BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 514|
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THIRD READING
Bill No: SB 514
Author: Anderson (R)
Amended: 1/26/16
Vote: 27 - Urgency
SENATE HEALTH COMMITTEE: 6-0, 1/13/16
AYES: Hernandez, Nguyen, Monning, Nielsen, Roth, Wolk
NO VOTE RECORDED: Hall, Mitchell, Pan
SENATE APPROPRIATIONS COMMITTEE: 7-0, 1/21/16
AYES: Lara, Bates, Beall, Hill, Leyva, Mendoza, Nielsen
SUBJECT: California Health Benefit Exchange
SOURCE: Author
DIGEST: This bill prohibits the California Health Benefit
Exchange, known as Covered California, from disclosing personal
information obtained from an application for health care
coverage to a certified insurance agent or certified enrollment
counselor without the consent of the applicant. Contains an
urgency clause that will make this bill effective upon enactment
and operative on October 1, 2016.
ANALYSIS:
Existing law:
1)Establishes Covered California in state government as a
state-based marketplace where individuals and small businesses
can purchase qualified health plans.
2)Establishes the Information Practices Act of 1977 (IPA), which
prohibits state agencies from disclosing personal information
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unless the information is disclosed according to one of a
specified list of provisions, such as:
a) With prior voluntary written consent, not more than 30
days in advance of the disclosure, or in the time limit
agreed to by the individual; or,
b) To those officers, employees, attorneys, agents, or
volunteers of the agency that has custody of the
information if the disclosure is relevant and necessary in
the ordinary course of the performance of their official
duties and is related to the purpose for which the
information was acquired.
3)Defines, under the IPA, "personal information" as any
information that is maintained by an agency that identifies or
describes an individual, including, but not limited to, his or
her name, social security number, physical description, home
address, home telephone number, education, financial matters,
and medical or employment history.
4)Establishes, under the federal Affordable Care Act (ACA), the
procedures for determining eligibility requirements for
participation in an exchange, premium tax credits, cost
sharing reductions, and the individual responsibility
exemption.
5)Requires, under the ACA, any person who receives information
provided by an applicant for insurance coverage to use the
information only for the purposes of, and to the extent
necessary in, ensuring the efficient operation of the
exchange, including verifying eligibility of an individual to
enroll through an exchange or to claim a premium tax credit or
cost sharing reduction or the amount of the credit or
reduction, and not disclose the information to any other
person except as provided.
6)Authorizes under federal regulations an exchange to only use
or disclose such personally identifiable information for the
purposes of determining eligibility in a qualified health
plan, for other insurance affordability programs, or for
exemptions from the individual responsibility provisions, as
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specified, to the extent such information is necessary to
carry out the functions of the exchange, as specified. For
other uses which the Secretary of Health and Human Services
determines are in compliance with the ACA but are not to carry
out the exchange functions, requires individual consent. To
carry out other functions, requires consent and substantive
and procedural requirements, as specified.
This bill:
1)Prohibits Covered California from disclosing personal
information, as defined in existing law, obtained from an
application for health care coverage to a certified insurance
agent or certified enrollment counselor without the consent of
the applicant.
2)Defines personal information as the same meaning set forth in
the IPA.
3)Contains an urgency clause that will make this bill effective
upon enactment, however, establishes October 1, 2016, as the
operative date of this bill's provisions.
Comments
1)Author's statement. According to the author, the ACA has
directed states to provide marketplaces, or exchanges, for
consumers seeking health insurance. Covered California, the
health benefit exchange in California, has provided this
platform for individuals shopping for a plan. Unfortunately,
due to a security loophole in the law, shoppers on the Web
site have suffered a disclosure of their data to outside
companies without having given their permission. This bill is
an effort to close that loophole, so that consumers may shop
free from fear of losing their privacy to unknown, outside
entities.
2)Covered California Launch. Covered California opened for
enrollment October 1, 2013. While the California launch was a
success, it was not without issues. Many found the overall
enrollment process difficult to complete. Covered California
identified challenges and opportunities for improvement. Due
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to technical system issues, Covered California allowed people
who started applications to complete those applications until
April 15th. According to Covered California, to follow-up on
applications started to ensure coverage effective January 1,
2014, Covered California enlisted the help of roughly 2,100 of
its Certified Insurance Agent subcontractors to offer
additional assistance to roughly 41,000 households. The basic
contact information (name, telephone number, etc.) was
securely transmitted to Certified Insurance Agents by General
Agent partners, with instructions to quickly touch as many of
these consumers as possible to ensure that they were offered
additional assistance to complete their enrollments. Consumer
information was carefully protected: each Certified Insurance
Agent who participated in the program was given only a small
batch of "leads" at a time, according to their capacity to
reach consumers, and results were reported back to the General
Agents. The program was put on hold when some consumers were
surprised to be contacted by someone they did not realize was
calling on behalf of Covered California.
3)Covered California Privacy Practices. Covered California
Notice of Privacy Practices, Use and Disclosure explain that
Covered California may use and disclose a consumer's personal
information with contractors to help with enrollment and
contact the consumer when necessary. Additionally, all
contractors with whom Covered California shares information
for these purposes undergo a fingerprint and background check,
receive specialized training on keeping information
confidential, and must sign confidentiality agreements that
require contractors to follow the safeguards applicable to
Covered California and prohibit the use of the information for
any purposes outside the scope of the contract.
