BILL ANALYSIS Ó
AB 1102
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Date of Hearing: April 28, 2015
ASSEMBLY COMMITTEE ON HEALTH
Rob Bonta, Chair
AB 1102
(Santiago) - As Amended March 26, 2015
SUBJECT: Health care coverage: special enrollment periods:
triggering event.
SUMMARY: Requires a health care service plan (plan) or health
insurer (insurer) to allow an individual to enroll in or change
an individual plan or policy as a result of pregnancy.
EXISTING LAW:
1)Establishes under federal law, the Patient Protection and
Affordable Care Act (ACA) which requires that all individuals,
with certain exceptions, who have access to affordable
coverage purchase minimum essential coverage, as defined, or
pay a penalty.
2)Establishes the Knox-Keene Health Care Service Plan Act of
1975 which provides for the licensure and regulation of health
care services plans by the Department of Managed Health Care
(DMHC) and provides for the regulation of health insurers by
the California Insurance Commissioner.
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3)Establishes the California Health Benefit Exchange (Exchange),
now called Covered California, to arrange for and offer
coverage to individuals and small groups, consistent with
state and federal requirements, including determining
eligibility for federal premium tax credits to assist eligible
low- and moderate-income persons with the purchase of health
coverage from contracted Covered California health plans and
insurers.
4)Requires, under both federal and state law, health plans and
insurers issuing health benefit plans in the individual and
small group market to comply with specified requirements
regarding the offering, sale, and scope of coverage provided,
including requirements to cover the following 10 essential
health benefits (EHBs): maternity and newborn care; ambulatory
patient services; emergency services; hospitalization; mental
health and substance use disorder services, including
behavioral health treatment; prescription drugs;
rehabilitative and habilitative services and devices;
laboratory services; preventive and wellness services and
chronic disease management; and, pediatric services, including
oral and vision care.
5)Requires all plans and insurers to fairly and affirmatively
offer, market, and sell all of the health benefit plans that
are sold in the individual market to all individuals and
dependents in each of the plan's or insurer's service areas.
6)Requires plans and insurers to limit enrollment in individual
health benefit plans to annual open enrollment periods, and
special enrollment periods, as specified.
7)Requires plans and insurers to allow individual health plan
subscribers to add dependents to the plan at the option of the
subscriber, consistent with open enrollment and special
enrollment periods.
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8)Requires plans and insurers to allow an individual to enroll
in or change individual health benefit plans as a result of
specified triggering events including when the individual:
a) Loses minimum essential coverage, as defined;
b) Gains a dependent or becomes a dependent;
c) Is mandated to be covered as a dependent pursuant to a
valid state or federal court order;
d) Is released from incarceration;
e) Gains access to a new health benefit plan as a result of
a permanent move;
f) Received services from a contracting provider for
specified conditions, and the provider is no longer
participating with the plan or insurer;
g) Demonstrates to the Exchange that he or she did not
enroll in a plan or insurance policy during the immediately
preceding open enrollment period because of misinformation
that he or she was covered under minimum essential
coverage;
h) Is a member of the reserve forces of the United States
military, or of the California National Guard returning
from active duty; or,
i) With respect to individual health plans offered through
the Exchange, qualifies under specified federal provisions
regarding special enrollment periods, changes in
eligibility for federal advance premium tax credits.
9)Provides that an individual shall have 60 days from the date
of a triggering event to apply for coverage, as specified.
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10)Sets forth specified timeframes by which an individual may
exercise the right to buy coverage, and for when coverage
becomes effective after application for enrollment during
annual open and special enrollment periods, including
effective dates of coverage in cases of birth, adoption,
placement for adoption, marriage, domestic partnership, or
loss of minimum essential coverage.
11)Prohibits plans and insurers from basing eligibility for
coverage on specified factors, including health status or
medical condition, and prohibits plans or insurers from
requiring applicants for coverage, or any dependents, from
completing a health assessment or medical questionnaire, or
from acquiring or requesting information that relates to a
health status-related factor prior to enrollment.
FISCAL EFFECT: This bill has not yet been analyzed by a fiscal
committee.
COMMENTS:
1)PURPOSE OF THIS BILL. According to the author, maternity care
is an EHB under the ACA, and special enrollment exists for
women who give birth. The author states, because of this, it
makes sense to ensure that access to prenatal care is granted.
The author contends that, if pregnancy qualifies as a
triggering event, women will be afforded the opportunity of
important preventive measures that, in the long run, would
save lives and the health care system money.
2)BACKGROUND.
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a) Open enrollment and special enrollment periods. Under
the ACA, individuals are required to maintain health
insurance or pay a penalty, with exceptions for financial
hardship, religion, incarceration, and immigration status.
