BILL ANALYSIS AB 88 Page 1 ASSEMBLY THIRD READING AB 88 (Thomson) As Amended February 24, 1999 Majority vote HEALTH 10-3 APPROPRIATIONS 14-6 ----------------------------------------------------------------- |Ayes:|Gallegos, Aanestad, |Ayes:|Migden, Cedillo, Davis, | | |Corbett, Firebaugh, | |Hertzberg, Kuehl, Papan, | | |Kuehl, Steinberg, | |Romero, Shelley, | | |Thomson, Cedillo, Wayne, | |Steinberg, Thomson, | | |Wildman | |Wesson, Wiggins, Wright, | | | | |Aroner | | | | | | |-----+--------------------------+-----+--------------------------| |Nays:|Baugh, Bates, Strickland |Nays:|Brewer, Ashburn, Battin, | | | | |Pescetti, Maldonado, | | | | |Runner | | | | | | ----------------------------------------------------------------- SUMMARY : Requires a health care service plan (health plan) contract or disability insurance policy to provide coverage for severe mental illnesses, and for the serious emotional disturbances of a child. Specifically, this bill : 1)Requires every health plan or disability insurer contract issued, amended, or renewed on or after January 1, 2000, that provides hospital, medical, or surgical coverage, to provide coverage for diagnosis and medically necessary treatment of severe mental illnesses and for the serious emotional disturbances of a child. 2)Defines "severe mental illnesses" as including: a) Schizophrenia; b) Schizoaffective disorder; c) Bipolar disorder (manic depressiveness); d) Major depressive disorders; AB 88 Page 2 e) Panic disorder; f) Obsessive-compulsive disorder; g) Pervasive developmental disorder or autism; h) Anorexia nervosa; and, i) Bulimia nervosa. 3)Defines "serious emotional disturbances of a child" as one or more mental disorders, other than substance abuse or developmental disability, identified in the Diagnostic and Statistical Manual of Mental Disorders. 4)Requires severe mental illness benefits to include outpatient and inpatient services, hospital services, and prescription drugs if a plan contract or insurance policy otherwise covers prescription drugs. 5)Requires terms for maximum lifetime benefits, copayments and deductibles to be applied equally to all benefits under a plan contract or insurance policy. 6)Exempts specialized health plan contracts and insurance policies, including Medicare supplement policies, and Medi-Cal contracts from the requirements of this bill. EXISTING LAW requires a health plan contract or disability insurance policy covering hospital, medical or surgical services to cover the diagnosis and treatment of specified physical conditions. FISCAL EFFECT : According to the Assembly Appropriations Committee analysis, the Public Employees Retirement System indicates a one-half of 1% premium increase that could occur would result in annual state costs of $1.6 million. COMMENTS : 1)The author intends this bill to prohibit discrimination against people with biologically-based mental illnesses, dispel scientifically unsound distinctions between mental and AB 88 Page 3 physical illnesses, and require equitable mental health coverage among all plans and insurers to prevent adverse risk selection. 2)At least 19 states require equitable coverage for mental illnesses. Benefits range from all mental illnesses, plus chemical dependency, to covering only selected severe illnesses. This bill requires equitable coverage for selected severe mental illnesses. 3)An April 1998 U.S. Department of Health and Human Services report indicates that full parity for mental health and substance abuse in managed care plans would increase premiums less than 1%. In 1996, the Congressional Budget Office (CBO) projected premium increases of 3.2% would result from mental health parity, and increases of 4% would result from full parity including chemical dependency coverage. These findings are disputed by the RAND Corporation, because the CBO projections "did not incorporate any cost distinction between managed care or fee-for-service care" and concluded the CBO projections likely "overestimate the cost effects of parity legislation . . . ." 4)The California Alliance for the Mentally Ill (CAMI), the sponsor, argues that this bill would benefit employers by improving worker productivity, reducing homelessness, and lowering criminal justice costs. The California Psychiatric Association (CPA) argues that nearly all health plans discriminate against patients with brain disorders such as schizophrenia, depression and manic depression. The California Psychological Association supports this bill in concept, and is sponsoring SB 468 (Polanco), which would require coverage for all mental illnesses. 5)The California Association of Health Plans (CAHP) opposes this bill unless amended. CAHP is urging the author to exclude individuals and small employers from the coverage requirements in this bill. The California Network of Mental Health Clients is opposed to this bill unless amended to exclude coverage of involuntary treatment. The Citizens Commission on Human Rights (CCHR), established by the Church of Scientology to address AB 88 Page 4 psychiatric violations of human rights, argues this bill will mandate dubious science, increase the ranks of the uninsured, and provide a gateway to insurance fraud. Analysis Prepared by : Ann Blackwood / HEALTH / (916) 319-2097 FN: 0001253