BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Kevin de Le�n, Chair
SB 639 (Hernandez) - Health care coverage.
Amended: April 9, 2013 Policy Vote: Health 6-2
Urgency: No Mandate: Yes
Hearing Date: May 6, 2013 Consultant: Brendan McCarthy
This bill meets the criteria for referral to the Suspense File.
Bill Summary: SB 639 would make several changes to the
regulation of health plans and health insurance, by limiting out
of pocket expenditures, establishing maximum deductibles, and
defining levels of coverage. These changes implement
requirements of the federal Affordable Care Act or enact
state-level policies allowed under the Affordable Care Act.
Fiscal Impact:
One-time costs of $400,000 to review plan filings and
ongoing costs of $60,000 for enforcement of the bill's
provisions by the Department of Managed Health Care (Managed
Care Fund).
Potential ongoing costs in the tens of thousands to low
hundreds of thousands for enforcement of the bill's
provisions by the Department of Insurance. (Insurance Fund).
Background: Beginning in 2014, under the federal Patient
Protection and Affordable Care Act (Affordable Care Act), total
annual out-of-pocket expenditures for health care coverage in
the individual, small group, and health benefit exchange markets
will be limited (to roughly $6,000 for an individual and $13,000
for a family). In addition, annual deductibles in the small
group market will generally be limited to $2,000 for an
individual and $4,000 for a family.
The Affordable Care Act also requires health care coverage
inside and outside of a health benefit exchange to meet
specified levels of coverage - referred to as "metal tiers". For
example, a bronze tier plan must cover 60% of the average
individual's annual health care costs and a platinum tier plan
must cover 90% of the average individual's annual health care
costs.
SB 639 (Hernandez)
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The Affordable Care Act requires a health insurance plan offered
in the group or individual market that provides coverage for
emergency services to cover emergency services without prior
authorization and at the same level of cost sharing regardless
of the medical provider.
Proposed Law: SB 639 would make several changes to the
regulation of health plans and health insurance, pursuant to the
Affordable Care Act.
Provisions of the bill implementing requirements of federal law
would:
Limit out-of-pocket expenses for non-grandfathered products
in the individual and small group markets;
Limit out-of-pocket expenses for non-grandfathered products
in the large group market (with a one-year exemption for
certain kinds of supplemental coverage);
Limit deductibles in the small group market;
Define the levels of coverage for non-grandfathered
products in the individual and small group markets to
conform to the metal tiers in the Affordable Care Act;
Require insurance plans in the group or individual market
to cover emergency services without prior authorization and
at uniform cost sharing.
Provisions of the bill implementing state policies allowed by
the Affordable Care Act would:
Prohibit a non-grandfathered product in the individual
market from being offered at any of the metal tiers, unless
it is a standardized product. (In other words, the plan must
meet the standard benefit designs developed by the
California Health Benefit Exchange for sale in the
Exchange.)
Define actuarial value and authorize state departments to
develop a state actuarial value calculator.
Authorize a plan to offer supplemental benefits, provided
those supplemental benefits do not change the overall risk
mix of the plan.
Related Legislation:
AB X1 2 (Pan, Enrolled to the Governor) and SB X1 2
(Hernandez, Enrolled to the Governor) would make several
changes to the individual market for health care coverage,
SB 639 (Hernandez)
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including requiring the guaranteed issue of coverage and
prohibiting the use of preexisting conditions as a means of
setting rates.
SB 961 (Hernandez, 2012) and AB 1461 (Monning, 2012) would
have made changes similar to AB X1 2 and SB X1 2. Both bills
were vetoed by Governor Brown.
AB 1083 (Monning, Statutes of 2012) made changes to the
small group health insurance market, pursuant to the
Affordable Care Act.
Staff Comments: The only mandated costs on local governments
under the bill relate to crimes and infractions for violations
of the regulatory authority of the Department of Insurance. Such
costs are not a reimbursable mandate under the California
Constitution.