BILL ANALYSIS �
SB 3 X1
Page 1
Date of Hearing: June 11, 2013
ASSEMBLY COMMITTEE ON HEALTH
Richard Pan, Chair
SB 3 X1 (Ed Hernandez) - As Amended: May 28, 2013
SENATE VOTE : 37-0
SUBJECT : Health care coverage: bridge plan.
SUMMARY : Requires the California Health Benefits Exchange
(Exchange), by means of selective contracting, to make a bridge
plan product, as defined, available to specified eligible
individuals, as a qualified health plan (QHP). Exempts the
bridge plan product from certain requirements that apply to QHPs
relating to making the product available, marketing, and selling
to all individuals equally (guaranteed issue), to making the
product available outside the Exchange and selling products at
other levels of coverage. Requires the Department of Health
Care Services (DHCS) to include provisions relating to bridge
plan products in its contracts with Medi-Cal managed care plans
(MCPs). Specifically, this bill :
1)Defines bridge plan product as an individual health benefit
plan that meets the standards for licensure by the Department
of Managed Health Care (DMHC) under the Knox-Keene Health Care
Service Plan Act of 1975 (Knox-Keene) or as a health insurer
licensed under the Insurance Code that contracts with the
Exchange.
2)Authorizes health care service plans and health insurers
offering a bridge plan product to limit the product to a
specified group of individuals and exempts the bridge plans
from being subject to the requirement to sell products within
each of the five levels of coverage available in the Exchange,
and the requirement known as guaranteed issue, inside and
outside the Exchange.
3)Requires, to the extent federal approval has been obtained and
for the purpose of allowing, to the greatest extent possible,
a person to remain with the same plan when a person must move
from Medi-Cal to a QHP in the Exchange, the Exchange to make
bridge plan products available using its selective contracting
authority.
SB 3 X1
Page 2
4)Provides that to be qualified as bridge plan product, the plan
must:
a) Be a health care service plan or health insurer that
contracts with DHCS to provide MCP services;
b) Meet the Exchange requirements to contract as a QHP;
c) Meet a medical loss ratio (MLR) of 85%;
d) Limit enrollment to specified eligible individuals; and,
e) Demonstrate that the provider network is substantially
similar to the Medi-Cal managed care plan offered by the
health care service plan or health insurer.
5)Requires, until December 31, 2014, a health care service plan
that contracts with the Exchange to offer a qualified bridge
plan product to do all of the following:
a) File a material modification with DMHC to expand its
license if it has not been approved to offer individual
coverage as of the effective date of this bill; or,
b) File an amendment to expand its license with DMHC if it
has been approved to offer individual health benefit plans.
6)Specifies that the plan is deemed to be in compliance with
licensure requirements during the pendency of the material
modification or license amendment request.
7)Requires, if a health insurance policy has not been filed with
the Insurance Commissioner (IC) on or after the effective date
of this bill, a health insurer that contracts with the
Exchange to offer a qualified bridge plan product to file the
policy form with the IC.
8)Requires a health care service plan or a health insurer
selling a bridge plan product to maintain a MLR of 85% for the
bridge plan product and requires the methodology for
calculating the MLR to be, to the extent possible, the same as
is utilized by other health care service plans and insurers
under applicable licensure and Exchange requirements and
SB 3 X1
Page 3
requires the plan to report its MLR to DMHC and the insurer to
report to California Department of Insurance (CDI).
9)Provides that a health care service plan or a health insurer
selling a bridge plan product is not required to offer,
market, and sell the bridge plan product to any individual,
except to individuals eligible pursuant to a contract entered
into by DHCS and DMHC.
10)Requires a health care service plan or an insurer selling a
bridge plan product to provide an initial open enrollment
period of six months, an annual enrollment period, and a
special enrollment period consistent with the annual
enrollment and special enrollment periods of the Exchange.
11)Requires the Exchange to provide information on all available
Exchange-qualified health plans in the area, including, but
not limited to, bridge plan product options for selection by
individuals eligible to enroll in a bridge plan product.
12)Adds to the annual report that the Exchange is currently
required to produce, data relating to bridge plan products
regarding the extent of overlap between MCP health care
provider and facility networks and those contracting for
services in the bridge plan.
