BILL ANALYSIS Ó
SB 757
Page 1
Date of Hearing: June 21, 2011
ASSEMBLY COMMITTEE ON HEALTH
William W. Monning, Chair
SB 757 (Lieu) - As Amended: June 13, 2011
SENATE VOTE : 25-13
SUBJECT : Discrimination.
SUMMARY : Requires every group health care service plan (health
plan) contract and every policy or certificate of group health
insurance marketed, issued, or delivered to a resident of this
state, regardless of the situs of the contract, the subscriber
or master group policyholder, to comply with existing law that
provides for equal coverage for the registered domestic partner
of an employee, subscriber, insured, or policyholder to the same
extent as provided to a spouse, and prohibits a plan or health
insurer from discriminating based on the gender or sexual
orientation of the spouse or registered domestic partner of an
employee, subscriber, insured, or policyholder.
EXISTING LAW :
1)Provides for the regulation of health plans by the Department
of Managed Health Care (DMHC) under the Knox-Keene Health Care
Service Plan Act of 1975 (Knox-Keene) and regulation of
disability insurers selling health insurance (health insurers)
by the California Department of Insurance (CDI) under the
Insurance Code.
2)Requires group health plan contracts and disability insurance
policies to provide equal coverage to employers or guaranteed
associations, for the registered domestic partner of an
employee or subscriber to the same extent and subject to the
same terms and conditions as provided to a spouse of the
employee or subscriber, and inform employers and guaranteed
associations of this coverage. Prohibits a plan from offering
or providing coverage for a registered domestic partner that
is not equal to the coverage provided to the spouse of an
employee or subscriber.
3)Defines "domestic partners" as two adults who have chosen to
share one another's lives in an intimate and committed
relationship of mutual caring. Establishes domestic
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partnerships in California when both persons file a
Declaration of Domestic Partnership with the Secretary of
State, and specific requirements are met. Affords domestic
partners the same rights, protections, benefits,
responsibilities, obligations, and duties under the law,
whether derived from statutes, administrative regulations,
court rules, government policies, common law, or any other
provisions or sources of law, as are granted and imposed upon
spouses. Provides former and surviving domestic partners the
same rights, protections, benefits, responsibilities,
obligations, and duties to as imposed upon former and
surviving spouses.
4)Requires every insurance policy that is issued, amended,
delivered, or renewed in California to provide coverage for
the domestic partner of an insured or policyholder that is
equal to the same terms and conditions offered to a spouse of
an insured or policy holder.
5)Prohibits, under Knox-Keene, a health plan from refusing to
contract, canceling, or declining to renew or reinstate any
health plan contract because of the race, color, national
origin, ancestry, religion, sex, marital status, sexual
orientation, or age of any contracting party, prospective
contracting party, subscriber, enrollee, member or otherwise.
6)Prohibits, in Knox-Keene, modification of benefits, coverage,
or the inclusion of any limitations, exceptions, exclusions,
reductions, copayments, coinsurance, deductibles,
reservations, or premium, price, or charge differentials
because of the race, color, national origin, ancestry,
religion, sex, marital status, sexual orientation, or age of
any contracting party, prospective contracting party,
subscriber, enrollee, member, or otherwise.
7)Prohibits life and disability insurers, including health
insurers, from using race, color, religion, sex, national
origin, ancestry, or sexual orientation in determining whether
to offer insurance.
8)Defines "sex" for the purposes of 5) through 7) above as
having the same meaning as "gender" as defined in existing
law, which includes a person's gender identity and gender
related appearance and behavior whether or not stereotypically
associated with the person's assigned sex at birth.
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FISCAL EFFECT : According to the Senate Appropriations
Committee, to the extent that DMHC and CDI receive complaints
from California citizens covered by out-of-state insurers that
are not subject to California law, there could be enforcement
costs. Although the likely number of complaints is small, the
cost of enforcing this type of provision is unknown and could be
either minor, if the enforcement was within their normal course
of business, or potentially significant if the departments had
no other recourse than legal action. The type of enforcement
action would depend on the individual situation.
COMMENTS :
1)PURPOSE OF THIS BILL . According to the author, California has
established strong laws prohibiting discrimination in the
issuance of insurance policies in the state. Existing law
requires California-based insurers to provide the same
coverage to domestic partners that they provide to spouses.
