BILL ANALYSIS Ó ------------------------------------------------------------ |SENATE RULES COMMITTEE | SB 222| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ 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. CONTINUED SB 222 Page 2 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 CONTINUED SB 222 Page 3 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. CONTINUED SB 222 Page 4 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. CONTINUED SB 222 Page 5 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 CONTINUED SB 222 Page 6 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 CONTINUED SB 222 Page 7 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 **** END **** CONTINUED