13)Authorizes the Exchange to adopt regulations to implement the
provisions of this bill after consultation with stakeholders,
as specified in current law, and exempts the process for
adoption from the requirements for the Administrative
Procedures Act, until January 1, 2016.
14)Requires DHCS to ensure that contracts with health care
service plans or insurers to provide Medi-Cal managed care
coverage meet all of the following requirements:
a) Limits enrollment in the bridge plan product to the
following individuals:
i) An individual who is eligible for the Exchange and
can demonstrate their Medi-Cal or Healthy Families
program (HFP) coverage was terminated;
ii) Other members of a household that are counted as
part of the Modified Adjusted Gross Income (MAGI) unit;
SB 3 X1
Page 4
and,
iii) An individual who is eligible for the Exchange and
has a household of not more than 200% of the federal
poverty limit (FPL), conditioned upon federal approval
and if consistent with the Patient Protection and
Affordable Care Act (ACA);
b) Further limits enrollment to a plan through which the
individual or a member of the household was enrolled prior
to eligibility for the bridge plan product either as a
Medi-Cal enrollee or a HFP enrollee.
15)Requires the Exchange to seek federal approval to allow
individuals described in 14) a) and b) above to enroll in a
different bridge plan product if the individual's primary care
provider is included in the contracted network of a different
bridge plan and the bridge plan the individual would otherwise
be eligible for is not offered in the individual's service
area or the product is not selected as bridge plan product by
the Exchange.
16)Provides that the MCP is to only offer a bridge plan product
if the premium contribution amount in the silver category for
the eligible individual is equal to or less than the premium
contribution amount for the lowest cost plan in the silver
category that would have been available to the individual
without the bridge plan product.
17)Authorizes DHCS to enter into a contract with the Exchange to
delegate the implementation of any part of these provisions to
the Exchange.
18)States the intent of the Legislature that the Exchange
provides a more affordable coverage option for low-income
individuals, improves continuity of care for individuals
moving from Medi-Cal to the Exchange, and reduces the need for
individuals enrolled in a MCP to change plans due to changes
in household income.
EXISTING LAW :
1)Requires, under the ACA, as amended by the Health Care
Education and Reconciliation Act of 2010 each state, by
SB 3 X1
Page 5
January 1, 2014, to establish an Exchange that makes 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. The ACA
establishes requirements for the Exchange and for QHPs
participating in the Exchange, and defines who is eligible to
purchase coverage in the Exchange.
2)Allows, under the ACA and effective January 1, 2014, eligible
individual taxpayers, whose household income is between 100%
and 400% of the FPL inclusive, an advance payment of premium
tax credits based on the individual's income for coverage
under a QHP offered in the Exchange. The ACA also requires a
reduction in cost-sharing for individuals with incomes below
250% of the FPL, and a lower maximum limit on out-of-pocket
expenses for individuals whose incomes are between 100% and
400% of the FPL.
3)Establishes the Exchange in state government (known as Covered
California), and specifies the duties and authority of Covered
California. Requires Covered California to be governed by a
Board of Directors that includes the Secretary of the
California Health and Human Services Agency (CHHSA) and four
members with specified expertise who are appointed by the
Governor and the Legislature.
4)Requires, under the ACA, health plans offering coverage in the
individual or group market to accept every employer and
individual that applies for coverage. Permits a health plan
to restrict enrollment to open or special enrollment periods.
Permits health plans to deny coverage to individuals if the
health plan has demonstrated, if required, to the applicable
state authority that it will not have the capacity to deliver
services adequately to any additional individuals because of
its obligations to existing group contract holders and
enrollees, and it is applying this provision to all
individuals without regard to the claims experience of those
individuals, employers, and their employees (and their
dependents) or any health-status related factor.
5)Establishes DMHC to regulate health plans under Knox-Keene in
the Health and Safety Code and CDI to regulate health insurers
under the Insurance Code.
SB 3 X1
Page 6
6)Establishes, under state and federal law, the Medicaid program
(Medi-Cal in California) as a joint federal and state program
offering a variety of health and long-term care services to
low-income women and children, low-income residents of
long-term care facilities, and seniors and people with
disabilities. Authorizes DHCS to enter into contracts with
MCPs to provide services to Medi-Cal enrollees.
