BILL ANALYSIS
AB 29
Page 1
Date of Hearing: April 14, 2009
ASSEMBLY COMMITTEE ON HEALTH
Dave Jones, Chair
AB 29 (Price) - As Amended: March 24, 2009
SUBJECT : Health care coverage.
SUMMARY : Prohibits the limiting age for dependents covered by
health plan contracts and group health insurance policies from
being less than 27 years of age, and allows subscribers,
employees or members to elect to continue coverage for these
dependents if they contribute the premium for that coverage.
Specifically, this bill :
1)Prohibits the limiting age for dependents covered by health
plan contracts and group health insurance policies from being
less than 27 years of age.
2)Allows subscribers, employees, or members to elect to provide
coverage to their dependents who are between the ages of 23
and 26 inclusive, provided they contribute the premium for
that coverage.
3)Specifies that nothing in this bill requires employers to pay
the cost of coverage for dependents who are between the ages
of 23 and 26 inclusive.
4)Makes any employment contract subject to collective bargaining
that is issued, amended, or renewed on or after January 1,
2010, subject to the provisions of this bill.
EXISTING LAW :
1)Provides for the regulation of health care service plans by
the Department of Managed Health Care and regulation of health
insurers by the California Department of Insurance.
2)Requires every health plan contract and insurance policy
covering spouses or dependents to grant immediate accident and
sickness coverage, from and after the moment of birth, to each
newborn infant of a subscriber or spouse, and to each minor
child placed for adoption from and after the date where there
exists specified written or other evidence of the subscribers'
right to control the health care of the child placed for
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adoption.
3)Prohibits plan contracts and insurance policies that provide
dependent coverage, where coverage terminates upon attainment
of the limiting age specified in the contract or policy, from
terminating coverage for a child that continues to be both of
the following:
a) Incapable of self-sustaining employment by reason of
mental retardation or physical handicap; and,
b) Chiefly dependent on the subscriber for support and
maintenance, provided proof of the incapacity and
dependency is furnished to the plan or insurer, as
specified.
4)Requires, under the body of law known as Cal-COBRA, health
plans and health insurers that provide coverage under a group
benefit plan to an employer with 2-19 eligible employees to
offer continuation coverage to a qualified beneficiary
enrolled in the health plan or policy upon a qualifying event,
without evidence of insurability.
5)Defines, for purposes of eligibility for Cal-COBRA, a
"qualifying event" as any of the following events that would
result in a loss of group coverage by a qualified beneficiary
if the person did not elect Cal-COBRA coverage:
a) The death of the covered employee;
b) The termination of employment or reduction in hours of
the covered employee's employment, except that termination
for gross misconduct does not constitute a qualifying
event;
c) The divorce or legal separation of the covered employee
from the covered employee's spouse;
d) The loss of dependent status by a dependent enrolled in
the group benefit plan; and,
e) With respect to a covered dependent only, the covered
employee's entitlement to benefits under Medicare.
FISCAL EFFECT : This bill has not yet been analyzed by a fiscal
committee.
COMMENTS :
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1)PURPOSE OF THIS BILL . According to the author, the age at
which a dependent child covered by health plans and insurance
policies is no longer eligible to receive benefits currently
ranges from 19-23 depending on the child's in-school status.
The author believes that this bill is needed to decrease the
estimated 27.3% of Californians ages 19-27 who are currently
uninsured because they are no longer eligible for benefits
under their parents' coverage. The author points out that
buying insurance in the individual market is extremely
expensive and often an expense that young adults choose to go
without. The author notes that given that the average age of
a California State University undergraduate is now 24, this
bill is intended to provide young adults with an extended
period of time to establish full time employment and obtain
health insurance of their own.
2)BACKGROUND . According to a December 2008 briefing paper by
the National Conference of State Legislatures (NCSL), young
adults between the ages of 19 and 29 are the largest growing
age group in the U.S. at risk of being uninsured and currently
account for 30% of the uninsured population. In California,
they make up 20% of the state's uninsured. Young adults often
lose their health insurance if covered under their parent's or
guardian's policy once they graduate from high school,
college, or turn 19. Typically, parents who cover their
children as dependents on their plan or policy do so through
their employer's health insurance benefits. Most
employer-sponsored health insurance does not cover dependents
after age 19 if they are not enrolled in college full-time.
