BILL ANALYSIS                                                                                                                                                                                                    ”



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          ASSEMBLY THIRD READING


          AB  
          2004 (Bloom)


          As Amended  May 31, 2016


          Majority vote


           ------------------------------------------------------------------ 
          |Committee       |Votes|Ayes                  |Noes                |
          |                |     |                      |                    |
          |                |     |                      |                    |
          |                |     |                      |                    |
          |----------------+-----+----------------------+--------------------|
          |Health          |16-0 |Wood, Maienschein,    |                    |
          |                |     |Bonilla, Burke,       |                    |
          |                |     |Campos, Chiu,         |                    |
          |                |     |Dababneh, Gomez,      |                    |
          |                |     |                      |                    |
          |                |     |                      |                    |
          |                |     |Roger HernŠndez,      |                    |
          |                |     |Lackey, Nazarian,     |                    |
          |                |     |Olsen, Rodriguez,     |                    |
          |                |     |Santiago, Steinorth,  |                    |
          |                |     |Waldron               |                    |
          |                |     |                      |                    |
          |----------------+-----+----------------------+--------------------|
          |Appropriations  |16-2 |Gonzalez, Bloom,      |Bigelow, Jones      |
          |                |     |Bonilla, Bonta,       |                    |
          |                |     |Calderon, Daly,       |                    |
          |                |     |Eggman, Gallagher,    |                    |
          |                |     |                      |                    |
          |                |     |                      |                    |
          |                |     |Eduardo Garcia,       |                    |








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          |                |     |                      |                    |
          |                |     |                      |                    |
          |                |     |Roger HernŠndez,      |                    |
          |                |     |Holden, Quirk,        |                    |
          |                |     |Santiago, Wagner,     |                    |
          |                |     |Weber, Wood           |                    |
          |                |     |                      |                    |
          |                |     |                      |                    |
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          SUMMARY:  Requires coverage for hearing aids for enrollees or  
          insureds less than 18 years of age, as specified.  Includes  
          initial assessment, new hearing aids at least every five years,  
          new ear molds, new hearing aids if alternations to the existing  
          hearing aids cannot meet the needs of the child, a new hearing  
          aid if the existing one is no longer working, fittings,  
          adjustments, auditory training, and maintenance of the hearing  
          aids.  Defines hearing aid as an electronic device usually worn  
          in or behind the ear of a deaf and hard of hearing person for  
          the purpose of amplifying sound.  Makes coverage inoperative if  
          the state becomes fiscally liable for hearing aid coverage  
          provided to adults.  Sunsets coverage on January 1, 2019.   
          Includes legislative intent to explore alternate approaches to  
          ensure the continuation of broad coverage of pediatric hearing  
          benefits without incurring ongoing state costs.
          FISCAL EFFECT:  According to the Assembly Appropriations  
          Committee:


          1)According to the California Health Benefits Review Program  
            (CHBRP): 
             a)   No cost to Medi-Cal (General Fund (GF)/federal) nor  
               California Public Employees' Retirement System, as hearing  
               aids are already covered.
             b)   Increased employer-funded premium costs in the private  
               insurance market of approximately $13 million.










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             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).   
            These costs would only be incurred for the operative date of  
            the mandate, until January 1, 2019, assuming coverage was no  
            longer provided.  


          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  
            for 2017 and 2018, assuming costs must be defrayed for  
            small-group and individual enrollees in CoveredCA plans.  The  
            mandate expires in 2019 and the state would not incur costs to  
            defray the costs of exceeding essential health benefits (EHBs)  
            beyond this date.


          4)Recent state regulatory action in other states indicated a  
            broad federal ban on age discrimination in insurance coverage  
            invalidates age limits for coverage of hearing aids.  If  
            similar logic applied in California, the state would be  
            required to pay for hearing aids for adults as well.  Federal  
            regulations issued on May 16, 2016 clarifying  
            antidiscrimination provisions do not apply to state mandates  
            may resolve this concern.


          COMMENTS:  The author states that a child's ability to hear  
          should not be determined based on family income.  It should be  








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          viewed as a fundamental right of choice to the citizens of our  
          state, especially when the state has a mandated hearing  
          screening program.  To diagnose deafness and then fail to  
          provide intervention is morally and ethically unacceptable.


          CHBRP Analysis.  CHBRP estimates that in 2015, all  
          state-regulated coverage (for 25.2 million Californians) would  
          be subject to this bill.  Coverage required by this bill would  
          appear to exceed EHBs as this benefit is not included in the  
          state's benchmark plan.  Currently, CHBRP estimates that in  
          privately funded plans and policies, about 9% of enrollees  
          through age 17 have coverage for hearing aids and services.  In  
          publicly funded plans, CHBRP estimates that 100% of enrollees  
          through age 17 have coverage for hearing aids and services.   
          Postmandate, CHBRP estimates there would be no change in the  
          average per enrollee cost of hearing aids and services. CHBRP  
          estimates hearing aids and services cost on average $2,023 per  
          enrollee, which includes children who may not have purchased a  
          new hearing aid in the given year, but may use related hearing  
          aid services in that year.  The average cost per hearing aid  
          user for their hearing aid and hearing aid services is  
          approximately $3,566.


          Coverage for Hearing Aids.  California law requires screening  
          for hearing loss among children, first at birth in the Newborn  
          Hearing Screening Program and subsequently at school-age.  There  
          is no existing law mandating any kind of coverage for hearing  
          aids for private insurance.  However, for children 21 and under  
          in Medi-Cal and children who meet certain qualifications  
          including a qualifying hearing loss, hearing aids are covered  
          through California Children's Services (CCS).  CCS is a state  
          program that provides coverage for children under age 21 with  
          certain eligible physical limitations and chronic health  
          conditions or diseases, including disorders of the sense organs  
          like hearing loss.  Children may also qualify for CCS by meeting  
          certain age, residence, medical, and financial requirements.   
          Medi-Cal recipients under age 21 must be referred to CCS for  








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          hearing loss services, including hearing aids, both for  
          fee-for-service and managed care.  For Medi-Cal beneficiaries in  
          county organized health system (COHS) plans, the COHS plans,  
          rather than CCS, provide hearing services.  


          Similar Requirements in Other States.  Sixteen states require  
          that health benefit plans cover hearing aids for children.   
          Three states - Arkansas, New Hampshire, and Rhode Island require  
          that plans cover hearing aids for adults and children.   
          Wisconsin requires coverage for both hearing aids and cochlear  
          implants for children.  Of the 16 states that mandate coverage  
          of hearing aids for children, California's proposed legislation  
          is most similar to Colorado's law which requires plans to cover  
          hearing aids for children younger than 18 years when medically  
          necessary.  


          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 California Association of Health Plans, the Association of  
          California Life and Health Insurance Companies, and America's  
          Health Insurance Plans contend that health insurance mandates  
          threaten efforts of all health care stakeholders to provide  
          consumers with meaningful health care choices and affordable  
          coverage options.  


          Analysis Prepared by:                                             
                          Kristene Mapile / HEALTH / (916) 319-2097  FN:  
          0003286









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