BILL ANALYSIS Ó
Senate Appropriations Committee Fiscal Summary
Senator Kevin de León, Chair
SB 28 (Hernandez and Steinberg) - California Health Benefit
Exchange.
Amended: April 16, 2013 Policy Vote: Health 9-0
Urgency: No Mandate: Yes
Hearing Date: May 6, 2013 Consultant: Brendan McCarthy
This bill does not meet the criteria for referral to the
Suspense File.
Bill Summary: SB 28 would require notification of subscribers of
two state-run health plans about coverage options that will be
available thorough the state's Health Benefit Exchange. The bill
would also require the Department of Health Care Services to
designate the Health Benefit Exchange and counties as the single
point of entry for determining eligibility for accelerated
enrollment in Medi-Cal.
Fiscal Impact:
Minor staff costs for the Major Risk Medical Insurance
Board to provide subscriber contact information to the
California Health Benefit Exchange and for the Exchange to
notify subscribers about coverage options (various funds).
No additional costs to perform Medi-Cal accelerated
enrollment determinations (General Fund and federal funds).
See below.
Background: Under current law, the Department of Health Care
Services manages the state's Medi-Cal program. Under current
law, the Department is required to establish a single point of
entry and provide for accelerated enrollment in Medi-Cal by
children. To this end, the Department selected an outside vendor
as the single point of contact that processes applications over
the internet or by mail. Based on the initial application
review, the single point of contact makes an initial
determination of eligibility. If it appears that the child is
likely to qualify for Medi-Cal, the single point of entry
enrolls the child temporarily in fee-for-service Medi-Cal and
forwards the application to the appropriate county human
services department for a full eligibility determination.
SB 28 (Hernandez)
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Under current law, the state operates the Major Risk Medical
Insurance Program to provide health coverage to people who have
been denied private coverage because of a pre-existing
condition. Under the program, participants are required to pay
premiums of 125 percent of the standard average individual rate
they would pay for comparable coverage. (In 2013, premiums will
be equal to 100 percent of market rate premiums, but they will
return to 125 percent in 2014.) In addition, the program has
annual benefit limits of $75,000 and lifetime benefit limits of
$750,000. The state share of the program's cost, about $32
million per year, is funded from tobacco tax revenues.
Under the federal Patient Protection and Affordable Care Act
(Affordable Care Act) the state is also operating a federally
subsidized Pre-Existing Condition Insurance Program. This new
program is similar to the existing Major Risk Medical Insurance
Program, except that the new program has no annual cap on
benefits and lower subscriber premiums, generally making the new
program more attractive to subscribers.
Proposed Law: SB 28 would require notification of subscribers to
two state-run health plans about coverage options that will be
available through the state's Health Benefit Exchange.
Specifically, the bill would require the Major Risk Medical
Insurance Board to provide contact information for all
subscribers to the Major Risk Medical Insurance Program and the
Pre-Existing Condition Insurance Program to the California
Health Benefit Exchange. The bill requires the Exchange to
notify subscribers of their coverage options through the
Exchange after January 1, 2014.
The bill would also require the Department of Health Care
Services to designate the Health Benefit Exchange and the
counties as the single point of entry for determining
eligibility for accelerated enrollment in Medi-Cal.
The bill requires the single point of entry to grant accelerated
enrollment to a child if a complete eligibility determination
cannot be made upon the receipt of an application.
Related Legislation:
SB X1 1 (Hernandez and Steinberg) implements various
provisions of the Affordable Care Act regarding Medi-Cal
SB 28 (Hernandez)
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eligibility. That bill is in the Assembly Health Committee.
AB X1 1 (J. Perez) is identical to SB X1 1. That bill is in
the Senate Health Committee.
SB 249 (Leno) permits the Department of Public Health to
share health records of enrollees in certain health coverage
program with specified qualified entities. That bill will be
heard in this committee.
Staff Comments: Current law establishes accelerated enrollment
for children in Medi-Cal. While this bill changes the entity
that is allowed to make accelerated enrollment decisions, it
does not change the existing eligibility criteria. In addition,
the state has a maintenance of effort under the federal
Affordable Care Act which prohibits the state from changing
Medi-Cal eligibility and enrollment processes for children in a
way that would reduce enrollment.
The Major Risk Medical Insurance Program is subsidized with
state Proposition 99 funds. The Governor's budget proposal
includes language that would end the program after 2014.
However, under current law, there is no sunset on the program
and current enrollees may continue to participate in the program
after 2014. To the extent that current enrollees shift from the
program (which is subsidized by the state) to coverage through
the Health Benefit Exchange (which is subsidized by the federal
government) the state could see savings. Given that individuals
with pre-existing medical conditions are likely to be very aware
of their coverage options in the current market and the
potential for better, less expensive coverage through the
Exchange, it is not likely that this bill will result in
significant cost savings to the state.
Any costs incurred by the counties due to Medi-Cal eligibility
determinations will be paid through the Medi-Cal program.