BILL ANALYSIS
AB 115
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Date of Hearing: March 17, 2009
ASSEMBLY COMMITTEE ON HEALTH
Dave Jones, Chair
AB 115 (Beall) - As Introduced: January 14, 2009
SUBJECT : Adult Health Coverage Expansion Program.
SUMMARY : Revises the Adult Health Coverage Expansion Program
(AHCEP) in Santa Clara County, authorized pursuant to AB 12
(Beall), Chapter 677, Statutes of 2007, for the purpose of
allowing AHCEP to provide health care coverage products to the
spouses, domestic partners, and eligible children of program
enrollees, as specified. Specifically, this bill :
1)Authorizes the local initiative in Santa Clara County, for
purposes of the AHCEP, to offer a "complementary product"
which provides coverage for a spouse, domestic partner, or the
eligible dependent children of a program enrollee, authorizes
the complementary product to provide coverage of different
health care services than are covered for eligible employees
in AHCEP, and to have different eligibility criteria than the
employee coverage.
2)Exempts the complementary product from the following
requirements imposed on all health plans and health insurers
offering coverage to small employers in firms of 2-50
employees:
a) The requirement that health plans fairly and
affirmatively offer and market to all small employers in
firms of 2-50 employees all of the products and policies
the health plan offers to any small employer or to
associations of small employers. Exemption from this
requirement allows AHCEP to market and offer the program,
or any complementary product, only to small businesses who
meet the eligibility requirements for AHCEP (as proposed in
this bill, at least 25% of employees are low-income adults,
as specified, age 19-64, and work for the employer more
than 20 hours per week);
b) The prohibition from a health plan or solicitor inducing
or encouraging a small employer to exclude from coverage an
otherwise eligible employee in the firm; and,
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c) The requirement that health plans establish uniform
participation requirements across all small employer firms.
Participation requirements are optional requirements
health plans may impose on small employers seeking coverage
that a specific percentage of a firm's workers enroll with
the respective health plan in order for the health plan to
be willing to provide coverage for the small employer firm.
3)Clarifies that the exemption from California's small employer
health care coverage requirements in #2 above applies only to
the pilot, and the complementary product authorized by this
bill, and only to the Santa Clara County local initiative.
4)Changes from 35% to 25% the percent of employees in a small
business who must be earning less than 350% of the federal
poverty level (FPL) ($37,905 for one person in 2009) in order
for the small business to be able to participate in AHCEP, and
eliminates the requirement in the existing authorizing law for
AHCEP that at least 50% of employees meet all employee
eligibility criteria;
5)Makes binding, and applies to dependents, the requirement that
the local initiative not limit or exclude coverage for any
eligible employee or dependent by type of illness, treatment,
medical condition, or accident, except for preexisting
conditions permitted under the existing law related to
coverage for small employers.
6)Limits the requirement that the AHCEP, or any complementary
product offered to dependents, be guaranteed renewable,
authorizing Santa Clara County to drop from coverage
participating employers if the local initiative ceases to
offer the AHCEP pilot program.
7)Authorizes AHCEP to include within what is considered to be
the premiums paid to the health plan the value of
hospital-based services provided to program enrollees and
apportioned to the employee.
8)Deletes the existing law applicable to the AHCEP which
requires premiums and copayments for the program to be
established in a manner substantially similar to the Healthy
Families Program.
9)Prohibits the use of state General Fund monies for funding of
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AHCEP or any related complementary products.
10)Expresses legislative intent that the exemptions provided in
this bill for AHCEP only apply to AHCEP and products
authorized in this bill.
11)Makes related technical and conforming changes.