FISCAL EFFECT : According to the Senate Appropriations Committee,
based on a prior version:
1)Administrative costs to establish bridge plans . The costs to
DHCS and Covered California to establish bridge plans are
likely to be minor as they have already begun the process of
developing this option.
2)Information Technology (IT) costs . Adding bridge plans to the
existing IT system under development to support Covered
California (California Healthcare Eligibility, Enrollment and
Retention System (CalHEERS)) may increase project costs. At
this time, Covered California is planning to incorporate
bridge plans into CalHEERS. However, it is not clear yet
whether adding bridge plan support functions can be
accomplished within the project's current development budget
of about $183 million (mostly federal funds). If there are
additional IT costs, those costs may be covered within the
project's five-year operations and maintenance cost of $176
million (mostly federal funds) or by fees charged by Covered
California on participating health plans.
3)Ongoing administrative costs for Covered California . The
administrative costs of operating Covered California will be
paid by fees on participating QHPs based on the number of
people enrolled through Covered California (generally 3% of
the average premium per member per month). It is important to
note that this bill does not expand eligibility for Covered
California. However, it is likely that some Exchange-eligible
consumers would not apply for coverage without a bridge plan
option (for example, because switching health plans and/or
having to find a new primary care doctor would discourage
healthy consumers who have lost Medi-Cal coverage from
applying for coverage).
The marginal impact on Covered California enrollment due to the
bridge plan option is not known at this time. However,
SB 3 X1
Page 7
projections made by the Urban Institute and the UC Labor
Center for enrollment in a proposed Basic Health Plan (which
would serve a similar population) indicate that potentially
around 100,000 additional consumers would enroll in a Basic
Health Plan, if available. Using these projections as a proxy
for the marginal enrollment in Covered California due to the
availability of a bridge plan option, administrative costs
(and fee revenues) for Covered California are likely to be
about $15 million per year.
4)Enrollment impacts on Medi-Cal . The availability of a bridge
plan option will likely increase enrollment in Medi-Cal.
There are two elements of the bridge plan option that are
likely to increase overall Medi-Cal enrollment. First, a
low-cost bridge plan option is likely to keep low-income
consumers enrolled in Covered California and connected to the
health care system. A bridge plan participant who experiences
a reduction in income may be more likely to apply for Medi-Cal
than a person who would have dropped coverage in the absence
of a bridge plan option. Second, the fact that bridge plans
will mirror MCPs means that a bridge plan participant would
not experience disruptions of coverage or need to change
primary care providers if he or she shifted from a bridge plan
to Medi-Cal managed care. This is likely to encourage bridge
plan participants who experience a reduction in income to
apply for Medi-Cal. The magnitude of this impact, and its
fiscal implications to Medi-Cal, is unknown at this time.
COMMENTS :
1)PURPOSE OF THIS BILL . According to the author, this bill
would establish a bridge health insurance plan for low-income
individuals, the parents of Medi-Cal and HFP-eligible
individuals, and individuals moving from Medi-Cal coverage to
subsidized coverage through Covered California. The author
states that a bridge plan is a Covered California product that
promotes continuity of care, provides an additional coverage
choice to hard-working Californians, and reduces the negative
effects of "churning" back and forth between systems of
coverage where individuals are required to shift health plans
and health coverage programs because of changes in their
household income. By allowing individuals to remain within
their current health plan when they shift health subsidy
programs, this bill will prevent disruptions in individuals'
SB 3 X1
Page 8
provider networks and improve continuity of care. In
addition, the author argues this bill would make it more
likely that Covered California-eligible parents of Medi-Cal
enrolled children would be covered by a single health plan
with the same provider network. The author states there are a
number of life experiences that affect an individual's income
eligibility for health subsidy programs (through Medi-Cal and
Covered California), such as the birth of a child, marriage or
divorce, getting or losing a job or receiving a pay raise or
pay reduction, and the aging out of a child from coverage.
The author also states that in addition to promoting continuity
of care, this bill is needed to potentially provide a more
affordable health plan choice, which will increase the number
of individuals signing up for coverage (particularly
individuals moving from no-cost Medi-Cal to paying premiums in
Covered California), and therefore expand enrollment within
Covered California. Finally, the author also argues that this
bill will provide protection for the safety net.