California-based insurers must comply with California's
antidiscrimination laws. However, some out-of-state insurance
companies are attempting to evade complying with the
California law that prohibits the sale or issuance of
discriminatory insurance policies. Some out-of-state
insurance companies are refusing to insure domestic partners
of gay and lesbian Californians, despite clear intent of the
California Legislature to prohibit the sale of any such
discriminatory policy in California. Multi-state companies
that do business in California often contract with
out-of-state insurance companies to provide coverage for their
employees. Because some of these out-of-state insurance
companies believe there is a loophole in the law, they are
discriminating against employees who live in California and
who are in a domestic partnership by refusing to provide equal
coverage to domestic partners. Because of this practice,
California-based insurance companies are at a disadvantage in
the marketplace because of the price savings available to
out-of-state companies that sell discriminatory policies.
2)SUPPORT . This bill is sponsored by Equality California who
writes the goal of this bill is to ensure that out-of-state
insurers selling insurance in California abide by the same
nondiscrimination laws as California insurers. According to
the California Association of Marriage and Family Therapists
(CAMFT), the California Insurance Equality Act (Act) was
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passed in 2004 requiring group health care plans and insurers
to provide equal coverage to registered domestic partners.
CAMFT provides a quote from then Insurance Commissioner John
Garamendi that the Act established a necessary and consistent
standard of non-discrimination in insurance in conformance
with AB 205 (Goldberg), Chapter 421, Statutes of 2003, by
ensuring that insurance companies treat domestic partners in
the same manner as spouses in the purchase of insurance. While
existing law requires same coverage to registered domestic
partners as that of spouses, some out-of-state carriers do not
comply and refuse to insure the registered domestic partner of
California residents.
3)PRIOR LEGISLATION .
a) AB 119 (Jones), Chapter 365, Statutes of 2009, prohibits
health plans and health insurers from charging a premium,
price, or charge differential for health care coverage
because of the sex of the prospective subscriber, enrollee,
policyholder, or insured.
b) AB 1586, (Koretz), Chapter 421, Statutes of 2005,
defines the term "sex," in existing law that prohibits
health plans and insurers from specified discriminatory
acts, to have the same meaning as "gender," as defined
under the Penal Code, as specified.
c) AB 2204 (Kehoe), Chapter 488, Statutes of 2004, enacts
the Act which requires group health plans, health
insurance, and all forms of insurance to provide equal
coverage to registered domestic partners.
d) AB 205 seeks to extend most of the rights and
responsibilities available to spouses solely available
under state law to registered domestic partners.
4)DOUBLE REFERRAL . This bill has been double-referred. Should
this bill pass out of this committee, it will be referred to
the Assembly Committee on Judiciary.
5)COMMENTS . Recent amendments indicate that a plan or insurer
may not discriminate based on the gender or sexual orientation
of the spouse or registered domestic partner of an employee,
subscriber, insured, or policyholder. California already has
in place anti-discrimination provisions covering sex, gender
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discrimination, and many other factors. The intent in adding
these amendments is to apply the provisions of this bill to
nondiscrimination provisions based on gender or sexual
orientation. To avoid confusion with existing law, the author
may wish to add references to existing nondiscrimination laws
to sections 1 and 3 in this bill, instead.
6)IF ENACTED, CAN THIS BILL BE ENFORCED ?
a) According to the DMHC, jurisdiction follows the
contract, namely the subscriber contract. While a health
plan that is based out-of-state cannot lawfully sell
managed care contracts to California consumers,
out-of-state plans may have California residents. An
out-of-state plan, out-of-state employer, and a California
enrollee are not in DMHC's jurisdiction but if the
out-of-state plan enters into California provider contracts
to provide care to its California residents, then this
event triggers DMHC oversight. Moreover, if the
out-of-state plan leases a California plan's provider
network, this could also trigger DMHC oversight, depending
on the lease agreement.
b) According to the CDI, if the company is admitted in
California (meaning holding a certificate of authority),
CDI would have the broadest remedies available, including
bringing an action to revoke the certificate of authority,
which would be used only in egregious cases, as well as a
cease and desist action. Even if the company is not
admitted in California, there is still general authority
for the Insurance Commissioner to file an injunction in
Superior Court if any person is violating or is about to
violate the Insurance Code. This would be reserved for
clear and extreme violations of the Insurance Code, but
this is a very broad statute that gives the Insurance
Commissioner authority even over the conduct of nonadmitted
carriers. CDI would expect the nonadmitted category to be
a fairly limited one, as any insurer wishing to transact
insurance in California needs to be and likely is licensed
in California.
REGISTERED SUPPORT / OPPOSITION :
Support
Equality California (sponsor)
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California Association of Marriage and Family Therapists
California School Employees Association, AFL-CIO
Greater San Diego Business Association
Opposition
None on file.
Analysis Prepared by : Teri Boughton / HEALTH / (916) 319-2097