BILL ANALYSIS
SENATE COMMITTEE ON INSURANCE
Senator Jackie Speier, Chair
SB 1158 (Scott) Hearing Date: April 21, 2004
As Introduced: January 29, 2004
Fiscal: Yes
Urgency: No
SUMMARY
This bill would require group health plan contracts and all
health insurance policies issued, amended, or renewed on or
after January 1, 2005, to provide coverage for hearing
aids, up to $1,000, to all enrollees, subscribers, and
insureds under 18 years of age at least once every 36
months.
DIGEST
Existing law
1. Provides for the regulation of health plans by the
Department of Managed Health Care (DMHC) and for the
regulation of health insurers by the Department of
Insurance (DOI).
2. Requires health plans (but not health insurers) to
cover a number of basic health care services. Entitles
the director of the DMHC to define the scope of the
services and to exempt plans from the requirement for
good cause.
3. Defines "basic health care services" to mean all of
the following:
(1) Physician services, including consultation and
referral.
(2) Hospital inpatient services and ambulatory care
services.
(3) Diagnostic laboratory and diagnostic and
therapeutic radiologic services.
(4) Home health services.
(5) Preventive health services.
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(6) Emergency health care services, including
ambulance and ambulance transport services and
out-of-area coverage.
(7) Hospice care.
1. Mandates that health plans and health insurers offer
or provide coverage for a number of benefits and
services.
This bill
1. Would mandate that every health plan contract that
covers hospital, medical, or surgical expenses on a
group basis, and every health insurance policy, provide
coverage for hearing aids, up to $1,000, to all
enrollees and subscribers under 18 years of age at
least once every 36 months.
2. Would define a "hearing aid" as any nonexperimental,
wearable instrument or device designed for the ear and
offered for the purpose of aiding or compensating for
impaired human hearing, but excluding batteries and
cords.
3. Would require that health plans and health insurers
retain sole discretion as to the provider of hearing
aids with which they choose to contract. Would further
require that reimbursement to providers be made
according to the principles and policies of the health
plan or health insurer.
4. Would specify that the bill would not preclude health
plans or health insurers from conducting managed care,
medical necessity, or utilization review.
5. Would, for health insurers only, not apply to Medicare
supplement, vision-only, dental-only,
CHAMPUS-supplement insurance, or insurance excluded
from the statutory definition of "health insurance."
COMMENTS
1. Purpose of the bill . To increase access to hearing
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aids for hearing-impaired minors.
2. UC Cost-Benefit Analysis . Pursuant to AB 1996
(Thompson, 2002), the University of California has
submitted to the Legislature a cost-benefit analysis
for each of the health insurance mandate bills before
the committee at its April 21, 2004, hearing: SB 1158
(Scott); SB 1192 (Chesbro); and SB 1555 (Speier). The
UC reports detail the medical effectiveness, cost, and
public health impact of each health mandate bill.
The reports are coordinated by a small UC staff, which
oversees a network of healthcare and health insurance
experts and contracts with Milliman USA for actuarial
analysis. UC gives the stakeholders who are directly
affected by the legislation the opportunity to submit
information but no editorial control over the reports.
However, UC solicits comments on initial drafts of its
analyses from a national stakeholders group, including
representatives of consumers, insurers and health
plans, employers and other purchasers, and hospitals
and other providers.
The UC reports are the only cost-benefit analyses
available to the committee for consideration. The
director of UC's California Health Benefits Review
Program will be available to answer questions that the
committee may have about the reports. The executive
summary and total cost analysis of SB 1158 have been
excerpted from the full report and are attached to this
analysis.
3. UC Results in Brief .
Medical Effectiveness: UC finds that the use of
hearing aids is medically effective in treating
children for hearing loss. Estimates are that the
average life span of a hearing aid in a child is two
years. The devices have been shown to improve speech
and language development, and early detection of
hearing loss followed by intervention can improve
social and emotional development. Other benefits of
hearing aids for children include increased social
interaction, less stress, and better social and family
relationships.
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Utilization, Cost, and Coverage Impacts: SB 1158 is
projected to raise premiums by $0.11 to $0.20 per
member per month depending on the type of insurance
product. UC finds that the majority (61%) of children
with hearing loss currently use hearing aids despite
the fact that most private health plans and health
insurers do not cover the service. Mandating coverage
would increase utilization by only 4% - in part because
cost (an average of $3,000 per unit) is not currently a
significant barrier to access for a number of potential
reasons including the following: families may
prioritize hearing aid purchases in their budgets; they
may have access to charities providing hearing aids for
free or at reduced prices; and health plans and health
insurers may offer them discounts. Because Medi-Cal
and Healthy Families provide coverage for hearing aids
for children, SB 1158 should not shift any cost from
the private to the public sector.
