BILL ANALYSIS
AB 119
Page 1
Date of Hearing: March 31, 2009
ASSEMBLY COMMITTEE ON HEALTH
Dave Jones, Chair
AB 119 (Jones) - As Introduced: January 15, 2009
SUBJECT : Health care coverage: pricing.
SUMMARY : Prohibits health plans and health insurers from
charging a premium, price, or charge differential for health
care coverage because of the sex of the prospective subscriber,
enrollee, policyholder, or insured. Specifically, this bill :
1)For health plans licensed under the Knox-Keene Health Care
Service Plan Act of 1975 (Knox-Keene), repeals the ability of
plans to charge differential premium rates for sex in
individual contracts, where premium rate differences are based
on objective, valid, and up-to-date statistical and actuarial
data.
2)For health insurers offering coverage under the Insurance
Code, prohibits health insurance policies issued, amended, or
renewed on or after January 1, 2010, from being subject to
premium, price, or charge differentials because of the sex of
any contracting party or potential contracting party,
policyholder, or insured, even if that premium, price, or
charge differential is based on statistical and actuarial data
or sound underwriting practices as otherwise permitted in law.
Defines sex for the purposes of this bill to mean gender as
currently defined in law.
EXISTING LAW :
1)Provides for the regulation of health plans by the Department
of Managed Health Care (DMHC) under Knox-Keene and regulation
of disability insurers selling health insurance (health
insurers) by the California Department of Insurance (CDI)
under the Insurance Code.
2)Prohibits, under Knox-Keene, a health plan from refusing to
contract, canceling, or declining to renew or reinstate any
health plan contract because of the race, color, national
origin, ancestry, religion, sex, marital status, sexual
orientation, or age of any contracting party, prospective
contracting party, subscriber, enrollee, member or otherwise.
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3)Prohibits, in Knox-Keene, modification of benefits, coverage,
or the inclusion of any limitations, exceptions, exclusions,
reductions, copayments, coinsurance, deductibles,
reservations, or premium, price, or charge differentials
because of the race, color, national origin, ancestry,
religion, sex, marital status, sexual orientation, or age of
any contracting party, prospective contracting party,
subscriber, enrollee, member, or otherwise.
4)Establishes in Knox-Keene, for individual coverage, an
exception to 3) above for premium, price or charge
differentials because of the sex or age of any individual,
when based on objective, valid, and up-to-date statistical and
actuarial data.
5)Prohibits life and disability insurers, including health
insurers, from using race, color, religion, sex, national
origin, ancestry, or sexual orientation in determining whether
to offer insurance.
6)Prohibits life and disability insurers, including health
insurers, from using race, color, religion, national origin,
ancestry, or sexual orientation as a condition or risk for
which a higher rate, premium, or charge may be required to be
paid by an insured, but does not include sex in the prohibited
list of conditions or risks.
7)Authorizes in the Insurance Code, for life and disability
policies, including health insurance, premium, price, or
charge differentials because of the sex of the individual when
based on objective, valid, and up-to-date statistical and
actuarial date or sound underwriting practices.
FISCAL EFFECT : This bill has not yet been analyzed by a fiscal
committee.
COMMENTS :
1)PURPOSE OF THIS BILL . The author of this bill states that
women seeking health insurance in the individual market should
have the same protections from gender discrimination as those
whose health benefits are provided by their employers.
According to the author, access to health care saves lives and
the affordability of health insurance should not be determined
by gender. Those who cannot afford the inflated price of the
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discriminatory premiums now charged to women often go without
insurance. The author argues that uninsured women are less
likely to obtain preventive care, and are therefore more
likely to seek treatment only when their health problem has
become an emergency and is more costly to treat. This leads
to worse patient outcomes, costs public hospitals more, and
burdens already over-crowded emergency rooms. The author
points to the wide variation in rate differentials for women
among health insurers, within California and across the
country, which suggests higher premiums charged to women are
not based on costs or actuarial data, because some insurers do
not have any rate differences for men and women, while others
charge as much as 40-50% more. Finally, the author points out
that California already prohibits insurers from charging
discriminatory premiums based on race, color, national origin,
ancestry, religion, marital status and sexual orientation,
regardless of any cost differences among these groups.
