BILL ANALYSIS Ó
Senate Appropriations Committee Fiscal Summary
Senator Kevin de León, Chair
SB 189 (Monning) - Health care coverage: wellness programs.
Amended: May 8, 2013 Policy Vote: Health 5-2
Urgency: No Mandate: Yes
Hearing Date: May 23, 2013 Consultant: Brendan McCarthy
SUSPENSE FILE.
Bill Summary: SB 189 would prohibit a health plan or health
insurer from offering a wellness plan unless certain
requirements are met.
Fiscal Impact:
One-time costs of about $700,000 over three years for the
development of regulations and review of health plan filings
by the Department of Managed Health Care (Managed Care
Fund).
Ongoing costs of about $85,000 for ongoing review of health
plan filings and enforcement by the Department of Managed
Health Care (Managed Care Fund).
Likely one-time costs in the hundreds of thousands for the
development of regulations and review of plan filings by the
Department of Insurance (Insurance Fund).
Likely ongoing costs in the tens of thousands for ongoing
review of insurance filings and enforcement by the
Department of Insurance (Insurance Fund).
Unknown future impacts on state health care programs. See
below.
Background: The federal Affordable Care Act imposes a number of
requirements on health plans and health insurers, many of which
have been incorporated into state law.
The Affordable Care Act allows wellness programs offered by
employers that are designed to promote health or prevent
disease, provided certain conditions are met. Many of the
restrictions on wellness programs in the Affordable Care Act
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apply to health-contingent wellness programs, rather than
participation-based wellness programs.
Proposed Law: SB 189 would prohibit a health plan or health
insurer from offering a wellness plan unless certain
requirements are met. In general, the bill would prohibit health
plans and health insurers from offering health-contingent
wellness programs (for example, a program where an incentive was
based on weight loss or lowered cholesterol levels).
For example, under the bill a wellness program:
Must be reasonably designed to promote health or prevent
disease;
Must not lead to cost shifting;
May only offer an incentive or award in the form of a
discount or rebate of a premium, deductible, copayment or
coinsurance if it is based on participation and may not
exceed $350 per year;
Must not condition the receipt of an incentive or reward on
satisfaction of a standard related to a health status
factor;
Must not result in premium increases;
Must meet a variety of other requirements.
The bill requires the Department of Managed Health Care and the
Department of Insurance to report to the Legislature by March 1,
2019 on wellness programs.
The bill has a January 1, 2020 sunset date.
Related Legislation: AB 1636 (Monning, 2012) would have required
a committee to study wellness programs. That bill was held on
this committee's Suspense File.
Staff Comments: Most of the requirements of this bill go
beyond the requirements of the Affordable Care Act.
At this time, staff is not aware of any state health care
programs (such as CalPERS or Medi-Cal) that use
health-contingent wellness programs. At least some health plans
offered to CalPERS members use participation-based wellness
programs.
By eliminating health-based wellness programs and putting
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restrictions on the use of participation-based wellness
programs, this bill may limit the ability of state health care
programs to use wellness programs.
According to an analysis by the California Health Benefits
Review Program, there is evidence that participation in wellness
programs reduces certain unhealthy behaviors such as smoking.
However, the evidence that wellness programs improve health is
either ambiguous or the evidence does not indicate that
participation in wellness programs improves health-related risk
factors.
Because the evidence to date does not indicate that wellness
programs improve overall health, it is not clear that limiting
the use of wellness programs by health plans and health insurers
in state run health care programs will prevent future savings
from those programs.
Staff also notes that the bill does not impose any restrictions
on employers developing their own wellness programs for their
employees. Therefore, CalPERS would most likely be able to set
up its own wellness programs for its beneficiaries, without the
obligation to meet the requirements of this bill.
The only costs that may be incurred by a local agency relate to
crimes and infractions. Under the California Constitution, such
costs are not reimbursable by the state.