BILL ANALYSIS Ó
SB 800
Page 1
Date of Hearing: August 13, 2013
ASSEMBLY COMMITTEE ON HEALTH
Richard Pan, Chair
SB 800 (Lara) - As Amended: August 6, 2013
SENATE VOTE : 39-0
SUBJECT : Health care coverage programs: transition.
SUMMARY : Transfers specified employees of the Managed Risk
Medical Insurance Board (MRMIB) to the Department of Health Care
Services (DHCS) or the California Health Benefit Exchange
(Exchange) if any statute dissolves or terminates MRMIB.
Requires DHCS to provide the Exchange, or its designee,
information about parents or caretakers of children enrolled in
the Healthy Families Program (HFP) or the targeted low-income
Medi-Cal program in order to conduct outreach to potentially
eligible individuals. Contains an urgency clause to make this
bill's provisions take immediate effect upon enactment.
1)Requires, in order to assist the Exchange, to conduct outreach
to individuals potentially eligible for insurance
affordability programs, DHCS to provide the Exchange, or its
designee, with the names, addresses, email addresses,
telephone numbers, or other contact information, and written
and spoken languages of individuals who are not enrolled in
Medi-Cal but are the parents or caretakers of children
enrolled in HFP or have been transitioned from HFP to its
replacement, the targeted low-income Medi-Cal program.
2)Makes any permanent or probationary civil service employee who
is employed by MRMIB and assigned to the Federal Temporary
High Risk Pool whose function ceases to immediately be
transferred to the Exchange and to retain his or her status,
position, and rights pursuant to existing law and the State
Civil Service Act (SCSA).
3)Requires, if any statute dissolves or terminates MRMIB, any
employee of MRMIB who immediately prior to the effective date
of the dissolution or termination of MRMIB was assigned to
HFP, the Access for Infants and Mothers Program (AIM), the
County Health Initiative Matching (CHIM) Fund, or the Major
Risk Medical Insurance Program (MRMIP) to be transferred to
DHCS and to retain his or her status, position, and rights
SB 800
Page 2
pursuant to existing law and the SCSA.
4)Requires if any statute dissolves or terminates MRMIB, any
employee of MRMIB who, immediately prior to the effective date
of the dissolution or termination of MRMIB was assigned to the
Federal Temporary High Risk Pool to be transferred to the
Exchange and to retain his or her status, position, and rights
pursuant to existing law and the SCSA.
5)Requires, if any statute dissolves or terminates MRMIB, an
employee's applicable reinstatement rights that would have
applied to MRMIB, to instead apply to DHCS.
EXISTING LAW :
1)Establishes MRMIP administered by MRMIB to provide major risk
medical coverage to California residents who have been
rejected for coverage by at least one private health plan, or
if the only private health coverage that the applicant can
secure would impose substantial waivers or provide limited
coverage or afford coverage only at an excessive price.
2)Requires MRMIB to cease to provide coverage through the
Federal Temporary High Risk Pool on July 1, 2013, except as
required by the contract between MRMIB and the United States
Department of Health and Human Services, and at that time to
cease to operate the program except as required to complete
payments to, or payment reconciliations with, participating
health plans or other contractors, process appeals, or conduct
other necessary termination activities.
3)Requires under the federal Patient Protection and Affordable
Care Act (ACA), effective January 1, 2014, that an individual
have the option to apply for insurance affordability programs,
which includes the state Medicaid program, the state
Children's Health Insurance Program, enrollment in a qualified
health plan (QHP) through the Exchange (known as Covered
California) and a Basic Health Plan, if there is one, in
person, by mail, online, by telephone, or other commonly
available electronic means.
4)Requires under the ACA, effective January 1, 2014, development
of a single, accessible standardized application for insurance
affordability programs to be used by all eligibility entities
and establishes a process for developing and testing the
SB 800
Page 3
application.
5)Requires under the ACA, effective in 2014, individuals to
maintain health insurance or pay a penalty, with exceptions
for financial hardship (if the cost of health insurance
premiums exceeds 8% of household adjusted gross income),
religion, incarceration, and immigration status.
6)Creates the Exchange, as an independent state entity governed
by a five-member board, to be a marketplace for Californians
to purchase affordable, quality health care coverage, claim
advanceable premium tax credits (APTCs) and cost-sharing
subsidies, and as a way to meet the personal responsibility
requirements of the ACA.
