BILL ANALYSIS Ó
AB 1305
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Date of Hearing: May 13, 2015
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Jimmy Gomez, Chair
AB
1305 (Bonta) - As Amended May 5, 2015
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Urgency: No State Mandated Local Program: YesReimbursable:
No
SUMMARY:
This bill requires, for health insurance provided on a family
coverage basis, deductibles and out-of-pocket maximums for
coverage of essential health benefits (EHBs), to include a
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maximum deductible and out-of-pocket limit for each individual
covered by the plan or policy, that is less than or equal to the
maximum deductible and out-of-pocket limit for an individual.
It also makes exceptions for certain high-deductible health
plans and policies, to ensure they comply with federal rules.
FISCAL EFFECT:
The California Health Benefit Review Program estimates:
1)No impact on publicly funded health insurance programs.
2)Reduced expenditures in the private market of tens of millions
of dollars, mostly in the form of reduced premium payments for
individually purchased insurance, based on individual
cost-sharing amounts going up to family cost-sharing amounts
for some consumers. However, CHBRP states this is likely an
overestimate due to data limitations. Any impact on
expenditures would depend on how product offerings and
consumer behavior changed to comply with this bill's
provisions.
COMMENTS:
1)Purpose. According to the author, this bill prohibits a health
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plan or insurer from imposing a higher deductible and
out-of-pocket cost limit on an individual simply because the
individual is a member of a family. The author explains that
health plans and insurance policies often include a deductible
amount, as well as limits on the amount out-of-pocket costs a
person or family may incur in a year. The author states that
some family plans and policies include deductibles and
out-of-pocket limits for an individual in the plan or policy,
so when a family member gets sick, they only have to reach the
individual deductible or cost-sharing limit in order for
coverage to kick-in. However, the author states other plans
and insurers do not include these individual deductibles and
out-of-pocket costs limits within a family plan or policy,
which means that families with one member who has more
expensive health care needs would have to reach the higher
family limits before coverage kicks in. The author contends
that under this structure, families with one member with high
health care costs are forced to pay thousands of dollars in
out-of-pocket expenses simply because they are in a family.
The author states that this bill creates parity between what
consumers pay in individual and family plans by requiring
individual deductibles to be embedded in family plans. The
author concludes that this bill is consistent with federal
regulations regarding limits on out-of-pocket cost sharing,
and will make California a national leader in terms of
deductibles.
2)CHBRP Analysis. CHBRP conducted an evidence-based assessment
of this bill which was published on April 22, 2015. According
to the analysis, this bill only impacts the private insurance
market outside the Exchange. Over 97% of enrollees in plans
or policies subject to this bill are covered by plans and
policies that have no deductible, or already have an embedded
deductible.
CHBRP found high-deductible health plans, which can be paired
with tax-advantaged health savings accounts or health
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reimbursement accounts, would be the only products affected by
this bill. As such, this bill would affect the insurance of
approximately 2.1% (506,722) of the 24.6 million Californians
who have health insurance regulated by the state that may be
subject to any state health benefit mandate law. CHBRP
assumed insurers would have to make the self-only deductible
match the family coverage deductible of $2,600. This increase
in deductibles for individuals who are purchasing these
products for self-only coverage lead to CHBRP's estimates of
reduced health care utilization and reduced spending, because
higher cost-sharing levels tend to reduce utilization.
However, individuals could also switch to plans with a lower
deductible level, or insurer could offer different products in
response to this change.
3)Support. This bill is sponsored by Health Access and supported
by various labor, patient advocacy, and disease advocacy
groups.
4)Opposition. The Chamber of Commerce opposes this bill, citing
their position against bills that shift health care costs from
one payer to another. The Chamber contends this bill would
increase costs for employers for coverage of families. (In
their projection of the most likely outcome of this bill,
CHBRP found overall expenditures, including those by
employers, would not increase but actually decrease.)
5)Previous Legislation. SB 639 (Ed Hernandez), Chapter 316,
Statutes of 2013, codifies provisions of the ACA relating to
out-of-pocket limits on cost-sharing.
Analysis Prepared by:Lisa Murawski / APPR. / (916)
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