BILL ANALYSIS
SENATE HEALTH
COMMITTEE ANALYSIS
Senator Elaine K. Alquist, Chair
BILL NO: AB 98
A
AUTHOR: De La Torre
B
AMENDED: April 13, 2009
HEARING DATE: July 8, 2009
9
CONSULTANT:
8
Park/
SUBJECT
Maternity services
SUMMARY
Requires every individual or group health insurance policy,
as specified, to cover maternity services, as defined.
CHANGES TO EXISTING LAW
Existing federal law:
Existing federal law, under the Federal Civil Rights Act,
requires employers that offer health insurance, and have 15
or more employees, to cover maternity services benefits at
the same level as other health care benefits.
Existing law:
Existing law provides for the regulation of health plans by
the Department of Managed Health Care (DMHC) and for the
regulation of health insurers by the California Department
of Insurance (CDI).
Existing law requires health plans regulated by DMHC to
provide all medically necessary basic health care services,
as defined. Existing regulation specifies that basic health
care services include maternity services necessary to
prevent serious deterioration of the health of the enrollee
or the enrollee's fetus, and preventive health care
Continued---
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services, specifically including prenatal care. No similar
provision is applicable to health insurers regulated by
CDI.
Existing law prohibits health plans and health insurers
from issuing contracts and policies that contain a
co-payment or deductible for inpatient hospital or
ambulatory care for maternity services that exceeds the
most common amount charged for the same type of care and
service provided for other covered medical conditions.
Existing law prohibits health plans and health insurers who
are providing maternity benefits, for a person covered
continuously from conception, from attaching any
exclusions, reductions, or limitations to coverage for
involuntary complications from pregnancy, unless these
provisions apply to all of the benefits paid by the plan or
insurer.
This bill:
This bill would require 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.
The bill would define 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.
The bill would exempt from the provisions of this bill
specialized health insurance, Medicare supplement,
short-term limited duration health insurance, vision-only,
or Civilian Health and Medical Program of the Uniformed
Services (CHAMPUS) supplement insurance, Tricare supplement
insurance, hospital indemnity, accident-only, and specified
disease insurance.
The bill would find and declare that it is essential to
clarify that all health coverage made available to
California consumers, whether issued by health plans
regulated by the DMHC or disability insurers who sell
health insurance (health insurers) regulated by CDI, must
include maternity services.
STAFF ANALYSIS OF ASSEMBLY BILL 98 (De La Torre) Page
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FISCAL IMPACT
According to the Senate Appropriations Committee analysis
of an identical bill last year, AB 1962 (De La Torre), the
bill would result in 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.
BACKGROUND AND DISCUSSION
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 percent of these individuals are
women of childbearing age. The author believes 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).
The author points to a recent March of Dimes study, that
indicated that California had more than 54,000 preterm
births, and more than 14,000 pregnant women had late or no
prenatal care at all. The author states that average health
care costs, including inpatient and outpatient care, are
about 10 times greater for a premature baby during the
first year of life, averaging $32,325 compared to $3,325
for a full-term baby. The author asserts that maternity
care reduces birth complications and costs for newborn
care.
Additionally, 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
STAFF ANALYSIS OF ASSEMBLY BILL 98 (De La Torre) Page
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author highlights a finding from the report 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.
California Health Benefits Review Program (CHBRP)
Pursuant to AB 1996 (Thomson), Chapter 795, Statutes of
2002, and SB 1704 (Kuehl), Chapter 684, Statutes of 2006,
which asks the University of California to assess
legislation proposing a mandated benefit or service, or the
repeal of a mandated benefit or service, the California
Health Benefits Review Program (CHBRP) prepared a written
analysis of the public health, medical, and economic
impacts of this measure. The following are highlights from
the analysis:
Medical Effectiveness . Randomized controlled trials have
consistently found no statistically significant
association 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 in producing better
birth outcomes for mothers and infants. These services
include smoking cessation counseling, folic acid to
prevent neural tube defects, treatment and monitoring of
hypertensive disorders, treatment related to preeclampsia
or other complications, screening for various genetic and
sexually transmitted diseases, and diagnostic
ultrasounds, among others.
Utilization, Cost, and Coverage Impacts . This bill
requires the entire CDI-regulated market to cover
maternity services. According to CHBRP, most
Californians enrolled in CDI-regulated policies (66
percent) have coverage for prenatal care and maternity
services, while all enrollees have coverage for
complications of pregnancy. One hundred percent of
enrollees in the CDI-regulated large and small group
markets currently have benefits, indicating that the bill
would impact only those enrollees in individual
CDI-regulated policies.
In the CDI-regulated individual insurance market, about
22 percent of enrollees have maternity benefits, and
STAFF ANALYSIS OF ASSEMBLY BILL 98 (De La Torre) Page
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about 805,000 enrollees currently lack maternity
benefits, including 207,000 women between the
childbearing ages of 19 and 44. CHBRP
notes that risk segmentation has already had a
substantial impact on this market, pointing to an
analysis of a similar measure published in 2004, which
showed that approximately 82 percent of enrollees had
maternity benefits at that time.
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 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
the measure 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 health expenditures are
expected to increase by 0.04 percent, 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 expenditures
are estimated to increase by 1.1 perecent, and total
premium expenditures are estimated to increase by 4.24
percent. Per member, per month premium expenditures are
estimated to increase by an average of $7.17. Premiums
are likely to increase more for younger individuals, age
19 to 29, and, for the majority of individuals in the
CDI-regulated individual market who do not currently have
maternity benefits, CHBRP estimates that AB 98 would
STAFF ANALYSIS OF ASSEMBLY BILL 98 (De La Torre) Page
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increase average premiums by 2 percent to 27 percent,
depending on the age of the enrollee. For the minority of
individuals who currently have maternity benefits, CHBRP
estimates an average decrease in premiums by 1.3 percent
to 19.46 percent, 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
percent 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 percent, 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.
