BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 125|
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THIRD READING
Bill No: SB 125
Author: Hernandez (D)
Amended: 4/6/15
Vote: 27 - Urgency
SENATE HEALTH COMMITTEE: 8-0, 3/25/15
AYES: Hernandez, Nguyen, Hall, Mitchell, Monning, Nielsen,
Pan, Wolk
NO VOTE RECORDED: Roth
SENATE APPROPRIATIONS COMMITTEE: 6-0, 4/13/15
AYES: Lara, Bates, Beall, Leyva, Mendoza, Nielsen
NO VOTE RECORDED: Hill
SUBJECT: Health care coverage
SOURCE: Author
DIGEST: This bill requests the California Health Benefit Review
Program (CHBRP) to analyze the impact of specified legislation
on essential health benefits and Covered California, as well as
legislation that impacts health insurance benefit design, cost
sharing, premiums, and other health insurance topics. Requests
the analyses to be provided to the Legislature in a manner
pursuant to a timeline agreed upon by CHBRP and the Legislature.
Extends the fee assessed on health plans and insurers for this
purpose until fiscal year 2016-17. Extends the sunset date of
CHBRP to June 30, 2017. Establishes an annual open enrollment
period for purchasers in the individual health insurance market
for the policy year beginning on January 1, 2016, from November
1, of the preceding calendar year, to January 31, of the benefit
year, inclusive.
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ANALYSIS:
Existing law:
1)Requests the University of California (UC) to establish the
CHBRP to assess, as specified and not later than 60 days from
receiving a request by the Legislature, legislation proposing
to mandate or repeal a health plan or health insurance benefit
or service for public health, medical, and financial impacts.
2)Requires health plans, except specialized health plans, and
health insurers, for fiscal years 2010-11 to 2014-15, to be
assessed an annual fee to fund CHBRP, as specified, not to
exceed $2 million.
3)Sunsets CHBRP on June 30, 2015.
4)Requires health plans and insurers to limit enrollment in
individual health benefit plans to open enrollment periods,
annual enrollment periods, and special enrollment periods.
5)Requires plans and insurers to provide an initial open
enrollment period from October 1, 2013, to March 31, 2014,
inclusive, an annual enrollment period for the policy year
beginning on January 1, 2015, from November 15, 2014, to
February 15, 2015, inclusive, and annual enrollment periods
for policy years beginning on or after January 1, 2016, from
October 15 to December 7, inclusive, of the preceding calendar
year.
This bill:
1)Requests CHBRP, in addition to analyzing the public health
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impacts, medical effectiveness, and financial impacts of
legislation proposing to mandate or repeal a benefit or
service, to also analyze the impact on essential health
benefits (EHBs) and Covered California.
2)Requests CHBRP to assess legislation that impacts health
insurance benefit design, cost sharing, premiums, and other
health insurance topics.
3)Requests analyses to be provided to the appropriate committees
of the Legislature in a manner pursuant to a timeline agreed
upon by the Legislature and CHBRP.
4)Extends the fee assessed on health plans and insurers to
fiscal year 2016-17.
5)Requests CHBRP to submit a report to the Governor and
Legislature by
January 1, 2017, regarding the implementation of the program.
6)Extends the sunset date of CHBRP to June 30, 2017.
7)Establishes an annual open enrollment period for the policy
year beginning on or after January 1, 2016, from November 1,
of the preceding calendar year, to January 31, of the benefit
year, inclusive.
8)Contains an urgency clause that will make this bill effective
upon enactment.
Background
Affordable Care Act (ACA). The ACA represents a major expansion
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of U.S. health care coverage through an expansion and
simplification of the Medicaid program and the adoption of major
reforms of the health insurance market. Most transformational
are changes to the small group and individual insurance markets,
such as mandating guaranteed issuance of coverage, eliminating
pre-existing condition exclusions, limiting factors upon which
premium rates can be developed, and authorizing the creation of
health benefit exchanges either at the state or federal level.
California took early steps to establish Covered California,
pass rate review requirements, establish EHBs, and adopt
insurance market reforms to implement aspects of the ACA, in
some cases before federal regulatory guidance was issued or
finalized. An overarching objective in the development of
California implementing legislation was to ensure, to the extent
possible, that laws applicable to plans and insurers
participating in Covered California were also applied to plans
and insurers not participating in Covered California in order to
keep a level, regulatory playing field. For example, open and
special enrollment periods not only apply to qualified health
plans (QHPs) but also to health plans and insurers not
participating in Covered California. As such, for the
individual market, an initial open enrollment period of October
1, 2013, to March 31, 2014, and annual open enrollment period of
November 15, 2014, to February 15, 2015, for the 2015 benefit
year apply to QHPs and health plans and insurers not
participating in Covered California. The federal Department of
Health and Human Services (HHS) initially issued a regulation to
maintain an annual open enrollment period, for policy years
beginning on or after January 1, 2016, from November 1 to
December 15, inclusive, of the preceding calendar year. On
February 20, 2015, HHS issued the "Final HHS Notice of Benefit
and Payment Parameters for 2016," which requires the annual open
enrollment period for the 2016 policy year to be November 1, of
the preceding calendar year, to January 31, of the benefit year.
