BILL ANALYSIS Ó AB 422 Page 1 Date of Hearing: May 7, 2013 ASSEMBLY COMMITTEE ON HEALTH Richard Pan, Chair AB 422 (Nazarian) - As Introduced: February 15, 2013 SUBJECT : Health care applications. SUMMARY : Adds information regarding health care coverage available through the California Health Benefit Exchange (Exchange), to notifications on applications for the School Lunch Program, effective January 1, 2014. Information from the application may also be used to determine eligibility for the Healthy Families Program (HFP), county or local-sponsored programs, as defined and as applicable, if the parent has granted consent when a child does not meet eligibility requirements for Medi-Cal. EXISTING LAW : 1)Establishes the Medi-Cal program, administered by the Department of Health Care Services (DHCS), which provides comprehensive health benefits to low-income children, their parents or caretaker relatives, pregnant women, elderly, blind or disabled persons, nursing home residents, and refugees who meet specified eligibility criteria. 2)Requires the Department of Education to administer the National School Lunch program, which provides free meals to children with family incomes at or below 130% of the federal poverty level (FPL) and reduced price meals to children with family incomes at or below 185% of FPL. 3)Establishes the Children's Health Insurance Program (CHIP) that provides health coverage to children in families that are low income, but with incomes too high to qualify for Medicaid. After January 1, 2013, begins a transition of California's CHIP from the HFP, administered by the Managed Risk Medical Insurance Board (MRMIB) to Medi-Cal. 4)Permits information from an application for the School Lunch Program to be used to determine eligibility for HFP and any other county- or local-sponsored programs, as defined and as applicable, if the parent has granted consent when a child does not meet eligibility requirements for Medi-Cal. AB 422 Page 2 5)Requires, effective January 1, 2014, under the federal Patient Protection and Affordable Care Act (ACA), an individual to have the option to apply for state subsidy programs, which include the state Medicaid program, the state's CHIP, enrollment in a qualified health plan (QHP) through a state exchange, and a Basic Health Plan (BHP), if there is one, either in person, mail, online, telephone, or other commonly available electronic means. 6)Under the ACA, effective in 2014, requires individuals to maintain health insurance or pay a penalty, with exceptions for financial hardship (if health insurance premiums exceed 8% of a household's adjusted gross income), religion, incarceration, and immigration status. 7)Creates the Exchange, known as Covered California, as an independent state entity governed by a five-member board, to be a marketplace for Californians to purchase affordable, quality health care coverage, for those qualified to claim advance payment of premium tax credits and obtain cost-sharing subsidies and as a way to meet the personal responsibility requirements of the ACA. 8)Under the ACA, effective January 1, 2014, requires development of a single, accessible standardized application for the Exchange subsidies, the state Medicaid program, and the CHIP program to be used by all eligibility entities and establishes a process for developing and testing the application 9)Under the ACA, effective January 1, 2014, requires states to expand and simplify Medicaid eligibility (Medi-Cal in California) by expanding coverage to former foster youth up to age 26, eliminating the asset test for families, children, and non-disabled persons under age 65, establishing a new methodology for counting income in Medi-Cal, known Modified Adjusted Gross Income (MAGI). FISCAL EFFECT : None COMMENTS : 1)PURPOSE OF THIS BILL . According to the author, current law authorizes school districts to provide families with notifications about the availability of school lunch programs. AB 422 Page 3 These notifications also inform parents about the availability of low-cost health care coverage for children. The ACA offers individuals and families with additional health care coverage options, including expanded Medi-Cal coverage and tax subsidies through the Exchange. The author states that this bill will update current information provided to parents about the availability of low-cost health care coverage to include information about the new Exchange. The author points out that multiple health problems may occur in the absence of health insurance, consequently affecting a child's ability to learn and parents' ability to work. In addition, children who have access to medical, dental, and vision care often experience a greater sense of well-being. According to the Los Angeles Unified School District (LAUSD), this translates into improved school attendance and higher academic achievement. The author cites the California Simulation of Insurance Markets (CalSIM) Study, conducted by the UCLA Center for Health Policy Research and the UC Berkeley Labor Center, which estimates that 1.42 million adults will be eligible for coverage under the new Medi-Cal expansion. An additional 2.6 million adults will be eligible for tax credits to purchase health insurance through California's new insurance marketplace, Covered California. Although children and families may be eligible for these new coverage options, many parents are unaware of health coverage options. The CalSIM model includes two scenarios to estimate take-up rates in Medi-Cal and Covered California, a base model which assumes current individual and market behaviors, and an enhanced model which assumes additional outreach, enrollment, and simplification measures are in place. For example, under the base scenario 900,000 adults under 65 are predicted to enroll into Medi-Cal whereas under the enhanced scenario with a more aggressive enrollment and outreach strategy enrollment would reach 1.4 million by 2014. The author argues that by updating information about these new coverage options parents would be better informed in order to take advantage of the health care coverage. 