BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
AB 2004 (Bloom) - Hearing aids: minors
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|Version: May 31, 2016 |Policy Vote: HEALTH 5 - 0 |
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|Urgency: No |Mandate: Yes |
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|Hearing Date: August 1, 2016 |Consultant: Brendan McCarthy |
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This bill meets the criteria for referral to the Suspense File.
Bill
Summary: SB 2004 would require health insurers and health plans
to provide coverage for hearing aids for enrollees under 18
years of age.
Fiscal
Impact:
No cost impact is anticipated is anticipated for the Medi-Cal
program or for CalPERS health care coverage. Both programs
already provide coverage for hearing aids for enrollees under
18 years of age.
Ongoing costs of $1.5 to $2.0 million per year to subsidize
the cost to provide the hearing aid benefit for individuals
enrolled in health care coverage through Covered California.
Under federal law, states are required to cover the cost of
any new benefit mandate that exceeds essential health benefits
for those individuals that are receiving subsidized coverage
through a health benefit exchange. The state's current
essential health benefit benchmark plan does not include
coverage for hearing aids. Therefore, under this bill the
AB 2004 (Bloom) Page 1 of
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state would be imposing a new benefit mandate that exceeds
essential health benefits and the state would be responsible
for covering the cost to subsidize that benefit for
individuals purchasing subsidized coverage through Covered
California.
Minor ongoing costs for review of insurance plan filings by
the Department of Insurance (Insurance Fund).
Minor ongoing costs for review of health plan filings by the
Department of Managed Health Care (Managed Care Fund).
Background: Under federal law, health insurance policies and health plans
are generally required to provide coverage for ten essential
health benefits (such as emergency services, prescription drugs,
etc.). Under federal regulation, the states are authorized to
select an essential health benefits benchmark plan, which sets
the standards for providing essential health benefits. Once a
state has selected an essential health benefits benchmark plan,
any new benefit mandate imposed by the state that is not already
covered by the benchmark plan is considered to exceed the
essential health benefits. For individuals purchasing subsidized
health care coverage through a health benefits exchange, such as
Covered California, the state would be responsible for paying
for the cost to subsidize the new benefit.
The state's current essential health benefits benchmark plan,
the Kaiser Small Group HMO plan, does not provide coverage for
hearing aids.
One of the essential health benefits required under federal law
is "habilitative services" which are health care services and
devices that help a person keep, learn, or improve skills and
functioning for daily living.
Proposed Law:
SB 2004 would require health insurers and health plans to
provide coverage for hearing aids for enrollees under 18 years
of age.
Specific provisions of the bill would:
AB 2004 (Bloom) Page 2 of
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Require health insurance policies and health plans to provide
coverage for hearing aids for all enrollees under 18 years of
age when medically necessary;
Specify the services and devices included in the coverage
mandate;
Exempt certain specialty insurance policies and health plans;
Make the provisions of the bill inoperative if any federal
agency determines that the benefit mandate constitutes a
discriminatory age limitation and the state is required to
defray the costs to provide subsidized coverage for hearing
aids to individuals over 18 years of age;
Impose a January 1, 2019 sunset on the bill's requirements.
Staff
Comments: The requirement to provide coverage for hearing aids
for enrollees under age 18 exceeds the benefits in the state's
essential health benefits benchmark plan. To date, the state has
not enacted a benefit mandate that clearly exceeded essential
health benefit requirements.
Federal law and regulation prohibit discrimination on the basis
of race, color, national origin, sex, age, or disability in a
variety of health care programs. Some states have interpreted
federal requirements to prohibit health coverage benefit
mandates with limitations based on age. A federal regulation
issued in May 2016 indicates that states may impose new laws
that impose age distinctions without violating federal law.
However, the regulation also stated that arbitrary age
limitations could constitute age discrimination.
Based on the clear requirement that hearing aids must only be
covered for enrollees under 18 years of age, it is likely that
the federal government would rule that this bill discriminates
based on age.
The federal essential health benefits requirement includes
coverage of habilitative services. Under federal guidance, if a
state's essential health benefits benchmark plan provides
coverage for habilitative services, then the habilitative
services benefit is set by the coverage provided by the
AB 2004 (Bloom) Page 3 of
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benchmark plan. If the benchmark plan does not cover
habilitative services, they would still be a required essential
health benefit, but the parameters of the benefit could be
defined by the state. The Kaiser Small Group HMO plan does
provide coverage for habilitative services, but it excludes
coverage for hearing aids. Therefore, in California habilitative
services do not include coverage for hearing aids.
According to the California Health Benefits Review Program,
there is a preponderance of evidence that hearing aids are
effective in improving speech outcomes in children and that
hearing aids are effective in improving language development
outcomes in children.
The California Health Benefits Review Program found that the
bill would result in a minor increase in utilization of hearing
aids. This is because the Program found that when hearing aids
are not covered by health insurance, families pay the necessary
out-of-pocket costs themselves. According to the Program, about
21,000 families would experience cost savings, because the costs
of coverage would shift from consumers to health insurers and
health plans. On the other hand, the Program projects that only
about 200 additional children would receive hearing aids who
would not receive them under current law (e.g. because the
out-of-pocket costs are unaffordable).
The only costs that may be incurred by a local agency relate to
crimes and infractions. Under the California Constitution, such
costs are not reimbursable by the state.
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