BILL ANALYSIS Ó
AB 1102
Page 1
Date of Hearing: May 13, 2015
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Jimmy Gomez, Chair
AB
1102 (Santiago) - As Amended May 5, 2015
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Urgency: No State Mandated Local Program: YesReimbursable:
No
SUMMARY:
This bill allows women to enroll in health insurance, or change
their private health insurance plans, when they become pregnant.
AB 1102
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FISCAL EFFECT:
1)Costs to update the California Healthcare Eligibility,
Enrollment and Retention System (CalHEERS) with appropriate
business rules and logic to effectuate the addition of
pregnancy as a triggering event would be in the low hundreds
of thousands (federal/ California Health Trust Fund).
2)This bill has a limited fiscal impact on the state's purchase
of health care, because eligible women can enroll in
state-sponsored coverage throughout the year. The state could
even realize some (likely small) level of cost savings if some
women eligible for state-sponsored coverage decided to
purchase coverage through the exchange, based on provider
networks or health plan choices. However, it would have
significant fiscal impacts and could lead to disruption in the
private health insurance market.
COMMENTS:
1)Purpose. According to the author, maternity care is an
essential health benefit under the federal Patient Protection
and Affordable Care Act (ACA), and special enrollment exists
for women who give birth. 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 money.
2)Background. The ACA requires all individuals to be insured or
pay a penalty. One way the ACA encourages individuals to
purchase insurance before needing health care is by specifying
open enrollment periods. According to recently released
federal regulations, for 2016, the open enrollment period will
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run from November 1, 2016 to January 31, 2016. Individuals
can purchase health insurance outside this period only when
experiencing a qualifying life event such as getting married,
losing a job, or moving to the state. None of the qualifying
events are based on a change in health status.
Special enrollment periods based on a change in health status
undermine the fundamental nature of insurance risk pools and
pricing, in the same sense that one cannot purchase car
"insurance" after an accident. In contrast, Medi-Cal and
other state-sponsored programs have no defined enrollment
periods; individuals can apply on a rolling basis.
3)Related Federal and State Action. At the federal level, the
U.S. Department of Health and Human Services (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
pregnancy. On April 10, 2015, Secretary Burwell responded in a
letter that, after reviewing federal statute and regulations,
HHS does not have the legal authority to establish such an
exception.
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. On April 15, 2015, Covered California
issued a response to this letter stating, "absent HHS
guidelines, Covered California is unable to even consider
making pregnancy a qualifying life event that would trigger a
special enrollment period." 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
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for not having coverage through the year."
4)CHBRP Review. In their accelerated review of this bill, the
California Health Benefits Review Program (CHBRP) notes
several important potential points and consequences:
a) Women affected would most likely be of midrange to
higher incomes, considering the existing public program
coverage options for women of lower incomes (coverage
through Medi-Cal and the Medi-Cal Access Program is
available for women up to 322% of the federal poverty
level).
b) CHBRP's review of premium impact focused only on Covered
California. They found 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 estimates these marginal price impacts would lead to
thousands of people being priced out of coverage. Although
CHBRP's accelerated review did not allow time to assess the
impact on the individual market outside Covered California,
it would likely experience similar impacts.
c) 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
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.
d) CHBRP notes a significant difference in initiation of
prenatal care between insured versus uninsured individuals.
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To the extent this bill could increase utilization of
effective prenatal care that can reduce outcomes such as
preterm births and related infant mortality, it has
potential to reduce morbidity and mortality and associated
societal costs. CHBRP states that reducing out-of-pocket
costs could, in turn increase pregnant women's use of
prenatal care, and that there is clear and convincing
evidence that certain prenatal care services produce better
outcomes for mothers and infants.
3)Support. Maternal and Child Health Access, Western Center on
Law and Poverty, and SEIU California support this bill.
Supporters state half of all pregnancies are unintended, note
the importance of prenatal care, and state this bill would
help bridge a narrow, but significant gap in access to health
coverage.
4)Opposition. Health plans and insurers oppose this bill.
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.
1)Staff Comments. No one disputes it is important for pregnant
women to access prenatal care; however, this bill is not about
whether care should be denied to pregnant women, it is about
whose responsibility it is to pay for the care. Medi-Cal and
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the Medi-Cal Access Program (formerly Access for Infants and
Mothers) already cover pregnant women in California on a
rolling basis up to 322% of the federal poverty level, or
nearly $38,000 for a single individual. The fundamental
question posed by this bill, then, is whether or not a
pregnant woman, with annual income levels $2,000 higher than
the median income in the state, should have the right, upon
becoming pregnant, to benefit from the array of services
provided through health insurance plans she did not choose to
purchase before she needed to use health care services. This
essentially allows a woman to skip paying premiums while she
does not need health care, and only pay premiums during the
time health care is needed, in which case the premiums cover a
small portion of the $18,000 cost of a normal childbirth.
Adding a health status-based open enrollment event, opponents
may argue, is a slippery slope to adding other conditions.
Adding health conditions as triggering events for open
enrollment is anathema to the nature of insurance markets. As
long as our health care delivery and finance system is based
on an insurance model, adding such conditions as triggering
events will fundamentally undermine the entire system and
should not be taken lightly.
On the other hand, despite the negative impacts of adverse
selection on the insurance market, pregnancy is a special case
that poses a unique ethical dilemma, because the quality and
amount of prenatal care impacts not only the mother, but her
child. The potential societal benefits of healthier children
and issues of equity to children add a complex wrinkle to an
otherwise more straightforward issue of adverse selection. In
the case of an individual who experiences a change in health
status such as developing a chronic disease, only the
individual's health is directly at risk based on the quality
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and amount of health care available to him or her. This is
obviously not the case for pregnancy.
There are issues of gender equity raised as well-a woman is
the one who incurs costs related to pregnancy. Is it fair
that under current law, a young woman, who is otherwise
similarly situated to a young man who chooses to go without
coverage, pays a higher price for the lack of coverage because
she is the one bearing the child? In our current health care
system, being a young woman is inherently financially riskier
than being a young man. This bill would allow younger women
to shift financial risk to other payers.
Finally, this bill poses two separate questions that should
perhaps be thought of separately: (1) whether an individual
should be able to enroll in an insurance product at all upon
becoming pregnant (in which preventive care is covered with no
cost-sharing), and (2) whether an individual currently
enrolled in a plan (in which preventive care is covered with
no cost-sharing), should be able to change her existing plan
upon becoming pregnant. This bill allows for both. In both
scenarios, prenatal care is covered with no cost-sharing.
However, in scenario (1), a woman is gaining access to free
prenatal care, with corresponding positive impact on her
future child's health. In scenario (2), a woman would not be
gaining access to prenatal care; she would simply be able to
enroll in a higher-actuarial value plan, reducing her
cost-sharing for the delivery event and other medical services
without the corresponding positive impact on her future
child's health.
AB 1102
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Analysis Prepared by:Lisa Murawski / APPR. / (916)
319-2081