BILL ANALYSIS Ó
SB 33
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SENATE THIRD READING
SB
33 (Hernandez)
As Amended August 28, 2015
Majority vote
SENATE VOTE: 37-0
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|Committee |Votes|Ayes |Noes |
| | | | |
| | | | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Health |18-1 |Bonta, Maienschein, |Chávez |
| | |Bonilla, Burke, Chiu, | |
| | |Gomez, Gonzalez, | |
| | |Roger Hernández, | |
| | |Lackey, Nazarian, | |
| | |Patterson, | |
| | | | |
| | | | |
| | |Ridley-Thomas, | |
| | |Rodriguez, Santiago, | |
| | |Steinorth, Thurmond, | |
| | |Waldron, Wood | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Appropriations |17-0 |Gomez, Bigelow, | |
| | |Bloom, Bonta, | |
| | |Calderon, Chang, | |
SB 33
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| | |Nazarian, Eggman, | |
| | |Gallagher, Eduardo | |
| | |Garcia, Holden, | |
| | |Jones, Quirk, Rendon, | |
| | |Wagner, Weber, Wood | |
| | | | |
| | | | |
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SUMMARY: Limits Medi-Cal estate recovery by the Department of
Health Care Services (DHCS) to only those services required to be
recovered under federal Medicaid law.
FISCAL EFFECT: According to the Assembly Appropriations
Committee:
1)Losses from Recovery. In 2013-14, DHCS collected $61 million in
recoveries. Given these expected reductions in recovery
amounts, annual revenues losses associated with this bill are
projected to be in the range of $40-$50 million ($20-$25 million
General Fund (GF)).
2)Future losses from recovery. The Patient Protection and
Affordable Care Act (ACA) resulted in increased enrollment for
both "mandatory" populations (those eligible under pre-ACA
rules) and "optional" expansion populations, for which costs are
largely federally funded.
a) Mandatory population. The state shares costs with the
federal government for the "mandatory" population on a 50:50
basis. The ACA also requires the state to remove "asset
tests" for eligibility and requires every individual to
maintain health insurance or face a penalty. Therefore,
foregone revenues are likely to grow in future years because
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the total population enrolled under pre-ACA eligibility rules
(and for which the state would collect 50% of the estate
claim) will be larger than it was in 2013-14, and there is a
somewhat greater likelihood that beneficiaries will have
assets against which the state could submit a claim.
b) Optional expansion population. The state will incur
unknown future revenue loss, mostly federal funds, from
foregone claims on the estates of deceased Medi-Cal
beneficiaries eligible under the Medi-Cal expansion, with
minor GF losses beginning in 2017 (5% - 10% GF, 95% - 90%
federal funds). As part of its implementation of the federal
ACA, the state has expanded Medi-Cal coverage to childless
adults with incomes up to 138% of the federal poverty line.
Under current law, in future years, health care costs for
members of this population over 55 years of age would be
subject to cost recovery, including health care costs for
which recovery is optional. Under this bill, the state will
forego some of those revenues. It is important to note that
for the Medi-Cal expansion population, the federal government
will pay 100% of the cost at first, declining to 90% of costs
by 2020. Any cost recovery made by the state from this
population would largely be returned to the federal
government. Therefore, the GF impact from eliminating some
cost recovery from this population is limited.
1)Administrative costs in the low hundreds of thousands (50% GF,
50% federal) to DHCS to process additional requests for the
amount of recoverable Medi-Cal expenses that have been paid on
behalf of a beneficiary. Costs could be lower or higher
depending how robustly beneficiaries are notified of the
availability of this data, and the ease of requesting it.
2)Administrative cost savings. Based on narrower estate recovery
rules, administrative cost savings from fewer staff working on
estate recovery should be significant. The current budget for
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estate recovery is approximately $4.5 million (25% GF, 75%
federal). The effect of this bill on these administrative costs
is unknown, but it appears reasonable to assume such a
significant reduction in the number of recoverable estates
should result in a nearly proportionate decrease in
administrative staff costs to pursue estate recovery claims.
COMMENTS: According to the author, Medi-Cal estate recovery is
unfair to Medi-Cal beneficiaries, is a deterrent to signing people
up for Medi-Cal, and is counter to state and federal efforts to
enroll people into health care coverage. The author states
California currently implements several federal options to collect
from Medi-Cal beneficiaries beyond what is required under federal
law, and has failed to implement a federal option to establish a
homestead exemption that would allow Medi-Cal beneficiaries to
pass a home of modest value onto their heirs. The author contends
that by recovering for health care services beyond those required
by federal law, California forces low income individuals age 55
and older to choose between signing up for basic healthcare
services, and passing on their home and other limited assets they
possess to their children. The author states Oregon and
Washington discontinued estate recovery collection amounts
required by federal law due to the negative impact estate recovery
rules were having on enrollment. The author maintains
California's estate recovery program undermines the idea of
Medi-Cal as a health care entitlement program by essentially
turning Medi-Cal coverage for basic medical services into a loan
program, with collection taking place at death; this unfairly
places part of the burden on financing the cost of health care in
Medi-Cal on the estates of deceased Medi-Cal beneficiaries with
limited assets.
The Western Center on Law and Poverty, a cosponsor of this bill,
states that the effort to enroll Californians in public and
subsidized health coverage programs is being impaired by the fact
that DHCS conducts estate recovery for certain Medi-Cal services;
when consumers learn this fact they become fearful that if they
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enroll in Medi-Cal they will lose their homes to pay for services
received. California Advocates for Nursing home Reform, a
cosponsor of this bill, contends that Medi-Cal estate recovery
disproportionately affects minority homeowners who enroll in
Medi-Cal, as they are often not informed of their rights.
Supporters conclude that no one should be forced to choose between
their personal health and their ability to pass assets along to
their heirs.
There is no known opposition to this bill on file.
Analysis Prepared by:
An-Chi Tsou / HEALTH / (916) 319-2097 FN: 0001707