BILL ANALYSIS                                                                                                                                                                                                    Ó






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                                   THIRD READING 


          Bill No:  AB 1305
          Author:   Bonta (D)
          Amended:  9/4/15 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:    Author


          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.


          Senate Floor Amendments of 9/4/15 clarify that the provisions  








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          that place limits on the out-of-pocket maximum and deductibles  
          for an individual member of a family cannot be greater that  
          those limits for an individual.  The amendments also revise the  
          adjustment factor on the deductibles for small group coverage  
          and delay the large group market implementation date to January  
          1, 2017.





          ANALYSIS:   


          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.









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          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)Prohibits coverage purchased for a family that has a maximum  
            out-of-pocket limit for each individual covered by the plan or  
            policy from having an individual limit that is greater than  
            the maximum out-of-pocket limit for coverage purchased for an  
            individual.

          2)Prohibits coverage purchased for a family that includes a  
            deductible for each individual covered by the plan or policy  
            from having an individual deductible that is greater than 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  
            January 1, 2017.

          5)Corrects a cross reference in existing law with regard to the  
            indexing of small employer health plan and policy deductible  
            amounts.


          Comments


          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  







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          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 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:   (Verified9/4/15)









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          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
          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:   (Verified9/4/15)


          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  







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          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,  
            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 / 
          9/8/15 16:26:15


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