7)Requires under California law, the Exchange Board to undertake
activities necessary to market and publicize the availability
of health care coverage and federal subsidies through the
Exchange. Requires the Exchange Board to also undertake
outreach and enrollment activities that seek to assist
enrollees and potential enrollees with enrolling and
reenrolling in coverage through the Exchange in the least
burdensome manner, including populations that may experience
barriers to enrollment, such as the disabled and those with
limited English language proficiency.
8)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 services to
low-income women and children, low-income residents of
long-term care facilities, seniors, and people with
disabilities.
9)Effective January 1, 2014, adopts the ACA state option to
expand Medi-Cal to provide coverage to childless adults,
between ages 19 and 65 who are not otherwise eligible for
Medi-Cal, expands coverage for parents and caretaker relatives
with family income up to 138% of the federal poverty level
(FPL) and eliminates assets and resources limits.
10)Authorizes DHCS to seek necessary federal waivers to
automatically enroll parents into the Medi-Cal program, if
they apply, who have one or more children who are eligible
based on a determined income level at or below 138% FPL.
SB 800
Page 4
11)Requires the DHCS, or any other government agency that is
determining eligibility for, or enrollment in, the Medi-Cal
program or any other program administered by DHCS, or
collecting protected health information for those purposes,
and the Exchange to share information with each other as
necessary to enable them to perform their respective statutory
and regulatory duties under state and federal law. Requires
this information to include, but not be limited to, personal
information, as defined in state law, and protected health
information, as defined in federal Health Insurance
Portability and Accountability Act of 1996 (HIPAA), regarding
individual beneficiaries and applicants.
12)Establishes under federal law, HIPAA, which among various
provisions, requires the protection and confidential handling
of protected health information.
13)Defines "personal information" under state law, as any
information that is maintained by an agency that identifies or
describes an individual, including, but not limited to, his or
her name, social security number, physical description, home
address, home telephone number, education, financial matters,
and medical or employment history and includes statements made
by, or attributed to, the individual.
14)Establishes the SCSA which prescribes rules and requirements
governing California's personnel system.
15)Requires whenever a function or the administration of a law
is transferred from one state agency to another state agency,
all persons serving in the state civil service and engaged in
performance of the function or the administration of the law
to be transferred to that agency. Requires the status,
positions, and rights of those persons to be retained.
Provides that a state agency is not required to retain any
unnecessary officers or employees.
FISCAL EFFECT : According to the Senate Appropriations
Committee, minor administrative costs to DHCS and/or the Major
Risk Medical Insurance Board to provide contact information
(General Fund). Likely costs in the low hundreds of thousands
for the Exchange to contact parents and caretakers (federal
funds). Potential increased costs in the Medi-Cal program in
the millions to low tens of millions (federal funds) for one
year. The August 6, 2013 amendments related to transferring
SB 800
Page 5
MRMIB staff to DHCS and the Exchange have not yet been analyzed
by a fiscal committee.
COMMENTS :
1)PURPOSE OF THIS BILL . According to the author, this bill
ensures access to affordable care for California families, by
ensuring the successful and efficient implementation of the
ACA in two ways. First, this bill helps to promote health
care access for as many people as possible by facilitating
effective outreach. This bill also expedites the transfer of
experienced staff with relevant program knowledge who can
provide the necessary expertise to Covered California. This
bill facilitates the transfer of information about parents of
the children enrolled in HFP or being transitioned into
Medi-Cal, to Covered California so that Covered California can
conduct outreach to these individuals. Outreach for this
population is essential because, by definition of their
children's participation in HFP, they are extremely likely to
be able to access federal subsidies making health care
coverage possible. This bill further ensures the successful
implementation of the ACA by ensuring that Covered California
can obtain knowledgeable and experienced staff. This bill
provides for the transfer of a similarly aligned workforce at
MRMIB that will readily transition to Covered California
should MRMIB be dissolved. As a result of the expanded ACA
coverage options, many of MRMIB's participants will obtain
coverage elsewhere and many of MRMIB's programs and enrollment
functions will have transitioned to other departments. This
bill ensures Covered California will have staff with the
skills and expertise necessary to successfully launch
enrollment and outreach while simultaneously providing
employment security and certainty to a valuable resource of
knowledgeable and experienced staff.