2)BACKGROUND . AB 59 (Cedillo), Chapter 894, Statutes of 2001, established a statewide pilot project to expedite enrollment into Medi-Cal for children receiving free lunches through the National School Lunch Program, referred to as "EE." Five school districts implemented EE in 73 schools for the 2003-04 school year. The current EE process is structured to expedite AB 422 Page 4 Medi-Cal enrollment for children who qualify for free school lunches. Under the program, if a child is determined ineligible for Medi-Cal due to income but is potentially eligible for HFP the county sends an HFP application to the child's parents, who must complete the application process for that program separately. The school's EE coordinator reviews School Lunch Program applications and determines whether a child appears eligible for Medi-Cal. If a child is determined to be eligible for EE, the application is forwarded to the county for final determination when there is written consent from the parents. The child is deemed temporarily eligible for full-scope, no-cost Medi-Cal and the county has five working days to send the family a card for temporary enrollment. The county then sends a follow-up form asking the parent for additional information required for a full application review. If the child is subsequently determined ineligible for Medi-Cal, the temporary enrollment is terminated and the county sends the parents an application for the HFP. SB 1196 ( Cedillo), Chapter 729, Statutes of 2004, revised the process to permit the information from the School Lunch Program to also be used to actually determine eligibility for HFP and any other county- or local-sponsored programs, if the parent has granted consent. SB 1196 also requires a county to forward a School Lunch Program application and any specified supplemental forms to the HFP or a county or local-sponsored health insurance program, if an applicant is determined to be ineligible for the full-scope, no-cost Medi-Cal. When a child is not eligible for full-scope, no-cost Medi-Cal, SB 1196 further requires the county to notify the parent or guardian that their child is ineligible for Medi-Cal and that the application has been forwarded to the HFP or a county- or local-sponsored health insurance program. An example of how this has been implemented is the LAUSD Parent Handbook that includes information about student health insurance, entitled the LAUSD Children's Health Access and Medi-Cal Program (CHAMP), and informs parents that it can assist them with enrolling their children into no-fee or low-cost health insurance programs, provides a toll-free CHAMP HELPLINE for enrollment assistance, a Website, and other referrals to information. 3)ACA . The ACA increases access to health insurance beginning in 2014 through a coordinated system of "insurance AB 422 Page 5 affordability programs," including Medicaid, CHIP, subsidies through advanced payment of premium tax credits for coverage provided through new Exchanges, and optional state-established BHPs. The ACA, implementing guidelines, and proposed rules issued by the Centers for Medicare and Medicaid Services (CMS) to date, advance the federal vision of a simplified, integrated enrollment system for all insurance affordability programs. It is based on a system that is technology-driven and relies on electronic data matching to the greatest extent possible. The rules effectuate the ACA's transformative change to Medicaid eligibility rules, enrollment, and renewal processes, which will have significant impacts on applicants, enrollees, and state Medicaid agencies. This is equally true on the Exchange side. a) Covered California . The California Exchange was established in 2010 by AB 1602 (John A. Pérez), Chapter 655, Statutes of 2010, and SB 900 (Alquist), Chapter 659, Statutes of 2010. Through the Exchange, now called Covered California, people with incomes between the Medi-Cal threshold and up to 400% FPL are eligible for subsidies and cost-sharing reductions. Exchanges will not be insurers but will provide eligible individuals and small businesses with access to QHPs in a comparable way. b) The California Healthcare Eligibility, Enrollment and Retention System (CalHEERS) . CalHEERS is a procurement conducted jointly by the Exchange, DHCS, and MRMIB to build the Information Technology (IT) system to support the consumer application and enrollment process at the Exchange. The portal will offer eligibility determinations for both Medi-Cal and federally subsidized Covered California coverage through the Exchange. It will allow