BILL ANALYSIS Ó
SENATE COMMITTEE ON HEALTH
Senator Ed Hernandez, O.D., Chair
BILL NO: SB 18
AUTHOR: Hernandez
AMENDED: April 17, 2013
HEARING DATE: May 1, 2013
CONSULTANT: Moreno
SUBJECT : California Health Benefits Review Program: health
insurance.
SUMMARY : Requests the California Health Benefits Review Program
(CHBRP) assess, in addition to the health, medical, and
financial impacts, the impact that health coverage mandates will
have on essential health benefits (EHB), as specified, and the
California Health Benefits Exchange (Covered California).
Existing federal law:
1.Requires health plans and health insurers that offer coverage
in the small group or individual market to ensure that
coverage includes the EHB package.
2.Requires, under the Patient Protection and Affordable Care Act
(ACA, Public Law 111-148), as amended by the Health Care
Education and Reconciliation Act of 2010 (Public Law 111-152),
each state, by January 1, 2014, to establish an American
Health Benefit Exchange that makes qualified health plans
(QHPs) available to qualified individuals and qualified
employers. If a state does not establish an Exchange, the
federal government is required to administer the Exchange.
Establishes requirements for the Exchange and for QHPs
participating in the Exchange, and defines who is eligible to
purchase coverage in the Exchange.
Existing state law:
1.Provides for regulation of health insurers by the California
Department of Insurance (CDI) under the Insurance Code and
provides for the regulation of health plans by the Department
of Managed Health Care (DMHC) pursuant to the Knox-Keene
Health Care Service Plan Act of 1975 (Knox-Keene Act).
2.Requires health plans to cover a number of basic health care
services and permits DMHC to define the scope of the services
and to exempt plans from the requirement for good cause.
Continued---
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3.Establishes Covered California as California's Health Benefit
Exchange to facilitate the purchase of qualified health plans
by qualified individuals and qualified small employers by
January 1, 2014.
4.Designates the Kaiser Small Group HMO as California's
benchmark plan to serve as the EHB standard.
5.Requests the University of California (UC) to establish the
CHBRP to assess, within 60 days of receiving a request by the
Legislature, legislation proposing to mandate or repeal a
health plan or health insurance benefit or service for public
health, medical, and financial impacts.
6.Requires health plans, except specialized health plans, and
health insurers, for fiscal years 2010-11 to 2014-15, to be
assessed an annual fee to fund the UC program, as specified,
not to exceed $2 million.
7.Sunsets the UC program on January 1, 2015.
This bill: Requests the CHBRP assess, in addition to the
health, medical, and financial impacts, the impact that health
coverage mandates will have on EHBs, as specified, and Covered
California.
FISCAL EFFECT : This bill is keyed non-fiscal.
COMMENTS :
1.Author's statement. As of January 1, 2014, the ACA will
require most forms of health care coverage to cover EHBs so
that consumers will be certain that products they purchase are
comprehensive. Last year, California selected its EHB
benchmark plan through SB 951 (Hernandez) Chapter 866,
Statutes of 2012 and AB 1453 (Monning) Chapter 854, Statutes
of 2012, which will go into effect on January 1, 2014. Under
the ACA, and with the selection of this Kaiser plan, mandated
benefits in California's individual and small group markets
are quite comprehensive. Any additional state mandates will
require the state to defray the costs for individual market
and small group products.
In the 2011-12 legislative session, even with implementation
of the ACA in full swing, there were 19 health benefit mandate
bills that were introduced and analyzed by CHBRP. This year,
there have been nine mandate bills introduced so far. Adding
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additional mandates not only complicates implementation of
ACA, but also has the potential to impose costs on the General
Fund. The Legislature will always have the authority to pass
health benefit mandates that it believes are prudent, but in
order to make rational decisions it needs to have complete
information about the overall impact of such mandates. In
addition to the information already provided by CHBRP, SB 18
will ensure that Legislature has a complete picture of the
overall impact of health benefit mandates by requiring an
analysis of how these mandates will affect Covered California
as well as our EHB law.
