BILL ANALYSIS Ó
AB 2 X1
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 2 X1 (Pan)
As Amended April 1, 2013
Majority vote
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|ASSEMBLY: |53-25|(February 28, |SENATE: |27-9 |(April 25, |
| | |2013) | | |2013) |
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Original Committee Reference: HEALTH
SUMMARY : Establishes health insurance market reforms contained
in the Patient Protection and Affordable Care Act (ACA) specific
to individual purchasers, such as prohibiting insurers from
denying coverage based on preexisting conditions; and makes
conforming changes to small employer health insurance laws
resulting from final federal regulations.
The Senate amendments :
1)Apply this bill's provisions only to the Insurance Code.
2)Expand provisions tying provisions of California law to
federal law as follows:
a) Makes inoperative 12 months after the repeal of federal
guarantee issue and federal community rating provisions,
the following California small group provisions:
i) Guarantee issue;
ii) Community rating; and,
iii) Prohibition on eligibility rules based on health
status and other factors.
b) Makes operative prior California small group law
(pre-ACA) related to guarantee issue and rating
requirements if federal guarantee issue and federal
community rating are repealed;
c) Makes inoperative 12 months after the repeal of the
federal individual mandate, the following California
individual market provisions:
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i) Guarantee issue;
ii) Community rating;
iii) Prohibitions on preexisting condition provisions;
and,
iv) Prohibitions on eligibility rules based on health
status and other factors.
d) Makes operative 12 months after the repeal of the
federal individual mandate the following California
individual market provisions:
i) Written policies on underwriting;
ii) Rescission requirements; and,
iii) Guarantee issue for children.
3)Require the California Department of Insurance (CDI) to use
risk adjustment information to monitor federal implementation
of risk adjustment in the state and to ensure that insurers
are in compliance with federal requirements.
4)Require, on and after January 1, 2014, a disability insurer
subject to the federal uniform explanation of coverage
documents to satisfy existing state law by providing the
uniform summary information required under federal law, as
specified. Require the insurer to ensure that all applicable
disclosures are met, as specified.
5)State that health coverage through an association that is not
related to employment to be considered individual coverage
pursuant to federal regulations.
6)Prohibit a carrier or agent or broker (in both the individual
and small group markets) from discriminating based on the
individual's race, color, national origin, present or
predicted disability, age, sex, gender identity, sexual
orientation, expected length of life, degree of medical
dependency, quality of life, or other health conditions.
Require this provision to be enforced in the same manner as
other sections of the Insurance Code, as specified.
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7)Revise single risk pool provisions as follows: a carrier must
consider, as a single risk pool for rating purposes in the
small employer market (and individual market), the claims
experience of all insureds in all nongrandfathered small
employer (and individual market) health benefit plans offered
by the carrier in this state, whether offered as health care
service plan contracts or health insurance policies, including
those insureds and enrollees who enroll in coverage through
the California Health Benefit Exchange (Exchange), now called
Covered California, and insureds and enrollees covered by the
carrier outside of the Exchange.
8)Prohibit student health insurance coverage, as defined in
federal regulations, to be included in a health insurer's
single risk pool for individual coverage.
9)Allow a carrier to vary premiums based on administrative
costs, excluding any user fees required by the Exchange.
10)Revise the geographic rating regions (in both the individual
and small group markets) to include the same 19 regions as in
AB 1089 (Monning), Chapter 852, Statutes of 2012.
11)Delete provisions related to Health Insurance Portability and
Accountability Act of 1996.
12)Allow for a limited open enrollment period for an individual
enrolled in noncalendar-year individual health plan contracts
prior to the date the policy year ends in 2014.
13)Require a dependent that is a registered domestic partner to
have the same effective date of coverage as a spouse.
14)Add a special enrollment opportunity for an individual who is
a member of the reserve forces of the United States military
returning from active duty or a member of the California
National Guard returning from active duty service under
federal law.
15)Reduced from 63 to 60 the number of days an individual has to
enroll in a special enrollment circumstance.
