 
          effects of augmented prenatal care on women at high risk 
          for having a low-birth weight baby who were enrolled in a 
          special program that provided basic prenatal care, prenatal 
          education, and case management.  The program saved about 
          $13,962 per single low-birth weight birth prevented, and, 
          after program costs were considered, the return on 
          investment equaled 37 percent; for every dollar invested in 
          the program $1.37 was saved.  In addition, a March of Dimes 
          (MoD) report indicated that hospital charges for premature, 
          low-birth weight infants totaled $37.7 billion nationally 
          in 2003.  The MoD report stated that premature birth was 
          among the most common, serious, and costly problems facing 
          infants in the U.S. and is responsible for about half of 
          all infant hospitalizations.

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

          According to the Assembly Appropriations Committee analysis 
          of SB 155 (Evans) which contained similar provisions, this 
          bill will result in the following costs:

           According to the California Health Benefits Review 
            Program, no direct state fiscal impact for publicly 
            supported health coverage provided through Medi-Cal, 
            California Public Employees' Retirement System, or 
            Healthy Families/Access for Infants and Mothers.  

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           Increased premium costs in the individual insurance 
            market of approximately $110 million. Increased premium 
            costs are estimated to be offset by a reduction in 
            out-of-pocket costs for women who would otherwise pay for 
            a variety of services not covered by insurance in the 
            absence of this mandate. 

           Federal regulations implementing PPACA may reduce the 
            fiscal impact of this bill in future years. PPACA 
            requires maternity services to be covered as a basic 
            benefit in state-run health insurance exchanges that will 
            provide health coverage to millions of individuals.

           SUPPORT  :   (Verified  9/2/11)

          American Congress of Obstetricians and Gynecologists, 
            District IV
            (co-source)
          California Commission on the Status of Women (co-source)
          Kaiser Permanente (co-source)
          American Academy of Pediatrics, California
          American Civil Liberties Union 
          American Federation of State, County, and Municipal 
          Employees
          Blue Shield of California
          California Academy of Family Physicians
          California Association of Physician Groups
          California Department of Insurance
          California Medical Association
          California National Organization for Women
          California Nurse Midwives Association
          California Nurses Association
          California Pan-Ethnic Health Network
          California Primary Care Association
          California School Employees Association
          California Teachers Association 
          California Women's Law Center
          Congress of California Seniors
          First 5 Los Angeles
          Having Our Say Coalition
          Latino Health Alliance
          Local Health Plans of California
          March of Dimes Foundation

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          Maternal and Child Health Access
          NARAL Pro-Choice California
          National Association of Social Workers, California 
          Nevada County Citizens for Choice 
          Planned Parenthood Affiliates of California
          Planned Parenthood Mar Monte
          United Nurses Associations of California/ Union of Health 
          Care 
             Professionals
          Women's Health Specialists

           OPPOSITION  :    (Verified  9/6/11)

          California Chamber of Commerce

           ARGUMENTS IN SUPPORT  :    According to the author's office, 
          existing law requires health plans and group insurers to 
          include maternity services, but individually marketed plans 
          are not subject to that requirement.  The author's office 
          maintains that as a result, cheaper "maternity-free" 
          policies have increased.  The author's office also asserts 
          that the percentage of policies containing maternity 
          coverage has dropped from 82 percent in 2004 to only 19 
          percent in 2009, leaving a growing number of women priced 
          out of the insurance market.  The author's office contends 
          that, as employer-sponsored coverage declines, insurance 
          companies are increasingly targeting the young and 
          uninsured with products that do not include maternity 
          services, even though 25 percent of these individuals are 
          women of childbearing age.  The author's office maintains 
          that these types of products delay and restrict access to 
          prenatal care, which can lead to serious health 
          complications for both the mother and the newborn, and 
          force more women into state-funded programs, such as 
          Medi-Cal or Access for Infants and Mothers.

           ARGUMENTS IN OPPOSITION  :    The California Chamber of 
          Commerce opposes this bill and writes, "The marketplace for 
          health coverage products includes an array of options for 
          which employers and individuals can choose to meet their 
          needs and their budget.  Options include discounted 
          products for individuals that do not want or need maternity 
          coverage.  SB 222 would prohibit insurers from offering 
          these discounted products and would lead to premium rate 

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          increases for many Californians.

          "While well intentioned, CalChamber believes that SB 222 
          would further exacerbate the problem of rising health care 
          costs.  This bill may only minimally increase health 
          insurance premiums; however this increase cannot be viewed 
          in isolation.  This year alone the legislature considered 
          at least a dozen new mandates to add to the many currently 
          imposed benefit mandates.  These mandates have reduced 
          flexibility in benefit design, increased health 
          care costs and premium rates leading to reduced employers' 
          and individuals choice of benefit packages, ultimately 
          contributing to the need for health care reform today.  
          Benefit mandates make insurance less affordable, resulting 
          in an increased number of uninsured."

           
           CTW:do  9/7/11   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE

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