enrollment through multiple access points including mail, phone, and in-person applications. It is guided by a "no wrong door" policy that is intended to ensure the maximum number of Californians obtain coverage appropriate to their needs. Enrollment will begin by October 2013, effective January 1, 2014. The CalHEERS business functions include interfacing with the Medi-Cal eligibility data system. Covered California is in the process of establishing an Assister's Program that will include assister enrollment entities (AEEs) and individual entities. AEEs are entities and organizations eligible to be trained and registered to AB 422 Page 6 provide in-person assistance to consumers to help them apply for Covered California programs, particularly entities that have access to Covered California's targeted population. Individual assisters are individuals who are employed, trained, certified, and linked to AEEs to provide in-person assistance to consumers and help them apply for Covered California programs and are individuals who can provide assistance in a culturally and linguistically appropriate manner to consumers. According to a recent stakeholder webinar conducted by Covered California on the assisters program (March 14, 2013 Stakeholder Webinar), the proposed compensation for AEEs is $58 per new enrollment into Covered California, including a person who was a MAGI-eligible Medi-Cal enrollee but upon redetermination qualifies for Covered California and when a currently enrolled person adds a new dependent. Compensation for annual renewal is $25. The funding source for the initial application is the federal funding from the Level II Establishment Federal Grant and renewals will be funded as operating costs from self-sustainability funds. A list of eligible entities will be established and Covered California is looking to all opportunities to build a robust network of In-Person Assisters, particularly those who have prior experience with healthcare and providing application assistance. School districts are listed among the recommended proposed entities. c) Public Awareness. An April 2013 Health Tracking Poll from the Kaiser Family Foundation (KFF), found that much of the public remains confused about the ACA. Four in 10 Americans (42% were unaware that the ACA is still the law of the land, including 12% who believe the law has been repealed by Congress, 7% who believe it has been overturned by the Supreme Court and 23% who don't know whether or not the ACA remains law. The poll further found that about half of the public said they do not enough information about the health reform law to understand how it will impact their own family, share that rises among the uninsured and low-income households. Covered California has a budget of about $290 million to reach 5.3 million Californians. Slightly less than half the money is going into television ads and other traditional media buys. Most of the remaining funds are going into social media, data mining and on-the ground outreach. AB 422 Page 7 4)HFP . The federal CHIP provides health coverage to children in families that are low-income, but with incomes too high to qualify for Medicaid. Until January 1, 2013, California's CHIP was the HFP, administered by the MRMIB and provided health insurance for about 863,000 children up to age 19, in families with incomes above the thresholds needed to qualify for Medi-Cal but below 250% of the FPL. (The FPL for 2013 is $23,550 in annual income for a family of four). Under CHIP, states have the option to create a stand-alone program such as HFP or expand its Medicaid program to include these children in families with higher income. In both options, the federal matching ratio is 65% federal funds to 35% State Funds. As originally implemented in California, Medi-Cal was expanded to cover infants under age one in families with income under 200% of FPL, children aged one to five in families with income up to 133% FPL, and children age six to 18 in families with income up to 100% FPL. A child of any age in a family with income over the threshold but up to 250% FPL was covered by HFP. As part of the eligibility simplification, the ACA, effective calendar year 2014, replaces many of the complex categorical groupings and limitations in the Medicaid program. The ACA requires, by January 1, 2014, the state's Medicaid program to cover all children in families with income up to 133% FPL, thereby eliminating discontinuity based on the age of the child. In effect, this required California to transition children in families with income between 100% FPL and 133% FPL between age six and 19 to Medi-Cal from HFP by 2014. The ACA also gives the states authority to integrate CHIP into the exchanges or retain as a stand-alone program. The Legislature adopted a modified version of this proposed transition. AB 1494 (Committee on Budget), Chapter 28, Statutes of 2012, enacted a transition of approximately 860,000 HFP subscribers to the Medi-Cal Program beginning no sooner than January 1, 2013, in four Phases throughout 2013. Children in HFP will transition into Medi-Cal's new optional Targeted Low Income Children's Program covering children whose family income is up to and including 250% of FPL. Phase 1 began January 1, 2013, and is continuing through May 1, 2013 and includes approximately 100,000 children. Phase 