Public Health Impacts: SB 1158 is estimated to have a
minor, though positive, effect on public health, both
in terms of increasing the number of children with
hearing aids and in terms of savings to the educational
system. An additional 3,200 children (out of 9.2
million children state-wide) would obtain hearing aids
due to SB 1158, and an indeterminate number of
additional children would be able to afford hearing
aids with better technology. Identifying and treating
hearing loss in children reduces the likelihood that
they will be misplaced in the educational system with
children who are provided special (and costly) services
for mental or learning disabilities.
4. High Cost Estimates . The cost figures used in this
analysis are based on a $1,000 benefit with an annual
limit, rather than the 36-month limit that SB 1158
requires. Revised cost estimates will be available to
the committee at the hearing, and are expected to be
lower than the figures used here.
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5. Support .
According to the author, increasing children's access
to needed hearing aids will allow for significant
improvement in their ability to learn and to succeed in
school, at negligible cost. The author notes that most
HMOs currently provide surgery to repair hearing but do
not offer hearing aids, despite the high rate of
utilization among those covered for the devices. Seven
states (Connecticut, Kentucky, Louisiana, Maine,
Maryland, Missouri, and Oklahoma) currently mandate
coverage of hearing aids for children.
The California Speech-Language Hearing Association
(CSLHA) writes in support of SB 1158, and argues that
mandated coverage of hearing aids for children would
improve communication and language skills of
hearing-impaired children at an early age, and would
improve educational outcomes by lowering special
education costs and preventing students from falling
behind in school or dropping out. Further, CSLHA
believes that the benefit would lower county social
service and public safety costs.
The American Federation of State, County and Municipal
Employees, AFL-CIO and the AT (Assistive Technology)
Network emphasize the importance of hearing aids in
assimilating hearing-impaired children into appropriate
peer groups and educational settings.
The Nor-Cal Center on Deafness emphasizes the high cost
of hearing aids for families, and notes that as
children grow, their hearing is likely to deteriorate.
New hearing aids are needed more frequently for growing
children.
A number of individuals write in support of SB 1158,
noting the effectiveness of hearing aids in helping to
prevent a range of physical and psychological maladies
in hearing-impaired children, including depression,
anxiety, stress, and chemical dependency.
6. Opposition .
The California Association of Health Plans, Health Net,
and the Association of California Life and Health
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Insurance Companies write that plans and health
insurers offer coverage for hearing aids already, so
that the effect of SB 1158 will be to limit employer
and consumer choice. The Association notes that the UC
study estimated a $2.5 million per month increase to
premiums following implementation of SB 1158, and that
the majority of the cost increase would fall on the
individual and small-employer markets, which are the
most likely health insurance consumers to drop coverage
in response to rising costs.
America's Health Insurance Plans and Blue Cross write
that SB 1158 follows the passage of a substantial
number of health mandate measures in state
legislatures, and that employers will respond to higher
costs and reduced flexibility by self-insuring,
reducing coverage, reducing wages, increasing
co-payments or dropping coverage.
The California Chamber of Commerce writes that, while
SB 1158 would have a minor impact on health care
premiums, taken together mandated health care benefits
are difficult for businesses to absorb under the
cost-sharing rules established by The Health Insurance
Act of 2003 (SB 2, Burton/Speier). The Chamber urges a
moratorium on new health mandate bills until the costs
to businesses of SB 2 can be assessed
7. Prior Legislation . SB 174 (Scott, 2003): Essentially
the same language as SB 1158. Held in this committee
pending receipt of the UC report. SB 1158 is the
reintroduced version of SB 174.
SB 1638 (Scott, 2002): Held in the Assembly Health
Committee. Would have required group plans and health
insurers to provide hearing aid coverage up to $1,500
to enrollees and subscribers under 18 years of age.
AB 2884 (Wiggins, 2002): Held in Assembly Health
Committee. Would have required all plans and health
insurers to cover hearing aids to all enrollees and
subscribers up to a cost of $1,200 per hearing aid
every 46 months.
POSITIONS
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Support
American Federation of State, County, and Municipal
Employees, AFL-CIO
AT Network
California Speech-Language Hearing Association
Ear Professionals International Corporation (EPIC)
Nor-Cal Center on Deafness
3 Individuals
*California Foundation for Independent Living
Oppose
America's Health Insurance Plans (AHIP)
Association of California Life and Health Insurance
Companies (ACLHIC)
Blue Cross
California Association of Health Plans
California Chamber of Commerce
Health Net
*Position on SB 174
Consultant: Soren Tjernell, 455-0825.