BILL ANALYSIS �
SENATE COMMITTEE ON EDUCATION
Carol Liu, Chair
2013-2014 Regular Session
BILL NO: AB 314
AUTHOR: Pan
AMENDED: April 9, 2013
FISCAL COMM: Yes HEARING DATE: July 3, 2013
URGENCY: No CONSULTANT: Lynn Lorber
SUBJECT : Health care coverage: student plans and policies.
SUMMARY
This bill prohibits a health care service plan directly
operated by a public or private college or university that
directly provides health care services only to its students,
faculty, staff, administration and their dependents, from
establishing an annual or a lifetime limit on the dollar
value of benefits for any participant or beneficiary.
BACKGROUND
The federal Affordable Care Act among other things, includes
a number of health insurance market reforms including a
prohibition on lifetime benefit limits on any plan sold or
renewed after September 23, 2010, and a phased-in prohibition
of annual limits on the dollar value of essential health
benefits. The current minimum annual limit allowed is $2
million. However, policy years beginning on or after January
1, 2014 are prohibited from including annual limits on
essential health benefits. The prohibition on annual limits
and the restricted annual limit provisions apply to group
plans whether or not a plan is grandfathered, but do not
apply to individual market grandfathered plans. Nothing in
the Affordable Care Act prohibits plans from placing either
lifetime or annual limits on non-essential health benefits.
(Public Law 111-148 and Public Law 111-152).
The California Department of Managed Health Care regulates
health plans. Current state law is consistent with the
federal Affordable Care Act as follows, as it relates to this
bill:
1) Requires, to the extent required by federal law, every
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health plan and health insurer that issues, sells,
renews, or offers contracts or policies for health care
coverage to comply with the annual and lifetime benefit
requirements of the federal Affordable Care Act.
2) Permits restricted annual limits on coverage for
essential health benefits through 2013, and prohibits
health plans and health insurers from establishing
annual or lifetime limits on the dollar value of
essential health benefits for any participant beginning
in 2014.
3) Exempts self-funded insurance plans from various
provisions of the Affordable Care Act, including the
prohibition of limits on the dollar value of essential
health benefits.
4) Exempts health plans directly operated by a bona fide
public or private institution of higher learning that
directly provides health care services only to its
students, faculty, staff, administration and their
dependents from regulation by the Department of Managed
Health Care. (Health and Safety Code � 1367 et seq)
ANALYSIS
This bill prohibits a health care service plan directly
operated by a public or private college or university that
directly provides health care services only to its students,
faculty, staff, administration and their dependents from
establishing an annual or a lifetime limit on the dollar
value of benefits for any participant or beneficiary.
STAFF COMMENTS
1) Need for the bill . According to the author, "This bill
is necessary to ensure health plans administered by the
University of California and other institutions of
higher learning cannot impose lifetime or annual limits
on the amount of money spent on treating illnesses or
injuries. The federal health reform under the
Affordable Care Act (ACA) prohibits health plans from
placing caps on the lifetime or annual dollar limits of
benefits provided to a participant. However, federal
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regulations exempt self-insured plans operated by
institutions of higher learning from the ACA. This
policy leaves students who face a catastrophic illness
without appropriate coverage, and often times they are
faced with paying the entire cost of care past their
benefits coverage."
2) Self-funded plans . According to the Senate Health
Committee analysis, self-funded plans, unlike
fully-insured plans, are generally plans in which the
sponsor retains the direct risk associated with paying
covered health expenses, rather than paying a premium
and transferring the risk to an insurance company.
Self-insurance is more common among larger sponsors,
mainly because the health expenses of larger groups are
more predictable and therefore larger sponsors face less
risk. Self-funded plans are explicitly exempted from
certain requirements of the Affordable Care Act,
including the requirements to provide minimum essential
benefits, and the prohibition on annual and lifetime
benefit limits also do not apply to these plans.
3) Student health plans . Federal regulations define
student health insurance coverage as a type of
individual health insurance coverage that is a written
agreement between an institution of higher education and
a health insurance issuer, and provided to students
enrolled in that institution and their dependents.
