BILL ANALYSIS Ó
-----------------------------------------------------------------
|SENATE RULES COMMITTEE | AB 332|
|Office of Senate Floor Analyses | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
-----------------------------------------------------------------
THIRD READING
Bill No: AB 332
Author: Calderon (D)
Amended: 8/24/15 in Senate
Vote: 21
SENATE INSURANCE COMMITTEE: 6-1, 6/24/15
AYES: Roth, Glazer, Hernandez, Liu, Mitchell, Wieckowski
NOES: Berryhill
NO VOTE RECORDED: Gaines, Hall
SENATE APPROPRIATIONS COMMITTEE: 5-0, 7/6/15
AYES: Lara, Beall, Hill, Leyva, Mendoza
NO VOTE RECORDED: Bates, Nielsen
ASSEMBLY FLOOR: 59-16, 5/11/15 - See last page for vote
SUBJECT: Long-term care insurance
SOURCE: California State Council of the Service Employees
International Union and United Long-Term Care Workers
DIGEST: This bill creates a task force within the California
Department of Insurance (CDI) to study the components necessary
to design a statewide long-term care insurance program and
submit a report with its recommendations to the Insurance
Commissioner (IC), the Governor, and the Legislature by July 1,
2017.
Senate Floor Amendments of 8/24/15 eliminated the requirement
that the task force consider the premium necessary to provide an
adequate benefit within a solvent program and added the
requirement that CDI produce an actuarial analysis of the task
AB 332
Page 2
force recommendations by July 1, 2018, which, if approved by the
task force, would be submitted to the Legislature. The
amendments were taken at the suggestion of the CDI in response
to recent opposition by the Department of Finance (DOF). The
amendments lower the estimated costs from one-time costs of
$115,000 per year for two years to one-time costs of $70,000 per
year for two years.
ANALYSIS:
Existing law:
1)Provides for the regulation of long-term care insurance by the
IC and prescribes various requirements and conditions
governing the delivery of individual or group long-term care
insurance in the state.
2)Establishes the California Partnership for Long-Term Care
Program within the Department of Health Care Services (DHCS)
to link private long-term care insurance and health care
service plan contracts that cover long-term care with the
In-Home Supportive Services program and Medi-Cal and to
provide Medi-Cal benefits to certain individuals who have
income and resources above the eligibility levels for receipt
of medical assistance, but who have purchased certified
private long-term care insurance policies.
This bill:
1) Creates a task force within the CDI to be led by the IC for
the purpose of examining the components necessary to design
and implement a statewide long-term care insurance program.
2) Provides that the task force has nine voting members,
including the IC, Director of the DHCS; Director of the
Department of Aging; four appointed by the Governor including
a certified actuary, a non-government health policy expert, a
representative of a long-term care provider association, and
a representative of a senior or consumer organization; one
appointed by the Speaker of the Assembly from an employee
representative organization; and one appointed by the Senate
Committee on Rules from the long-term care insurance
industry.
AB 332
Page 3
3) Prohibits task force members from receiving per diem or
similar compensation for serving on the task force.
4) Makes findings and declarations related to the public
perception of the anticipated need for long-term care
services and challenges in financing those services.
5) Requires the task force to consider specified factors.
6) Requires CDI and any participating state agency to operate
within its existing budgetary resources for purposes of
implementing this section.
7) Requires the task force to recommend options regarding the
program, comment on the program flexibility, and make
recommendations on key regulatory provisions regarding
existing insurance programs in a report submitted to the IC,
Governor, and Legislature on or before July 1, 2017.
8) Requires CDI to produce an actuarial report by July 1, 2018,
that analyzes the task force recommendations to be submitted
to the Legislature if approved by the task force.
9) Permits the IC to seek private funds for purposes of
implementing this section.
10)Sunsets on January 1, 2019.
Background
Long-term care support and services are the nonmedical services
needed by a person unable to take care of him or herself. The
services are expensive and may be covered by long-term care
insurance (LTCI). But LTCI is looking less viable as a
financing means for middle and lower-income people. Individuals
who have not been able to save enough to provide adequate
retirement income are unlikely to be able to support the added
cost of LTCI premiums.
In January of this year, the Senate Select Committee on Aging
and Long Term Care released a report finding that California has
fragmented system of providing long-term care. The report notes
that the number of individuals age 65 and older in California is
projected to increase almost 100 percent in the next 20 years.
