BILL ANALYSIS
AB 98
Page 1
Date of Hearing: March 24, 2009
ASSEMBLY COMMITTEE ON HEALTH
Dave Jones, Chair
AB 98 (De La Torre) - As Introduced: January 6, 2009
SUBJECT : Maternity services.
SUMMARY : Requires every individual or group health insurance
policy, as specified, to cover maternity services, as defined.
Specifically, this bill :
1)Requires every individual or group policy of health insurance
that covers hospital, medical, or surgical expenses that is
issued, amended, renewed, or delivered on or after January 1,
2010, to cover maternity services.
2)Defines maternity services to include prenatal care,
ambulatory care maternity services, involuntary complications
of pregnancy, neonatal care, and inpatient hospital maternity
care, including labor and delivery and postpartum care.
3)Exempts from the provisions of this bill Medicare supplement,
short-term limited duration health insurance, vision-only, or
Civilian Health and Medical Program of the Uniformed Services
(CHAMPUS)-supplement insurance, or hospital indemnity,
hospital-only, accident-only, or specified disease insurance
that does not pay benefits on a fixed benefit, cash payment
only basis.
4)Makes the following findings and declarations:
a) Health care service plans (health plans) are required by
the Knox-Keene Health Care Service Plan Act of 1975
(Knox-Keene) to provide maternity services as a basic
health care benefit;
b) Existing law does not require health insurers to provide
designated basic health care services and, therefore, they
are not required to provide coverage for maternity
services; and,
c) It is essential to clarify that all health coverage made
available to California consumers, whether issued by health
plans regulated by the Department of Managed Health Care
(DMHC) or disability insurers who sell health insurance
(health insurers) regulated by the California Department of
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Insurance (CDI), must include maternity services.
EXISTING LAW :
1)Provides for the regulation of health plans by DMHC under
Knox-Keene and for the regulation of health insurers by CDI
under the Insurance Code.
2)Requires health plans under Knox-Keene to cover a number of
basic health care services and permits DMHC to define the
scope of the services and to exempt plans from the requirement
for good cause.
3)Provides, under Knox-Keene, that "basic health care services"
include: a) physician services, including consultation and
referral; b) hospital inpatient services and ambulatory care
services; c) diagnostic laboratory and diagnostic and
therapeutic radiological services; d) home health services; e)
preventive health services; f) emergency health care services,
including ambulance and ambulance transport services and
out-of-area coverage; and, g) hospice care.
4)Provides, under Knox-Keene, that health plans must provide all
medically necessary basic health care services, including
maternity services necessary to prevent serious deterioration
of the health of the enrollee or the enrollee's fetus, and
preventive health care services, specifically including
prenatal care.
5)Prohibits health plans and health insurers from issuing
contracts and policies that contain a copayment or deductible
for inpatient hospital or ambulatory care maternity services
that exceed the most common amount charged for the same type
of care and services provided for other covered medical
conditions.
6)Prohibits health plans and health insurers providing maternity
benefits for a person covered continuously from conception
from attaching any exclusions, reductions, or limitations to
coverage for involuntary complications of pregnancy unless
those provisions apply to all of the benefits paid by the plan
or insurer.
FISCAL EFFECT : This bill has not yet been analyzed by a fiscal
committee. According to the Senate Appropriations Committee
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analysis of an identical bill last year, AB 1962 (De La Torre),
special fund costs for increases in policy oversight of $226,000
in the first year, $270,000 in the second year, and $108,000 in
the third year, to be paid for through the Insurance Fund.
COMMENTS :
1)PURPOSE OF THIS BILL . The author asserts that one of the
latest trends in the individual market is for insurers to
exclude maternity care from their basic plan benefits to sell
cheaper products to target populations. As more employers are
dropping employee health coverage, the author contends that
insurance companies are increasingly targeting the young,
uninsured population of the market with non-maternity
products, even though 25% of these individuals are women of
childbearing age. The author argues that these types of
non-maternity products delay and restrict access to prenatal
care, which can lead to serious health complications for both
the mother and the baby, and force more women into
state-funded programs, such as Medi-Cal or Access for Infants
and Mothers (AIM). As evidence of the need to level the
playing field between health plans regulated by DMHC that are
required to cover maternity services and health insurers
regulated by CDI that currently are not, the author points to
a 2008 report from the National Women's Law Center entitled,
Nowhere to Turn: How the Individual Health Insurance Market
Fails Women, which found that it is difficult and costly for
women to find health insurance that covers pregnancy-related
care. The report indicated that women often face higher
premiums than men because insurance companies engage in gender
rating practices that further erode the affordability of these
products for women.