2)FEDERAL HEALTH REFORM . On March 23, 2010, the federal
government enacted the ACA. Beginning in 2014, the ACA give
states the option to expand Medicaid eligibility to a new
"adult group." It also collapses and simplifies most existing
eligibility categories into three broad groups: parents,
pregnant women, and children under age 19. The "adult group"
includes all non-pregnant individuals ages 19 to 65 with
household incomes at or below 133% FPL. (The law includes a
five percentage point of FPL disregard making the effective
limit 138% FPL). The income calculation is based on Modified
SB 800
Page 6
Adjusted Gross Income (MAGI), as defined in the Internal
Revenue Code. Regarding the private health insurance market,
the ACA primarily restructures the individual and small group
markets, setting minimum standards for health coverage,
providing financial assistance to individuals with income
below 400% of FPL through APTCs, tax credits for small
employers, the establishment of Exchanges, and an essential
health benefits package required to be offered by QHPs.
Beginning in 2014, QHPs will be required to offer coverage at
one of four levels: bronze, silver, gold, or platinum.
As mentioned, some individuals with income under 400% FPL will
receive APTCs toward the purchase of a QHP. The payment will
go directly to the insurer and will reduce the premium
liability for that individual. Those who qualify for premium
credits and are enrolled in a QHP at the silver tier beginning
in 2014 will also be eligible for assistance in paying any
required cost-sharing for their health services. Limitations
on Exchange plans related to out-of-pocket costs will be based
upon high deductible health plans that qualify individuals for
health savings accounts. Cost sharing subsidies will further
reduce those out-of-pocket maximums by two-thirds for
qualifying individuals between 100% and 200% FPL, by one-half
for qualifying individuals between 201% and 300% FPL, and by
one-third for qualifying individuals between 301% and 400%
FPL.
Eligibility for the insurance affordability programs at the
Exchange will begin with a Medicaid screen. If an individual
is not found eligible for Medicaid, the state must collect
necessary information and determine potential eligibility for
APTC in an Exchange. States are also required, to the maximum
extent possible; to rely on electronic data matches with
trusted third party sources to verify information provided by
applicants.
State Medicaid agencies are to enter into one or more
agreements with an Exchange and other insurance affordability
programs to coordinate eligibility determinations and
enrollment. The state Medicaid agency must ensure that any
individual who is determined ineligible for Medicaid is
screened for potential eligibility for benefits available
through an Exchange and promptly transfer the electronic
account of individuals screened as potentially eligible to the
Exchange. States also have the option to enter into an
SB 800
Page 7
agreement with an Exchange to make final determinations of
eligibility for APTCs for Exchange coverage. With regard to
Exchange determinations of Medicaid eligibility, states can
enter into agreements to either have the Exchange make final
Medicaid eligibility determinations or have the Exchange make
assessments of potential Medicaid eligibility and transfer
accounts to the Medicaid agency for final determination.
3)CALIFORNIA IMPLEMENTATION . California Healthcare Eligibility,
Enrollment, and Retention System (CalHEERS) is a procurement
conducted jointly by the Exchange, DHCS, and MRMIB to build
the Information Technology system to support the consumer
application and enrollment process at the Exchange. Following
extensive review and stakeholder comment and input, Accenture
was hired through a solicitation process for the design,
development, and deployment of CalHEERs. The portal will
offer eligibility determinations for both Medi-Cal and
federally subsidized Covered California coverage through the
Exchange. It will allow enrollment through multiple access
points including mail, phone, and in-person applications. It
is guided by a "no wrong door" policy that is intended to
ensure the maximum number of Californians obtain coverage
appropriate to their needs. Eligibility and enrollment
functions will be released in September of 2013 in order to
begin enrollment by October 2013, effective January 1, 2014.
The CalHEERS business functions include interfacing with the
Medi-Cal eligibility data system. It will also have the
capacity to be a secure interface with federal and state
databases in order to obtain and verify information necessary
to determine eligibility.
Covered California has undertaken a comprehensive outreach
campaign and in March of 2012, awarded Ogilvy PR Worldwide
$900,000 to develop the campaign. The Exchange reported in
July of 2013 that as part of this effort Covered California
has teamed up with 50 grantees and more than 200
subcontractors to help educate consumers about the state's
health insurance exchange. The grants are aimed at reaching
diverse, underserved communities about the Covered California
health insurance plans available online, over the phone, or
via in-person enrollment under the new health care reform law.
