BILL ANALYSIS Ó
Senate Appropriations Committee Fiscal Summary
Senator Kevin de León, Chair
AB 1180 (Pan) - Health care coverage: federally eligible defined
individuals: conversion or continuation of coverage.
Amended: August 14, 2013 Policy Vote: Health 9-0
Urgency: Yes Mandate: Yes
Hearing Date: August 30, 2013
Consultant: Brendan McCarthy
SUSPENSE FILE. AS PROPOSED TO BE AMENDED.
Bill Summary: AB 1180 would make inoperative a variety of state
laws implementing the federal Health Insurance Portability and
Accountability Act of 1996 and other provisions of law that
provide former employees the right to continue their coverage or
convert their health care coverage to individual market
coverage.
Fiscal Impact (as proposed to be amended):
One-time costs of about $240,000 for the Department of
Managed Health Care to review health plan filings, develop
model notices for health plans, and develop regulations
(Managed Care Fund).
One-time costs of $22,000 to develop the required notice to
consumers and ongoing costs of about $10,000 per year for
enforcement by the Department of Insurance (Insurance Fund).
Background: The federal Health Insurance Portability and
Accountability Act of 1996 (HIPPA) made a variety of changes to
the health care market, including provisions regarding federal
tax policy relating to healthcare, patient privacy rights, and
the ability of individuals to keep their health care coverage
due to a change in employment. In particular, HIPAA allows
individuals that change employers or lose employment to keep
their existing coverage (at their own expense) or to purchase
similar coverage without the fear that they would lose coverage
due to a preexisting medical condition.
Beginning on January 1, 2014, under the federal Patient
Protection and Affordable Care Act (Affordable Care Act), health
plans and health insurers that offer coverage in the individual
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market and small group market are required to accept every
employer or individual that wishes to purchase coverage and to
renew coverage at the individual or employer's request. The
Affordable Care Act prohibits health plans or insurers from
imposing any exclusion of coverage based on a preexisting
condition. Federal law also limits the "rating factors" used to
determine the price of a health plan or insurance policy to a
narrow list of factors, including age, geographic region, family
size, and tobacco use.
Federal law exempts plans in effect on March 23, 2010
("grandfathered plans") from these requirements, as long as no
changes are made to those plans.
Because of the changes in the Affordable Care Act that will
allow all willing purchasers to get health care coverage
("guaranteed issue"), the provisions of HIPAA requiring the
continuation or conversion of existing health care coverage will
no longer be necessary after January 1, 2014.
Proposed Law: AB 1180 would make inoperative a variety of state
laws implementing the federal Health Insurance Portability and
Accountability Act of 1996 and other provisions of law that
provide former employees the right to continue their coverage or
convert their health care coverage to individual market
coverage.
The bill provides that if the section of the federal Affordable
Care Act that mandates an individual to purchase health care
coverage is repealed or amended to no longer apply to the
individual market, current law provisions made inoperative by
the bill would once again become operative.
Other provisions of the bill would:
Require health plans and health insurers to notify
individuals affected by the bill of their coverage options
after January 1, 2014;
Require the Department of Managed Health Care and the
Department of Insurance to develop a uniform notice for
consumers;
Exempt the development of the uniform notice from the
Administrative Procedure Act;
Authorize the Major Risk Medical Insurance Board to adopt
emergency regulations relating to the reconciliation process
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for the Major Risk Medical Insurance Program;
Eliminate the current premium formula and create a new
formula for rates charged to subscribers of grandfathered
HIPAA plans;
Delete other provisions of law that will be unneeded after
January 1, 2014.
This bill is an urgency measure.
Related Legislation: AB X1 2 (Pan) and SB X1 2 (Hernandez),
statutes of 2012, conform California law the Affordable Care Act
with regard to the individual market.
Staff Comments: The only costs that may be incurred by a local
government relate to crimes and infractions. Under the
California Constitution, such costs are not reimbursable by the
state.
Proposed author's amendments: would address chaptering issues
with AB 1391 and make technical corrections.