2)BACKGROUND . Numerous studies have shown that prenatal care
pays for itself by helping to minimize the prevalence and
severity of low- and very low-birth weight babies. A 2004
study in the Journal of Perinatal and Neonatal Nursing
evaluated the effects of augmented prenatal care on women at
high risk for having a low-birth weight baby who were enrolled
in a special program that provided basic prenatal care,
prenatal education, and case management. The program saved
about $13,962 per single low-birth weight birth prevented,
and, after program costs were considered, the return on
investment equaled 37%; for every dollar invested in the
program, $1.37 was saved. In addition, a March of Dimes
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report indicated that hospital charges for premature,
low-birth weight infants totaled $37.7 billion in 2003. The
report stated that premature birth was among the most common,
serious, and costly problems facing infants in the U.S. and is
responsible for about half of all infant hospitalizations.
3)CALIFORNIA HEALTH BENEFITS REVIEW PROGRAM (CHBRP) . AB 1996
(Thomson), Chapter 795, Statutes of 2002, requests the
University of California to assess legislation proposing a
mandated benefit or service, and prepare a written analysis
with relevant data on the medical, economic, and public health
impacts of proposed health plan and health insurance benefit
mandate legislation. CHBRP was created in response to AB 1996
and extended for four additional years in SB 1704 (Kuehl),
Chapter 684, Statutes of 2006. In its analysis of AB 98,
CHBRP reports:
a) Medical Effectiveness . Studies of the impact of the
number of prenatal care visits that pregnant women receive
have consistently found no correlation between the number
of prenatal visits and birth outcomes for either infants or
mothers. However, there is clear and convincing evidence
that specific services provided during, or in conjunction
with, prenatal care visits are effective. These services
include smoking cessation counseling, blood pressure
monitoring, screening for various genetic and
sexually-transmitted diseases, and diagnostic ultrasounds.
b) Utilization, Cost, and Coverage Impacts . This bill
requires the entire CDI-regulated market to cover maternity
services. Since all group policies are required to, and in
practice, currently cover maternity services, this bill
would impact only those enrollees in individual
CDI-regulated policies. According to CHBRP, most
Californians enrolled in CDI-regulated policies (66%) have
coverage for prenatal care and maternity services. In the
individual insurance market, about 805,000 enrollees
currently lack maternity benefits, including 207,000 women
between the childbearing ages of 19 and 44. CHBRP
estimates that approximately 7,100 pregnancies would be
newly-covered under CDI insurance policies as a result of
this bill. Overall, the mandate in this bill is estimated
to have no impact on the number of deliveries since the
birth rate is not expected to change as a result of this
bill. CHBRP concludes that most women are likely to
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continue to face large out-of-pocket costs for maternity
services regardless of whether or not their insurance
policy includes maternity benefits and attributes this to
almost two-thirds of the women in CDI-regulated policies
currently being in high deductible health plans (HDHPs).
According to CHBRP, prenatal care is usually subject to
HDHP deductibles and would affect women currently enrolled
in non-HDHPs choosing to switch to HDHPs as a result of
this bill in order to save on premiums. CHBRP also notes
that standard prenatal care is almost always bundled with
delivery services and paid for as a single lump-sum fee to
physicians so, to the extent that they are bundled as a
fixed charge and women are aware of this fee structure, it
is unlikely that AB 98 would have a large impact on
utilization of standard prenatal care services.
CHBRP estimates that total statewide health expenditures
by or for all enrollees in both DMHC and CDI-regulated
policies will increase by 0.04%, or about $30 million, as a
result of this bill. All of the cost impacts of AB 98
would be concentrated in the individual CDI-regulated
insurance market, where total premium expenditures are
estimated to increase by 4.24%, and per member per month
premium expenditures are estimated to increase by an
average of $7.17. Most of the increase would be
concentrated among those aged 19-44. For the majority of
individuals in the CDI-regulated individual market who do
not currently have maternity benefits, CHBRP estimates that
AB 98 would increase average premiums from 2% to 27%,
depending on the age of the enrollee. CHBRP also notes
that, based on its survey of health insurers, premiums are
currently gender-rated for 59% of individually purchased
CDI-regulated health insurance products in California and,
under gender rating, the premium increases resulting from
this bill could be greater for women than men. According
to CHBRP, on average, the premiums for female enrollees
purchasing health insurance policies in the individual
CDI-regulated market would go up by 7.7%, while those of
male enrollees would remain unchanged. Lastly, CHBRP
states that the estimated premium increases could result in
adding 7,600 individuals to the ranks of the newly
uninsured; these individuals are likely to be younger
individuals and women, if they experience the greatest
premium increases.
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c) Public Health Impact . CHBRP reports that it is unable
to estimate what the impact of AB 98 would be on the
utilization of prenatal care and concludes that the overall
public health impact most likely lies somewhere between a
lower bound estimate that would assume no increase in the
utilization of effective prenatal care services because
these pregnant women would probably still face high levels
of cost sharing found in the cheapest insurance plans and
an upper bound estimate that would assume an increase in
utilization and a corresponding improvement in health
outcomes if all 7,100 newly covered pregnancies would have
financial barriers to prenatal care removed.
