BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 908|
|Office of Senate Floor Analyses | |
|(916) 651-1520 Fax: (916) | |
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UNFINISHED BUSINESS
Bill No: SB 908
Author: Hernandez (D)
Amended: 8/18/16
Vote: 21
SENATE HEALTH COMMITTEE: 7-2, 4/6/16
AYES: Hernandez, Hall, Mitchell, Monning, Pan, Roth, Wolk
NOES: Nguyen, Nielsen
SENATE APPROPRIATIONS COMMITTEE: 5-2, 5/27/16
AYES: Lara, Beall, Hill, McGuire, Mendoza
NOES: Bates, Nielsen
SENATE FLOOR: 24-12, 6/1/16
AYES: Allen, Beall, Block, De León, Hall, Hancock, Hernandez,
Hertzberg, Hill, Hueso, Jackson, Lara, Leno, Leyva, Liu,
McGuire, Mendoza, Mitchell, Monning, Pan, Pavley, Roth,
Wieckowski, Wolk
NOES: Anderson, Bates, Berryhill, Fuller, Gaines, Huff,
Moorlach, Morrell, Nguyen, Nielsen, Stone, Vidak
NO VOTE RECORDED: Cannella, Galgiani, Glazer, Runner
ASSEMBLY FLOOR: 51-26, 8/22/16 - See last page for vote
SUBJECT: Health care coverage: premium rate change: notice:
other health coverage
SOURCE: Health Access California
DIGEST: This bill requires health plans and health insurers to
notify purchasers in the individual and small group market if
premium rates have been determined unreasonable or unjustified.
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Page 2
Assembly Amendments (1) delete an option which would have
provided individual and small business purchasers 60 days to
choose another plan and in the individual market, a special
enrollment period; (2) require the departments to develop the
notice and exempt the notice development from the Administrative
Procedures Act; (3) permit plan's and insurer's to combine the
rate notification notice with the disclosure that the regulator
has determined the rate is unreasonable or unjustified; (4)
require grandfathered individual and small group rate increases
to be made public for 120 days prior to the implementation of
the rate increase; (5) require all required rate information for
nongrandfathered individual health plan contracts and insurance
policies on the earlier of 100 days before the first day of the
applicable open enrollment period, or the date specified in the
federal guidance issued pursuant to federal regulations; (6)
require plans and insurers to respond to a department's request
for any additional information necessary to complete review of
the rate filing for individual and small group health plan
contracts and health insurance policies within five business
days of a request; (7) require regulators to determine whether a
plan's or insurer's rate increase is unreasonable or not
justified no later than 60 days following receipt of all the
information required to makes a determination; (8) require
regulators to issue a determination that the rate increase is
unreasonable or not justified no later than 15 days before the
first day of the applicable open enrollment period; and (9)
permit, if a health care service plan fails to provide all the
information the department requires to make its determination,
the department to determine that the rate increase is
unreasonable or not justified.
ANALYSIS:
Existing law:
1)Establishes the Department of Managed Health Care (DMHC) to
regulate health care service plans (health plans) and the
California Department of Insurance (CDI) to regulate insurers,
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Page 3
including health insurers.
2)Requires health plans and health insurers, for the small group
and individual markets, to file with DMHC and CDI, at least 60
days prior to implementing any rate change, specified rate
information so that the departments can review the information
for unreasonable rate increases.
3)Requires, pursuant to federal Centers for Medicare and
Medicaid Services (CMS) regulations, if a health insurance
issuer implements a rate increase determined to be
unreasonable, with the later of 10 business days after the
implementation of such increase or receipt of final
determination, the health insurance issuer to submit a final
justification and prominently post it on its Web site in a
form and in a manner prescribed by the federal Secretary of
the Department of Health and Human Services for at least three
years. CMS will also post the issuer's final justification on
the CMS Web site for at least three years.
This bill:
1)Requires notification to individuals and small groups when
DMHC or CDI has determined the health plan or health insurance
policy rate is unreasonable or not justified.
2)Requires rate information to be filed 120 days, prior to
implementing a rate change in the grandfathered individual or
small group market. Requires all required rate information for
nongrandfathered individual health plan contracts and
insurance policies on the earlier of 100 days before the first
day of the applicable open enrollment period, or the date
specified in the federal guidance issued pursuant to federal
regulations.
3)Requires health plans and insurers to comply with DMHC or
CDI's requests for additional information within specified
timelines.