Covered California awarded $34 million to organizations
targeting consumers and another $3 million to organizations
that reach out to small businesses qualified to provide
coverage to employees through the Small Business Health
SB 800
Page 8
Options Program. The Outreach and Education Grant Program
establishes partnerships with key organizations, including
universities, faith-based organizations, and unions that have
trusted relationships with uninsured individuals. The grant
recipients are expected to reach approximately 9 million
individuals and more than 200,000 small businesses across all
58 counties to raise public awareness about the competitively
priced health insurance companies available through Covered
California. The grant recipients represent a mix of
culturally and linguistically diverse groups targeting
Californians where they live, shop, work, and play. Covered
California will train and certify staff of these funded
organizations to provide outreach and education to eligible
consumers throughout the state. These staff will be referred
to as Covered California Certified Educators. The selected
organizations will reach consumers in the following 13
languages: Arabic, Armenian, Chinese, English, Farsi, Hmong,
Khmer, Korean, Laotian, Russian, Spanish, Tagalog and
Vietnamese.
4)MRMIB . MRMIB, an independent agency in state government has a
long history administering health insurance programs in
California such as HFP, AIM, MRMIP and the Federal Temporary
High Risk Pool established under the ACA. The Federal
Temporary High Risk Pool is being phased out by the federal
and state government in anticipation of the ACA. Actions
initiated by Governor Brown's administration have raised
questions about the future of MRMIB. AB 1494 (Committee on
Budget), Chapter 28, Statutes of 2012, enacted a transition of
the approximately 860,000 HFP subscribers into the Medi-Cal
program to begin no sooner than January 1, 2013, in four
Phases throughout 2013. Children in HFP will transition into
Medi-Cal's new optional Targeted Low Income Children's Program
covering children whose family income is up to and including
250% of FPL. As of January 1, 2013, all newly eligible
children are being enrolled in Medi-Cal. The Governor's
2013-14 Budget Summary proposed to phase out MRMIB, but the
Legislature declined to adopt this proposal.
Enrollment in some MRMIB programs may decline because of the
ACA. For example, some MRMIP subscribers could receive better
coverage and potentially pay lower premiums in Covered
California. With the exception of calendar years 2013 and
2014, individuals in MRMIP pay premiums that are 25% above the
rate for a comparable product in the private market. [AB 1526
SB 800
Page 9
(Monning), Chapter 855, Statutes of 2012, authorized MRMIB to
lower premiums to 100% and MRMIB has exercised this option for
2013 and 2014.] Despite the high cost, MRMIP products all
have a low annual and lifetime limit. In addition, depending
on income, many MRMIP enrollees will likely be able to obtain
more affordable coverage with better benefits in Covered
California (where premium and cost-sharing subsidies are
available). However, not all MRMIP enrollees will be eligible
to participate in Covered California. Other MRMIB programs
such as AIM and CHIM will need to remain based on federal
requirements to maintain existing programs.
5)SUPPORT . Proponents argue that this bill will allow the state
to target outreach efforts for enrollment in subsidized
coverage and help ensure more of California's uninsured become
aware of the coverage options available to them under the ACA
starting next year. Proponents state that it is more
important than ever to educate people about expanding
subsidized health coverage programs and take steps to enroll
them in coverage. This is a win-win-win. Tax subsidies are
100% federally funded and coverage for the Medi-Cal expansion
population is also 100% federally funded through 2017, with
the federal share gradually reducing to 90% in 2020. The
state, the health care economy, and Californians will benefit
immeasurably from these federally funded health benefits.
6)RELATED LEGISLATION .
a) AB 2 X1 (Pan) Chapter 1, Statutes of 2013 First
Extraordinary Session and SB 2 X1 (Ed Hernandez) Chapter 2,
Statutes of 2013 First Extraordinary Session enact
substantially similar provisions 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. Pérez), Chapter 3, Statutes of 2013
First Extraordinary Session and SB 1 X1 (Ed Hernandez and
Steinberg), Chapter 4, Statutes of 2013 First Extraordinary
Session, 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. AB 1 X1, implements most of the
eligibility provisions and includes a provision that
requires DHCS, or any other government agency that is
SB 800
Page 10
determining eligibility for, or enrollment in, the Medi-Cal
program, any other program administered by DHCS or
collecting protected health information for those purposes,
and the Exchange to share information with each other as
necessary to enable them to perform their respective
statutory and regulatory duties under state and federal
law. Requires this information to include, but not be
limited to, personal information and protected health
information regarding individual beneficiaries and
applicants.
c) SB 3 X1 (Ed Hernandez), Chapter 5, Statutes of 2013
First Extraordinary Session requires Covered California to
establish a "bridge" plan product by contracting with
Medi-Cal managed care plans for individuals losing Medi-Cal
coverage (for example, because of an increase in income),
the parents of Medi-Cal children, and individuals with
incomes below 200% FPL.
