BILL ANALYSIS Ó Senate Appropriations Committee Fiscal Summary Senator Christine Kehoe, Chair SB 951 (Hernandez) - Health care coverage: essential health benefits Amended: April 16, 2012 Policy Vote: Health 6-3 Urgency: No Mandate: Yes Hearing Date: April 30, 2012 Consultant: Brendan McCarthy This bill does not meet the criteria for referral to the Suspense File. Bill Summary: SB 951 would select the Kaiser Small Group HMO plan as the state's essential health benefit benchmark plan, pursuant to the federal Affordable Care Act. Fiscal Impact: No additional costs to subsidize the costs of state benefit mandates for health plans sold in the Exchange. One-time costs to the Department of Insurance of $120,000 in 2012-13 and $110,000 in 2013-14 for the review of health insurance policy filings (Insurance Fund). Background: Under the federal Patient Protection and Affordable Care Act (Affordable Care Act), health plans and health insurers that offer coverage in the individual market or the small group market must provide coverage that is equivalent to the benefits of a specified essential health benefits benchmark plan. Federal guidance allows states to determine which plan will be the benchmark plan. Also under the Affordable Care Act, individuals with household income less than 400 percent of the federal poverty level and certain small businesses purchasing health plans through the California Health Benefit Exchange will be eligible for subsidies. The Affordable Care Act requires the state to pay for the subsidies attributable to any state-mandated benefits that are not provided under the benchmark plan. Proposed Law: SB 951 would require individual or small group health plans and health insurance policies sold in the Exchange or the small group market after January 1, 2014 to provide SB 951 (Hernandez) Page 1 benefits at least equal to those provided by the essential health benefits benchmark plan. The bill would select the Kaiser Small Group HMO as the state's essential health benefits benchmark plan. The bill requires habilitative services (which are not covered by the Kaiser Small Group HMO) to be covered at parity with rehabilitative services provided by Kaiser Small Group HMO. In addition, the bill requires pediatric oral care and pediatric vision care (neither of which are covered by the Kaiser Small Group HMO) to be provided at the same level as is provided in certain federal plans. Related Legislation: SB 961 (Hernandez) 2011 requires health plans to comply with federal requirements in the individual market. That bill will be heard in this committee. SB 1321 (Harman) 2011 requires the California Health Benefit Exchange to select the health plan with the lowest cost as the essential health benefit benchmark plan. That bill is in the Senate Health Committee. SB 1453 (Monning) 2011 is identical to this bill. That bill is in the Assembly Appropriations Committee. Staff Comments: Because the bill selects a health plan that is subject to all state-mandated benefits, the bill does not impose an obligation on the state to pay for the costs of subsidizing those benefits for individuals or small employers eligible for subsidies. To date, federal guidance on the definition or scope of required benefits for habilitative services has been limited. Once additional federal guidance becomes available, the bill may need to be amended to ensure that it conforms to federal requirements. The bill does not impose a reimbursable state mandate because the only costs that might be incurred by a local agency relate to a crime or infraction. SB 951 (Hernandez) Page 2