4)SUPPORT . The sponsor of this bill, the California Commission
on the Status of Women, writes that women should not have to
pay more for what amounts to essential medical care and this
bill will ensure fair, affordable access to maternity coverage
in all health insurance policies. The American College of
Obstetricians and Gynecologists, District IX, asserts that
women should not be required to pay significantly more for
coverage for their basic medical needs that are part of their
biology and such gender discrimination is exacerbated by a
lesser ability to pay for these policies when women still earn
less than 80-cents on the dollar of that of men. The
California Medical Association and the California Association
of Physician Groups point out that reproductive health
coverage is preventive medicine that, in its absence, can pose
significant health problems for both the mother and baby.
Blue Shield of California notes that while it does not
generally support benefit mandates, the practice of allowing
insurers to offer individual policies without maternity
coverage undermines a basic purpose of insurance, which is to
spread treatment costs for fundamental health care services
over a large population, keeping costs reasonable for all.
Health Access California states that this bill closes a gap in
existing law; and if an insurer fails to provide maternity
coverage, the state picks up the cost, whether for prenatal
care provided through a public program or the costs associated
with lack of prenatal care. Finally, the California Nurses
Association insists that insurance products in the individual
market that do not carry comprehensive maternity coverage
offer selective health care that is not in the best interest
of women.
5)OPPOSITION . The Association of California Life and Health
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Insurance Companies (ACLHIC) contends in opposition that since
federal law already requires group insurance policies to
include maternity benefits, the mandate in this bill is an
individual market competition issue, rather than a health
insurance access or equity issue. ACLHIC notes that
approximately 93% of births in California are covered by some
form of insurance and current law also ensures maternity
benefits are offered on the same terms and conditions as other
health benefits so there is no consumer equity issue that
needs to be addressed. The National Federation of Independent
Business objects to this bill because it would significantly
increase the cost of individual health care policies which are
a major vehicle for small business owners and others who do
not have employer-based coverage. Anthem Blue Cross writes
that, by eliminating choice, this bill negatively impacts
women and men who have made a conscious decision not to buy
maternity services, or women who are unable to have children,
by forcing them to purchase coverage for services they do not
want or need.
6)RELATED LEGISLATION . AB 119 (Jones) prohibits gender
discrimination in individual health insurance and health plan
rates. This bill is scheduled to be heard in the Assembly
Health Committee on March 31, 2009.
7)PRIOR LEGISLATION .
a) AB 1962 (De La Torre) of 2008 and SB 1555 (Speier) of
2004 were nearly identical to this bill. Both bills were
vetoed by the Governor. In his veto messages, Governor
Schwarzenegger acknowledged that the bills present a
difficult choice between protecting access to affordable
health insurance when costs continue to rise for employers
and individuals, or mandating that every person who pays
for their own health insurance must buy maternity services.
The Governor stated that he must continue to veto
one-sided mandates that only increase costs to the overall
health care system.
b) SB 897 (Speier) of 2003 contained similar provisions to
SB 1555 and was reviewed by CHBRP, but was not heard in any
committee.
c) SB 1411 (Speier), Chapter 880, Statutes of 2002,
prohibits health plans and health insurers from charging a
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higher copayment for maternity services than for other
medical services.
8)SUGGESTED TECHNICAL AMENDMENT . This bill does not exclude
from the mandate all types of specialized health insurance,
including dental-only or behavioral health plans. The author
may wish to clarify with the following technical amendment: on
page 2, line 22, delete "Medicare supplement" and lines 23-26,
and insert "specialized health insurance, Medicare supplement,
short-term limited duration health insurance,
CHAMPUS-supplement insurance, TRI-CARE supplement, or to
hospital indemnity, accident-only, and specified disease
insurance."
REGISTERED SUPPORT / OPPOSITION :
Support
California Commission on the Status of Women (sponsor)
American Civil Liberties Union
American College of Obstetricians and Gynecologists, District IX
American Federation of State, County and Municipal Employees,
AFL-CIO
Blue Shield of California
California Academy of Family Physicians
California Association of Physician Groups
California Communities United Institute
California Immigrant Policy Center
California Medical Association
California Nurse Midwives Association
California Nurses Association
California Teachers Association
Congress of California Seniors
Health Access California
March of Dimes
NARAL Pro-Choice California
The Women's Foundation of California
Opposition
Anthem Blue Cross
Association of California Life and Health Insurance Companies
California Association of Health Underwriters
California Chamber of Commerce
National Federation of Independent Business
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Analysis Prepared by : Cassie Rafanan / HEALTH / (916)
319-2097