Specifically, the author states that even after full
implementation of health care reform, and under a best case
scenario, an estimated three to four million individuals will
remain uninsured in California. The Bridge plan can help core
safety net providers like public hospital systems continue to
serve the remaining uninsured, by contributing to a diverse
payor mix with Covered California enrollees.
2)BACKGROUND . On March 23, 2010, President Obama signed the ACA
into law. The ACA will greatly expand access to public and
private health insurance coverage in California. Beginning in
2014, millions of low-income Californians will gain access to
coverage under the expansion of Medicaid, and lower to middle
income Californians will be eligible for premium and
cost-sharing subsidies offered through the Exchange.
Beginning in 2014, individuals purchasing coverage through
Covered California with incomes up to 400% of the FPL
(approximately $45,690 for an individual in 2013) are eligible
for premium tax credits. The value of the tax credit is based
on the premium for the second lowest cost silver plan in
Covered California in the area where the person is eligible to
purchase coverage. The premium tax credit caps the amount a
person is required to spend on premiums for the second lowest
cost silver plan. For example, individuals with incomes
SB 3 X1
Page 9
between 150% and 200% of the FPL would pay no more than 4% to
6.3%, respectively, of their income on premiums (approximately
$57 to $121 per month) for the second lowest cost silver plan.
The ACA also provides cost-sharing subsidies for enrollees
with incomes less than 250% of the FPL who are enrolled in
silver plans. These subsidies reduce the out-of-pocket costs
(co-payments and deductibles) an eligible Covered California
enrollee pays when receiving health care services.
According to the author, despite the premium and cost-sharing
subsidies available through Covered California, there is a
concern that low-income individuals will have difficulty
affording even subsidized premiums, which will adversely
affect enrollment in Covered California. Additionally,
significant churning between Medi-Cal and Covered California
income eligibility and low Medi-Cal health plan participation
in Covered California will require individuals experiencing a
change in income to switch health plans and potentially health
care provider networks. In a February 2011 Health Affairs
article, researchers analyzed projected churning between
Medicaid and Exchange coverage for the newly eligible. They
estimated that more than 35% of adults with family incomes
below 200% of the FPL will experience a change in eligibility
within six months, and 50% will experience a change within one
year. In addition, 24% will churn at least twice within a
year, and 39% will experience churning within two years.
3)BRIDGE PLAN OPTION . On December 10, 2012, the Centers for
Medicare and Medicaid Services (CMS) issued a letter,
"Frequently Asked Questions (FAQ) on Exchanges, Market
Reforms, and Medicaid" that outlined the bridge plan option.
CMS indicated that a state could allow a Medicaid health plan
to offer QHPs in the Exchange on a limited-enrollment basis to
certain populations. The letter also stated that additional
guidance will be issued soon, but has not as yet, been
released. In the December FAQ, CMS stated this approach is
intended to promote continuity of coverage between Medicaid or
HFP and the Exchange, allowing individuals transitioning from
Medicaid or HFP coverage to the Exchange to stay with the same
issuer and provider network, and for family members to be
covered by a single issuer with the same provider network.
CMS stated an Exchange may allow an issuer with a state
Medicaid managed care organization contract to offer a QHP as
a Medicaid bridge plan under the following terms:
SB 3 X1
Page 10
a) The state must ensure that the health plan complies with
applicable laws, and in particular with a provision of the
ACA that requires health plans to provide guarantee issue
coverage, but provides an exception to the guarantee issue
requirement to a health plan whose provider network reaches
capacity. CMS states such a health plan may deny new
enrollment generally while continuing to permit limited
enrollment of certain individuals in order to fulfill
obligations to existing group contract holders and
enrollees. If the health plan demonstrates that the
provider network serving the Medicaid managed care
organization and bridge plan has sufficient capacity only
to provide adequate services to bridge plan-eligible
individuals and existing Medicaid and/or HFP-eligible
enrollees, the bridge plan could generally be closed to
other new enrollment. However, in order to permit
additional enrollment to be limited to bridge plan eligible
individuals, the state must ensure there is a legally
binding contractual obligation in place requiring the
Medicaid managed care plan to provide coverage to these
individuals.
