BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 1305|
|Office of Senate Floor Analyses | |
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THIRD READING
Bill No: AB 1305
Author: Bonta (D)
Amended: 6/25/15 in Senate
Vote: 21
SENATE HEALTH COMMITTEE: 8-0, 7/1/15
AYES: Hernandez, Nguyen, Hall, Mitchell, Monning, Nielsen,
Pan, Roth
NO VOTE RECORDED: Wolk
SENATE APPROPRIATIONS COMMITTEE: 7-0, 8/27/15
AYES: Lara, Bates, Beall, Hill, Leyva, Mendoza, Nielsen
ASSEMBLY FLOOR: 78-0, 6/1/15 - See last page for vote
SUBJECT: Limitations on cost sharing: family coverage
SOURCE: Health Access California
DIGEST: This bill requires maximum out-of-pocket limits and
deductibles for health plan or health insurance coverage for
families to include maximum out-of-pocket limits and deductibles
for each individual of the family to be less than or equal to
the maximum out-of-pocket limit and deductibles that apply for
coverage purchased for an individual. This bill implements the
individual deductible requirement in the large group market on
contracts and policies issued, amended, or renewed on or after
July 1, 2016.
ANALYSIS:
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Page 2
Existing law:
1)Establishes the Department of Managed Health Care (DMHC) to
regulate health plans and the California Department of
Insurance (CDI) to regulate health insurance policies.
2)Establishes specified limits on annual out-of-pocket expenses
for covered benefits that meet the definition of California
essential health benefits (EHBs). Identifies as California
EHBs, 10 federally mandated categories of coverage, state
mandated benefits, and benefits covered under a state-selected
benchmark plan.
3)Prohibits the limits described above from exceeding the limit
on high deductible health plans (HDHPs), as defined in the
federal Internal Revenue Code (IRC) adjusted annually, as
described in the ACA, and any subsequent rules, regulations,
or guidance issued under the ACA.
4)Limits the deductible for a small employer health plan
contract or insurance policy offered, sold, or renewed on or
after January 1, 2014, to $2,000 in the case of a plan
contract covering a single individual, and $4,000 in the case
of any other plan contract or policy. Indexes these amounts
consistent with a specified section of the ACA and any federal
rules or guidance pursuant to that section.
5)Requires this limitation to be applied in a manner that does
not affect the actuarial value of any small employer health
plan contract or insurance policy, and for small group
products at the bronze level of coverage, and authorizes DMHC
and CDI to permit plans to offer a higher deductible in order
to meet the actuarial value requirement of the bronze level.
This bill:
1)Requires coverage purchased for a family that has a maximum
out-of-pocket limit for each individual covered by the plan or
policy to have an individual limit that is less than or equal
to the maximum out-of-pocket limit for coverage purchased for
an individual.
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2)Requires coverage purchased for a family that includes a
deductible for each individual covered by the plan or policy
to have an individual deductible that is less than or equal to
the deductible for coverage purchased for an individual.
3)Includes an exception in 2) for an HDHP.
4)Implements provisions above in the large group market on
contracts and policies issued, amended, or renewed on or after
July 1, 2016.
5)Corrects a cross reference in existing law with regard to the
indexing of small employer health plan and policy deductible
amounts.
Comments
1)Author's statement. According to the author, this bill
prohibits a health plan or insurer from imposing a higher
deductible and limit on out-of-pocket costs on an individual
simply because the individual is a member of a family. 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 individuals in the plan or policy, so
when a family member gets sick, he or she only has to reach
the individual deductible or cost-sharing limit in order for
coverage to kick-in. However, other plans and insurers do not
include these individual deductibles and out-of-pocket cost
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 family limits before coverage
kicks in. 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
plan. This bill creates parity between what consumers pay in
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individual and family plans by embedding individual
deductibles and out-of-pocket limits in family plans, and
ensures consumers are not unfairly charged for doing what is
right by getting family coverage.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: Yes
According to the Senate Appropriations Committee,
1)One-time costs of about $440,000 for policy development and
adopting regulations and ongoing costs of about $340,000 per
year for DMHC to update policies and respond to public
information requests (Managed Care Fund).
2)One-time costs of about $40,000 in 2015-16 and $45,000 in
2016-17 to review plan filings for compliance by CDI
(Insurance Fund). Ongoing costs are expected to be minor.
3)No significant costs to the Medi-Cal program or for health
care coverage provided by CalPERS are anticipated. According
to the California Health Benefits Review Program, health plans
and health insurance policies provided by Medi-Cal and CalPERS
are already compliant with the requirements of the bill and
therefore would not experience any increased costs.
SUPPORT: (Verified8/28/15)
Health Access California (source)
American Cancer Society Cancer Action Network
American Federation of State, County, and Municipal Employees
California Black Health Network
California Chapter of the American College of Emergency
Physicians
California Chapter of the National Association of Social Workers
California Chronic Care Coalition
California Labor Federation
California Pan-Ethnic Health Network
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California Primary Care Association
California School Employees Association
California Teachers Association
CALPIRG
Children Now
Children's Defense Fund California
Congress of California Seniors
Consumers Union
The Children's Partnership
Western Center on Law and Poverty
OPPOSITION: (Verified8/28/15)
None received
ARGUMENTS IN SUPPORT: Health Access California writes that
this bill assures that no Californian has a deductible or out
of pocket limit higher than the individual deductible or out of
pocket limit. The California School Employees Association
indicates that if one person in a family plan gets sick it is
unfair for the family to be exposed to the out-of-pocket maximum
of $13,300. For classified school employees who earn modest
incomes, the maximum out-of-pocket costs could equal their
entire salary. This bill would provide much needed relief.
According to the Western Center on Law and Poverty this bill
could save a family as much as $6,600 in out-of-pocket costs,
which is significant for a family with someone facing a serious
illness. The California Chapter of the American College of
Emergency Physicians believes this bill is an important measure
that will prohibit health plans and health insurers from giving
an enrollee a higher deductible and out-of-pocket limit because
the person has a family insurance plan. The California Labor
Federation indicates that this solution will provide parity with
those enrolled in individual and family health care plans.
ASSEMBLY FLOOR: 78-0, 6/1/15
AYES: Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bloom,
Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chang,
Chau, Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle,
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Daly, Dodd, Eggman, Frazier, Gallagher, Cristina Garcia,
Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray,
Grove, Harper, Roger Hernández, Holden, Irwin, Jones,
Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low,
Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin,
Nazarian, Obernolte, O'Donnell, Olsen, Patterson, Perea,
Quirk, Rendon, Ridley-Thomas, Rodriguez, Salas, Santiago,
Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber,
Wilk, Williams, Wood, Atkins
NO VOTE RECORDED: Beth Gaines, Hadley
Prepared by:Teri Boughton / HEALTH /
8/31/15 16:51:32
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