BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
98 (De La Torre)
Hearing Date: 7/23/2009 Amended: 4/13/2009
Consultant: Katie Johnson Policy Vote: Health 7-4
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BILL SUMMARY: AB 98 would require health insurance policies
that cover hospital, medical, or surgical expenses to also
provide coverage for maternity services.
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Fiscal Impact (in thousands)
Major Provisions 2009-10 2010-11 2011-12 Fund
CDI oversight $216 $216 $0 Special*
*Insurance Fund
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STAFF COMMENTS: This bill meets the criteria for referral to
the Suspense File.
Existing federal law, the Federal Civil Rights Act, requires
that employers that offer health insurance and have 15 or more
employees must cover maternity services.
Existing law provides for the regulation of health insurance
policies and health care service plans by the California
Department of Insurance (CDI) and the Department of Managed
Health Care (DMHC) respectively. Under current law, the
Knox-Keene Health Care Service Plan Act of 1975, health care
service plans are required to provide maternity services as a
basic health care benefit. CDI-regulated health insurance
policies, however, are not required to cover maternity services.
This bill would require that every individual or group policy of
health insurance that covers hospital, medical, or surgical
expenses and that is issued, amended, renewed, or delivered on
or after January 1, 2010, must also provide coverage for
maternity services. CDI would incur costs of approximately
$216,000 in FY 2009-10 and $216,000 in FY 2010-2011 to fund
staff counsel to implement this bill. As shown by the cost
estimates, CDI would not be able to review all health insurance
policies subject to this bill prior to January 1, 2010. Staff
recommends that the bill be amended to require that every
individual or group policy of health insurance that covers
hospital, medical, or surgical expenses and issued, amended,
renewed, or delivered on or after January 1, 2011, provide
coverage for maternity services. Ongoing costs to CDI would be
absorbable.
According to a 2009 California Health Benefits Review Program
(CHBRP) analysis of AB 98, this bill would have little to no
fiscal impact on publicly-funded California health care programs
such as Medi-Cal, Healthy Families, Access for Infants and
Mothers (AIM), or the California Public Employees Retirement
System (CalPERS). CHBRP estimates that approximately 30 percent
of women with private insurance may be
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AB 98 (De La Torre)
eligible for AIM when they become pregnant. In addition to
providing services to uninsured women, AIM serves women with
private insurance with incomes between 200 and 300 percent of
the federal poverty level with out-of-pocket maternity costs of
greater than $500. To the extent that this bill provides women
with maternity coverage that makes them ineligible for AIM,
there may be a small savings to the state. AIM is funded
primarily by federal funds and state tobacco tax revenue.
However, to the extent that the requirement to provide maternity
services causes the prices of individual insurance products to
increase and to the extent that that increase in premiums causes
people to drop coverage, the public health system could need to
absorb approximately 7,600 newly uninsured people. CHBRP
estimates that this bill could cause a 1.1 percent increase in
premiums, or an average of $7.17 per member per month, in the
individual market health insurance products which would cause
these 7,600 people to become uninsured. If they were to seek
medical care in a clinic or a hospital emergency department, it
is likely that a county would pay for the services as part of
its medically indigent program, the person would pay out of
pocket, or the hospital or clinic would not be reimbursed for
services rendered.
For example, if each uninsured individual caused the state to
pay $10 in health care costs, it would equal $76,000 annually.
If the state paid $100 per newly uninsured person, it would
total $760,000 annually.
This bill is similar to AB 1962 (De La Torre) of 2008, which the
Governor vetoed stating, "This bill is nearly identical to a
measure I vetoed in 2004 [SB 1555 (Speier)]. My concerns with
this bill remain unchanged. A mandate, no matter how small, will
only serve to increase the overall cost of health care."
Since this bill, AB 98, mandates the same maternity coverage
services be provided by health insurers, it does not address the
veto message.