BILL ANALYSIS Ó
SB 923
Page 1
SENATE THIRD READING
SB
923 (Hernandez)
As Amended May 31, 2016
Majority vote
SENATE VOTE: 29-5
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|Committee |Votes|Ayes |Noes |
| | | | |
| | | | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Health |17-0 |Wood, Maienschein, | |
| | |Bonilla, Burke, | |
| | |Campos, Chiu, Gomez, | |
| | |Roger Hernández, | |
| | |Lackey, Nazarian, | |
| | |Patterson, | |
| | | | |
| | | | |
| | |Ridley-Thomas, | |
| | |Rodriguez, Santiago, | |
| | |Steinorth, Thurmond, | |
| | |Waldron | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Appropriations |18-0 |Gonzalez, Bigelow, | |
| | |Bloom, Bonta, | |
| | |Calderon, Chang, | |
SB 923
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| | |Daly, Eggman, | |
| | |Gallagher, | |
| | | | |
| | | | |
| | |Roger Hernández, | |
| | |Holden, Jones, | |
| | |Obernolte, Quirk, | |
| | |Santiago, Wagner, | |
| | |Weber, Wood | |
| | | | |
| | | | |
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SUMMARY: Prohibits health care service plans (health plans) and
health insurance policies (health policies) from changing cost
sharing requirements during a plan or policy year in the
individual or small group markets.
FISCAL EFFECT: According to the Assembly Appropriations
Committee, the costs to Department of Managed Health Care and
California Department of Insurance are expected to be minor and
absorbable, if any (Managed Care Fund/Insurance Fund).
COMMENTS: According to the author, the federal Patient
Protection and Affordable Care Act (ACA) provide many new
consumer protections to make health insurance more affordable
and available. These include protections on cost-sharing, such
as actuarial value requirements and placing annual limits on
out-of-pocket costs. One of the many individual market reforms
California enacted while implementing the ACA, was a provision
that prohibited plans and insurers from altering premiums during
the plan year. This essential patient protection does not
currently apply to cost sharing requirements across all markets.
This bill will ensure health care consumers are actually
provided what they were promised when signing up for coverage by
prohibiting a health plan contract or health policy from
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changing any cost sharing requirements during the plan year.
The health insurance market is segmented into group and nongroup
markets. In the group market there are companies that issue
health insurance plans or policies to large employers or small
employers, or both, and in the nongroup market plans or policies
are issued to individual purchasers who buy insurance for
themselves and/or their family members. Both small group and
individual health plans or policies are available for purchase
in health benefit exchanges (Covered California in this state)
and outside health benefit exchanges. The laws that apply to
specific market segments are not always the same.
The ACA includes a number of provisions that reform the health
insurance market. These reforms help put American consumers
back in charge of their health coverage and care, ensuring they
receive value for their premium dollars. The ACA creates a more
level playing field by cracking down on unreasonable health
insurance premiums and holding insurance companies accountable
for unjustified premium increases. Most transformational are
changes to the small group and individual insurance markets,
such as mandating guaranteed issuance of coverage, eliminating
pre-existing condition exclusions, and limiting factors upon
which premium rates can be developed. The ACA requires carriers
to provide essential health benefits with standardized tiers of
cost-sharing. With standardized benefits, consumers can more
accurately compare plans and policies because the benefits are
the same for all plans offered in the Exchange marketplace.
Additionally, standardizing benefits ensures that the selected
health insurance plans define what consumers get and limit the
consumer's out-of-pocket costs by type of service.
For both small group and individual group health plans or
policies, California law establishes either a 12 month or
calendar year rating period meaning rates have to be based on a
12 month period. Prior to the ACA, California law already
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prohibited changing the premium rates, copayments, coinsurances,
or deductibles for the length of the contract in group health
plans and policies, with certain exceptions (i.e. when the
parties to the contract agree in writing).
According to an article in the Los Angeles Times, in October of
2015, a major health plan settled an $8.3 million lawsuit when
in 2011 the company was altering deductible requirements
mid-year. As part of the settlement, the health plan assumed no
wrong-doing and argued that neither state law nor their existing
contracts prohibited this practice. There were 50,000 affected
consumers including one individual who received a $19,000 award
because the individual had paid particularly high out-of-pocket
costs. Affected consumers stated that they felt their health
plan was changing the rules in the middle of the game. This
bill would apply to grandfathered and nongrandfathered health
plan contracts and policies in the individual and small group
markets that are issued, amended, or renewed on or after January
1, 2017.
Health Access California, sponsor of this bill, states that this
bill requires health plans and insurers to keep cost sharing
designs for a specific product in place during the entire rate
year. Additionally, the sponsor explains that cost sharing
design refers to what the copays or coinsurances are for a
specific benefit. The American Federation of State, County and
Municipal Employees, American Federation of Labor and Congress
of Industrial Organizations (AFL-CIO), writes in support as this
bill holds health care providers accountable for their services
and patients. The National Association of Social Workers,
California Chapter supports this bill because it will help
consumers budget their health care expenditures and will allow
consumers to understand their potential costs during the plan
year. The California School Employees Association, AFL-CIO,
states that this bill stops the unfair practice of the health
plan increasing co-payments, or any other cost sharing
requirements throughout the year.
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Analysis Prepared by:
Kristene Mapile / HEALTH / (916) 319-2097 FN:
0003650