Individuals who do not meet these requirements may be
subject to a penalty when filing their federal income tax
return. Effective January 1, 2015, the penalty is the
greater of $325 or 2% of income.
The ACA also includes several insurance market reforms, such as
prohibitions against health insurers imposing preexisting health
condition exclusions and a requirement that health plans and
insurers offer EHBs in the individual and small group markets.
The ACA requires the U.S. Secretary of Health and Human
Services (HHS) to establish open enrollment periods for
health plans sold through state health benefits exchanges,
and requires individual market plans sold outside an
exchange to be offered during this open enrollment period
as well. Open enrollment serves as a safeguard against
people waiting to become sick to enroll. People will
generally be unable to enroll in individual coverage
outside of the open enrollment period unless they
experience a qualifying life event, which triggers a
special enrollment opportunity. Such events include loss
of eligibility for other coverage, gaining a dependent,
divorce, or a large change in income. Under current state
or federal law, none of the qualifying life events
triggering a special enrollment period are based on changes
in health status.
The open enrollment period for this year was November 15,
2014 to February 15, 2015. According to recently released
federal regulations, for 2016, the open enrollment period
will run from November 1, 2016 to January 31, 2016.
Additionally, a special open enrollment period was
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authorized by the federal government, and implemented by
Covered California, for individuals who were unaware of the
tax penalty for failing to maintain health insurance. The
special enrollment period runs from February 15, 2015 to
April 30, 2015.
b) California Health Benefits Review Program (CHBRP)
analysis. On April 23, 2015, CHBRP published an analysis
of this bill. According to CHBRP, there appear to be two
populations of pregnant women affected by this bill: those
who are already insured with maternity benefits, and those
who are uninsured at the time of conception. It should
also be noted that these women would also most likely be of
midrange to higher incomes considering the existing public
program coverage options for women of lower incomes.
CHBRP's analysis focused on the bill's impact to Covered
California, noting that 21.7% of Covered California
enrollees are women of childbearing age. In terms of
utilization and cost, CHBRP estimated the impact to Covered
California expenditures if 10% and 25% of women dropped
coverage as a result of this bill. Specifically, CHBRP
found that if 10% of women dropped coverage, and later
added coverage after becoming pregnant, Covered California
would experience an increase in premiums of 0.4% amounting
to $22.8 million. If 25% of women took the same actions,
premiums would increase by 1.2% or $75.8 million.
CHBRP also estimated that 3.6% of women aged 19 to 44
become pregnant each year, and about a quarter of those
with higher incomes would be expected to temporarily add
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coverage for maternity and childbirth expenses. CHBRP
estimated that 489 women would newly enroll in Covered
California, generating a net cost impact of approximately
$5,822,339. According to CHBRP, this group of women would
also propel somewhat of an increase in utilization of
prenatal care services once their new insurance is
activated.
CHBRP also considered the potential for insured women to,
upon pregnancy, change from a more affordable plan with a
limited network, to a more expensive plan with a broader
network selection. CHBRP was unable to perform a complete
projection of the impact of this scenario, but stated that
it would likely be of smaller magnitude than that of women
dropping and later re-enrolling upon pregnancy, or of
uninsured women seeking coverage upon pregnancy.
The CHBRP analysis notes disparities among insured and
uninsured women with regard to prenatal care.
Specifically, about 94% of privately insured women
initiated prenatal care in their first trimester as
compared to 61% of uninsured women. Additionally, CHBRP
noted that the annual societal economic burden associated
with preterm births is an average of $51,600 per infant
born preterm. A pregnancy and non-complicated birth costs
approximately $18,690 in California. In California, 10.1%
of babies are born prematurely, and CHBRP notes that, to
the extent that this bill could increase utilization of
effective prenatal care that can reduce outcomes such as
preterm births and related infant mortality, there is a
potential to reduce morbidity and mortality and associated
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societal costs.
Finally, CHBRP's review of medical effectiveness of this
bill focuses on prenatal care, due to the fact that this
bill could increase the number of pregnant women with
health insurance, and, thus reduce-out-of-pocket expenses
for prenatal care. CHBRP states that reducing
out-of-pocket costs could, in turn increase pregnant
women's use of prenatal care. CHBRP states that there is
clear and convincing evidence that certain prenatal care
services produce better outcomes for mothers and infants.
c) Recent federal correspondence. At the federal level,
the U.S. Department of HHS is being urged by advocates and
lawmakers to add pregnancy as a qualifying life event for a
special enrollment period outside of open enrollment. In
March 2015, 37 U.S. Senators sent a letter to HHS Secretary
Sylvia Mathews Burwell, encouraging her to institute a
special open enrollment period for women to enroll in
health coverage when they find out they are pregnant. In
the letter, the Senators asserted, among other things, that
if a woman becomes pregnant at a time outside of the open
enrollment period and is uninsured, or enrolled in a
grandfathered plan that does not cover maternity services,
then she will not be able to access coverage for maternity
care, forcing them to either forgo critical care or face
significant out-of-pocket costs.