However, a May 2008 issue brief by The Commonwealth Fund (TCF)
suggests that the protections afforded young adults by virtue
of being a full-time student, i.e. coverage through a parent's
employer-based insurance or a university-sponsored policy, are
lost upon graduation. TCF states that one-third of college
graduates can expect to spend at least some time uninsured in
the year following graduation.
In addition, NCSL points out that young adults often have
difficulty obtaining and securing health insurance coverage
for themselves. NCSL cites ordinary transitions in and out of
school and jobs throughout their 20s as the leading factor
that affect the ability of young adults to remain on their
parent's or guardian's coverage or become eligible for
employer-sponsored health insurance. NCSL notes that young
people often have entry level low-paying and temporary jobs
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that typically do not offer health benefits and high premiums
for health insurance in the individual market make purchasing
insurance out of reach.
According to TCF, young adults generally constitute a healthy
group, but going without insurance disrupts their access to
the health care system and leaves young adults and their
families at risk for high out-of-pocket costs and financial
hardship in the event of a serious illness or severe injury.
To address the gaps in coverage for this population, NCSL and
TCF report that at least 30 states have enacted legislation to
extend dependent coverage regardless of a dependent's
enrollment status in school.
3)Cal-COBRA COVERAGE . Current law allows a dependent child to
qualify for temporary continuation of coverage under the
Cal-COBRA program for a period of up to 36 months if they lose
coverage under their parent's small employer (2-19 employees)
-sponsored group benefit plan as a result of losing their
dependent status under the plan. Beneficiaries typically pay
the entire premium for coverage, i.e. both employer and
employee share, which is capped at 110% of the group rate.
4)PUBLIC PROGRAMS . Public programs are not accessible to young,
healthy, childless adults. The Medi-Cal program currently
provides coverage for children up to the age of 21. After the
age of 21, young adults are only eligible for Medi-Cal if they
are disabled, pregnant, or have dependent children. The
Healthy Families Program covers children up to the age of 19
consistent with eligibility requirements of the federal State
Children's Health Insurance Program.
5)SUPPORT . Supporters, including the American College of
Obstetricians and Gynecologists, the California Commission on
the Status of Women, the California Medical Association, and
Health Access California, write that at a time when health
insurance is getting more difficult to obtain and retain, this
bill provides an avenue for young adults who rely on their
parents for financial support to be able to maintain coverage
during the transition to independence. The California Public
Interest Research Group states that this bill proposes a
common-sense solution to help young Californians maintain
their health coverage. The American Federation of State,
County and Municipal Employees adds that by allowing employees
to contribute the premium for the specified coverage, the
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state will not incur a loss in revenue and public employees
will have the assurance of providing health coverage to all
members of their families.
6)OPPOSITION . Opponents, representing health plans, health
insurers, and employers, contend that mandating guaranteed
coverage to a new group of dependents until age 27 without the
opportunity to predict their potential risks and costs could
result in adverse selection and increase costs which, in turn,
may lead some employers to drop dependent coverage entirely.
Furthermore, they believe that there is a risk that premiums
for these dependents may run afoul of federal rules on tax
deductibility of health insurance premiums.
7)PRIOR LEGISLATION . AB 1698 (N??ez) of 2005 would have
prohibited health plan contracts or insurance policies that
cover dependent children from establishing a limiting age
prior to a dependent's 26th birthday. AB 1698 was vetoed by
the Governor due to his concern that the bill would have had
the unintended consequence of actually reducing the number of
employers taking advantage of dependent health care coverage,
leading to fewer persons with health insurance, not more.
8)POLICY COMMENT . Currently, the Health and Safety and
Insurance Codes do not define dependents for purposes of
health coverage and there is no limiting age specified in
current law. Current practice among health plans and insurers
is to extend dependent coverage until the age of 19 or up to
23, if the dependent is a full-time student. If health plans
and health insurers continued or implemented different
conditions for older dependents would this be consistent with
the author's intent?
REGISTERED SUPPORT / OPPOSITION :
Support
American College of Obstetricians and Gynecologists, District IX
American Federation of State, County and Municipal Employees,
AFL-CIO
California Commission on the Status of Women
California Medical Association
California Public Interest Research Group
Health Access California
AB 29
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Opposition
Anthem Blue Cross
Association of California Life and Health Insurance Companies
California Association of Health Plans
California Chamber of Commerce
Health Net
Analysis Prepared by : Cassie Rafanan / HEALTH / (916)
319-2097