EXISTING LAW :
1)Establishes the AHCEP, a pilot project administered by the
Medi-Cal local initiative in Santa Clara County, to provide
health care coverage to 5,000 or more low-income adults who
reside in Santa Clara County and who are employed in specified
small Santa Clara County firms and businesses. For purposes
of AHCEP:
a) Defines "small business" to mean an entity located in
Santa Clara County that employs 50 or fewer persons, with
at least 35% of the employees earning less than 350% FPL
for a family size of one, and that has not offered health
care coverage to its employees for the past 12 months,
provided that the provisions of any such prior coverage
required the employer to contribute at least 50% of the
total amount of the premium for that coverage. Includes
individual franchise outlets within the definition of a
small business. Eligible employees must work for the
employer at least 20 hours per week;
b) Requires that at least 50% of the employees of an
otherwise eligible small business meet the individual
employee eligibility requirements for the program, that at
least 50% of those eligible employees choose to receive
coverage through the program in order for the small
business to qualify to participate in the program, and
excludes from eligibility dependents of an eligible
employee;
c) Requires that all health care services under the program
be provided by a provider operated by the county, or with
whom the county or local initiative has contracted to
provide health care services, except for emergency or
out-of-area care, or instances in which a required
specialized service is not contracted for by the county or
the local initiative;
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d) Authorizes AHCEP to utilize premium subsidies for
eligible employees, as specified, and requires the county
and local initiative to negotiate discounted rates for
services provided to AHCEP participants by providers
operated by the county or by providers contracted with the
county to provide health care services.
2)Establishes the Medi-Cal program, administered by Department
of Health Care Services (DHCS), which provides comprehensive
health benefits to low-income children, their parents or
caretaker relatives, pregnant women, elderly, blind or
disabled persons, nursing home residents, and refugees who
meet specified eligibility criteria. Currently, adults may be
eligible for full scope Medi-Cal under the following
categories: parents (with incomes up to 100% FPL); medically
needy/indigent (up to 75% FPL); and, aged and disabled (up to
127% FPL).
3)Defines "local initiative" to mean a prepaid health plan that
is organized by, or designated by, a county government or
county governments, or organized by stakeholders of a region
designated by DHCS, to provide comprehensive health care to
eligible Medi-Cal beneficiaries.
4)Requires all health plans and health insurers offering health
coverage to employers of 2-50 employees to issue that coverage
without any exclusion based on medical underwriting, requires
renewal of all coverage for small employers, at the option of
the small employer, as specified, and restrains the ability of
plans and insurers to set initial and renewal premiums, within
specified "rate bands," based on the health status,
occupation, or claims experience of the employees of a small
employer.
FISCAL EFFECT : According to the Senate Appropriations Committee
analysis of a similar bill last year, AB 1057 (Beall),
regulatory and administrative duties and special fund costs to
the Department of Managed Health Care (DMHC) of $9,000 for
half-year costs in the first year and $17,000 for full year
costs, to be paid for through the Managed Care Fund.
COMMENTS :
1)PURPOSE OF THIS BILL . This bill makes changes to the AHCEP
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pilot program as passed by the Legislature in AB 12 (Beall).
AHCEP will provide health care coverage to the low-income
eligible employees of small businesses in Santa Clara County,
not to exceed 5,000 employees in the county. AHCEP will be
administered by the local initiative in Santa Clara County,
Santa Clara Family Health Plan (SCHFP). The County of Santa
Clara is planning to provide hospital-based services to
program enrollees through county-operated public hospitals.
According to the author, these changes are needed because AB
12 did not provide for coverage of dependents in AHCEP. The
AHCEP has not been implemented to date, but, according to the
author's office is in the final stages of approval by DMHC and
should be operational sometime this summer.
2)BACKGROUND . According to the California Employer Health
Benefits Survey, a joint product of the California HealthCare
Foundation (CHCF) and the National Opinion Research Center, in
2008, the number of workers with health coverage varied
significantly by employer size, with only 7% of workers in
firms with less than 10 employees covered; 17% in firms with
10-49 employees; and, 16% in firms with 50-199 employees. By
contrast, 47% of workers in firms over 1,000 were covered.
3)SANTA CLARA COUNTY . This bill permits Santa Clara County or
its local initiative to administer the program. The local
initiative for Santa Clara County is the SCHFP, a Knox-Keene
licensed health plan that currently provides coverage under
Medi-Cal, Healthy Families, Healthy Kids, and Medicare.
