BILL ANALYSIS                                                                                                                                                                                                    

                                                                    AB 2004

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          Date of Hearing:  May 4, 2016


                               Lorena Gonzalez, Chair

          2004 (Bloom) - As Amended April 26, 2016

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          Urgency:  No  State Mandated Local Program:  YesReimbursable:   


          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  
             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,  


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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.


          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)