BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 125|
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UNFINISHED BUSINESS
Bill No: SB 125
Author: Hernandez (D)
Amended: 5/21/15
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
SENATE FLOOR: 38-0, 4/16/15
AYES: Allen, Anderson, Bates, Beall, Berryhill, Block,
Cannella, De León, Fuller, Gaines, Galgiani, Hall, Hancock,
Hernandez, Hertzberg, Hill, Hueso, Huff, Jackson, Lara, Leno,
Leyva, Liu, McGuire, Mendoza, Mitchell, Monning, Moorlach,
Morrell, Nguyen, Nielsen, Pan, Pavley, Roth, Stone, Vidak,
Wieckowski, Wolk
NO VOTE RECORDED: Runner
ASSEMBLY FLOOR: 78-0, 6/2/15 (Consent) - See last page for
vote
SUBJECT: Health care coverage
SOURCE: Author
DIGEST: This bill extends the sunset date of the California
Health Benefit Review Program (CHBRP) to June 30, 2017 and makes
changes to its analyses and timelines. Extends the fee assessed
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on health plans and insurers for this purpose until fiscal year
2016-17. 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. Conforms state law to federal requirements regarding
how to count employees for the purposes of determining employer
size with regard to small or large group health insurance
markets.
Assembly Amendments conform state law to federal requirements
regarding how to count employees for the purposes of determining
employer size with regard to small or large group health
insurance markets.
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 (referred to as "mandate bills") for public health,
medical, and financial impacts. Sunsets CHBRP on June 30,
2015.
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)Requires health plans and insurers to limit enrollment in
individual health benefit plans to open enrollment periods,
annual enrollment periods, and special enrollment periods.
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4)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.
5)Defines "small employer" for plan years commencing on or after
January 1, 2014, and on or before December 31, 2015, as any
person, firm, proprietary or nonprofit corporation,
partnership, public agency or association that is actively
engaged in business or service, that, on at least 50 percent
of its working days, as specified, employed at least one, but
not more than 50 eligible employees. For plan years
commencing on or after January 1, 2016, defines a "small
employer" as one with at least one but not more than 100
eligible employees.
6)Defines "eligible employee" as any permanent employee who is
actively engaged on a full-time basis with a normal workweek
of an average of 30 hours per week over the course of a month,
at the small employer's regular places of business, as
specified. Deems permanent employees who work at least 20
hours, but not more than 29 hours, as eligible employees if
specified criteria are met.
This bill:
1)Requests CHBRP to analyze the impact of mandate bills 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.
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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)Requires health plans and insurers to provide annual open
enrollment periods for plan or policy years beginning on or
after January 1, 2016, from November 1, of the preceding
calendar year, to January 31 of the benefit year, inclusive.
8)Revises, for plan years commencing on or after January 1,
2016, the definition of small employer to require the use of a
full-time equivalent (FTE) employee counting method for
determining the size of the employer, specifically whether the
employer is a small employer.
9)Contains an urgency clause that will make this bill effective
upon enactment.
Background
Affordable Care Act (ACA). The ACA represents a major expansion
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. California took early
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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.
Enrollment periods. 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. On February 20, 2015, the
federal Department of Health and Human Services (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.
Small employer definition. Federal and state laws define a
"small employer" as an employer with one to 100 employees, as
specified. Federal law allows states to define small employers
as those with one to 50 employees for plan years prior to
January 1, 2016. California currently exercises this option, so
under California law, until December 31, 2015, small employers
are defined as having one to 50 employees. However, beginning
January 1, 2016, a small employer is defined under state law as
one with 1 to 100 employees, as specified.
While both federal and state laws use similar definitions of a
small employer, the laws vary with respect to how employees are
counted to determine whether or not an employer can purchase
health insurance in the small group market or the large group
market. With respect to exchanges, federal regulations require,
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on or after January 1, 2016, employees to be counted using an
FTE method. Under the FTE method, employers are required, in
addition to the number of full-time employees, to count the
number of FTE employees to determine the total number of its
employees. This counting method takes part-time employees into
account in order to determine the size of the employer for the
specific purposes of exchanges. California law does not require
the use of the FTE method to count employees to determine the
size of an employer.
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.
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.
CHBRP. CHBRP was established under AB 1996 (Thomson, Chapter
795, Statutes of 2002), which requested the UC to assess 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. 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
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Angeles, San Diego, and San Francisco) and three private
universities (Loma Linda University, the University of Southern
California, and Stanford University).
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
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
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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
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
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CHBRP analysis is received and the Committee analysis must be
completed.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: Yes
According to the Assembly Appropriations Committee:
1)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).
2)Minor administrative costs for the California Health Benefits
Exchange to revise existing regulations to conform to the
updated open enrollment period.
SUPPORT: (Verified6/2/15)
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: (Verified6/2/15)
California Right to Life Committee, Inc.
ASSEMBLY FLOOR: 78-0, 6/2/15
AYES: Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bloom,
Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chang,
Chau, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Daly, Dodd,
SB 125
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Eggman, Frazier, Beth Gaines, Gallagher, Cristina Garcia,
Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray,
Hadley, Harper, Roger Hernández, Holden, Irwin, Jones,
Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low,
Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin,
Nazarian, Obernolte, O'Donnell, Olsen, Patterson, Perea,
Quirk, Rendon, Ridley-Thomas, Rodriguez, Salas, Santiago,
Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber,
Wilk, Williams, Wood, Atkins
NO VOTE RECORDED: Chávez, Grove
Prepared by:Melanie Moreno / HEALTH /
6/2/15 21:56:01
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