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. CHBRP notes that, in
California, there are 3,000 infant deaths each year and
10.9 percent of babies are born preterm, with each
premature birth costing society approximately $51,600.
CHBRP notes that, to the extent that this bill increases
the utilization of effective prenatal care that can
reduce preterm births and infant mortality, there's a
potential to reduce morbidity and mortality and
associated societal costs.
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Effectiveness of prenatal care and costs associated with
premature infants
According to a 2004 study in the Journal of Perinatal and
Neonatal Nursing, which 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
percent. For every dollar invested in the program, $1.37
was saved. A March of Dimes 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.
Governor's veto
This bill is virtually identical to two bills that Governor
Schwarzenegger vetoed in the last four years. In his veto
message of AB 1962 (De La Torre) of 2008, Governor
Schwarzenegger stated:
This bill is nearly identical to a measure I vetoed in
2004. My concerns with this bill remain unchanged. A
mandate, no matter how small, will only serve to
increase the overall cost of health care. I want to
decrease the number of uninsured Californians.
Increasing the cost of coverage moves in the opposite
direction. The choice is difficult - protect access to
affordable health insurance when costs continue to
increase for employers and individuals - or mandate
that every person who pays for their own health
insurance must buy coverage for maternity services.
Until the goals of prevention, affordability and the
concept of shared responsibility are addressed through
comprehensive health care reform, I must continue to
veto one-sided mandates that only increase costs to
the overall health care system.
Related legislation
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AB 119 (Jones) eliminates the exception in current law that
allows health plans and health insurers to use gender as a
basis for premium, price, or charge differentials, when
based on valid statistical and actuarial data. Pending in
the Senate Appropriations Committee.
SB 54 (Leno) is a nearly identical bill to AB 119. Pending
in the Assembly Judiciary Committee.
Prior legislation
AB 1962 (De La Torre) of 2008 and SB 1555 (Speier) of 2004
were nearly identical to this bill. Vetoed by Governor.
SB 897 (Speier) of 2003 contained similar provisions to SB
1555 and was reviewed by CHBRP, but was not heard in any
committee.
SB 1411 (Speier), Chapter 880, Statutes of 2002, prohibits
health plans and health insurers from charging a higher
copayment for maternity services than for other medical
services.
Arguments in 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. The California Academy of Family
Physicians writes that women will never need treatment for
prostate cancer, as men will never need treatment for
cervical cancer, and childless couples will never need
pediatric care; the point of insurance is to pool resources
STAFF ANALYSIS OF ASSEMBLY BILL 98 (De La Torre) Page
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and risk, share the cost of medical care, and protect
individuals from financial harm due to a medical condition.
Planned Parenthood (PP) writes that women who buy insurance
without maternity coverage may still find themselves in
need of this coverage, as almost half of all pregnancies
are unintended. PP writes that a woman with late or no
prenatal care is three times more likely than normal to
have a premature 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. Blue Shield notes that only one segment
of the market is permitted to escape the requirement to
provide maternity services, and this bill would close that
loophole.
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. 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.
Arguments in opposition
The Association of California Life and Health Insurance
Companies (ACLHIC) writes that forcing people to buy a
benefit that might cause them to drop coverage altogether
seems counterproductive to the shared goal of reducing the
number of uninsured. ACLHIC notes that approximately 93
percent 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. ACLHIC expresses concern that the
mandate could put increased pressure on the state budget
through uncompensated emergency room care by uninsured
persons.
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Anthem Blue Cross (BC) 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. BC
notes that it provides the ability for members to shift
from non-maternity products to maternity products if the
member does become pregnant. BC believes that 805,000
individuals, including 461,000 Blue Cross members, who have
purchased coverage without maternity benefits are at risk
of premium increases of up to 107 percent, as a result of
the mandate, and that 10,000 Blue Cross members will drop
coverage.
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. The California Association
of Health Underwriters states that it can attest to the
price-sensitivity of young Californians, and that this bill
would drive young women from coverage and cause many
thousands more to move to higher deductible plans.
The Department of Managed Health Care and the Department of
Finance write that this legislation would likely result in
increased medical insurance premiums, which would force
Californians who purchase their own coverage out of the
health insurance market altogether.
PRIOR ACTIONS
Assembly Floor: 50-27
Assembly Appropriations:12-5
Assembly Health: 13-4
POSITIONS
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
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Employees
Blue Shield of California
California Academy of Family Physicians
California Association of Physician Groups
California Children's Hospital Association
California Communities United Institute
California Immigrant Policy Center
California Maternal Child and Adolescent Health
Directors
California Medical Association
California National Organization for Women
California Nurses Association
California Nurse Midwives Association
California School Employees Association
California Teachers Association
California Women, Infants, and Children (WIC)
Association
Congress of California Seniors
City of West Hollywood
Having Our Say Coalition
Health Access California
Kaiser Permanente
Latino Coalition for a Healthy California
Latino Health Alliance
Latino Health Coalition
Los Angeles Best Babies Network
March of Dimes
Maternal and Child Health Access
Planned Parenthood Affiliates of California
Planned Parenthood, Mar Monte
Planned Parenthood, Six Rivers
The Women's Foundation of California
Oppose: Anthem Blue Cross
Association of California Life & Health Insurance
Companies
California Association of Health Underwriters
California Chamber of Commerce
Department of Finance
Department of Managed Health Care
Irvine Chamber of Commerce
National Federation of Independent Business
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