2.CHBRP. Since 2004, CHBRP has analyzed 89 bills, 41 of which
were passed by the Legislature and enrolled to the Governor,
of which 32 were vetoed. Eight bills analyzed by CHBRP became
law:
a. AB 2185 (Frommer) Chapter 711, Statues of 2004, requires
health plans to cover specified equipment used in the
treatment of pediatric asthma;
b. AB 228 (Koretz), Chapter 419, Statues of 2005, prohibits
health plans and insurers from denying organ or tissue
transplantation coverage on the basis that the insured
person is HIV positive;
c. SB 1245 (Figueroa) Chapter 482, Statutes 2006, requires
health plan coverage to include screening for Human
Papillomavirus in annual cervical cancer screening tests;
d. AB 2012 (Emmerson) Chapter 756, Statutes 2006, permits
doctors of podiatric medicine to prescribe orthotic and
prosthetic devices covered by the plan or insurer;
e. AB 1461 (Krekorian) Chapter 630, Statutes 2008, excludes
a health insurance policy from application of liability for
loss sustained or contracted in consequence of the
insured's being intoxicated or under the influence of any
controlled substance unless prescribed by a physician;
f. AB 1894 (Krekorian) Chapter 631, Statutes 2008, requires
health plans to provide HIV testing, regardless of whether
it is related to primary diagnosis;
g. SB 255 (Pavley) Chapter 449, Statutes 2012, clarifies
and further specifies a current-law mandate related to
health care coverage of breast cancer treatment; and
h. AB 137 (Portantino) Chapter 436, Statutes 2012, which
provides that individual or group policies of health
insurance shall be deemed to provide coverage for
mammographies for screening or diagnostic purposes upon
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referral of a participating nurse practitioner,
participating certified nurse-midwife, participating
physician assistant, or participating physician, as
specified.
3.Federal health care reform. On March 23, 2010, President
Obama signed the ACA (Public
Law 111-148), as amended by the Health Care and Education
Reconciliation Act of 2010 (Public Law 111-152), into law.
Among other provisions, the new law makes statutory changes
affecting the regulation of and payment for certain types of
private health insurance. Beginning in 2014, individuals will
be required to maintain health insurance or pay a penalty,
with exceptions for financial hardship, religion,
incarceration, and immigration status. Several insurance
market reforms are included in the ACA, such as prohibitions
against health insurers imposing lifetime benefit limits and
preexisting health condition exclusions. These reforms impose
new requirements on states related to the allocation of
insurance risk, prohibit insurers from basing eligibility for
coverage on health status-related factors, allow the offering
of premium discounts or rewards based on enrollee
participation in wellness programs, impose nondiscrimination
requirements, require insurers to offer coverage on a
guaranteed issue and renewal basis, determine premiums based
on adjusted community ratings (age, family, geography and
tobacco use).
4.Essential Health Benefits. Effective January 1, 2014, the
ACA also requires Medicaid
benchmark and benchmark-equivalent plans, plans sold through
the Exchange and the Basic Health Program (if enacted), and
health plans and health insurers providing coverage to
individuals and small employers to ensure coverage of EHBs,
as defined by the Secretary of the Department of Health and
Human Services (HHS). HHS is required to ensure that the
scope of EHBs is equal to the scope of benefits provided
under a typical employer plan, as determined by the
Secretary. Under federal law, EHBs must include 10 general
categories and the items and services covered within the
following categories:
a. Ambulatory patient services;
b. Emergency services;
c. Hospitalization;
d. Maternity and newborn care;
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e. Mental health and substance use disorder
services, including behavioral health treatment;
f. Prescription drugs;
g. Rehabilitative and habilitative services and
devices;
h. Laboratory services;
i. Preventive and wellness services and chronic
disease management; and
j. Pediatric services, including oral and vision
care.
On December 16, 2011, the HHS CCIIO released an EHB Bulletin
proposing that EHBs be defined using a benchmark approach. SB
951 (Hernandez) and AB 1453 (Monning) designated the Kaiser
Small Group HMO as California's benchmark plan to serve as the
EHB standard.
1.Covered California. Through SB 900 (Alquist) Chapter 659,
Statutes of 2010, and AB 1602 (Perez), Chapter 655, Statutes
of 2010, California was the first state in the nation to
establish a Health Benefit Exchange (now called Covered
California). Adopted by the California Health Exchange Board
of Directors in October 2011, its vision is to improve the
health of all Californians by assuring their access to
affordable, high quality care. According to Covered
California, it is an easy-to-use marketplace where individuals
can get financial assistance to make coverage more affordable
and where people can compare and choose health coverage. As
of 2014, about 2.6 million Californians will qualify for
federal financial assistance and an additional 2.7 million who
do not qualify for assistance will benefit from guaranteed
coverage through Covered California or from an insurance
company in the individual market. An estimated 2.3 million
California residents will enroll in a health plan through
Covered California by 2017.
2.Prior legislation. SB 1704 (Kuehl), Chapter 684, Statutes of
2006, extended the sunset date of the UC program to January 1,
2011 and adds legislation proposing to repeal a mandated
benefit or service to the types of legislation that the
Legislature requests that UC assess.
AB 1540 (Committee on Health), Chapter 298, Statutes of 2009,
extended the sunset date of the UC program to June 30, 2015.
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3.Support. The California Association of Health Plans (CAHP)
writes that implementation of the ACA, the establishment of
EHB, and the development of standardized benefits means that
new mandate proposals must be analyzed with broader
implications in mind. CAHP state that several new laws
proposed this session may impact the work of Covered
California and health plans in a way that could complicate the
October 2013 open enrollment period for Covered California.
SUPPORT AND OPPOSITION :
Support: California Association of Health Plans
Oppose: None received
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