BILL ANALYSIS Ó
SENATE COMMITTEE ON HEALTH
Senator Ed Hernandez, O.D., Chair
BILL NO: SB 145
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|AUTHOR: |Pan |
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|VERSION: |September 10, 2015 |
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|HEARING DATE: |September 11, | | |
| |2015 | | |
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|CONSULTANT: |Teri Boughton |
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PURSUANT TO SENATE RULE 29.10
SUBJECT : Robert F. Kennedy Farm Workers Medical Plan.
SUMMARY :1. Requires the Department of Health Care Services (DHCS) to
annually reimburse the Robert F. Kennedy Farm Workers Medical
Plan (RFK Plan) for claim payments that exceed $70,000 made by
the RFK plan on behalf of an eligible employee or dependent
for a single episode of care on or after September 1, 2016.
Caps the reimbursement at $3 million per year. Sunsets this
bill on January 1, 2021.
Existing law:
1)Establishes regulatory requirements for stop-loss insurance
for small employers, including on or after January 1, 2016,
setting an individual attachment point of $40,000 or greater
and an aggregate attachment point of the greater of $5,000
times the total number of group members, 120% of expected
claims, or $40,000. Exempts small employer stop-loss
insurance issued prior to September 1, 2013, from these
attachment point requirements.
2)Provides $2.5 million in one-time funding to the RFK Plan to
purchase stop-loss insurance.
3)Establishes under federal law, the Affordable Care Act (ACA),
which among other provisions, expands eligibility for Medicaid
(Medi-Cal in California), sets up health benefit exchanges,
and establishes reforms on private health insurance.
This bill:
1)Requires DHCS to annually reimburse the RFK Plan for claim
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payments that exceed $70,000 made by the plan on behalf of an
eligible employee or dependent for a single episode of care on
or after September 1, 2016. Caps the reimbursement at $3
million per year.
2)Requires the plan to submit to DHCS completed data, verified
by an independent certified public accountant, for claims paid
by the plan for services during the preceding year from
September 1 to August 31, inclusive, to seek reimbursement
commencing after September 1, 2017, and annually thereafter.
3)Requires DHCS to analyze claims data if received from the
plan, to determine the aggregate amount of claims that exceed
$70,000 paid by the plan on behalf of an eligible employee or
dependent for any separate episode of care.
4)Requires no later than 60 days after DHCS receives claims data
submitted by the plan, DHCS to reimburse the plan the amount
determined pursuant to 3) above up to the amount of $3 million
per year.
5)Includes as legislative intent the following:
a) The RFK Plan is a joint labor-management
health plan for farm workers organized under Section
302(c)(5) of the federal Labor Management Relations
Act of 1947.
b) This plan has been in existence for more than
45 years and has provided vital health services to
farm workers and their families, enabling them to lead
healthier lives, make better use of their available
income, and achieve self-sufficiency.
c) The plan has focused on primary and preventive
care and has significantly alleviated the burden on
publicly funded health resources in the plan's
coverage areas.
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d) The plan has saved the state significant sums
of money that would have otherwise been expended to
provide health care.
e) The Legislature has determined that the plan
is an efficient and cost-effective means to deliver
health care services to farm workers and their
families within the plan's coverage areas. Thus, it is
in the state's interest to maintain the range of
health care services provided by the plan without
threatening the plan's financial viability.
6)Sunsets this bill on January 1, 2021.
FISCAL
EFFECT : According to the Assembly Appropriations Committee,
General Fund costs of up to $3 million per year to DHCS to
reimburse the RFK Plan for episodes of high-cost care incurred
by the RFK Plan enrollees.
PRIOR VOTES :
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|Assembly Floor: |46 - 28 |
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|Assembly Appropriations Committee: |11 - 5 |
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|Assembly Health Committee: |12 - 4 |
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COMMENTS :
1)Author's statement. According to the author, this bill
provides a longer-term strategy that will allow the state to
keep agricultural employer and farm worker contributions
flowing into health care, thereby allowing 16,000 farmworkers
and their families to preserve privately funded insurance. SB
145 will save the state money in avoided Medi-Cal costs and
provides good public and fiscal policy for both farm workers
and taxpayers.
2)CA Farmworker Health Coverage. According to background
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information provided at a July 10, 2014 briefing sponsored by
the California Program on Access to Care, provided by Ed
Kissam of the Werner-Kohnstamm Family Fund, there are
approximately 600,000 farmworkers in California. Agricultural
work is less seasonal in California than in other states.
Approximately, 300,000 farmworkers work less than 191 days a
year and might be deemed seasonal workers under the ACA. At
least three-quarters of farmworkers (74%) earn less than
$30,000 per year. More California farmworkers work for farm
labor contractors (FLC's) as compared to the rest of the U.S.
FLC employees are younger, more recently-arrived, and
typically earn less than those directly hired by growers.
Based on family income alone, at least 25% of farmworkers in
California would qualify for subsidized health insurance and
more than half (58%) would qualify for Medi-Cal. However,
about 400,000 of them lack legal status. So, they cannot
purchase subsidized insurance and can qualify only for
restricted-scope Medi-Cal. There are also disparities in
health insurance coverage which correlate with legal status.
Slightly more than one-quarter (27%) of California's
authorized farmworkers are covered by their employers but only
9% of the unauthorized farmworkers are covered by their
employers. About 75% of California farmworkers who had health
insurance had visited a provider in the past two years while
only 43% of those without insurance did.
3)RFK Plan. The RFK Plan was founded in 1969. It is a
self-funded, self-administered plan with an employer
contribution that depends on collective-bargaining agreements.
