BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 959|
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UNFINISHED BUSINESS
Bill No: SB 959
Author: Hernandez (D)
Amended: 8/4/14
Vote: 21
SENATE HEALTH COMMITTEE : 7-0, 3/26/14
AYES: Hernandez, Anderson, Beall, DeSaulnier, Evans, Monning,
Wolk
NO VOTE RECORDED: De León, Nielsen
SENATE APPROPRIATIONS COMMITTEE : 5-2, 5/23/14
AYES: De León, Hill, Lara, Padilla, Steinberg
NOES: Walters, Gaines
SENATE FLOOR : 24-7, 5/27/14
AYES: Anderson, Beall, Block, Corbett, De León, DeSaulnier,
Evans, Galgiani, Hancock, Hernandez, Hill, Hueso, Jackson,
Leno, Lieu, Mitchell, Monning, Padilla, Pavley, Roth,
Steinberg, Torres, Wolk, Wyland
NOES: Fuller, Gaines, Knight, Morrell, Nielsen, Vidak, Walters
NO VOTE RECORDED: Berryhill, Calderon, Cannella, Correa, Huff,
Lara, Liu, Wright, Yee
ASSEMBLY FLOOR : 79-0, 8/21/14 - See last page for vote
SUBJECT : Health care coverage
SOURCE : Author
DIGEST : This bill prohibits a change in premium rate or
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coverage for an individual plan contract or policy unless the
plan or insurer delivers a written notice of the change at least
15 days prior to the start of the annual enrollment period
applicable to the contract or 60 days prior to the effective
date of renewal, whichever occurs earlier in the calendar year.
Makes several corrections and clarifications to provisions of
law governing individual and small group health insurance,
including clarifying that health plans and insurers have a
single risk pool for enrollees and insureds.
Assembly Amendments 1) establish various definitions; 2) specify
processes for persons seeking information about subsidized
coverage; 3) add chaptering-out language to avoid conflicts with
SB 1034 (Monning); and make other technical changes.
ANALYSIS : Existing law:
1. Establishes a health benefits exchange pursuant to the
Affordable Care Act (ACA), referred to as Covered California,
where qualified health plans (QHPs) offer health plan
contracts or health insurance policies for individual
purchasers and small businesses (through the Small Business
Health Options Program or SHOP) categorized in the following
metal tiers: Platinum, Gold, Silver, Bronze, and
Catastrophic.
2. Requires health plans and insurers participating in Covered
California to offer, market, and sell one product within each
of the five levels of coverage, and to offer, market, and
sell the same products outside of Covered California.
3. Requires health plans and health insurers to consider as a
single risk pool for rating purposes the claims experience of
all insureds and enrollees in all nongrandfathered health
benefit plans in this state, whether offered as a health plan
contract or health insurance policy, including those insureds
and enrollees who enroll in individual coverage through
Covered California and enrollees and insureds outside of
Covered California. This requirement applies separately for
individual market products and small group products.
4. Requires health plans and health insurers to establish an
index rate based on the total combined claims costs for
providing essential health benefits, as defined, within the
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single risk pool, as required. Requires the index rate to be
determined at least each calendar year for both small group
and individual market, and not more frequently than each
calendar quarter for small group. Requires the index rate to
be adjusted on a market-wide basis based on the total
expected market wide payments and charges under the risk
adjustment and reinsurance programs established for the
state, as specified.
5. Requires a health plan or insurer that declines to offer
coverage to or denies enrollment for a large group applying
for coverage or that offers small group coverage at a rate
that is higher than the standard employee risk rate, to, at
the time of the denial or offer of coverage, provide the
applicant with specific reasons for the decision in writing,
in clear, easily understandable language.
6. Requires individual and small group health plan contract and
insurance policy rate information to be filed with Department
of Managed Health Care (DMHC) or Department of Insurance
(CDI) concurrent with required notices explaining reasons for
denials, increases in premium rates, the plan's average rate
increase by plan year, segment type, and product type.