Student health plans are prohibited from imposing annual
and lifetime benefit limits, pre-existing condition
exclusions for students under age 19, arbitrary
rescission and conditioning enrollment on health status
factor. However, some student health plans are
self-funded, and as such are exempt from federal
requirements (they are neither health insurance coverage
nor group health plans).
4) Self-funded California student health plans . The
University of California's (UC) Student Health Insurance
Programs (SHIP) is a systemwide self-funded insurance
plan providing health care benefits for enrolled
students and is governed by an advisory board and
executive committee that include plan administrators and
student representatives from each campus. UC SHIP
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indicates that in the fall of 2012, more than 138,000 UC
undergraduate and graduate students and their dependents
were enrolled in the plan. At the time this bill was
introduced, the UC SHIP plan included a $400,000
lifetime benefit limit as well as a $10,000 annual
prescription drug limit.
The UC indicates that in May of 2013 the Chancellors of the
10 UC campuses agreed unanimously with an advisory
committee's recommendation to eliminate the lifetime
maximum and other caps on essential health benefits for
the upcoming plan year to coincide with the Affordable
Care Act requirement that these limits be eliminated by
2014. This bill prohibits annual and lifetime limits on
all benefits offered by a student health plan.
5) Unintended consequences ? While beneficial to students
and other plan participants, the elimination of caps on
annual and lifetime benefits could result in increased
costs to institutions of higher education. As a result,
could some institutions, particularly those with smaller
student health plans (and therefore greater risk), cease
offering those plans entirely?
If a student is not covered by a student health plan, what
other options does that student have? Students under
age 26 may be covered under their parents' plan, or be
eligible to participate in the Health Benefit Exchange
(see Comment #6). However, some students may not be
eligible to participate in the Health Benefit Exchange
(Exchange), such as undocumented and international
students. Do these students have other options for
health coverage and care?
Should small student health plans be allowed to continue to
impose limits on benefits if participants sign an
acknowledgement of those limits and the eligibility
criteria to participate in the Exchange?
6) Health Benefit Exchange . Federal law requires each
state, by January 1, 2014, to establish an Exchange that
makes qualified health plans available to qualified
individuals and qualified employers. Federal law
establishes requirements for the Exchange, for health
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plans participating in the Exchange, and defines who is
eligible to receive coverage in the Exchange. The
California Health Benefits Exchange is established in
statue, for the purpose of certifying qualified health
plans, operating a toll-free hotline and Web site, rate
qualifying health plans, informing individuals of the
eligibility requirements for Medi-Cal and Healthy
Families, providing an electronic calculator to
calculate plan costs, and granting certifications of
exemption from the individual requirement to have health
insurance.
7) Essential health benefits . Federal law authorizes
states to select a single benchmark to serve as the
essential health benefits standard for qualified health
plans operating inside the state exchange and plans
offered in the individual and small group markets, with
an exception for grandfathered plans. Essential health
benefits are minimum benefits that all health plans and
insurers in the individual and small group markets must
cover. Current state law establishes the Kaiser Small
Group HMO 30 plan as the essential health benefit
benchmark plan for individual and small group health
plan products licensed by the California Department of
Managed Health Care.
8) Non-essential health benefits . The Affordable Care Act
prohibits limits on annual and lifetime dollar amounts
for essential health benefits. This bill prohibits
institutions of higher education from imposing caps on
any component of the health plan, whether or not it is
an essential health benefit. The University of
California has adopted a policy to remove caps only on
essential health benefits.
9) Fiscal impact . According to the Assembly Appropriations
Committee, given the limited role for the California
Department of Managed Health Care in enforcing just one
provision of the comprehensive regulation of health
plans, this bill's fiscal impact should be minor,
probably less than $100,000. The actual cost depends on
the number of plans falling under the bill's provisions
and the extent to which any enforcement is needed.
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10) Amendments . This bill was heard by the Senate Health
Committee on June 26, 2013, where the author agreed to
accept the following amendments to be adopted by this
Committee:
a) Clarify that the prohibition on limits on
dollar value of benefits relates to essential
health benefits. (On page 2, lines 8 and 10)
b) Include a cross-reference to current law
defining essential health benefits. (On page 2,
lines 8 and 10)
SUPPORT
American Association of University Women
California Labor Federation
California School Employees Association
California Teachers Association
OPPOSITION
Association of Independent California Colleges and
Universities