On April 10, 2015, Secretary Burwell responded in a letter
stating that, after reviewing federal statute and
regulations, HHS does not have the legal authority to
establish pregnancy as an exceptional circumstance.
Secretary Burwell also added that, under the ACA, all
non-grandfathered individual and small group plans,
including those sold through an Exchange, must cover
maternity services, and women cannot be discriminated
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against on the basis of gender or pre-existing conditions
when purchasing health insurance through an Exchange.
Additionally, Secretary Burwell noted that the federal
Medicaid and Children's Health Insurance Program provide
access to coverage for pregnant women who can enroll in
these programs anytime if they qualify.
In March 2015, U.S. Senators Barbara Boxer and Dianne
Feinstein sent a letter urging Covered California to add
pregnancy as a qualifier for special enrollment through
Covered California. The Senators stated that prenatal care
"is critical for ensuring a healthy pregnancy and positive
outcomes for both the baby and the mother. Especially since
having a child is a qualifying life event, it makes sense
to ensure that access to care is granted prior to birth."
The Senators also stated that, "allowing women to purchase
health insurance during pregnancy will increase access to
care and has the potential to improve health, save lives,
and reduce future health costs."
On April 15, 2015, Covered California issued a response to
this letter stating that, "absent HHS guidelines, Covered
California is unable to even consider making pregnancy a
qualifying life event that would trigger a special
enrollment period in the California Health Benefit
Exchange." The letter also stated that, moving forward,
Covered California will continue to "stress the importance
of making sure that all consumers, regardless of health
status, understand the benefits of enrolling during the
Open Enrollment period as well as potential tax penalties
for not having coverage through the year."
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d) Public coverage programs. Currently, women with
qualifying low-income who become pregnant can apply for
Medi-Cal at any time during the year as Medi-Cal does not
subject applicants to an open enrollment period. Pregnant
women may also apply through their provider for Medi-Cal
Presumptive Eligibility (PE) for pregnant women, a program
that provides immediate no-cost pregnancy-related care to
low-income women pregnant women while their application is
evaluated for ongoing Medi-Cal. PE for pregnant women
offers coverage for specific ambulatory, pregnancy-related
care, some lab tests, and prescription drugs for
pregnancy-related conditions. PE for pregnant women is a
temporary program, and a pregnant woman may apply for
Medi-Cal on an ongoing basis during the PE period.
Additionally, the Medi-Cal Access Program (MCAP), formerly
known as the Access for Infants and Mothers Program,
provides low-cost affordable health coverage for
middle-income pregnant women, specifically those with
income too high for no-cost Medi-Cal, but at or below 322%
of the federal poverty level. MCAP coverage costs 1.5% of
an enrollee's adjusted net-annual income and is billed over
a 12-month period. MCAP provides coverage for pregnant
women who are not eligible for no-cost Medi-Cal, as
specified, and who do not have health insurance, or have
private insurance with a maternity-only deductible or
co-payment greater than $500.
3)SUPPORT. Supporters state that half of all pregnancies are
unintended, which means that if a pregnant woman is uninsured
at the time of pregnancy and does not have employer-based
coverage or does not qualify for Medi-Cal or MCAP, she will
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not have any coverage options until after the child is born.
Supporters assert that without prenatal care, expectant
parents are far more likely to lack diagnosis and treatment of
serious, even life-threatening complications during and after
pregnancy, and are more likely to have a pre-term delivery.
Supporters state that preterm birth is the leading cause of
infant death, developmental disabilities, and imposes
significant costs to the health care system. Supporters
further argue that the ACA implemented several changes which
would mitigate the potential consequences of adverse selection
that opponents of this bill argue, including individual
mandate requirements, massive coverage expansions, and the
requirement for maternity care to be covered as an EHB.
Supporters conclude by stating that this bill would help
bridge a narrow, but significant gap in access by extending
coverage to uninsured women at a time when it most makes
sense.
4)OPPOSITION. Opponents state that annual open enrollment
periods are designed to provide a period of open access into
any health plan of an enrollee's choice, while protecting
against individuals waiting to enroll until they need health
care. Opponents argue that special enrollment periods allow
individuals to enroll outside of this annual open enrollment
period, but only for narrow, qualifying events in a person's
life, such as the loss of coverage through divorce. Opponents
state that adding additional special enrollment periods not
intended by the ACA potentially drives up the cost of health
care and provides disincentives for individuals to enroll
under the normal timeframe.
