BILL ANALYSIS Ó
-----------------------------------------------------------------
|SENATE RULES COMMITTEE | AB 248|
|Office of Senate Floor Analyses | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
-----------------------------------------------------------------
THIRD READING
Bill No: AB 248
Author: Roger Hernández (D), et al.
Amended: 6/29/15 in Senate
Vote: 21
SENATE HEALTH COMMITTEE: 6-2, 6/24/15
AYES: Hernandez, Mitchell, Monning, Pan, Roth, Wolk
NOES: Nguyen, Nielsen
NO VOTE RECORDED: Hall
SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8
ASSEMBLY FLOOR: 51-27, 4/30/15 - See last page for vote
SUBJECT: Health insurance: minimum value: large group market
policies
SOURCE: Health Access California
DIGEST: This bill prohibits non-grandfathered health plans or
health insurers that offer, amend, or renew a large group health
plan contract or health insurance policy from marketing,
offering, amending, or renewing a large group plan contract or
health insurance policy that provides a minimum value of less
than 60%.
ANALYSIS:
Existing law:
1)Enacts, in federal law, the Affordable Care Act (ACA) to,
among other things, impose a penalty on employers, with at
least 50 full-time employees, that do not offer qualifying
coverage of minimum value (which means the plan's share of the
AB 248
Page 2
total allowed costs of benefits provided under the plan is
less than 60% of such costs), or that offer coverage that is
not affordable (employee's premium is more than 9.5% of annual
household income) if at least one full-time employee qualifies
for premium tax credits to purchase insurance in a health
benefit exchange.
2)Applies the employer responsibility provisions described above
to firms with 100 or more full-time equivalent employees
starting in 2015 and employers with 50 or more full-time
equivalent employees starting in 2016.
3)Requires effective January 1, 2014, that all individuals with
access to affordable coverage have minimum essential coverage
or pay a penalty of $325 or 2% of income for 2015, $695 or
2.5% of income (up to a cap of the premium for a Bronze plan)
for 2016, and caps adjusted by increases in cost of living
after 2016.
4)Establishes as minimum essential coverage, health insurance
coverage provided by an employer, health insurance purchased
through an exchange, coverage provided under a
government-sponsored program (including Medicare, Medicaid,
and health care programs for veterans), health insurance
purchased directly from an insurance company, and other health
insurance coverage that is recognized by the Department of
Health and Human Services (HHS) as minimum essential coverage.
5)Requires employers with over 50 employees to report to HHS
whether it offers minimum essential coverage to its employees
and their dependents.
6)Defines grandfathered plans as coverage in place in 2010 when
the ACA was enacted.
7)Provides, in state law, for the regulation of health plans by
the Department of Managed Health Care under the Knox-Keene
Act, including a requirement that health plans cover basic
health care services such as physician, inpatient and
ambulatory services, and provides for the regulation of health
insurers by the California Department of Insurance under the
Insurance Code.
AB 248
Page 3
8)Establishes California's Health Benefit Exchange (Covered
California) as an independent entity in state government not
affiliated with any state agency or department, governed by a
five member board. Requires the Covered California board to
establish and use a competitive process to select
participating carriers and other contractors.
This bill:
1)Prohibits a non-grandfathered health plan or health insurer
that offers, amends, or renews a large group health plan
contract or health insurance policy from marketing, offering,
amending, or renewing a large group plan contract or health
insurance policy that provides a minimum value of less than
60%.
2)Excludes from the prohibition in 1) above a health plan
offering a specialized health plan contract, or an insurer
issuing a specialized health insurance policy. Excludes
limited wraparound coverage, as specified. Excludes a
grandfathered health insurance policy that provides basic
health care services, as defined, without annual or lifetime
limits for any of the basic health care services.
3)Finds and declares that an employee of a large employer who
accepts health coverage from his or her employer that is less
than 60% minimum value is barred by federal guidance from
obtaining federal tax credits for affordable health coverage
through Covered California.
