BILL ANALYSIS Ó
AB 2004
Page 1
Date of Hearing: May 4, 2016
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Lorena Gonzalez, Chair
AB
2004 (Bloom) - As Amended April 26, 2016
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Urgency: No State Mandated Local Program: YesReimbursable:
No
SUMMARY:
This bill requires health plans and insurers to cover hearing
aids and related services for all enrollees under 18 years of
age when medically necessary. It exempts Medicare supplement,
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dental-only, or vision-only health plans and insurers.
FISCAL EFFECT:
1)According to the California Health Benefits Review Program
(CHBRP):
a) No cost to Medi-Cal (GF/federal) nor CalPERS, as hearing
aids are already covered.
b) Increased employer-funded premium costs in the private
insurance market of approximately $13 million.
c) Increased premium expenditures by employees and
individuals purchasing insurance of $7.1 million, and
reduced total out-of-pocket expenses of $16.5 million
(based on $19.5 million in newly covered benefits, offset
by cost-sharing of $3 million).
2)Minor costs to the California Department of Insurance
(Insurance Fund) and the Department of Managed Health Care
(Managed Care Fund) to verify plans and insurers comply with
this requirement.
3)This bill is likely to exceed the essential health benefits
and result in a cost to the state to defray expenditures on
behalf of enrollees in Covered California (CoveredCA ) plans
to which this mandate would apply. This essentially means the
state would pay for hearing aids on behalf of anyone enrolled
in CoveredCA. These costs could be as high as $1.8 million GF,
AB 2004
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assuming costs must be defrayed for small-group and individual
enrollees in CoveredCA plans.
4)Sixteen other states require coverage of hearing aids for
children, including Oregon. According to a 2015 regulatory
bulletin from the Oregon Insurance Commissioner, a broad
federal ban on age discrimination in insurance coverage
invalidates age limits for coverage of hearing aids in current
Oregon law. The bulletin requires carriers to cover issuers
to remove age limits on coverage of hearing aids because
federal law deems it discriminatory. If similar logic applies
in California, this age-restricted mandate may turn into a
mandate for coverage for individuals of all ages, posing much
higher fiscal risk associated with provision (3), as the state
would be required to pay for hearing aids for adults as well.
COMMENTS:
1)Purpose. The author states that a child's ability to hear
should not be determined based on family income, but that
hearing aids for children should be a fundamental right. This
bill will ensure all children have access to hearing aids.
2)CHBRP findings. CHBRP notes it is generally accepted that the
use of hearing aids improves the hearing of children with
hearing loss. As a result, there have been few recent studies
on the impact of hearing aids on hearing in children. CHBRP
concludes that there is a preponderance of evidence from
studies with moderately strong research designs that hearing
aids are effective in improving speech and language
development outcomes in children. This bill will have very
little impact on the number of children with hearing aids;
CHBRP predicts a small increase in utilization of 200
individuals. It will reduce the out-of-pocket costs of hearing
aids for individuals with commercial insurance by increasing
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premiums to cover the cost.
3)Current Coverage. Currently, CHBRP estimates that in privately
funded plans and policies, about 9% of enrollees through age
17 have coverage for hearing aids and services. Children
enrolled in publicly funded plans, including Medi-Cal which
enrolls children up to 250% of the federal poverty level, have
coverage for hearing aids. The federal poverty level for a
family of two, for example, is $16,020. This means a child of
a single parent who makes less than $40,000 annually would be
eligible for Medi-Cal and, if enrolled, would receive hearing
aids and related services at no cost.
4)Support. According to the Deaf and Hard of Hearing Service
Center, Inc., the barrier of cost needs to be removed,
primarily because some parents feel forced to choose a more
risky option, which is surgery to implant a cochlear device
that does not guarantee the child will hear. While not every
deaf child can benefit from a hearing device, those who can,
may be able to learn a spoken language. The National
Association of Social Workers, California Chapter (NASW-CA)
state that purchasing hearing aids for children can be a
financial challenge for parents.
5)Opposition. Health plans and insurers, as well as the
California Chamber of Commerce, oppose this bill, stating it
exceeds EHBs and poses significant fiscal risk to the state,
and that mandates raise premiums at a time when health care
affordability is a significant issue for families.
6)Prior legislation. AB 368 (Carter) of 2007, along with three
other bills in 2006 and 2004 required health care service
plans and health insurers to offer, at minimal cost, coverage
up to $1,000 for hearing aids, as defined, to all enrollees,
subscribers, and insureds under 18 years of age. Three were
vetoed due to the cumulative cost impact of mandates and one
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was held in the Senate Rules Committee.
Analysis Prepared by:Lisa Murawski / APPR. / (916)
319-2081