5)RELATED LEGISLATION. SB 125 (Ed Hernandez) establishes an
annual open enrollment period for purchasers in the individual
health insurance market for the policy year beginning on
January 1, 2016, from November 1, of the preceding calendar
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year, to January 31, of the benefit year, inclusive; extends
the sunset date of CHBRP to June 30, 2017.
6)PREVIOUS LEGISLATION.
a) SB 20 (Ed Hernandez), Chapter 24, Statutes of 2014,
requires a plan or insurer to provide annual enrollment
periods for policy years beginning on or after January 1,
2016, from October 15 to December 7, inclusive, of the
preceding calendar year.
b) SB 2 X1 (Ed Hernandez), Chapter 2, Statutes of 2013-14 First
Extraordinary Session, applied 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.
c) AB 2 X1 (Pan), Chapter 1, Statutes of 2013-14 First
Extraordinary Session, established health insurance market
reforms contained in the ACA specific to individual purchasers,
such as prohibiting insurers from denying coverage based on
pre-existing conditions and makes conforming changes to small
employer health insurance laws resulting from final federal
regulations.
d) SB 900 (Alquist), Chapter 659, Statutes of 2010, and AB 1602
(Perez), Chapter 655, Statutes of 2010, established the
Exchange.
e) AB 1180 (Pan), Chapter 441, Statutes of 2013, made
inoperative several provisions in existing law that
implement the health insurance laws of the federal Health
Insurance Portability and Accountability Act of 1996 and
additional provisions that provide former employees rights
to convert their group health insurance coverage to
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individual market coverage without medical underwriting.
Established notification requirements informing individuals
affected by AB 1180 of health insurance available in 2014.
f) SB 2 X1 (Ed Hernandez), Chapter 2, Statutes of 2013-14
First Extraordinary Session, and AB 2 X1 (Pan), Chapter 1,
Statutes of 2013-14 First Extraordinary Session, conform
California law to the ACA as it relates to the ability to
sell and purchase individual health insurance by
prohibiting pre-existing condition exclusions, establishing
modified community rating, requiring the guaranteed issue
and renewal of health insurance, and ending the practice of
carriers conditioning health insurance on health status,
medical condition, claims experience, genetic information,
or other factors. The bills also update the small group
market laws for health plans to be consistent with final
federal regulations.
g) AB 1602 (John A. Pérez), Chapter 655, Statutes of 2010,
and SB 900 (Alquist), Chapter 659, Statutes of 2010,
establish the Exchange and its powers and duties.
h) AB 1996 (Thomson), Chapter 795, Statutes of 2002,
requests the University of California (which created CHBRP
in response), until January 1, 2007, to, within 60 days of
receiving a request by the Legislature, review legislation
proposing to mandate or repeal a health plan or health
insurance benefit or service for public health, medical,
and financial impacts.
6)POLICY COMMENT. The goal of this bill is well intended. As
CHBRP stated in its analysis, there is clear and convincing
evidence that certain prenatal care services produce better
birth outcomes. Thus, this bill could very well have a
positive public health impact and reduced costs over time as a
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result in improved health outcomes for pregnant women and
their infants. However, the bill also raises important policy
questions about the introduction of triggering events based on
health-conditions. While California law has exceeded federal
law by adding our own qualifying events for special enrollment
such as being released from incarceration, or returning from
active military duty, none of the current qualifying events in
state or federal law are based on a change in health status.
Other policy questions to consider are what kind of impact the
bill may have on the insurance market in terms of possible
disincentives to maintain coverage pursuant to the individual
mandate, and potential adverse selection. Should this bill
move forward, the author should consider the potential impact
of this bill on the individual market as a whole, and continue
to seek additional data and information to determine to what
degree the benefits of increased access to coverage for
prenatal care or other health care services for pregnant women
would offset the potential for adverse selection and
accompanying increases in costs to the individual marketplace.
Finally, as stated in the analysis, women with incomes below
322% of the federal poverty limit may obtain free or low-cost
coverage through Medi-Cal or the Medi-Cal Access Program when
they become pregnant. As such, this bill would essentially
apply to women of relatively higher financial means, those
with incomes above 322% of the federal poverty limit.
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REGISTERED SUPPORT / OPPOSITION:
Support
Maternal and Child Health Access
Western Center on Law and Poverty
SEIU California
Opposition
Association of California Life and Health Insurance Companies
California Association of Health Plans
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Analysis Prepared by:Kelly Green / HEALTH / (916) 319-2097