b) The Exchange must ensure that a bridge plan offered by a
Medicaid managed care organization meets the QHP
certification requirements, and that having the Medicaid
managed care organization offer the bridge plan is in the
interest of consumers.
c) The Exchange must ensure that bridge plan eligible
individuals are not disadvantaged in terms of the buying
power of their premium tax credits as part of considering
whether to certify a bridge plan as a QHP.
d) The Exchange must accurately identify bridge
plan-eligible consumers, and convey to the consumer his or
her QHP coverage options.
e) The Exchange must provide information on bridge
plan-eligible individuals to the federal government, as it
will for any other individuals who are eligible for QHP in
the Exchange, to support the administration of advance
payments of premium tax credits.
SB 3 X1
Page 11
4)Federal Exchange premium subsidies . Federal premium subsidies
in Covered California are based on the individual's income,
and cap the amount an individual has to spend on the second
lowest cost silver plan. The difference between what the
individual pays for the second lowest cost silver plan and the
actual cost of the premium is paid by the federal premium
subsidy. Individuals can use the dollar amount of the federal
premium subsidy to buy another plan (in the platinum, gold,
silver, or bronze tiers) but must pay the difference between
the federal premium subsidy amount and the actual premium. In
addition to the federal premium subsidies, individuals with
incomes at or below 250% of the FPL receive cost-sharing
subsidies (that lower the average amount an individual would
pay out-of-pocket for co-payments, co-insurance and
deductibles). However, individuals only receive cost-sharing
subsidies in the silver benefit tier, so individuals are
likely to buy coverage in this benefit tier. In response to
questions to the Center for Consumer Information & Insurance
Oversight (CCIIO) at CMS, CCIIO staff stated that as part of
considering when to certify a bridge plan as a QHP, the
Exchange must ensure that bridge plan eligible individuals are
not disadvantaged in terms of the buying power of their
advance payments of premium tax credits.
5)BRIDGE PLAN'S EFFECT ON AFFORDABILITY . On May 23, 2013,
Covered California released a booklet outlining health plans
and rates for 2014. Contrary to predictions of high premiums
in the Exchange (the Congressional Budget Office predicted
monthly rates of $433, and a report by Milliman predicted
monthly rates of $450), the rates released by Covered
California included a statewide average for the
second-cheapest silver plan of $325 per month, or $3,900 per
year (average across all rating regions and age groups).
Introducing a bridge plan will reduce the federal subsidy for
bridge-eligible individuals. This is because the bridge plan
is required to be the least expensive silver plan on the
market, which makes the plan that was previously the cheapest
the benchmark plan for calculation of the premium subsidy (see
4) above). Assuming an even distribution of bridge-eligible
individuals across rating regions, the federal subsidy for
bridge-eligible individuals would be reduced by an average of
$21, the difference between the averages for the two
lowest-priced silver plans. (Because the introduction of a
SB 3 X1
Page 12
bridge plan is optional under this bill, this average will
depend on how many bridge plans are actually offered and where
they are offered.)
In order to satisfy this bill's requirement that an individual's
premium contribution amount for the bridge plan be equal to or
less than the premium contribution for the cheapest silver
plan that would otherwise be available, the average bridge
plan premium would be capped at $293 (again, depending on how
many bridge plans are offered). This bill requires the
Exchange to use its selective contracting authority when
certifying bridge plans, with the intent that negotiated
premium rates would result in a patient premium contribution
that is lower than this cap. This could result in the
availability of a bridge plan that is more affordable than the
lowest-cost silver plan would have otherwise been.
At the same time, the reduction in the federal subsidy
translates into an increase in the patient share of premiums
for commercial products offered to bridge-eligible individuals
through the Exchange. The patient share of premiums for the
lowest-priced silver plan in the absence of a bridge option is
compared to the patient share of premiums for the same plan if
a bridge plan is available. For example, for individuals at
150% of FPL, the average patient share increases from $36 to
$57.
