BILL ANALYSIS
SENATE HEALTH
COMMITTEE ANALYSIS
Senator Elaine K Alquist, Chair
BILL NO: AB 115
A
AUTHOR: Beall
B
AMENDED: April 13, 2009
HEARING DATE: May 20, 2009
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CONSULTANT:
1
Dunstan/
5
SUBJECT
Adult Health Coverage Expansion Program
SUMMARY
Revises the Adult Health Coverage Expansion Program (AHCEP)
in Santa Clara County to allow AHCEP to provide health care
coverage products to employees not currently eligible for
the program and to the spouses, domestic partners, and
eligible children of program enrollees.
CHANGES TO EXISTING LAW
Existing law:
Provides, through the Knox-Keene Act, for the regulation of
health care service plans (health plans), by the Department
of Managed Health Care (DMHC), and sets requirements for
health plans pertaining to the provision of mandatory basic
services; financial stability; availability and
accessibility of providers; review of provider contracts;
cost sharing; and consumer disclosure and grievance
requirements.
Establishes the Medi-Cal program, which provides
comprehensive health care coverage to certain categories of
low-income eligible individuals and families, including
children, the aged, the blind, the disabled, nursing home
Continued---
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residents, refugees, and pregnant women.
Authorizes specified counties to establish local
initiatives (LI), which are publicly managed health care
plans that provide managed care services to Medi-Cal
enrollees, and that also provides coverage for other target
populations.
Requires an LI to be governed and operated by a special
commission, or health authority, that are established by,
but are independent of, a county board of supervisors.
Existing law requires an LI to be a plan licensed by DMHC,
under the provisions of the Knox-Keene Act.
Establishes the AHCEP to provide health care coverage to
eligible adults with incomes up to 350 percent of the
federal poverty level (FPL) for a family of one, living and
employed in Santa Clara County, and who are without health
care coverage. Permits the AHCEP to be implemented as a
pilot program in Santa Clara County, and requires the Santa
Clara LI to administer the AHCEP.
Limits eligibility for the AHCEP to adults 19 to 64 years
of age, and additionally limits it to a maximum of 5,000
employees who are employed by a participating small
business for a minimum of 20 hours per week. Prohibits the
employees' dependents, spouses, and domestic partners from
being eligible for AHCEP and exempts the AHCEP from being
subject to specified provisions of the Knox Keene Act
related to small employer group access to health plan
contracts, except as specified.
Defines, for the purposes of the AHCEP, a "small business"
and a "small employer" as an entity located in Santa Clara
County that employs 50 or fewer persons, with at least 35
percent of the employees having an individual income of
less than 350 percent of the FPL for a family of one, which
has not offered health care coverage to its employees for
at least 12 consecutive months, provided that any prior
coverage required the employer to contribute at least 50
percent of the total amount of the premium.
Requires the AHCEP program coverage, to the extent
practical, be substantially similar to the benefits offered
to adults under the Healthy Families program, and contain
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at least the basic services included in the Knox-Keene
Health Care Services Plan Act.
This bill:
Allows the AHCEP to provide health care coverage products
to spouses, domestic partners, and eligible children of
program enrollees. Establishes that the expansion for
spouses, domestic partners, and eligible children of
program enrollees would be through a complementary product,
as defined.
Expands the qualifying definition of eligible small
business to those with at least 25 percent of employees who
earn less than 350 percent of the FPL. Repeals 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.
Permits complimentary products to have different
eligibility requirements and benefit designs than coverage
for employees. Exempts complimentary products from being
subject to specified provisions of the Knox Keene Act
related to small employer group health plan contracts, as
well as certain small group eligibility and participation,
requirements, except as specified.
Limits the requirement that the AHCEP, or any complementary
product offered to dependents, be guaranteed renewable,
only if the Santa Clara Family Health Plan continued to
offer the AHCEP pilot program. Authorizes the 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.
Prohibits the use of state General Fund monies for funding
of AHCEP or any related complementary products.
FISCAL IMPACT
According to the Assembly Appropriations Committee
analysis, there is no direct fiscal impact on the DMHC to
continue oversight of the AHCEP and health plan laws and
regulations.
