BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  AB 298
                                                                  Page  1

          Date of Hearing:   May 15, 2013

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                  Mike Gatto, Chair

                     AB 298 (Pan) - As Amended:  April 17, 2013 

          Policy Committee:                              PERSSVote:5-1

          Urgency:     No                   State Mandated Local Program:  
          No     Reimbursable:              

           SUMMARY  

          This bill reestablishes, until January 1, 2015, the Rural Health  
          Care Equity Program (RHCEP) and extends the benefit provided by  
          that program to all state employees and retired annuitants  
          living in rural areas, as specified.  

           FISCAL EFFECT  

          According to the Department of Human Resources, reinstatement of  
          the program for 2011 would result in additional GF costs of  
          approximately $20 million from enactment to sunset on January 1,  
          2015

           COMMENTS  

           1)Purpose  .  According to the author, many state workers who live  
            in rural areas of California or live outside of the state do  
            not have access to an HMO and are forced to pay higher costs  
            for healthcare using a Preferred Provider Organization (PPO).   
            These costs are a barrier to working families and their  
            ability to access affordable healthcare, often times causing  
            these families to put off necessary health procedures due to  
            cost, leading to greater health problems in the future.  The  
            RHCEP provides subsidies that offset the higher health care  
            costs paid by individuals in these rural areas.  The subsidy  
            is equal to the difference between the lowest PPO premium and  
            the weighted-average HMO premium.  The author notes,  
            additionally, the state will reimburse for an employee or  
            dependent's out-of-pocket expenses, such as deductibles and  
            co-insurance costs.

           2)Background  . The State of California offers its employees and  








                                                                  AB 298
                                                                  Page  2

            retirees a number of health plan options including at least  
            one low-cost Health Maintenance Organization (HMO) plan. In  
            some rural areas of California there are no HMO plans  
            available to state employees and retirees, requiring residents  
            in these areas to use one of the higher cost health care  
            options.  Recent budget actions eliminated the program.
                
            3)Previous legislation  .

             a)   AB 2608 (Chesbro) of 2010, is similar to this bill.   
               This bill was held on this Committee's Suspense File. 

             b)   ABX4 12 (Evans), Chapter 12, Statutes of 2009,  
               eliminated the RHCEP for all active state employees with  
               the exception of Bargaining Unit (BU) 5 (Highway Patrol)  
               employees, who were allowed to continue to have access to  
               this program, pursuant to their active bargaining  
               agreement, until the expiration of that agreement on July  
               2, 2010.

             c)   AB 1389 (Budget Committee), Chapter 751, Statutes of  
               2008, eliminated the RHCEP payments to state annuitants.

             d)   SB 1168 (Chesbro), Chapter 642, Statutes of 2006,  
               extended the operation of the RHCEP to January 1, 2012, and  
               specified that the program is only operative to the extent  
               funding is provided through the annual budget act or  
               another statute.

             e)   SB 514 (Chesbro), Chapter 743, Statutes of 1999,  
               established the RHCEP to provide subsidies and  
               reimbursements for health care costs incurred by state  
               employees and annuitants that live in rural areas of  
               California.  

           1)There is no registered opposition to this bill.  



           Analysis Prepared by  :    Roger Dunstan / APPR. / (916) 319-2081