Compared to California statewide averages, Santa Clara County
has a similar proportion of both uninsured residents and those
covered by job-based coverage. Nonetheless, a significant
number of Santa Clara County adults with incomes below 300%
FPL lack health insurance. According to UCLA, at the time
they were surveyed in 2007, 31.6% of Santa Clara County adults
under age 65 with household incomes under 300% FPL
(approximately 114,000 people) were uninsured, while 38.2% had
job-based coverage. As a comparison, this same population
statewide included 32.6% uninsured and 37.0% with job-based
coverage.
4)SMALL EMPLOYER ACCESS REFORMS . AB 1672 (Margolin), Chapter
1128, Statutes of 1992, establishes requirements for health
plans and health insurers providing health coverage to
employers with 2-50 employees. AB 1672 establishes the right
of any small employer to buy any health insurance product from
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any carrier (guaranteed issue) and prohibits a carrier from
canceling such coverage just because of the claims experience
of the group members (guaranteed renewal). AB 1672 limits a
carrier's ability to charge low rates to groups whose members
are in good health and high rates to groups with individuals
in poor health. Premiums cannot vary by more than 10% above
or below a standard rate developed by each carrier, based on
allowable factors established in AB 1672, such as age, family
size and geography.
5)SUPPORT . American Federation of State, County and Municipal
Employees, AFL-CIO supports this bill stating that it believes
in providing health care to all employees regardless of income
and argues that this bill will ensure that workers in small
businesses are able to access health care for themselves and
their families. California Alliance for Retired Americans
supports this bill and specifically mentions in the letter of
support the elimination of any requirement of copayments for
AHCEP products proposed in this bill.
6)PREVIOUS LEGISLATION .
a) AB 1057 (Beall) would have revised the AHCEP for the
purpose of allowing AHCEP to provide health care coverage
products to the spouses, domestic partners, and eligible
children of program enrollees, as specified. AB 1057 was
substantially similar to this bill but was vetoed by
Governor Schwarzenegger. The veto message read:
This bill would expand coverage to the uninsured in
Santa Clara county using federal funds that are only
available for three years. This program is not
sustainable and represents a piecemeal approach to a
larger problem. The larger problem can only be solved
with comprehensive health care reform that promotes
prevention, covers all Californians, contains cost and
shares responsibility. I cannot support a bill that
only covers a fraction of a problem requiring far
larger solutions.
b) AB 12 establishes the AHCEP, a pilot project to be
administered by the Medi-Cal local initiative in Santa
Clara County, to provide health care coverage to 5,000 or
more low-income adults who reside in Santa Clara County and
who are employed in specified small Santa Clara County
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firms and businesses.
c) AB 1672 (Margolin) establishes requirements for health
plans and health insurers providing health coverage to
employers with 2-50 employees.
7)POLICY QUESTIONS .
a) Target population . According to the author of this
bill, the AHCEP is intended to provide coverage for
uninsured low-income employees of small businesses. The
sponsor, SCFHP, states that the County is willing to
provide discounts or subsidies through its public hospital
system to make the coverage affordable, but states this
bill is needed to exempt this special coverage from having
to be sold to all small employers in the area. Given the
goal of AHCEP, insuring low-wage workers, what is the
rationale for reducing from 35% to 25% the number of
employees in a small business that must be low income in
order for the business to participate in AHCEP ?
b) Different product for dependents . This bill permits
AHCEP to offer different products, with different coverage,
for dependents of the employees enrolled in the program,
and to have different eligibility and participation
requirements. According to the sponsor, this is necessary
to offer dependents a product the County will not be
subsidizing. Does the coverage need to be an entirely
different benefit plan, with different participation and
eligibility requirements, or just a different price, one
plan priced with a subsidy and one plan priced without?
The author may wish to clarify how this will work and what
is intended to be the differences in the products.
REGISTERED SUPPORT / OPPOSITION :
Support
Santa Clara Family Health Plan (sponsor)
American Federation of State, County and Municipal Employees,
AFL-CIO
California Alliance for Retired Americans
Opposition
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None on file.
Analysis Prepared by : Deborah Kelch / HEALTH / (916) 319-2097