16)Revise the notice to people in an individual market
grandfathered plan as follows:
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New improved health insurance options are available
in California. You currently have health insurance
that is not required to follow many of the new laws.
For example, your policy may not provide preventive
health services without you having to pay any cost
sharing (copayments or coinsurance). Also your
current policy may be allowed to increase your rates
based on your health status while new policies
cannot. You have the option to remain in your
current policy or switch to a new policy. Under the
new rules, a health insurance company cannot deny
your application based on any health conditions you
may have. For more information about your options,
please contact Covered California at ___, the Office
of Patient Advocate at ___, your policy
representative, or insurance agent, or an entity paid
by Covered California to assist with health coverage
enrollment, such as a navigator or an assister.
17)Delete Children's Health Insurance Program Continuation
Coverage.
18)Add limited emergency regulation authority for CDI.
19)Define family to mean the policyholder and his or her
dependents.
20)Clarify that policy year means the period from January 1, to
December 31, inclusive.
21)Include other technical and conforming changes to make this
bill consistent with SB 2 X1 (Ed Hernandez).
AS PASSED BY THE ASSEMBLY , this bill:
1)Revised rating factors in existing small group law as follows:
includes references to the age rating curve established by
the Centers for Medicare and Medicaid Services, using the
individual's age as of the effective date of the contract and
specifies the three to one variation limitation is based upon
like individuals of different ages who are 21 years of age or
older, as described in federal regulations; and, six
geographic regions and for 2015 and thereafter, subject to
federal approval, 13 geographic regions. Requires the total
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premium charged to be determined by the sum of the premiums of
covered employees and dependents in accordance with federal
regulations.
2)Required a health plan or insurer to fairly and affirmatively
offer, market, and sell all of the plan's health benefit plans
that are sold in the individual market for policy years on or
after January 1, 2014, to all individuals and dependents in
each service area in which the plan provides or arranges for
health care services. Limited enrollment to open enrollment
and special enrollment periods, as specified.
3)Prohibited in the individual and small group market a health
plan or insurer from imposing any preexisting condition
provision upon any individual.
4)Prohibited in the individual market a health plan or insurer
from establishing rules for eligibility, including continued
eligibility, of any individual to enroll under the terms of an
individual health benefit plan based on any of the following
factors:
a) Health status;
b) Medical condition, including physical and mental
illness;
c) Claims experience;
d) Receipt of health care;
e) Medical history;
f) Genetic information;
g) Evidence of insurability, including conditions arising
out of acts of domestic violence;
h) Disability; and,
i) Any other health status-related factor as determined by
federal regulations, rules, or guidance issued pursuant to
federal law.
7) Specified that a health plan or insurer is not required
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to offer an individual health benefit plan or accept
applications for the plan under specified circumstances,
such as when an individual does not live or reside within
the plan's approved service areas.
8)Established as an initial open enrollment period from October
1, 2013, to March 31, 2014, and annually after that from
October 15 to December 7. This is the period when individuals
can purchase health insurance through the Exchange and in the
commercial market. In addition, gives individuals 63 days to
enroll under one of the following special enrollment trigger
events:
a) Loss of minimum essential coverage, as specified under
federal requirements;
b) Gaining a dependent or becoming a dependent;
c) Mandated coverage due to court order;
d) Released from incarceration;
e) Health benefit plan substantially violated a material
provision of the contract;
f) Gained access to a new health benefit plan as a result
of a permanent move;
g) Provider no longer participating in a plan and
individual has a specified condition;
h) Misinformed about minimum essential coverage; and,
i) For Covered California, any events listed under federal
regulations.
9)Required any data submitted by a health plan or health insurer
to the US Secretary of Health and Human Services, or her
designee, for purposes of the risk adjustment program
described in the ACA, to also be concurrently submitted to the
Department of Managed Health Care (DMHC) or CDI.
10)Required health plans and insurers to provide a notice to all
applicants for coverage related to guarantee issue for
children about other options for enrollment including new open
enrollment options. Authorized DMHC to develop a model notice
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requirement, in consultation with CDI. Authorized CDI to
develop a model notice requirement, in consultation with DMHC.
