BILL ANALYSIS �
SB 3 X1
Page 1
Date of Hearing: June 24, 2013
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
SB 3 X1 (Hernandez) - As Amended: June 19, 2013
Policy Committee: HealthVote:18-0
Urgency: No State Mandated Local Program:
No Reimbursable: No
SUMMARY
This bill requires, subject to federal approval, the California
Health Benefit Exchange (known as Covered California) to make
available bridge plan products, as defined. Specifically, this
bill:
1)Requires Covered California to use its selective contracting
authority to contract with, and certify as a qualified health
plan (QHP), a bridge plan product meeting specified
requirements, including that the offering plan or insurer
contracts with the Department of Health Care Services (DHCS)
to provide Medi-Cal managed care.
2)Identifies populations eligible to purchase a bridge plan
product as: a) an individual whose Medi-Cal or Healthy
Families coverage was terminated; b) other modified adjusted
gross income household members, as defined, with Medi-Cal or
Healthy Families enrollees; and c) by January 1, 2015, a
parent or caretaker relative of a child on Medi-Cal.
3)Imposes requirements on DHCS related to its Medi-Cal managed
care contracts to facilitate the bridge product program,
including a provision that a contracting plan only offer a
bridge product if the premium contribution amount, as
specified, is equal to or less than the amount for the lowest
cost plan in the same category available without the bridge
product.
4)Permits a carrier offering a bridge plan product to limit its
participation in Covered California solely to a bridge plan
product contract rather than the different coverage levels
required of carriers generally.
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5)Exempts bridge products from the requirement, applicable to
QHPs generally, to fairly and affirmatively offer, market, and
sell all products sold inside Covered California, to
purchasers in the outside market (known as "guaranteed
issue").
6)Requires Covered California to provide an evaluation of the
bridge plan program, as specified, four years after federal
approval, and sunsets the program five years after federal
approval.
FISCAL EFFECT
1)Covered California . Adding bridge plans to the existing
information technology system under development to support
Covered California may increase project costs. At this time,
Covered California is planning to incorporate bridge plans
into CalHEERS though it is unclear 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, they 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.
The ongoing administrative costs of operating Covered
California will be paid by fees on participating qualified
health plans based on the number of people enrolled through
Covered California (generally 3% of the average premium per
member per month). Although this bill does not expand
eligibility for Covered California, some consumers would not
apply for coverage without a bridge plan option making it
easier to maintain coverage. The marginal impact on Covered
California enrollment due to the bridge plan option is not
known at this time.
2)DHCS . Minor costs to DHCS for establishing bridge plans.
Availability of a bridge plan option will likely lead to a
very small increase in Medi-Cal enrollment to the extent this
bill accomplishes its goal of helping people maintain
continuous coverage despite changing circumstances. The
transition from the bridge product to Medi-Cal will be
seamless and is intended to prevent a person from falling off
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of coverage altogether. The magnitude of this impact and its
fiscal implications to Medi-Cal are unknown at this time.
Department of Managed Health Care (DMHC) . Estimated costs to
the Managed Care Fund (fee supported) are $414,000 in 2013-14,
$370,000 in 2014-15, and $528,000 ongoing. DMHC's costs are
primarily workload increases for enforcement, financial
oversight (including routine exams and review of plans'
minimum loss ratio), licensing, and premium rate review.
3)Department of Insurance (CDI) . There is no CDI estimate at
this time because there are no Medi-Cal managed care plans
regulated by CDI. In order to qualify to sell a bridge
product, a carrier must first be a participant in Medi-Cal
managed care. It is unknown whether this could change in the
future.
COMMENTS
1)Rationale . The California Health and Human Services Agency is
sponsoring this bill to address concerns about churning
between Medi-Cal and other health coverage as the state
implements the federal Affordable Care Act (ACA). Income
fluctuations could lead to frequent changes in Medi-Cal
eligibility over short periods of time. By creating a bridge
between Medi-Cal and subsidized coverage purchased by
individuals in Covered California, this bill would promote
continuity of care and expand coverage options. This bill is
also intended to make coverage more affordable to increase the
number of people signing up for coverage, Finally, the bridge
plan option is intended to help core safety net providers like
public hospital systems continue to serve the remaining
uninsured.
2)Federal Authority for Bridge Option . The Centers for Medicare
and Medicaid Services (CMS) outlined the bridge option in
December 2012. To promote continuity of care between Medicaid
(Medi-Cal in California) and the state's health benefit
exchange, a state could allow a Medicaid health plan to offer
enrollment to specific populations so that affected
individuals would be able to stay with the same plan and
provider network. CMS specified requirements for the bridge
option, which are reflected in this bill.
3)Affordability . Depending on how many individuals are eligible
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for a bridge plan, the amount of federal premium support
subsidies received in the state could be reduced because
subsidies are tied to the cost of products offered in Covered
California and the premium rates for bridge products are not
yet known. Covered California estimates 2.6 million
individuals will be eligible for federal subsidies. Data from
the UC Berkeley Labor Center indicate the number of potential
bridge plan-eligible individuals in 2014 would be between
670,000 and 840,000, assuming an April 2014 effective date.
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 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. These bills are
pending on the Governor's desk.
5)Previous Legislation . 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 with incomes below 200% of the federal poverty
level who do not qualify for Medi-Cal in lieu of these
individuals receiving coverage in Covered California. SB 703
was held on this committee's Suspense File.
Analysis Prepared by : Debra Roth / APPR. / (916) 319-2081