7. Requires plans for individual and small group health care
contracts and policies to file with regulators at least 60
days prior to implementing any rate change, including
disclosures such as average rate increase initially
requested, average rate increase, and effective date of rate
increase. Authorizes a plan or insurer to provide aggregated
additional data that demonstrates, or reasonably estimates,
year-to-year cost increases in specific benefit categories in
major geographic regions, defined by regulators, but not more
than nine regions.
8. Requires plan filings to include certification by an
independent actuary or actuarial firm that the rate increase
is reasonable or unreasonable and if unreasonable, that the
justification for the increase is based on accurate and sound
actuarial assumptions and methodologies.
9. Requires rate increase information to be made public 60 days
prior to implementation, including justification for any
unreasonable rate increases including all information and
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supporting documentation as to why the rate change is
justified.
10.Requires the regulators to accept and post to their Internet
Web sites any public comment on a rate increase submitted to
each department during the 60-day period prior to
implementation, as specified.
11.Requires if DMHC or CDI find that an unreasonable rate
increase is not justified or that a rate filing contains
inaccurate information, DMHC or CDI to post their findings on
their Internet Web sites.
12.Requires a health plan or insurer that declines to offer
coverage or denies enrollment for an individual or his or her
dependent for individual coverage or that offers individual
coverage at a higher rate than the standard rate, to, at the
time of the denial or offer of coverage, provide the
applicant with the reason in writing in clear and
understandable language.
13.Prohibits a change in premium rate or coverage for an
individual plan from becoming effective unless a written
notice is delivered 60 days prior to the effective date of
change.
14.Requires, if an applicant or dependent is denied or charged
a higher rate than the standard rate, the plan or insurer to
inform the applicant about the Major Risk Medical Insurance
Program (MRMIP) or the federal temporary high risk pool, as
specified.
This bill:
1. Clarifies that as a condition of participation in the SHOP
carriers must offer, market, and sell at least one product
within each of four levels of coverage, as specified.
2. Clarifies that a health plan or insurer, with respect to
small employer contracts that cover hospital, medical or
surgical expenses, must sell only four levels of coverage, as
specified.
3. Clarifies that a plan consider as a single risk pool for
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rating purposes in the small employer market the claims
experience of all enrollees in all non-grandfathered small
employer health benefit plans offered by the health plan and
all insureds in this state, whether offered as health plans
or insurance policies, including those who enroll through
Covered California and outside Covered California.
4. Permits the index rate to be adjusted for Exchange user
fees, as described in federal regulations.
5. Deletes references to risk rating and refusals to offer
coverage in rate review requirements of existing law.
6. Deletes requirements that certain rate justification or
denial explanations notices be filed concurrent with rate
filings for individual and small group coverage.
7. Revises requirements for disclosure of rate "increase"
information to refer to rate "change" information in multiple
provisions of existing law.
8. Deletes references to nine geographic rating regions and
instead refers to existing law establishing 19 geographic
rating regions.
9. Revises a requirement about posting information on the
Internet Web sites of DMHC and CDI upon a finding regarding
unreasonable rate increases to instead refer to decision by
the directors, respectively, that an unreasonable rate
increase is not justified.
10.Deletes a notice requirement when enrollment is denied or
rate is higher than the standard rate.
11.Prohibits a change in premium rate or coverage for an
individual plan contract or policy unless the plan or insurer
delivers a written notice of the increase at least 15 days
prior to the start of the annual enrollment period applicable
to the contract or 60 days prior to the effective date of
renewal, whichever occurs earlier in the calendar year.
12.Specifies that if a plan or insurer rejects a dependent of a
subscriber applying to be added to the subscriber's
individual grandfathered health plan, rejects an applicant
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for a Medicare supplement plan contract or policy due to the
applicant having end-stage renal disease, or offers an
individual grandfathered health plan to an applicant at a
rate that is higher than the standard rate, the plan shall
inform the applicant about MRMIP and about the new coverage
options, and the potential for subsidized coverage, through
Covered California. Requires the plan to direct persons
seeking more information, to MRMIP, Covered California, plan
or policy representatives, insurance agents, or an entity
paid by Covered California to assist with health coverage
enrollment, such as a navigator or an assister.