According to Covered California, both the paper and online
application include disclosures about Covered California's
privacy policy and require the consumer to agree that they are
aware of those privacy policies and practices, which is
required under the IPA and the ACA. On the paper
application, the privacy policy is described immediately above
the "rights and responsibilities" section of the application,
and is referenced in the declaration and signature which are
submitted under penalty of perjury. Specifically, the paper
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application states, "We will share your information with other
state, federal and local agencies, contractors, health plans,
and programs only to enroll you in a plan or program or to
administer programs, and with other state and federal agencies
as required by law." For the Web-based application, in order
to initially set up an online application a user is first
presented with two separate links: one for Covered
California's Terms and Conditions, and the other to Covered
California's privacy policy. In order to continue, a consumer
must actively consent by clicking a box to agree to the Terms
of Conditions and the privacy policy. The privacy policy
discloses that Covered California maintains administrative,
physical, technical, electronic and procedural safeguards to
protect the confidentiality and security of the personal
information. It allows links to additional information about
how data is collected online and used, and how to request
restrictions on the use and disclosure of information, among
other information.
4)California Healthcare Eligibility, Enrollment and Retention
System (CalHEERS). CalHEERS is a web-based system that
streamlines the eligibility and enrollment process for all
products and programs available through Covered California.
Covered California has a CalHEERS change request with the
title, "Consumer Consent to Share Personally Identifiable
Information with Covered California Certified Representative."
According to the document, Covered California needs to obtain
more explicit consumer consent before it shares any personally
identifiable information (namely, contact information) to any
of its certified representatives. The goal of this change
request is to implement a business policy that allows
consumers the opportunity to opt in or out of having their
information shared for program purposes. The background
associated with this change request indicates that most
consumers appreciated the help from certified representatives
but a few consumers were surprised that they were being
contacted by an agent since they had not delegated their
application. According to the document, while this use of
consumer information was legally authorized, Covered
California wants to make sure consumers always have a clear
expectation about how their information may be shared. If the
change request is implemented there will be two boxes for
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consumers to consent to Covered California's privacy policies
and information sharing practices. The first for the consumer
to agree to the privacy policy and the second to agree to have
information shared with the certified representative for
follow-up assistance. Consumer advocates have requested that
this change allow for an opt-in not an opt-out of having their
information shared.
According to Covered California, the change request is under
consideration for their next batch of changes, to be
implemented in September 2016. Currently, that batch still
needs to be prioritized. The prioritization process is under
way and will be finalized around April. Covered California has
been looking at ways that express consumer consent without
changing the application. Covered California is considering
options that might be more cost-effective and have the added
benefit of being a system that can actively check in with
consumers, even existing ones who may not be coming back to
the application any time soon to update their preferences.
Prior legislation. SB 974 (Anderson, 2014) would have required
Covered California to allow consumers to indicate whether they
would like assistance from an agent or enrollment counselor, and
prohibit Covered California from disclosing personal information
if applicants indicate they do not want assistance. SB 974 was
held in the Assembly Appropriations Committee.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: No
According to the Senate Appropriations Committee:
Potential one-time costs of about $300,000 to modify
information technology systems by Covered California to allow
applicants to indicate whether they would like assistance
(special fund). This bill, as amended, does not require
Covered California to develop a process for allowing an
applicant to indicate whether personal information can be
shared. If Covered California does develop such a system, it
would incur the costs above.
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Unknown potential costs to develop the systems and procedures
to pass along consumer information (upon consumer request) to
certified insurance agents or enrollment counselors (special
fund). In addition to the system changes needed to allow a
consumer to consent to having contact information shared with
insurance agents or enrollment counselors, Covered California
will need to develop systems and procedures for taking the
appropriate information and sharing it with the appropriate
partners. Covered California does not yet have a plan for how
that process would work, so no cost estimates are available at
this time. It is likely that the costs to create those "back
end" systems would be in the low hundreds of thousands. As
noted above, those costs would only occur if Covered
California decided to implement a system to allow the sharing
of applicant information, with consumer consent.
Potential minor costs to revise paper applications for health
care coverage by the Department of Health Care Services (DHCS)
(General Fund and federal funds). The state uses a single
paper application for the Medi-Cal program and coverage
through Covered California. In order to comply with the
requirements of this bill, DHCS would likely need to update
the paper application to opt out of future contacts. The costs
to do so are not expected to be significant since the
Department regularly revises those forms.
SUPPORT: (Verified1/22/16)
California Association of Health Underwriters
Independent Insurance Agents and Brokers of California
National Association of Insurance and Financial Advisors of
California
OPPOSITION: (Verified1/22/16)
None received
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ARGUMENTS IN SUPPORT: According to the California Association
of Health Underwriters, the National Association of Insurance
and Financial Advisors of California, and the Independent
Insurance Agents and Brokers of California licensed health
insurance agents are already mandated to comply with extensive
privacy laws, undergo substantial education on handling of
consumer information and ethics, plus annual continuing
education. These proponents support this bill because it
provides a simple, tailored approach to permit individuals
needing assistance in the Covered California enrollment process
to affirmatively indicate they need additional help with their
applications.
Prepared by:Teri Boughton / HEALTH /
1/26/16 16:39:30
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