HHS made these changes to give health insurance carriers
additional time before they would need to set their 2016 rates
and submit their QHPs applications, give states and HHS more
time to prepare for open enrollment, and give consumers more
time to shop for coverage.
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EHBs. Among many other provisions, the ACA requires Medicaid
benchmark and benchmark-equivalent plans, plans sold through the
Exchange, and health plans and health insurers providing
coverage to individuals and small employers to ensure coverage
of EHBs, as defined by HHS. HHS is required to ensure that the
scope of EHBs is equal to the scope of benefits provided under a
typical employer plan, as determined by the Secretary. Under
federal law, EHBs must include 10 general categories and the
items and services covered within specified categories.
On December 16, 2011, the HHS Center for Consumer Information
and Insurance Oversight released a bulletin proposing that EHBs
be defined using a benchmark approach. SB 951 (Hernandez,
Chapter 866, Statutes of 2012) and AB 1453 (Monning, Chapter
854, Statutes of 2012) designated the Kaiser Small Group HMO as
California's benchmark plan to serve as the EHB standard. The
state has to defray the costs of federal subsidies to cover any
mandate enacted that is beyond what is contained in EHBs
pursuant to SB 951 and AB 1453. The 2016 Notice of Benefit and
Payment Parameters final rule includes a definition of
habilitative, which differs from California's definition, and
proposes that states select new benchmark plans for 2017 based
on plans available in 2014. SB 43 (Hernandez) has been
introduced to update California's EHB benchmark selection.
Covered California. Through SB 900 (Alquist, Chapter 659,
Statutes of 2010) and AB 1602 (Perez, Chapter 655, Statutes of
2010), California was the first state in the nation to establish
a Health Benefit Exchange (known as Covered California).
Adopting its Board of Directors in October 2011, Covered
California's vision is to improve the health of all Californians
by assuring their access to affordable, high quality care.
According to Covered California, it is an easy-to-use
marketplace where individuals can get financial assistance to
make coverage more affordable and where people can compare and
choose health coverage. As of March 31, 2014, approximately 3.2
million Californians have enrolled in coverage since October 1,
2013, including 1.9 million in Medi-Cal.
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California Health Benefits Review Program. CHBRP was
established under AB 1996 (Thomson), Chapter 795, Statutes of
2002, which requested the University of California (UC) to
assess legislation that proposes a mandated benefit or service
(referred to as "mandate bills") and prepare a timely written
analysis within 60 days with relevant data on the medical,
economic, and public health impacts of proposed health plan and
health insurance benefit mandate legislation. Current law
requires health plans, except specialized health plans, and
health insurers, for fiscal years 2010-11 to 2014-15, to be
assessed an annual fee to fund CHBRP; this amount is to not to
exceed $2 million. CHBRP is administered in the UC Office of
the President and has staff that supports a task force of
faculty from six UC campuses (Berkeley, Davis, Irvine, Los
Angeles, San Diego, and San Francisco) and three private
universities (Loma Linda University, the University of Southern
California, and Stanford University). CHBRP is set to sunset on
December 31, 2015. The Governor's proposed budget provides $2
million for CHBRP.
Number of mandate bills. Since CHBRP's inception, the number of
bills mandating benefits and services has fluctuated, and in the
last year has decreased significantly. When AB 1996 was being
considered by the Legislature, the author stated that during the
2001-2002 legislative session, more than 14 mandate bills were
introduced. The author believed that UC would facilitate the
provision of quality, cost-effective health services by
providing current, accurate data and information to the Governor
and the Legislature for the purpose of determining
health-related programs and policies in connection with proposed
legislation. In 2003, the first year that the UC received
requests for analysis of mandate bills, only four were
introduced and analyzed. The following year, there were 13
mandate bills analyzed. Between 2005 and 2014, the number of
mandate bills introduced has varied, with the largest number (15
mandate bills) in 2011. With the passage of the ACA, and the
establishment of EHBs, policymakers have worked to ensure the
successful implementation of the ACA and Covered California, and
have endeavored to discourage any additional legislation to
alter state mandated benefits until the implications on EHBs
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were known.
New ways to tweak coverage requirements. In the 11 years since
CHBRP has been analyzing mandate bills, various stakeholders and
interest groups have developed legislative proposals other than
mandates to have a similar effect on coverage requirements.
These have included:
SB 639 (Hernandez, Chapter 316, Statutes of 2013) places in
California law provisions of the ACA relating to out-of-pocket
limits on health plan enrollee and insured cost-sharing,
health plan and insurer actuarial value coverage levels and
catastrophic coverage requirements, and requirements on health
insurers with regard to coverage for out-of-network emergency
services. Applies health plan enrollee and insured
out-of-pocket limits to specialized products that offer EHBs.