For a more detailed example, consider the rates published in
the Covered California booklet for Rating Region 15 (north Los
Angeles). The lowest-priced silver plan for a 40-year-old
single individual is the Health Net HMO Plan, with a premium
of $222, and the second lowest-priced silver plan is the Blue
Shield PPO, with a premium of $252. The federal subsidy caps
the individual's share of the premium for the second
lowest-cost plan (in this case, the Blue Shield plan) at a
certain percent of the individual's income. For an individual
at 150% of the FPL, this cap is about $57, leading to a
subsidy of $195. If that individual applies that subsidy to
the Health Net plan, their share of the premium for that plan
would be just $27.
However, if a bridge plan option is offered to that
individual, this bill would require that plan's premium
contribution amount to be less than or equal to the lowest
SB 3 X1
Page 13
cost silver plan that would have been otherwise available to
that individual-in this case, the Health Net HMO plan at $27.
Because the bridge plan is required to be the lowest-cost
silver plan offered, the Health Net plan would now become the
second lowest-cost plan, and federal subsidies would be
calculated based on the Health Net plan rather than the Blue
Shield plan, reducing the federal subsidy by $30. This, in
turn, would increase the patient's share of premiums for each
of these two plans by $30. Finally, the total premium amount
of the bridge plan would have to be at least $30 less than the
Health Net plan's premium (i.e., at most $192) to keep the
patient's share under $27.
Depending on how many individuals are eligible for a bridge
plan, the amount of federal premium support subsidies that are
received in the state could be significantly reduced. The
Covered California booklet estimates that 2.6 million
individuals will be eligible for federal subsidies. Data from
the UC Berkeley Labor Center indicate that the number of
potential bridge plan-eligible individuals in 2014 would be
between 670,000 and 840,000, assuming an April 2014 effective
date. If the federal subsidy for each of these individuals is
decreased by $21, based on the average premiums listed in the
Covered California booklet, this would translate to a total
reduction in federal subsidies received of $14 million to
$17.6 million. This reduction would be less to the extent
that some individuals receive a federal subsidy of less than
$21 and to the extent that not all bridge-eligible individuals
are offered a bridge plan.
6)SUPPORT WITH AMENDMENTS . The Western Center on Law and
Poverty (Western Center) supports this bill's limitation on
the premiums charged for bridge plans to ensure that
consumers' premium contribution is the same or less than what
they would pay in the lowest cost silver plan without the
bridge. The Western Center argues that this ensures that
beneficiaries eligible for the bridge will not have the
purchasing power of their tax credits undermined. However,
Western Center argues that this provision does nothing to
ensure greater affordability for the bridge plan than the
lowest cost silver plan. Western Center urges that this bill
be amended to set a specific threshold of premium differential
to achieve the stated goal of better premium affordability and
that Covered California use its selective contracting
authority to only approve bridge plans that have at least a
SB 3 X1
Page 14
15% price differential with the second lowest cost silver
plan. Even with a 14% price differential, Western Center
writes, consumers at 200% FPL would pay a premium of $44 to
$58 per month, still a cost-prohibitive amount for some
consumers at this income level. Western Center also requests
an amendment to allow consumers to seamlessly transition from
Medi-Cal to a bridge plan through CalHEERS, without requiring
the consumer to demonstrate a loss of Medi-Cal coverage, as
that information is already in the CalHEERS system. Anthem
Blue Cross believes the 85% MLR requirement should be
eliminated, given that plans will already need to comply with
eh 80% federal MLR requirement and further states that the
proposed 85% standard does not account for the additional
requirements affecting plans offered on the Exchange.
7)SUPPORT . The American Cancer Society Cancer Action Network
writes that continuity of coverage is essential in order to
achieve positive health outcomes for all individuals, but even
more so for individuals with a history of complex health
issues, including cancer, and that this bill will keep
low-income consumers enrolled in Covered California and
connected to the health care system. Also in support, the
California Association of Public Hospitals and Health Systems
(CAPH) writes that the bridge plan will help ensure that many
low-income individuals and families will be able to afford
plans offered through Covered California. CAPH argues that
the bridge-eligible population has minimal room in their
monthly budget for health care premiums, and that developing a
more affordable option for these low-income families will make
a big difference in whether or not they enroll. In addition,
CAPH writes that the bridge plan will help core safety net
providers like public hospital systems continue to serve the
state's remaining uninsured (estimated at three to four
million individuals) by contributing to a diverse payor mix
with Covered California enrollees.