4)States legislative intent in enacting this act to ensure that
employees of large employers who are offered health coverage
by their employers are offered coverage that meets or exceeds
60% minimum value, the minimum standard for comprehensive
employer coverage under federal law. This requirement applies
if an employer purchases that health coverage from a health
plan or health insurer regulated by the State of California.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: Yes
AB 248
Page 4
SUPPORT: (Verified7/15/15)
Health Access California (source)
American Federation of State, County and Municipal Employees,
AFL-CIO
Anthem Blue Cross
Blue Shield of California
California Black Health Network
California Conference Board of the Amalgamated Transit Union
California Conference of Machinists
California Immigrant Policy Center
California Labor Federation
California Nurses Association
California Pan-Ethnic Health Network
California Professional Firefighters
California School Employees Association
California State Council of the Service Employees International
Union
California Teachers Association
California Teamsters Public Affairs Council
Community Clinic Association of Los Angeles County
Consumers Union
Engineers & Scientists of California
International Longshore & Warehouse Union
Laborers' International Union of North America Local 777
Laborers' International Union of North America Local 792
Professional & Technical Engineers
UNITE-HERE, AFL-CIO
Utility Workers Union of America
Western Center on Law and Poverty
OPPOSITION: (Verified7/15/15)
California Association of Health Underwriters
California Association of Small Employer Health Plans
Independent Insurance Agents and Brokers of California
National Association of Insurance and Financial Advisors of
California
AB 248
Page 5
ARGUMENTS IN SUPPORT: Health Access California, the sponsor of
this bill, writes that the rules for large employers are
different than the rules for small businesses: small businesses
can only purchase coverage that is at least 60% actuarial value.
Large employers that offer subminimum coverage to their
employees and dependents avoid the employer responsibility
penalty and their employees are not eligible for tax credits
because they have employer-sponsored coverage. Guidance issued
by the Internal Revenue Service means that if a large employer
offers coverage that "fails to provide minimum value" and the
employee accepts that subminimum coverage, the employer escapes
the employer penalty and the employee is not eligible for the
premium tax credit. Blue Shield of California writes that this
bill will protect working Californians from being offered
substandard health insurance coverage by ensuring that a limited
benefit plan can only be sold as supplemental to comprehensive
insurance. Anthem Blue Cross believes these limited benefit
plans place their provider partners at much greater risk of bad
debt and also places consumers in a position where they are more
likely to not understand what their coverage includes. The
California Professional Firefighters writes that this bill
protects workers from being offered on-the-job coverage that is
below the minimum value standards. The California School
Employees Association makes sure that these barebones plans will
not be offered instead of comprehensive health coverage and, if
offered at all, they must be supplemental to comprehensive
coverage.
ARGUMENTS IN OPPOSITION: The California Association of Health
Underwriters (CAHU), the Independent Insurance Agents and
Brokers of California (IIABCal), the National Association of
Insurance and Financial Advisors of California (NAIFA
California), and the California Association of Small Employer
Health Plans (CASEHP) write that this bill makes providing
health care even more expensive for large employers by insisting
the employer-plan hit 60% minimum value before other products
can be added. This bill negatively impacts employers with
multi-state operations as they would have to have a different
health plan for one state versus all 49 other states, and that
nothing in the ACA dictates just how a large employer may
AB 248
Page 6
construct their health benefit package in order to reach the 60%
minimum value. There are a number of health care products of
varying types that can be placed together to create a health
care package that meets the minimum value requirements of the
ACA. CAHU, NAIFA, IIABCal and CASEHP believe this bill
inappropriately attempts to stop large employers from using
legally permissible building blocks of coverage because the
first building block is not a 60% minimum value plan.
ASSEMBLY FLOOR: 51-27, 4/30/15
AYES: Alejo, Bloom, Bonilla, Bonta, Brown, Burke, Calderon,
Chau, Chiu, Chu, Cooley, Cooper, Dababneh, Daly, Dodd, Eggman,
Frazier, Cristina Garcia, Eduardo Garcia, Gipson, Gomez,
Gonzalez, Gordon, Gray, Roger Hernández, Holden, Irwin,
Jones-Sawyer, Levine, Lopez, Low, McCarty, Medina, Mullin,
Nazarian, O'Donnell, Perea, Quirk, Rendon, Ridley-Thomas,
Rodriguez, Salas, Santiago, Mark Stone, Thurmond, Ting,
Waldron, Weber, Williams, Wood, Atkins
NOES: Achadjian, Travis Allen, Baker, Bigelow, Brough, Chang,
Dahle, Beth Gaines, Gallagher, Gatto, Grove, Hadley, Harper,
Jones, Kim, Lackey, Linder, Maienschein, Mathis, Mayes,
Melendez, Obernolte, Olsen, Patterson, Steinorth, Wagner, Wilk
NO VOTE RECORDED: Campos, Chávez
Prepared by:Teri Boughton / HEALTH /
8/4/15 9:18:45
**** END ****