BILL ANALYSIS Ó
AB 1180
Page 1
ASSEMBLY THIRD READING
AB 1180 (Pan)
As Amended May 2, 2013
2/3 vote. Urgency
HEALTH 18-0 APPROPRIATIONS 16-1
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|Ayes:|Pan, Ammiano, Atkins, |Ayes:|Gatto, Harkey, Bigelow, |
| |Bonilla, Bonta, Chesbro, | |Bocanegra, Bradford, Ian |
| |Gomez, | |Calderon, Campos, Eggman, |
| |Roger Hernández, | |Gomez, Hall, Rendon, |
| |Lowenthal, Maienschein, | |Linder, Pan, Quirk, |
| |Mansoor, Mitchell, | |Wagner, Weber |
| |Nazarian, Nestande, | | |
| |V. Manuel Pérez, Wagner, | | |
| |Wieckowski, Wilk | | |
| | | | |
|-----+--------------------------+-----+--------------------------|
| | |Nays:|Donnelly |
| | | | |
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SUMMARY : Makes inoperative because of the federal Patient
Protection and Affordable Care Act (ACA) several provisions in
existing law that implement the health insurance laws of the
federal Health Insurance Portability and Accountability Act of
1996 (HIPAA) and additional provisions that provide former
employees rights to convert their group health insurance
coverage to individual market coverage without medical
underwriting. Specifically, this bill :
1)Makes several provisions in existing law inoperative on
January 1, 2014, including laws related to: a) HIPAA and
conversion policies comparative benefit matrices pursuant to
AB 1401 (Thomson), Chapter 794, Statutes of 2002; b)
Conversion to nongroup coverage when the group policy has been
terminated by the employer including requirements on carriers
without individual market products to offer the most popular
health maintenance organization (HMO) model plan or the most
popular preferred provider organization (PPO) plan with the
greatest number of enrolled individuals for its type of plan
as of January 1 of the prior year, as reported to the
California Department of Managed Health Care (DMHC) or the
California Department of Insurance (CDI) under the same cost
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sharing terms and conditions (AB 1401); c) Requirements that
at least once a year a carrier permit an individual who has
been covered for at least 18 months in an individual market
plan to transfer to another plan or policy with equal or
lesser benefits without medical underwriting pursuant to AB
2889 (Frommer), Chapter 826, Statutes of 2006; d) Requirements
included in HIPAA conformity law pursuant to SB 265 (Speier),
Chapter 810, Statutes of 2000; e) Conversion policy for
employees or members with insurance on an expense-incurred or
service basis, other than for a specific disease or for
accidental injuries only whose coverage has been terminated
pursuant to SB 1846 (Russell), Chapter 1186, Statues of 1982;
and, f) Except with regard to specified provisions, on and
after January 1, 2014, that are applicable only to
grandfathered individual health plan contracts previously
issued to federally eligible defined individuals.
2)Repeals 1) if the federal mandate on individuals to purchase
insurance is repealed or amended to no longer apply to the
individual market.
3)Requires carriers to issue notices to individuals affected by
this bill informing them of changes in insurance laws
beginning January 1, 2014. Requires uniform model notices to
be adopted by CDI and DMHC no later than September 1, 2013,
and exempts the departments from Administrative Procedure Act
for purposes of adopting the model notices.
EXISTING LAW :
1)Establishes DMHC to regulate health plans under the Knox-Keene
Health Care Services Plan Act of 1975 in the Health and Safety
Code; CDI to regulate health insurers under the Insurance
Code; and, the Exchange to compare and make available through
selective contracting with health plans and health insurance
for individual and small business purchasers as authorized
under the ACA.
2)Defines a grandfathered health plan as having the same meaning
as that term is defined in the ACA. Federal law defines a
grandfathered health plan as any group health plan or health
insurance coverage to which Section 1251 of the ACA applies
(in general, coverage that existed as of March 23, 2010, which
permits new enrollment only for new employees or dependents).
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FISCAL EFFECT : According to the Assembly Appropriations
Committee, minor costs, less than $100,000, to CDI and DMHC to
develop the model notice. Negligible costs for the provisions
to make HIPAA and conversion laws inoperative and subsequently
operative if specified ACA changes occur. If those ACA changes
occur, this bill's provisions along with many other new state
laws will need to be reevaluated for potential cost issues.
COMMENTS : Health plans and health insurance companies believe
that in a post ACA world where there is guaranteed issue,
renewability, community rating, prohibitions on preexisting
condition exclusions, and many other protections made available
through the ACA, that these HIPAA and conversion requirements on
carriers are no longer necessary. However, according to the
author, these carriers also requested, and in agreement, the
Governor insisted that certain federal ACA protections must be
"tied back" to federal law, so that if those ACA provisions are
repealed, so too would the major provisions of California's
implementing ACA legislation. The author states that given
these circumstances, this bill is intended to make inoperative
the HIPAA and conversion provisions until such time as those ACA
protections are repealed, if ever. Additionally, some
individuals who are in grandfathered plans will be able to stay
in such plans until, and unless, they choose nongrandfathered
ACA compliant coverage. For those individuals in HIPAA PPO
plans, the rating protections in existing California law must be
adjusted in the event that the Major Risk Medical Insurance
Program is shut down, as is a possibility at some point in the
future because of the new ACA protections.
The California Association of Health Plans and the Association
of California Life & Health Insurance Companies support this
bill because this bill resolves an important state-federal
conformity issue by helping avoid a situation where health
plans, absent this legislation, would be required to sell
federal HIPAA and state conversion products that are out of
compliance with the ACA. Health Access California believes this
bill would continue to protect consumers.
This bill contains an urgency clause, allowing this bill to take
effect immediately upon enactment.
AB 1180
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Analysis Prepared by : Teri Boughton / HEALTH / (916) 319-2097
FN: 0000607