BILL ANALYSIS Ó
AB 1764
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Date of Hearing: May 11, 2016
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Lorena Gonzalez, Chair
AB
1764 (Waldron) - As Amended May 3, 2016
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Urgency: No State Mandated Local Program: NoReimbursable: No
SUMMARY:
Effective July 1, 2017, this bill requires the California Health
Benefit Review Program (CHBRP) to examine the impact of
coverage, or repeal of coverage, on projected medium-term costs
or savings for either two years or, if applicable, five years.
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Implementation is contingent upon reauthorization of the chapter
establishing CHBRP, which will sunset under current law sunset
July 1, 2017.
FISCAL EFFECT:
Assuming CHBRP and its revenue source are extended and the
provisions of this bill take effect, this bill could result in
an increase in modeling, analytic efforts, actuarial, staff and
faculty time, resulting in the following:
1)One-time costs to CHBRP of $200,000 to develop and test a
customized Cost Simulation Model (CSM).
2)An estimated $340,000 per year for staff and contract costs to
add the additional projections for each bill CHBRP analyzes.
The fund source for additional funding is uncertain, as the
current funding only provides up to $2 million from an
assessment on health plans and insurers (Health Care Benefits
Fund). The increased costs would result in cost pressure to
increase the assessment. Otherwise, this bill would result in
less funding available for CHBRP's other duties in order to stay
within the $2 million annual appropriation.
COMMENTS:
1)Purpose. According to the author, limiting savings and cost
estimates to a 12-month period does not accurately reflect the
benefits or impacts of the covered therapy. For example, the
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author notes treatment with high-cost drugs may show
substantial savings-from reduced hospitalization, for example-
that manifest after 12 months. This bill is author-sponsored.
2)CHBRP. Housed in the University of California Office of the
President, CHBRP responds to legislative requests to provide
independent analysis of the medical, financial, and public
health impacts of bills proposing to mandate - or repeal a
mandate for-coverage of health insurance benefits. A small
analytic staff works with a task force of faculty from several
UC campuses, as well as actuarial consultants, to analyze
bills, usually before the Legislature begins formal
consideration of such bills. With respect to costs, CHBRP
generally projects the cost for the 12-month period in which
the mandate is implemented. CHBRP comments on potential
long-term impacts when there is significant evidence
supporting such impacts.
3)CHBRP Comments. CHBRP notes the dynamism of health insurance
design, and states holding factors such as technology,
regulation, population covered constant for a near-term
projection is reasonable. With respect to long-term
projections, CHBRP notes numerous factors-take-up rates,
advances in practice patterns, technology adoption, policy or
regulatory changes- can have massive and unpredictable
impacts. They also note they would need to create and
implement a simulation model for fiscal impacts (or savings)
that can reliably project up to 5 years.
4)Prior legislation.
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a) SB 125 (Hernández), Chapter 9, Statutes of 2015, extends
the sunset of the California Health Benefits Review Program
(CHBRP) for two years to June 30, 2017, and extends the
existing assessment on health plans and health insurers to
support the program.
b) AB 1996 (Thomson), Chapter 795, Statutes of 2002,
requested the UC to create CHBRP. Two prior bills have
extended CHBRP's sunset, one in 2002 and one in 2009.
1)Staff Comment. UC is required to submit a report to the
Legislature and the Governor by January 1, 2017 on
implementation of CHBRP's mandate. The CHRBP provisions are
also set to expire on July 1, 2017. Furthermore, this bill is
contingent on a sunset extension. Thus, it seems logical to
consider an expansion of duties in context of a CHBRP sunset
extension.
Analysis Prepared by:Lisa Murawski / APPR. / (916)
319-2081