8)OPPOSE UNLESS AMENDED . The Bay Area Council states that in
the current form, this bill goes beyond the stated goals of
affordability and continuity of care, tilts the state towards
substantially more public rather than private coverage,
contrary to the goals of the ACA, and would prefer a more
narrowly tailored bridge plan with reasonable duration and
income limitations. The Bay Area Council further states that
as we work to provide affordable options for working and
SB 3 X1
Page 15
middle class consumers that allow them to preserve continuity
of coverage, we must be mindful of not creating barriers for
people to move up into higher-quality commercial coverage that
pays providers adequate rates. The Medicaid Bridge Plan - in
either its "broad" or "narrow" forms - provides a substantial
disincentive for Californians to move up into private
coverage. This is the case because access to a lower-cost
Bridge Plan lowers consumers' subsidies and hence their
purchasing power relative to the other products in the
Exchange.
9)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 enact
substantially similar provisions in each bill to implement
the ACA insurance provisions related to health insurance
regulated under the Insurance Code and the Health and
Safety Code, respectively.
b) AB 1 X1 (John A. P�rez) and SB 1 X1 (Ed Hernandez)
implement various provisions of the ACA regarding Medi-Cal
eligibility and program simplification including the use of
MAGI and expansion of eligibility in the Medi-Cal program.
c) SB 18 (Ed Hernandez) 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 Covered California.
d) SB 28 (Ed Hernandez and Steinberg) implements various
provisions of the ACA regarding Medi-Cal eligibility and
program simplification including the use of the MAGI and
expansion of eligibility in the Medi-Cal program.
10)PREVIOUS LEGISLATION .
a) SB 900 (Alquist), Chapter 659, Statutes of 2010,
establishes Covered California as an independent public
entity within state government, and requires Covered
California to be governed by a board composed of the CHHSA
Secretary, or his or her designee, and four other members
SB 3 X1
Page 16
appointed by the Governor and the Legislature who meet
specified criteria.
b) AB 1602 (John A. P�rez), Chapter 655, Statutes of 2010,
specifies the powers and duties of Covered California
relative to determining eligibility for enrollment in the
Covered California and arranging for coverage under QHPs,
requires Covered California to provide health plan products
in all five of the federal benefit levels (platinum, gold,
silver, bronze, and catastrophic), requires health plans
participating in Covered California to sell at least one
product in all five benefit levels in Covered California,
requires health plans participating in Covered California
to sell their Covered California products outside of
Covered California, and requires health plans that do not
participate in Covered California to sell at least one
standardized product designated by Covered California in
each of the five levels of coverage, if Covered California
elects to standardize products.
c) SB 703 (Ed Hernandez) of 2011 would have implemented the
Basic Health Program state option contained in the ACA to
provide health care coverage to individuals under 200% of
FPL who do not qualify for Medi-Cal in lieu of these
individuals receiving coverage in Covered California. SB
703 was held on the Assembly Appropriations suspense file.
11)POLICY COMMENTS .
a) Benefit of a Bridge Plan Product . Establishing a bridge
plan product lowers the benchmark for establishing a
person's subsidy. For example, if the second lowest silver
is priced at $252 for a 40 year old with income at 150% of
FPL, the subsidy is set at $195 and the person can purchase
the product for a premium of $57. If there is a bridge
plan, the subsidy would be decreased to be equal to the
subsidy for the lowest silver and the individual would have
to pay more for the second lowest cost silver. The policy
question that the Legislature must decide is whether this
lowered subsidy (in effect, possibly making the second
lowest cost silver plan unaffordable for this person) is a
worthwhile trade-off for providing continuity of care by
being able to stay with one's Medi-Cal plan. At this
point, the final provider networks are not public. Is
SB 3 X1
Page 17
there enough information to make an informed decision? A
judgment will have to be made on behalf of those affected.
b) Affordability . Supporters argue that the fact that the
cost of the second lowest cost silver plan would be
increased is irrelevant to those with the lowest income
(150% of FPL). They argue that in this income range, these
individuals will choose to remain uninsured or purchase the
lowest cost silver. These supporters argue that granting
the Exchange the power to do selective contracting will
result in low enough priced bridge products to make the
bridge plan product more affordable. If this is the case,
a ceiling could be required to ensure the trade-off of a
reduced subsidy is worthwhile.
c) Income Limits . The presence of a bridge plan product
lowers the subsidy for those eligible and the amount of
federal dollars available to pay providers. This may be a
reasonable trade-off if the person is still very
low-income, for instance 150% or 200% of FPL, and would
otherwise not be able to purchase any QHP. However, as
this freezes the person in at a lower subsidy, it could
disadvantage someone with income above 200% of FPL. To
remedy this there could be an upper income limit for
eligibility. According to CCIIO, this is an open question.