AB 1800 (Ma, 2012) would have implemented provisions of the
ACA related to prohibitions on health plans and health
insurers from imposing out-of-pocket maximum caps which exceed
specified levels. The bill was held in the Senate
Appropriations Committee.
AB 310 (Ma, 2011) would have prohibited health plan contracts
and health insurance policies that cover outpatient
prescription drugs from requiring coinsurance, as defined, as
a basis for cost sharing for outpatient prescription drug
benefits and imposes specified limitations on copayments, as
defined, and out-of-pocket expenses for outpatient
prescription drugs. The bill was held in the Assembly
Appropriations Committee.
60-day timeline. AB 1996 and subsequent legislation that
extended CHBRP included a request that analyses be provided to
the Legislature within 60 days. CHBRP developed a model that
has resulted in analyses not being completed prior to that
60-day deadline. According to CHBRP's 2013 report to the
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Legislature, it uses a 60-day timeline that details which
activities occur on what day. The 60-day clock is initiated by
CHBRP upon receipt of a request from the Senate or Assembly
Health Committee. According to CHBRP, it must have sufficient
capacity to do multiple (e.g., eight or more) analyses on
simultaneous 60-day timelines. CHBRP faculty, actuaries,
librarians, reviewers, and staff must produce and review
multiple drafts on multiple bills in what they consider a very
compressed timeframe, given their model. This timeline has led
to challenges for incorporating CHBRP's assessment into the
policy committee analysis used by legislators and the public at
the time of the bill hearing. Oftentimes mandate bills are
introduced close to the bill introduction deadline, which is
also about 60 days before deadline for policy committees to hear
bills, meaning mandate bills are almost always scheduled for the
final hearing prior to the policy committee deadline for fiscal
bills. Therefore, there is a tight window between the time the
CHBRP analysis is received and the Committee analysis must be
completed.
Prior Legislation
AB 1996 (Thomson, Chapter 795, Statutes of 2002) requests UC
(which created CHBRP in response), until January 1, 2007, to,
within 60 days of receiving a request by the Legislature, review
legislation proposing to mandate or repeal a health plan or
health insurance benefit or service for public health, medical,
and financial impacts.
SB 1704 (Kuehl, Chapter 684, Statutes of 2006) extended CHBRP's
sunset date to January 1, 2011, and added legislation proposing
to repeal a mandated benefit or service to the types of
legislation that the Legislature requests CHBRP assess.
Extended the sunset date of the program to January 1, 2011.
AB 1540 (Committee on Health, Chapter 298, Statutes of 2009)
extends CHBRP's sunset date to June 30, 2015.
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SB 1465 (Committee on Health, Chapter 442, Statutes of 2014)
extends the CHBRP's sunset date to December 31, 2015.
SB 20 (Hernandez, Chapter 24, Statutes of 2014) requires a plan
or insurer to provide annual enrollment periods for policy years
beginning on or after January 1, 2016, from October 15 to
December 7, inclusive, of the preceding calendar year.
AB 1578 (Pan, 2014) would have extended CHBRP's sunset date to
June 30, 2016. AB 1578 died in the Assembly.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: Yes
According to the Senate Appropriations Committee analysis,
annual costs of $2 million to support the CHBRP (within the UC),
supported by an assessment on health plans and health insurers
(Health Care Benefits Fund).
Minor administrative costs for the California Health Benefits
Exchange to revise existing regulations to conform to the
updated open enrollment period. According to the Exchange, the
required changes to existing regulations can be included within
an existing package of regulations and therefore there is no
additional cost anticipated. Similarly, the Exchange has already
planned to update information technology systems to accommodate
this change, so no new costs are anticipated.
No significant costs are anticipated for the Department of
Insurance or the Department of Managed Health Care.
SUPPORT: (Verified4/13/15)
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Anthem Blue Cross
California Association of Health Plans
California Chamber of Commerce
California Immigrant Policy Center
Kaiser Permanente
L.A. Care Health Plan
Western Center on Law and Poverty
OPPOSITION: (Verified4/13/15)
California Right to Life Committee, Inc.
ARGUMENTS IN SUPPORT: Proponents of this bill note the
significance of the analyses produced by CHBRP as well as the
necessity to maintain consistency between open enrollment
periods for health benefit plans in California and federal
regulations. The California Association of Health Plans
believes the changes to the individual annual open enrollment
periods should be made to conform to federal law and guidance as
soon as possible to allow for greater clarity on the matter for
health plans, consumers, and regulators. The California Chamber
of Commerce also acknowledges the need to extend the operative
date for CHBRP in order to make it possible for the Legislature
to fully weigh the potential health benefits and costs to the
system related to a particular proposal.
ARGUMENTS IN OPPOSITION: The California Right to Life
Committee, Inc. opposes the bill because of the request to
include EHBs into the CHBRP analyses. The opponents note that
EHBs can include preventative services which encompasses
reproductive health and abortion services. The California Right
to Life Committee, Inc. continues to oppose any effort to
include or require that abortion is an essential service or one
called preventative.
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Prepared by:Melanie Moreno / HEALTH / (916) 651-4111
4/15/15 16:28:55
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