BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                      



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          |SENATE RULES COMMITTEE            |                   SB 757|
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                                 THIRD READING


          Bill No:  SB 757
          Author:   Lieu (D)
          Amended:  4/28/11
          Vote:     21

           
           SENATE HEALTH COMMITTEE  :  6-3, 4/27/11
          AYES:  Hernandez, Alquist, De León, DeSaulnier, Rubio, Wolk
          NOES:  Strickland, Anderson, Blakeslee

           SENATE JUDICIARY COMMITTEE  :  3-2, 5/3/11
          AYES:  Evans, Corbett, Leno
          NOES:  Harman, Blakeslee

           SENATE APPROPRIATIONS COMMITTEE  :  6-2, 5/16/11
          AYES:  Kehoe, Alquist, Lieu, Pavley, Price, Steinberg
          NOES:  Emmerson, Runner
          NO VOTE RECORDED:  Walters


           SUBJECT  :    Discrimination

           SOURCE  :     Equality California


           DIGEST  :    This bill requires every group health care 
          service plan contract and every group health insurance 
          certificate marketed, issued, or delivered to a resident of 
          California to provide coverage to the subscriber's 
          registered domestic partner, regardless of the situs of the 
          contract, subscriber, or master group policyholder.

           ANALYSIS  :    
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          Existing law:

          1. Provides for the regulation of health care service plans 
             (health plans) by the Department of Managed Health Care. 
              

          2. Provides for the regulation of all forms of insurance, 
             including health insurance, by the California Department 
             of Insurance.

          3. Provides that every disability insurance policy covering 
             hospital, medical or surgical expenses, that is 
             advertised, issued, or delivered to a California 
             resident, regardless of the location of the contract or 
             master group policyholder, is subject to all 
             requirements in the California Insurance Code, except 
             those policies issued outside California to an employer 
             whose principal place of business and majority of 
             employees are outside California.

          4. Requires group health plans, health insurers, and all 
             other forms of insurance that provide dependent coverage 
             to provide coverage for a registered domestic partner 
             that is equal to the coverage provided to a spouse.

          5. Provides that any group health plan contract, health 
             insurance policy, or any other insurance policy, shall 
             be deemed to provide coverage for a registered domestic 
             partner that is equal to the coverage provided to a 
             spouse.

          This bill requires that every policy or certificate for 
          health insurance that is marketed, issued, or delivered to 
          a resident of California, regardless of the situs of the 
          contract or master group policy holder must offer or 
          provide coverage for a registered domestic partner that is 
          equal to the coverage provided to the spouse of an 
          employee, insured, or policyholder.

           Background
           
           Extraterritoriality  .  Employers located in one state often 
          employ individuals who reside in another state, or have 

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          employees in multiple states.  Many such employers purchase 
          a single group health plan or insurance policy covering all 
          of their employees, wherever they are located, which 
          results in such group plans and policies providing coverage 
          to residents of more than one state.  In most states, the 
          location of the employer's headquarters dictates which 
          state's insurance regulations apply, not the location of 
          the employee, as is the case with individual insurance 
          products.  For example, if an employer is headquartered in 
          New York and has some employees living in New Jersey, New 
          York insurance regulations will apply to the insurance 
          coverage of those employees who live in New Jersey.  This 
          is similar to California law.

          An exception to this rule occurs in states that choose to 
          exercise territorial jurisdiction; these states are known 
          as extraterritorial states.  States with extraterritorial 
          laws require health insurers to provide benefits based on 
          the laws of the state where an employee resides, regardless 
          of where the employer is located.

          There are currently 12 states that exercise territorial 
          jurisdiction of insurance laws for health insurance 
          policies.  They include Alaska, Arkansas, Connecticut, 
          Delaware, Indiana, Kansas, Mississippi, Montana, North 
          Carolina, Oklahoma, Utah and Washington.  Any other state's 
          group health insurance laws do not apply in these states.  
          This means that a policy issued by a New York-based insurer 
          to a New York employer for an employee residing in 
          Connecticut is subject to Connecticut's insurance 
          regulations and the New York insurer must issue a 
          certificate of insurance that complies with Connecticut 
          insurance law.  

           Comment
           
          Existing law, AB 2208 (Kehoe), Chapter 488, Statutes of 
          2004, establishes the California Insurance Equality Act, 
          which requires all types of insurance, including health 
          insurance, to provide coverage to registered domestic 
          partners equal to that provided to a spouse.

          This bill, with the words "regardless of the situs of the 
          contract or master policyholder," seeks to clarify that 

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          this parity requirement extends to insurance provided to 
          California residents by employers located out-of-state with 
          out-of-state insurance contracts or policies.

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

          According to the Senate Appropriations Committee:

                         Fiscal Impact (in thousands)

           Major Provisions               2011-12     2012-13      
           2013-14             Fund  

          DMHC enforcement             unknown, potentially minor 
          to significant               Special*

          * Managed Care Fund

           SUPPORT  :   (Verified  5/17/11)

          Equality California (source)
          California Association of Marriage and Family Therapists
          California Communities United Institute


           ARGUMENTS IN SUPPORT  :    Equality California, the sponsor 
          of this bill, asserts that employees of out-of-state 
          companies who live in California and are in a domestic 
          partnership are often the victims of discrimination because 
          their employer contracts with an out-of-state insurer that 
          does not provide equal benefits to domestic partners.  
          Because of this practice, domestic partners and employers 
          are often forced to switch insurers to purchase coverage 
          that treats spouses and domestic partners equally.  
          Equality California believes that this bill ensures that 
          such out-of-state insurers must abide by the same 
          nondiscrimination laws that California insurers already do. 


          Writing in support, the California Association of Marriage 
          and Family Therapists (CAMFT) argues that the 2004 
          California Insurance Equality Act was intended to provide a 
          necessary and consistent standard of nondiscrimination in 

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          insurance by ensuring that insurance companies treat 
          domestic partners in the same manner as spouses in the 
          purchase of insurance.  CAMFT believes this bill ensures 
          that out-of-state plans and insurers also adhere to the 
          nondiscrimination laws of California, thereby assuring 
          legislative intent behind the California Insurance Equality 
          Act.


          CTW:kc  5/17/11   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE

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