BILL ANALYSIS Ó
SB 20
Page 1
Date of Hearing: May 6, 2014
ASSEMBLY COMMITTEE ON HEALTH
Richard Pan, Chair
SB 20 (Ed Hernandez) - As Amended: May 1, 2014
SENATE VOTE : Not relevant.
SUBJECT : Individual health care coverage: enrollment periods.
SUMMARY : Changes the 2015 open enrollment period for individual
market health plans and insurance policies to November 15, 2014,
through February 15, 2015. Specifically, this bill :
1)Requires health plans and insurers in the individual market to
provide an annual enrollment period of November 15, 2014,
through February 15, 2014, for the policy year beginning on
January 1, 2015.
2)Requires health plans and insurers in the individual market to
provide the current annual enrollment period of October 15
through December 7 for policy years beginning on or after
January 1, 2016.
3)Corrects a reference to federal law that defines the term
"individual market" and makes other minor, technical changes.
EXISTING LAW :
1)Establishes the Department of Managed Health Care to regulate
health plans and the California Department of Insurance to
regulate health insurers.
2)Requires, under the federal Patient Protection and Affordable
Care Act (ACA), each state, by January 1, 2014, to establish a
health benefit exchange that makes qualified health plans
(QHPs) available to qualified individuals and qualified
employers, or, if a state chooses not to establish an
exchange, requires the federal government to establish one for
the state. Federal law establishes requirements for an
exchange, for health plans participating in an exchange, and
who is eligible to receive coverage in the exchange.
3) Requires health plans and insurers issuing health
benefit plans in the individual and small group markets to
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comply with specific rules in the offering, sale, and scope
of that coverage, unless the coverage is grandfathered
pursuant to the ACA.
4)Restricts the purchase of guaranteed individual coverage to an
initial open enrollment period from October 1, 2013, through
March 31, 2014, subsequent annual enrollment periods from
October 15 through December 7, and in special enrollment
circumstances such as marriage, divorce, or loss of coverage,
as defined in state and federal law.
5)Requires, under federal regulations, annual open enrollment
for QHPs sold through the California Health Benefit Exchange
(Exchange, now called Covered California) to begin on November
15, 2014, and extend through February 15, 2015, for the
benefit year beginning on January 1, 2015.
6)Requires, under federal regulations, all health plans and
insurers in the individual market to allow an individual to
purchase health insurance coverage during the open enrollment
periods established for exchanges.
FISCAL EFFECT : This bill, as amended, has not been analyzed by
a fiscal committee.
COMMENTS :
1)PURPOSE OF THIS BILL . The author states that this bill is
intended to modify the individual market open enrollment
period for the 2015 policy year in order to comply with the
dates announced by the U.S. Department of Health and Human
Services (HHS).
2)BACKGROUND .
a) Open enrollment. Under the ACA, individuals are
required to maintain health insurance or pay a penalty,
with exceptions for financial hardship, religion,
incarceration, and immigration status. The ACA also
includes several insurance market reforms, such as
prohibitions against health insurers imposing preexisting
health condition exclusions and a requirement that health
plans and insurers offer essential health benefits in the
individual and small group markets. The ACA allows each
state to establish its own exchange to offer individual and
small group coverage; if a state declines, the federal
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government will establish one for the state.
The ACA requires the Secretary of HHS to establish open
enrollment periods for health plans sold through state
exchanges and requires individual market plans sold outside
an exchange to be offered during this open enrollment
period as well. Open enrollment serves as a safeguard
against people waiting to become sick to enroll. People
will generally be unable to enroll in individual coverage
outside of the open enrollment period unless they
experience a qualifying life event, which triggers a
special enrollment opportunity. Such events include loss
of eligibility for other coverage, gaining a dependent,
divorce, or a large change in income.
b) Federal regulations. A final HHS rule published March
11, 2014, changed the open enrollment period for QHPs sold
through exchanges for the 2015 benefit year. According to
the new rule, the annual open enrollment period will begin
on November 15, 2014, and extend through February 15, 2015.
Coverage for a QHP purchased by the 15th of December,
January, or February will be effective on the first day of
the following month.
HHS, in its explanation of the rule, asserts that extending
the open enrollment period to February 15 is beneficial for
consumers because it provides additional time to select a
plan. HHS further posits that the additional time before
open enrollment will enable the collection of additional
rating experience that could have a positive benefit on
reducing 2015 rates for consumers. HHS notes that some
stakeholders have proposed alternate open enrollment period
ranges for future benefit years, and indicates that it
intends to propose open enrollment dates for the 2016 plan
year at a later date, allowing an additional year's
experience to inform the finalization of realistic
enrollment dates for 2016.
HHS further notes that its change to the open enrollment
period applies to the individual health insurance market
for plans offered through and outside the exchange, since
current federal regulations require the dates of exchange
open enrollment to apply to the individual market
generally.
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3)SUPPORT . Health Access California, in support, states
California has successfully implemented many elements of the
ACA, but there are still many things to improve before the
next open enrollment period. These include revising the
single application, improving information technology, changing
rules for enrollment assistance and many other operational,
implementation issues to make reform work for Californians.
Health Access writes private insurers have also faced very
significant operational challenges in meeting the flood of
demand for new coverage and coverage changes. One insurer
reported receiving more phone calls in two days than they
normally receive in a month. Other insurers are still
struggling to catch up with enrollment from the open
enrollment period that closed at the end of March, 2014.
Medi-Cal also has backlogs. Health Access states that, given
the challenges ahead, delaying and extending the next open
enrollment period makes sense.
4)RELATED LEGISLATION .
a) AB 2 X1 (Pan), Chapter 1, Statutes of 2013-14 First
Extraordinary Session, and SB 2 X1 (Ed Hernandez), Chapter
2, Statutes of 2013-14 First Extraordinary Session, conform
California law to the ACA as it relates to the ability to
sell and purchase individual health insurance by
prohibiting preexisting condition exclusions, establishing
modified community rating, requiring the guaranteed issue
and renewal of health insurance, establishing open
enrollment periods, and ending the practice of carriers
conditioning health insurance on health status, medical
condition, claims experience, genetic information, or other
factors.
b) AB 2433 (Mansoor) would have allowed individuals whose
health coverage was cancelled between December 1, 2013, and
March 31, 2014, to purchase catastrophic health coverage.
AB 2433 failed passage in the Assembly Health Committee.
c) SB 1446 (DeSaulnier) allows small employer health plan
contracts and insurance policies, as specified, that were
in effect as of October 1, 2013, to be renewed until
October 1, 2016, and to continue to be in force until
September 30, 2017. SB 1446 is pending in the Senate
Health Committee.
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5)PREVIOUS LEGISLATION . AB 1602 (John A. Pérez), Chapter 655,
Statutes of 2010, and SB 900 (Alquist), Chapter 659, Statutes
of 2010, establish the Exchange and its powers and duties.
6) PROPOSED AMENDMENTS . The author requests amendments be
adopted in committee to add an urgency clause to this bill
so that its provisions can take effect immediately upon
enactment.
REGISTERED SUPPORT / OPPOSITION :
Support
Health Access California
Western Center on Law and Poverty
Opposition
None on file.
Analysis Prepared by : Ben Russell / HEALTH / (916) 319-2097