BILL ANALYSIS                                                                                                                                                                                                    Ó




                   Senate Appropriations Committee Fiscal Summary
                            Senator Kevin de León, Chair


          SB 1052 (Torres) - Health care coverage.
          
          Amended: April 29, 2014         Policy Vote: Health 7-0
          Urgency: No                     Mandate: Yes
          Hearing Date: May 12, 2014      Consultant: Brendan McCarthy
          
          This bill meets the criteria for referral to the Suspense File.
          
          
          Bill Summary: SB 1052 would require health insurers and health  
          plans to post specified information on their websites regarding  
          their drug formularies. The bill would require the California  
          Health Benefit Exchange (Covered California) to post links to  
          health insurer and health plan drug formularies and to create a  
          search tool to allow consumers to search for health care  
          coverage by drug or by therapeutic condition.

          Fiscal Impact: 
              Potential one-time costs up to $150,000 to adopt  
              regulations by the Department of Insurance (Insurance Fund).  
              Ongoing enforcement costs are not expected to be  
              significant.

              One-time costs of $140,000 in 2014-15 and $110,000 in  
              2015-16 to develop standards and adopt regulations by the  
              Department of Managed Health Care. Ongoing enforcement costs  
              are not expected to be significant.

              One-time costs between $1 million and $5 million for  
              Covered California to add a search function to its website  
              and make the underlying improvements to its information  
              technology systems (federal funds and special funds).

              One-time cost of about $250,000 to $500,000 to hire an  
              independent contractor to evaluate Covered California's  
              marketing efforts (federal funds and special funds).

          Background: Under current law, health insurers are regulated by  
          the Department of Insurance and health plans are regulated by  
          the Department of Managed Health Care. (Collectively health  
          insurers and health plans are referred to as "carriers").
          








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          Under the federal Affordable Care Act states are required to  
          establish American Health Benefit Exchanges. If a state does not  
          create an Exchange, the federal government will do so. Within  
          the Exchanges, individuals will be able to purchase health care  
          coverage with standardized benefit packages and actuarial  
          values. In addition, individuals with incomes between 100  
          percent and 400 percent of the federal poverty level will be  
          eligible for subsidies for coverage purchased in the Exchanges.

          California has established its own California Health Benefit  
          Exchange (sometimes referred to as "Covered California").  
          Covered California has developed a website which allows  
          consumers to shop for health care coverage and compare health  
          plan costs and benefits. 

          Proposed Law: SB 1052 would require carriers to post specified  
          information on their websites regarding their drug formularies  
          and require Covered California to take certain, related actions.  


          Specific provisions of the bill would:
              Require a carrier that provides prescription drug benefits  
              to post its drug formulary on its website and to update that  
              formulary within 24 hours of making a change;
              Require a carrier to use a standard template for displaying  
              the drug formulary;
              Require a carrier to include specified information on cost  
              sharing, prior authorization requirements, and step therapy  
              requirements for each drug;
              Authorize the Department of Insurance and the Department of  
              Managed Health Care to develop standard templates and  
              require carriers to use those standard templates;
              Require Covered California to post links on its website to  
              the drug formularies of all carriers that offer coverage  
              through Covered California;
              Require Covered California to create a search tool on its  
              website to allow consumers to search for health care  
              coverage through Covered California by drug or by  
              therapeutic condition;
              Require Covered California to provide additional  
              information to the Legislature on its marketing efforts.

          Staff Comments: The only costs that may be incurred by a local  
          government under the bill relate to crimes and infractions.  








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          Under the California Constitution, such costs are not  
          reimbursable by the state.