According to information provided by this bill's sponsor, the
United Farm Workers (UFW), in terms of the employer
contribution: a $3.00-per-hour-per-employee contribution is
common; all agreements have contributions of between $2.50 and
$3.75 per hour per employee. Less than 5% of the plan budget
goes to administrative costs, including legally mandated
costs. The RFK plan covers everything from basic office
visits, out-patient diagnostic lab and x-ray to inpatient
hospitalizations, including physical therapy, chiropractic and
in some plans, home health care, skilled nursing and durable
medical equipment. Depending upon the benefit design, plan
participants can have small monthly premiums based on hours
worked, co-pays, and deductibles for hospitalization.
Deductibles vary from $5 to $170 in grandfathered plans. Most
plans have a 20% co-insurance and cover 80% of all benefits in
the particular plan.
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According to UFW, in the past year, the RFK plan provided health
insurance to more than 13,000 people living in farm worker
families in California. Of those covered, about 6,100 are
adults and about 7,500 are children. An estimated 9,132
members are eligible for full scope Medi-Cal, 1,560 are
eligible for limited scope Medi-Cal, 3,000 have income too
high to qualify for Medi-Cal. The plan has one year (Sep
2014-Aug 2015) of claim experience above with claims above
$70,000. Approximately 17 cases are claims over $70,000,
which total approximately $1.4 million. The $70,000 limit is
based on the previous annual benefit limit the plan had in
place prior to its compliance with the ACA in 2014.
In 2014, the plan secured a $3.2 million appropriation from
California to purchase stop-loss insurance. In the 2015-16
budget, UFW requested a lower amount of support from the state
($2.5 million) because of an enrollment increase by more than
2,300 lives in California. In the budget process, the sponsors
indicated the request was a one-time funding solution for the
purchase of stop-loss insurance for an additional year.
4)Stop-loss insurance. Stop-loss insurance is sold to
purchasers (typically employers and labor trusts) that
self-insure their employee's health care coverage to limit the
purchaser's financial exposure. Stop-loss insurance is
available in two forms: a) specific stop loss, where coverage
is initiated when a claim for an individual employee or
dependent reaches the threshold selected by the employer.
After the threshold is reached, the stop-loss policy would pay
claims up to the lifetime limit per employee; and, b)
aggregate stop loss, where coverage is initiated when the
employer's self-insurance total group health claims reach a
stipulated threshold selected by the employer. This bill
would have the State of California, through DHCS; act as a
stop loss insurer. Under this bill, the state would pay
claims for a single episode of care that exceeds $70,000 up to
a total cap across all claims over $70,000 of $3 million per
year until this bill sunsets in 2021. The RFK plan total
premium for stop-loss insurance for 2014-2015, was $3.43
million. The total premium for 2015-2016 is estimated to be
$3.1 million.
5)Prior legislation. SB 75 (Committee on Budget and Fiscal
Review, Chapter 18, Statutes of 2015) requires DHCS to
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allocate $2.5 million from the Major Risk Medical Insurance
Fund, on a one-time basis, to the RFK Medical Plan for
purposes of purchasing stop-loss insurance.
SB 870 (Committee on Budget and Fiscal Review, Chapter 40,
Statutes of 2014) provides $3.2 million in one-time funds from
the Major Risk Medical Insurance Fund to the RFK Medical Plan
for purposes of purchasing stop-loss insurance.
SB 161 (Ed Hernandez, Chapter 414, Statutes of 2013)
establishes regulatory requirements for stop-loss insurance
for small employers, including on or after January 1, 2016,
setting an individual attachment point of $40,000 or greater
and an aggregate attachment point of the greater of $5,000
times the total number of group members, 120% of expected
claims, or $40,000; and, exempts small employer stop-loss
insurance issued prior to September 1, 2013, from these
attachment point requirements.
SB 1431 (De Leon, 2012) would have set the stop-loss insurance
attachment point for small employers on policies issued on or
after January 1, 2012, at $45,000 for individuals and the
greater of $15,000 times the total number of covered employees
and dependents, 130% of expected claims, or $60,000. SB 1431
died in the inactive file on the Assembly Floor.
6)Support. This bill is sponsored by the UFW, which writes that
this bill would ensure farm workers and their families can
continue to obtain medical health benefits. UFW states that
even with President Obama's ACA, it is estimated that one
million Californians will remain uninsured and not eligible
for coverage due to immigration status. UFW indicates that
the Medi-Cal costs for this population in 2015 are estimated
at 6.6 million. With regard to stop-loss insurance, UFW
indicates that this bill reduces the potential state liability
and eliminates the need for on-going reliance on an uncertain
insurance market.
7)Policy comments.
a) Precedent Setting. While the ACA has transformed
the U.S. health care system by expanding coverage to
millions, including a significant drop in the rates of
uninsured in California with notable decreases in
uninsured rates for low-income and African Americans
according to the California HealthCare Foundation, many
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purchasers of health care have been affected by the
changes brought about by the ACA. Other purchasers of
health care for farmworkers and other industries that
employ low-wage workers may also wish to have this type
of assistance from the state. This proposal raises
several policy questions, including whether it is
appropriate for the state to assume the role of reinsurer
for high cost claims, and if the state elects to do so,
which entities and what criteria should make an entity
eligible for this assistance. In addition, the phrase
"episode of care" is not defined, and DHCS does not
currently perform this type of payment function.
SUPPORT AND OPPOSITION :
Support: United Farm Workers (sponsor)
Oppose: None received
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