2 began April 1, 2013, and includes approximately 240,000 children. Phase 3 is scheduled to begin August 1, 2013, and will transition approximately 111,000 children and Phase 4 is AB 422 Page 8 scheduled for September 2013 and covers approximately 38,000 children. Each phase is dependent on federal approval which has been received for Phases 1 and 2 only. 5)Auto-Enrollment . The genesis of the Cedillo bills (AB 59 and SB 1196) was: a) the relatively high numbers of success of auto-enrollment strategies with other public and private programs; and, b) the high numbers of children that remained eligible but unenrolled in CHIP/HFP. According to a Commonwealth Fund, June 2006 report, "Automatically Enrolling Eligible Children and Families into Medicaid and SCHIP: Opportunities, Obstacles, and Options for Federal Policymakers," 62% of uninsured children and two-thirds of uninsured low-income parents qualified for publicly funded health coverage but were not enrolled. According to the Commonwealth Fund 2006 report, building on the remarkable success of auto-enrollment strategies in other programs, many children's advocates and state policy makers have made efforts to place children into Medicaid and CHIP based on their families' receipt of other means tested benefits, such as assistance provided under the National School Lunch Program, the Special Supplemental Program for Women, Infants, and Children, or the Food Stamp Program. A significant hurdle, highlighted in the report, were the limitations and incompatibility of the computer systems used by different public benefit programs often necessitating manually processing paper applications and verifications. The report points to this as being a particular hurdle in California with information divided among various systems and among the 58 counties. One recommendation called for enhanced IT systems and infrastructure to allow automated queries, interfaces between programs and systems, and facilitating auto-enrollment. 6)SUPPORT . The California Pan-Ethnic Health Network (CPEHN), sponsor of this bill, worked with researchers last year from the California Program on Access at UC Berkeley on a series of group interviews with low-income, racial, and ethnic populations, including adults with Limited English Proficiency, to learn how information about health coverage is obtained, shared, and acted upon. The focus groups that CPEHN helped to conduct provided insight into how communities of color understand the benefits of the ACA and the barriers they face enrolling in current programs. The group interviews found that some racial and ethnic groups are more aware of the AB 422 Page 9 benefits under the ACA than others. For example, participants from Latino and African-American communities had heard of certain aspects of the ACA, such as the mandates on individuals to purchase insurance and employers to offer coverage. Some also knew of the coverage expansion for low-income adults. However, Native American and Asian respondents were less informed and felt less comfortable about their knowledge of the ACA. Focus group participants suggested that multiple mediums should be utilized to reach their communities with accurate, accessible, and linguistically appropriate messages. Participants noted that community organizations, schools, and trusted community institutions such as churches, child care centers, libraries, and community health centers also need to play a role in educating and enrolling communities of color. CPEHN concludes that this bill provides parents with critical, updated information about new health care options. The California Chiropractic Association (CCA) states in support, that the notification provided by this bill is essential to the implementation of the ACA. According to this supporter, many Californians are still uncertain about the steps they need to take in order to comply with the new requirements contained within the ACA. CCA further states in support that it believes that affordable access to health insurance will help reduce overall costs within the health care delivery system by encouraging early treatment interventions and by potentially reducing chronic illnesses that could have been prevented with better access to care. The California Teachers Association (CTA) also in support, states that it believes that healthy kids learn better. On the other hand, CTA argues, health problems are likely to escalate due to lack of health insurance, affecting a child's ability to learn and the parent's ability to work. CTA further states that although children and families may be eligible for this new coverage option, many parents are unaware. Health Access California states in support that reaching out to individuals and families who are likely to qualify for free or subsidized coverage is critical to its goal of achieving massive enrollment on day one. Children who qualify for free or reduced lunch are extremely likely to qualify for health coverage. 7)RELATED LEGISLATION . AB 1233 (Chesbro), pending in the Assembly Appropriations Committee, authorizes AB 422 Page 10 federally-recognized American Indian tribes and tribal organizations to use CalHEERS to facilitate Medi-Cal eligibility determinations using CalHEERS as a Medi-Cal Administrative Activities-specific activity. 