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4)Requires the DMHC or CDI to determine reasonableness no later
than 60 days following receipt of all information required to
make a determination. Requires regulators to issue a
determination that the rate increase is unreasonable or not
justified no later than 15 days before the first day of the
applicable open enrollment period.
5)Requires a plan to respond to DMHC's and CDI's request for any
additional information necessary to complete review of the
plan's or insurer's rate filing for individual and small group
health plan contracts and health insurance policies within
five business days of a request.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: Yes
According to the Assembly Appropriations Committee:
1)Minor costs to the DMHC (Managed Care Fund) to verify plans
and insurers comply with this requirement, and $130,000
ongoing to the CDI (Insurance Fund) to expedite determinations
of reasonableness.
2)Any costs incurred by Covered California-for example, to train
staff about handling special enrollments-are expected to be
minor and absorbable (California Health Trust Fund).
SUPPORT: (Verified 8/22/16)
Health Access California (source)
American Cancer Society Cancer Action Network
American Federation of State, County and Municipal Employees,
AFL-CIO
Asian Law Alliance
California Labor Federation
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California Medical Association
CALPIRG
Coalition of California Welfare Rights Organizations, Inc.
Consumers Union
Los Angeles County Professional Peace Officers Association
San Diego County Court Employees Association
San Luis Obispo County Employees Association
The Organization of SMUD Employees
Western Center on Law and Poverty
OPPOSITION: (Verified 8/22/16)
America's Health Insurance Plans
Association of California Life and Health Insurance Companies
California Association of Health Plans
ARGUMENTS IN SUPPORT: Health Access California writes that
today it is challenging for an individual consumer or small
business owner to know that their health insurance rate has been
found unreasonable or unjustified. The organization of SMUD
Employees, San Diego County Court Employees Association and the
San Luis Obispo County Employees Association write that each
year, millions of individual consumers and employers shop for
coverage and have virtually no way of knowing if the premium has
been found unreasonable or unjustified and no chance to shop for
other coverage. The California Labor Federation writes that
given the success of California's rate review law, notification
of consumers is a logical next step to broaden the impact of the
process and to continue to discourage unreasonable and
unjustified rate hikes. CALPIRG writes that the experience of
the program to date suggests that some insurance issuers are not
receptive to regulators' requests for rate reductions when they
find that the increases are not justified. When this happens
consumers can become locked in to unreasonable policies without
their informed consent. Western Center on Law and Poverty
believes consumers and small business owners deserve to know if
their health plan is charging unreasonable or unjustified rates
and should have the option to switch plans. The Asian Law
Alliance writes this bill will let the market work.
ARGUMENTS IN OPPOSITION: America's Health Insurance Plans
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(AHIP) writes that this bill fails to offer any solution to
address the problem of rising health care costs that threaten
the affordability of health care coverage in California. AHIP
believes this bill is unnecessary because federal regulations
have been promulgated governing the obligation to disclose
unreasonable rate increases. The California Association of
Health Plans believes this bill will subject health plans to new
administrative burdens and inadvertently disrupt the health
insurance market by adding additional and overlapping enrollment
options and rate freezes.
ASSEMBLY FLOOR: 51-26, 8/22/16
AYES: Alejo, Arambula, Atkins, Bloom, Bonilla, Bonta, Brown,
Burke, Calderon, Campos, Chau, Chiu, Chu, Cooley, Cooper,
Dababneh, Dodd, Eggman, Frazier, Cristina Garcia, Eduardo
Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Roger
Hernández, Holden, Irwin, Jones-Sawyer, Levine, Lopez, Low,
Mayes, McCarty, Medina, Mullin, Nazarian, O'Donnell, Quirk,
Ridley-Thomas, Rodriguez, Santiago, Mark Stone, Thurmond,
Ting, Weber, Williams, Wood, Rendon
NOES: Achadjian, Travis Allen, Baker, Bigelow, Brough, Chang,
Chávez, Dahle, Beth Gaines, Gallagher, Grove, Hadley, Harper,
Jones, Kim, Lackey, Maienschein, Mathis, Obernolte, Olsen,
Patterson, Salas, Steinorth, Wagner, Waldron, Wilk
NO VOTE RECORDED: Daly, Linder, Melendez
Prepared by:Teri Boughton / HEALTH / (916) 651-4111
8/22/16 22:15:43
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