BILL ANALYSIS Ó AB 2004 Page 1 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 Hernández, | | | | |Lackey, Nazarian, | | | | |Olsen, Rodriguez, | | | | |Santiago, Steinorth, | | | | |Waldron | | | | | | | |----------------+-----+----------------------+--------------------| |Appropriations |16-2 |Gonzalez, Bloom, |Bigelow, Jones | | | |Bonilla, Bonta, | | | | |Calderon, Daly, | | | | |Eggman, Gallagher, | | | | | | | | | | | | | | |Eduardo Garcia, | | AB 2004 Page 2 | | | | | | | | | | | | |Roger Hernández, | | | | |Holden, Quirk, | | | | |Santiago, Wagner, | | | | |Weber, Wood | | | | | | | | | | | | ------------------------------------------------------------------ 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. AB 2004 Page 3 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 AB 2004 Page 4 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 AB 2004 Page 5 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 AB 2004 Page 6