Does the committee wish to amend this bill to provide an
upper income limit subject to federal approval?
d) Continuity of Care as Rationale . The author's stated
purpose is to promote continuity of care which usually
means allowing a person to continue to receive services
from an existing provider. However, a parent of a child
who is in HFP or Medi-Cal has no relationship as an
enrollee of the plan or a patient of the provider. Further
attenuated is the situation if a person has not been on
Medi-Cal in the recent past. Does the committee wish to
amend this bill to limit eligibility to a person who lost
Medi-Cal in the prior six months?
e) Broad Bridge . The so-called "broad bridge" opens up the
bridge plan product to anyone under 200% of FPL. It is
just as likely that this person will have no relationship
with a provider in the plan and therefore it would actually
be counter-productive. In fact the CCIIO staff that has
SB 3 X1
Page 18
provided guidance on this issue has stated that it is very
unlikely that this category will be approved. The author
may wish to explain why a provision that is unlikely to be
approved would be included at this stage? Does the
committee wish to delete the broad bridge and reconsider in
future legislation when/if federal rules allow?
f) Sunset and Evaluation. The Legislature may want to be
able to re-consider the bridge plan concept after some of
these questions are answered. Adding a sunset and some
additional reporting requirements would allow this. These
could include:
i) A comparison of premium, subsidy, and cost to
consumers of bridge plans to see if it is actually more
affordable;
ii) Whether there are identifiable changes in provider
behavior to detect if providers are willing to
participate;
iii) Whether the impact is eroding the Exchange pool to
the detriment of other QHPs; and,
iv) Whether continuity of care is actually achieved.
v) Consumer surveys of whether individuals want to
retain their Medi-Cal plan or would purchase a second
level silver if there was no bridge plan product.
g) MLR . Under the ACA, consumers will receive more value
for their premium dollar because insurance companies are
required to spend 80% in the individual and small group
markets or 85% in the large group market of premium dollars
on medical care and health care quality improvement, rather
than on administrative costs, starting in 2011. If they
don't, the insurance companies must provide a rebate to
their customers starting in 2012. The author may want to
explain the rationale for choosing the 85% for the Bridge
plan product, whereas the competing QHP plans are only
required to meet 80%.
h) Technical Drafting .
SB 3 X1
Page 19
i) On page 15, line 8, Section 1399.864 (b)(3) should
be subdivision (c); on line 12, Section 1399.864 (b)(4)
should be subdivision (d); on line 25, subdivision (5)
should be subdivision (e); on line 33, Subdivision (6)
should be subdivision (f).
ii) Section 14005.70 (a)(1) and (a)(2) of the Welfare
and Institutions Code seem to be redundant.
REGISTERED SUPPORT / OPPOSITION :
Support
California Health and Human Services Agency, sponsor
American Cancer Society, Cancer Action Network
California Association of Public Hospitals & Health Systems
California Hospital Association
California Mental Health Directors Association
California Primary Care Association
California State Association of Counties
County Health Executives Association of California
Health Access California
L.A. Care Health Plan
Local Health Plans of California
Los Angeles Board of Supervisors
March of Dimes, CA Chapter
Organization of SMUD Employees (prior version)
Planned Parenthood Affiliates of California
Private Essential Access Community Hospitals
San Bernardino Public Employees Association (prior version)
San Luis Obispo County Employees Association (prior version)
Santa Clara County Board of Supervisors (prior version)
Santa Rosa City Employees Association (prior version)
SEIU California
The Glendale City Employees Association (prior version)
Oppose Unless Amended
Bay Area Council
Analysis Prepared by : Marjorie Swartz / Benjamin Russell
HEALTH / (916) 319-2097
SB 3 X1
Page 20