AB 332
Page 4
Despite the burgeoning need for long-term care services, only a
small portion of that population have purchased, or can afford,
LTCI policies.
This bill creates a task force within CDI to consider the
feasibility and components of building a statewide long-term
care insurance program. While the framework of the proposal is
posed as a public program, it is also designed to explore the
potential for private solutions, as well as consider potential
reforms to existing regulations that may increase availability
of fully private options. Participants have been chosen to
reflect critical issue areas: the IC and insurance industry to
address LTCI standards and the potential for public/private
partnerships; the directors of DHCS and Department of Aging to
consider the potential interaction with existing public
programs; caregiver representatives to provide input relative to
the availability of affordable services; and others.
SB 1438 (Alquist, 2012) proposed a similar task force, but was
held in the Senate Appropriations Committee.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: No
According to the Senate Appropriations Committee, this bill
involves one-time costs of $70,000 per year for two years to
provide staff support to the task force and perform the required
analysis (Insurance Fund).
SUPPORT: (Verified 8/26/15)
California State Council of the Service Employees International
Union (co-source)
United Long-Term Care Workers (co-source)
California Association of Public Authorities
California Commission on Aging
California Health Advocates
California State Retirees
Congress of California Seniors
LeadingAge California
Marin County Board of Supervisors
Older Women's League
AB 332
Page 5
Organization of SMUD Employees
San Bernardino Public Employees Association
San Luis Obispo County Employees Association
United Domestic Workers of America-UDW/AFSCME Local 3930
OPPOSITION:
Department of Finance (Verified 8/26/15)
ARGUMENTS IN SUPPORT: According to the author, there are two
options for the elderly to receive the care and personal
assistance they need to remain in their home. To qualify for the
first option, a person must meet the federal income
requirements, proving they earn wages 100 percent below poverty
level to qualify for Medi-Cal or Medicaid and, in turn, qualify
for many programs administered by the state such as In-Home
Supportive Services (IHSS). Otherwise, a person must earn or
save enough disposable income to hire a private home care aide -
at times paying an average of $30 per hour. Without
alternatives, the aging middle class must decide whether to
spend down their assets in order to qualify for safety net
services or exhaust personal assets.
California Health Advocates (CHA) states that neither privately
purchased insurance nor the state's Medi-Cal program can solve
the financing dilemma for this kind of care alone. Commercial
insurance is medically underwritten, expensive, subject to huge
premium increases, and discriminates in pricing against women,
while Medi-Cal is faced with growing numbers of people who are
or will become poor. Neither of these constitutes a way for the
majority of people to plan and pay for long term care. CHA
supports this bill because it would create a forum to explore
the potential for groundbreaking, fiscally sound options that
combine and integrate multiple payments sources to finance long
term care.
ARGUMENTS IN OPPOSITION: DOF notes that the IC already has the
authority to establish a task force and is concerned that
implementing the bill may divert resources away from
AB 332
Page 6
mission-critical CDI programs.
ASSEMBLY FLOOR: 59-16, 5/11/15
AYES: Achadjian, Alejo, Bloom, Bonilla, Bonta, Brown, Burke,
Calderon, Campos, Chau, Chiu, Chu, Cooley, Cooper, Dababneh,
Daly, Dodd, Eggman, Frazier, Cristina Garcia, Eduardo Garcia,
Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Hadley, Roger
Hernández, Holden, Irwin, Jones-Sawyer, Lackey, Levine,
Linder, Lopez, Low, Maienschein, Mathis, McCarty, Medina,
Mullin, Nazarian, O'Donnell, Perea, Quirk, Rendon,
Ridley-Thomas, Rodriguez, Salas, Santiago, Steinorth, Mark
Stone, Thurmond, Ting, Weber, Wilk, Williams, Wood
NOES: Travis Allen, Baker, Bigelow, Brough, Chávez, Dahle, Beth
Gaines, Grove, Harper, Jones, Kim, Mayes, Melendez, Obernolte,
Wagner, Waldron
NO VOTE RECORDED: Chang, Gallagher, Olsen, Patterson, Atkins
Prepared by:Hugh Slayden / INS. / (916) 651-4110
8/26/15 17:01:50
**** END ****