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BACKGROUND AND DISCUSSION
According to the author, although the vast majority of
adult Californians obtain health coverage through an
employer; many small business employees do not have access
to, or unable to afford, coverage. The author notes that
state and federal subsidized programs for adults are
limited to those with very low incomes and have strict
eligibility requirements. The author states that low- and
middle-income adults have the highest uninsurance rates and
have a greatest difficulty obtaining employer-based
coverage, or purchasing a private plan. According to the
author, this led him to introduce AB 12 of 2007, which was
enacted, and created the AHCEP program in Santa Clara
County. The author states that AB 115, which amends AB 12,
would enable the program to cover more people and provide
complementary products to spouses, domestic partners and
dependents of enrollees who currently are not eligible for
the program.
Background
According to the California Employer Health Benefits
Survey, a joint project of the California HealthCare
Foundation (CHCF) and the National Opinion Research Center,
in 2008, the number of workers with health coverage from
the employer varied significantly by employer size, with
only 7 percent of workers in firms with less than 10
employees covered; 17 percent in firms with 10-49
employees; and, 16 percent in firms with 50-199 employees.
By contrast, 47 percent of workers in firms over 1,000 were
covered.
The local initiative for Santa Clara County is the Santa
Clara Family Health Plan, a Knox-Keene licensed health plan
that currently provides coverage under the Medi-Cal,
Healthy Families, and Medicare programs. Compared to
California statewide averages, Santa Clara County has fewer
uninsured residents and a higher percentage of its
population covered by employment-based insurance.
Nonetheless, a significant number of Santa Clara County
adults with incomes below 300 percent of the federal
poverty level lack health insurance. According to UCLA, at
the time they were surveyed in 2007, 31.6 percent of Santa
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Clara County adults under age 65 with household incomes
under 300 percent FPL (approximately 114,000 people) were
uninsured, while 38.2 percent had job-based coverage. As a
comparison, for this same population statewide, 32.6
percent were uninsured and 37 percent had job-based
coverage.
The AHCEP, created by AB 12 (Beall), Chapter 677, Statutes
of 2007, provides health care coverage to eligible adults
who live and are employed in Santa Clara County, earn
incomes up to 350 percent of the federal poverty level, and
are without health insurance. The program is administered
by Santa Clara Family Health Plan, and is called the
Healthy Workers program. Existing law requires that the
cost of health coverage be paid through a combination of
contributions paid by the small business, premiums paid by
participating employees, and any county, federal, state, or
private sector funding that is made available.
Relevant legislation
SB 56 (Alquist) establishes, within DHCS, the California
Health Benefits Service Program to authorize and facilitate
the creation of joint ventures among public health coverage
programs, including existing publicly operated Medi-Cal
managed care plans, to provide health coverage to uninsured
persons and health insurance purchasers, including
individuals, employers and other health plan sponsors.
This bill is in the Senate Appropriations Committee.
Prior legislation
SB 973 (Simitian) and SB 1622 (Simitian) of 2007-2008 were
both substantially similar to SB 56. SB 973 was vetoed by
Governor Schwarzenegger and SB 1622 was held in the Senate
Appropriations Committee.
AB 12 (Beall), Chapter 677, Statutes of 2007, established
the Adult Health Coverage Expansion Program (AHCEP) to
provide health care coverage to eligible adults living and
employed in Santa Clara County, who are without health care
coverage.
SB 51 (Ducheny) of 2007, establishes the San Diego Health
Care Connection Demonstration Project to assist employers
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in San Diego County in providing health care benefits to
employees. This bill was held in the Senate Appropriations
Committee.
Arguments in support
The Santa Clara Family Health Plan, the sponsor of the
bill, argues that the bill is important to help provide
universal coverage in Santa Clara County. They note that
the program would also allow county safety net institutions
an opportunity to generate new revenue through worker and
employer premiums. 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. The Santa Clara
County Board of Supervisors supports AB 115 because it
would expand eligibility for the program to spouses,
domestic partners, and dependent children. They argue that
the bill also will lower the barriers for participation by
some small businesses.
PRIOR ACTIONS
Assembly Appropriations: 16-0
Assembly Floor: 79-0
Assembly Health: 19-0
POSITIONS
Support: Santa Clara Family Health Plan (sponsor)
American Federation of State, County and Municipal
Employees (AFSCME)
California Alliance for Retired Americans
Santa Clara County Board of Supervisors
Oppose: None received
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