13.Deletes a requirement for notification about MRMIP and the
federal temporary high risk pool.
14.Makes other technical and clarifying changes including
correcting inaccurate code references.
Comments
According to the author, this bill is necessary to make sure
there are not ambiguities or uncertainty about California's
health insurance laws. Clean-up legislation is likely to
continue to be necessary as new information becomes available,
such as through the finalization of federal regulations and
through the implementation process. This bill also clarifies
that health plans and insurers in California spread risk across
one pool only, not one pool for their DMHC business and another
for their CDI business. This clarification is necessary because
the interaction between federal regulations and state law may be
construed to require separate risk pools by regulator rather
than by company. Other provisions are technical or conforming
to federal requirements.
Prior Legislation
SB X1 2 (Hernandez, Chapter 2, Statutes of 2013) applies the
individual insurance market reforms of the ACA to health plans
regulated by DMHC and updates the small group market laws for
health plans to be consistent with final federal regulations.
AB X1 2 (Pan, Chapter 1, Statutes of 2013) establishes health
insurance market reforms contained in the ACA specific to
individual purchasers, such as prohibiting insurers from denying
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coverage based on pre-existing conditions and makes conforming
changes to small employer health insurance laws resulting from
final federal regulations.
SB X1 3 (Hernandez, Chapter 5, Statutes of 2013) requires
Covered California, by means of selective contracting, to make a
bridge plan product available to specified eligible individuals,
as a QHP. Repeals Covered California's authority for enrollment
in a bridge plan product on the October 1 that falls five years
after the date of federal approval.
AB 1083 (Monning, Chapter 852, Statutes of 2012) reforms
California's small group health insurance laws to enact the ACA.
Eliminates pre-existing condition requirements and establishes
premium rating factors based only on age, family size, and
geographic regions, except for grandfathered plans. Should
guaranteed issue and rating factors be repealed in the ACA,
California's existing guaranteed issue and rating law pre-ACA
would become operative.
SB 900 (Alquist, Chapter 659, Statutes of 2010) and AB 1602
(Perez, Chapter 655, Statutes of 2010) establishes the
California Health Benefit Exchange.
SB 1163 (Leno, Chapter 661, Statutes of 2010) requires carriers
to submit detailed data and actuarial justification for small
group and individual market rate increases at least 60 days in
advance of increasing their customers' rates.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
According to the Assembly Appropriations Committee, negligible
state fiscal effect.
SUPPORT : (Verified 8/21/14)
AFSCME, AFL-CIO
California Dialysis Council
California Optometric Association
Health Access California
ASSEMBLY FLOOR : 79-0, 8/21/14
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AYES: Achadjian, Alejo, Allen, Ammiano, Bigelow, Bloom,
Bocanegra, Bonilla, Bonta, Bradford, Brown, Buchanan, Ian
Calderon, Campos, Chau, Chávez, Chesbro, Conway, Cooley,
Dababneh, Dahle, Daly, Dickinson, Donnelly, Eggman, Fong, Fox,
Frazier, Beth Gaines, Garcia, Gatto, Gomez, Gonzalez, Gordon,
Gorell, Gray, Grove, Hagman, Hall, Harkey, Roger Hernández,
Holden, Jones, Jones-Sawyer, Levine, Linder, Logue, Lowenthal,
Maienschein, Mansoor, Medina, Melendez, Mullin, Muratsuchi,
Nazarian, Nestande, Olsen, Pan, Patterson, Perea, John A.
Pérez, V. Manuel Pérez, Quirk, Quirk-Silva, Rendon,
Ridley-Thomas, Rodriguez, Salas, Skinner, Stone, Ting, Wagner,
Waldron, Weber, Wieckowski, Wilk, Williams, Yamada, Atkins
NO VOTE RECORDED: Vacancy
JL:nl 8/21/14 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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