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, including
a provision that permits the Exchange Board to use
information from the MRMIP and the California Preexisting
Condition Insurance Program (also known as the Federal
Temporary High Risk Pool) to provide an individual a notice
that he or she may be eligible for reduced-cost coverage
through the Exchange or no-cost coverage through Medi-Cal.
The notice shall include information on obtaining coverage
pursuant to those programs.
e) AB 50 (Pan) requires DHCS to establish a process to
implement the ACA provision that allows hospitals to make a
preliminary determination of a person's eligibility for
Medi-Cal, requires DHCS to revise the existing process used
for Medi-Cal enrollees to choose a managed care plan,
requires DHCS, in consultation with the Exchange, and
stakeholders, establish a new more coordinated process that
is consistent with the ACA and allows applications for
renewal of a person's Medi-Cal eligibility to be
streamlined by prepopulating the form with existing
available information.
7)PREVIOUS LEGISLATION .
SB 800
Page 11
a) AB 1494 (Committee on Budget), Chapter 28, Statutes of
2012, among many other provisions, implements provisions
of the Budget Act of 2012 which transferred the HFP to
Medi-Cal (starting no sooner than January 1, 2013).
b) AB 792 (Bonilla), Chapter 851, Statutes of 2012,
establishes notification requirements about the
availability of reduced-cost coverage available in the
Exchange and no-cost coverage available in Medi-Cal to an
individual filing a dissolution or nullity of marriage,
divorce or separation, or petitioning for adoption or for
an individual who ceases to be enrolled in health coverage
through a health plan or health insurer.
c) AB 714 (Atkins) of 2011 would have established health
care eligibility notification requirements for individuals
who are enrolled in, or who cease to be enrolled in,
publicly funded state health care programs, and would have
required an application for coverage to be made on their
behalf through the Exchange and would have allowed
individuals to decline health care coverage in a manner to
be prescribed by the Exchange. AB 714 was held under
submission in the Senate Appropriations Committee.
d) AB 43 (Monning) of 2012 would have expanded Medi-Cal
coverage to persons with income that does not exceed 133%
FPL, effective January 1, 2014, and would have required a
transition plan for persons enrolled in a Low Income Health
Program. AB 43 died on the Senate Inactive File.
e) SB 677 (Ed Hernandez) of 2012 would have required DHCS
to implement the provisions of the ACA relating to
eligibility and benefits in the Medi-Cal program. SB 677
died on the Assembly Inactive File.
f) AB 1296 (Bonilla), Chapter 641, Statutes of 2011, the
Health Care Eligibility, Enrollment, and Retention Act,
requires the California Health and Human Services Agency,
in consultation with other state departments and
stakeholders, to undertake a planning process to develop
plans and procedures regarding these provisions relating to
enrollment in state health programs, as required by federal
law. AB 1296 also requires that an individual would have
the option to apply for state health programs through a
SB 800
Page 12
variety of means.
g) AB 1602 (John A. Pérez), Chapter 655, Statutes of 2010,
and SB 900 (Alquist), Chapter 659, Statutes of 2010,
establishes the Exchange as an independent public entity to
purchase health insurance on behalf of Californians with
incomes of between 100% and 400% FPL and employees of small
businesses. Clarifies the powers and duties of the board
governing the Exchange relative to the administration of
the Exchange, determining eligibility and enrollment in the
Exchange, and arranging for coverage under qualified
carriers.
8)TECHNICAL AMENDMENTS .
a) Conflicting statutes. AB 82 (Committee on Budget),
Chapter 23, Statutes of 2013, a Health Budget Trailer Bill
added the same statute number as this bill. A technical
amendment is needed to change the number.
b) Revised terminology. AB 1 X1 replaced the term "state
health subsidy program" with "insurance affordability
program." A technical amendment is need to this bill to
conform.
REGISTERED SUPPORT / OPPOSITION :
Support
100% Campaign
American Federation of State, County and Municipal Employees,
AFL-CIO
California Pan-Ethnic Health Network
California School Employees Association
Children Now
Children's Defense Fund-California
Children's Partnership
County Welfare Directors Association of California
Health Access California
PICO California
SEIU Local 1000
SEIU-California
Western Center on Law and Poverty
Opposition
None on file.
Analysis Prepared by : Teri Boughton / HEALTH / (916) 319-2097
SB 800
Page 13