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 ----------------------------------------------------------------- |Policy |Health |Vote:|16 - 1 | |Committee: | | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | | | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | | | | | | | | | | | | | | | ----------------------------------------------------------------- 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 Page 2 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 AB 1102 Page 3 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 AB 1102 Page 4 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. AB 1102 Page 5 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 AB 1102 Page 6 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 AB 1102 Page 7 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 Page 8 Analysis Prepared by:Lisa Murawski / APPR. / (916) 319-2081