Exempted this model notice authority from the Administrative
Procedures Act. Sunset this article on January 1, 2014.
11)Established definitions for individual market provisions,
similar to the definitions established for the small group in
existing law. Defined health benefit plan as any individual
or group health plan or policy of health insurance as defined,
and specifies what it does not include, such as Medi-Cal.
Defined a dependent as the spouse or registered domestic
partner or child of an individual, subject to applicable terms
of the health benefit plan.
12)Required a health plan or insurer outside the Exchange to
inform an applicant for coverage that he or she may be
eligible for lower cost coverage through the Exchange and the
Exchange enrollment period. (Did not apply to grandfathered
plans.)
13)Required a health plan or insurer outside the Exchange to
issue a notice to a subscriber that he or she may be eligible
for lower cost coverage through the Exchange and shall inform
the subscriber of the applicable open enrollment period
provided through the Exchange. (Did not apply to
grandfathered plans.)
14)Required a grandfathered health benefit plan to issue a
notice annually and in any renewal material, as specified.
15)Required a plan participating in the Healthy Families program
to notify a qualified beneficiary within 30 days of the
operative date of opportunities to purchase or maintain
coverage. Permit a qualified beneficiary to elect coverage
within 60 days of the mailing of the notice.
16)Required a qualified beneficiary receiving coverage pursuant
to this part to make premium payments of not more than 110% of
the average per subscriber payment made by the board or
department to all participating plans for coverage provided.
17)Prohibited a health plan or health insurer from advertising
or marketing an individual health benefit plan that is
grandfathered for the purpose of enrolling a dependent for
policy years on or after January 1, 2014. Nothing prevented a
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grandfathered plan from adding a dependent.
FISCAL EFFECT : According to the Senate Appropriations
Committee, one-time costs of about $600,000 to CDI to adopt
regulations and review health policy filings (Insurance Fund).
COMMENTS : This bill contains clean-up provisions to AB 1083
which enacted insurance market reforms consistent with the ACA
affecting health insurance sold to small employer purchasers and
establishes insurance market reforms consistent with the ACA
affecting the health insurance market for individual purchasers.
An important general objective of the ACA state implementing
legislation is to ensure that the rules in the Exchange and
outside the Exchange, as well as in both the small group and
individual markets, are as similar as possible in an effort to
avoid adverse selection. Clean-up provisions are necessary
because final federal regulations have been issued which require
updating of the AB 1083 provisions. In addition, while the
Legislature approved AB 1461 (Monning) and SB 961 (Ed Hernandez)
in 2012, which would have established insurance market rules for
individual purchasers, both bills were vetoed by the Governor
because a provision to link or "tie back" state law to federal
law was viewed as insufficient. As a result, Covered California
has initiated a Qualified Health Plan (QHP) solicitation process
based on assumptions of what might be the individual market
rules in California. Health insurers bidding to be QHPs must
submit premium bids to Covered California by March 31, 2013, in
order to ensure they receive regulatory review in time for
Covered California to begin marketing and offering those plans
in October of 2013. The rules established and revised by this
bill would apply to health insurance sold through Covered
California as well as insurance products sold in the commercial
market outside of Covered California, and need to be in place as
soon as possible in time for the regulatory reviews required for
QHPs. It is necessary to put the federal rules in state law for
state regulatory enforcement purposes.
On January 24, 2013, Governor Brown issued a proclamation to
convene the Legislature in Extraordinary Session to consider and
act upon legislation necessary to implement the ACA in the areas
of: 1) California's private health insurance market, rules and
regulations governing the individual and small group market; 2)
California's Medi-Cal program and changes necessary to implement
federal law; and, 3) options that allow low-cost health coverage
through Covered California to be provided to individuals who
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have income up to 200% of the federal poverty level. This bill
along with SB 2 X1 address the first of the three areas
identified in the Governor's proclamation.
Analysis Prepared by : Teri Boughton / HEALTH / (916) 319-2097
FN: 0000201