8)PREVIOUS LEGISLATION . a) AB 970 (De León) of 2012 would have authorized, upon consent of the applicant, information provided for the single state application for health subsidy programs to be used to initiate a simultaneous application for the California Work Opportunity and Responsibility to Kids (CalWORKs) or the CalFresh programs and would have required the California Health and Human Services Agency to convene a work group of stakeholders, as specified, to consider the feasibility, costs, and benefits of integrating application and renewal processes for additional human services and work support programs with the single state application for health subsidy programs. SB 970 was vetoed by Governor Brown stating this bill is well-intentioned but overly prescriptive in its requirements. Codifying another workgroup and requiring another report are not necessary. The Governor continued that his Administration has worked and will continue to work with the Legislature and stakeholders in transparent and cooperative ways to implement the requirements of the ACA. b) AB 792 (Bonilla), Chapter 851, Statutes of 2012, establishes notification requirements about the availability of reduced-cost coverage available in the Exchange and no-cost coverage available in Medi-Cal to an individual filing a dissolution or nullity of marriage, divorce or separation, or petitioning for adoption or for an individual who ceases to be enrolled in health coverage through a health plan or health insurer. c) AB 714 (Atkins) of 2011 would have established notification requirements to individuals who are enrolled in, or who cease to be enrolled in, publicly funded state health care programs, would require an application for coverage to be made on their behalf through the Exchange, and would allow individuals to decline health care coverage in a manner to be prescribed by the Exchange. AB 714 was held on suspense in the Senate Appropriations Committee. AB 422 Page 11 d) AB 1062 and SB 900 establish the structures and duties of the Exchange to comply with the mandate on the states. e) SB 1196 permits information from an application for the School Lunch Program to be used to determine eligibility for HFP and any other county- or local-sponsored programs, as defined and as applicable, if the parent has granted consent when a child does not meet eligibility requirements for Medi-Cal. f) AB 59 provides expedited Medi-Cal eligibility to children participating in the free meals School Lunch Program and their parents, if they chose to participate in the Medi-Cal program and authorized the release of information on their school lunch application. g) SB 493 (Sher), Chapter 897, Statutes of 2001, implement a simplified eligibility process as part of the Food Stamp Program to expedite the enrollment of individuals and families in the Medi-Cal and HFP. 9)POLICY COMMENT . a) Horizontal Integration . It is apparent that the experiences and recommendations reflected in the Commonwealth Report from 2006 about the challenges of auto enrollment in CHIP influenced the drafting and implementation of the ACA. The coverage expansion is built around a simplified, streamlined single application process with automated enrollment and verification systems. The ACA provides substantial funding to states to upgrade their Medicaid IT systems for this purpose is establishing a national database hub and will allow states to use Internal Revenue Service data for income verification for the first time. However, the massive IT undertaking needed to establish the state based Exchanges (or the federal exchange for states that chose not to develop a state-based exchange) has put the idea of auto-enrollment from one program to another on hold for the present. At the state level, Covered California is planning to include a question on the application asking if someone in the household would like a referral to a local agency for more information about CalWorks or CalFresh. Ideally once the IT systems are in place and enrollment has begun, the next step will be to coordinate with other income-based public programs. AB 422 Page 12 This bill is a small step towards this goal by requiring information about the new coverage opportunities to be included in the School Lunch Program application. b) HFP . This bill adds provisions to a notification that includes information regarding enrollment in HFP. This language could become obsolete once all children have transitioned to Medi-Cal. However, as the transition will not be concluded until after September 2013, and is dependent on additional federal approval, it is premature to make changes in the HFP provisions. REGISTERED SUPPORT / OPPOSITION : Support California Pan-Ethnic Health Network (sponsor) 100% Campaign American Federation of State, County and Municipal Employees, AFL-CIO California Chiropractic Association California Coverage and Health Initiatives California Optometric Association California Primary Care Association California School Employees Association California Teachers Association Children Now Children's Defense Fund-California Children's Partnership Health Access California National Association of Social Workers - California Chapter PICO California United Ways of California Western Center on Law and Poverty Numerous individuals Opposition None on file. Analysis Prepared by : Marjorie Swartz / HEALTH / (916) 319-2097