2)BACKGROUND . Currently, ten other states prohibit gender
rating of individual health insurance rates, while two others
limit it. Federal and state laws prohibit employers from
charging men and women different rates for employer-sponsored
health insurance. Existing California law also specifically
precludes gender rating for employer groups of 2-50 employees.
Gender discrimination in housing, employment, and other
public accommodations and services is prohibited under the
California Fair Employment and Housing Act and the Unruh Civil
Rights Act.
The California HealthCare Foundation (CHCF), which tracks
individual market trends, reports that gender-based health
insurance rates first began to show up in California-based
products in a noticeable way in coverage starting in mid-2007.
A preliminary review of market rates by CHCF in February
2009 found that, among California plans, rate differentials
between men and women ranged from no difference to 26% more.
CHCF found that rate differentials exist even in policies
without maternity coverage and for both Knox-Keene and
Insurance Code products.
3)NATIONAL WOMEN'S LAW CENTER REPORT . The National Women's Law
Center (NWLC) 2008 report Nowhere to Turn: How the Individual
Health Insurance Market Fails Women detailed their
investigation of gender discrimination in health insurance
premiums and other obstacles to coverage for women. The NWLC
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report found huge variations in premiums charged to women and
men for identical health plans (the vast majority of which do
not cover maternity benefits). In this nationwide study, some
insurers charged men and women the same prices, while others
charged women as much as 140% more than men. NWLC concluded:
"This discriminatory and arbitrary practice creates
substantial financial barriers for women seeking to obtain the
health care they need; as such, the use of gender rating
should be abandoned." In the report, NWLC pointed out that 40
years ago, the insurance industry voluntarily abandoned the
practice of using race as a rating factor, despite their
position that it was actuarially based. California already
prohibits insurers from charging higher premiums based on
race, color, national origin, ancestry, religion, marital
status, and sexual orientation, regardless of any cost
differences among these groups.
4)HEALTH CARE FOR WOMEN . According to an April 2007 report by
The Commonwealth Fund (TCF), Women and Health Coverage: The
Affordability Gap, men and women face similar challenges with
regard to health insurance, but women face unique barriers to
becoming insured. On average, women have lower incomes than
men and therefore have greater difficulty paying premiums.
Women are also less likely than men to have coverage through
their employer and more likely to obtain coverage through
their spouses. Women are more likely than men to have higher
out-of-pocket expenses, require more services, and therefore
are in greater need of comprehensive coverage. TCF found that
women are more likely to need health care services throughout
their lifetimes. According to TCF, women's reproductive
health needs require them to get regular check-ups, whether or
not they have children, and women of all ages are more likely
than men, 60% versus 40%, to take regular prescription
medicines. TCF found that women are more likely than men to
have difficulty obtaining needed health care (43% compared to
30%). Finally, TCF found that, whether insured or not, women
are more likely than men to have problems paying for their
health care. Nearly two of five women (38%) report medical
bill problems, compared with 29% of men.
The United States Preventive Services Task Force (USPSTF)
recommends numerous preventive services for both men and
women, as well as pregnant women and children, and complying
with the guidelines would necessitate that women access more
health care services than men. Many USPSTF recommendations,
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such as aspirin for the primary prevention of cardiovascular
events and screening for high blood pressure, colorectal
cancer, diabetes, tobacco use, obesity, human immunodeficiency
virus (HIV), and depression, apply to both men and women.
However, the USPSTF recommends an additional seven preventive
services specifically for women who are not pregnant that are
not recommended for men, such as screening for osteoporosis
and breast, cervical, and ovarian cancers and screening for
chlamydia and gonorrhea, two sexually transmitted infections
that often have no obvious symptoms but can cause long-term
complications and serious harm to the babies of infected
women.
5)INDIVIDUAL MARKET . According to CHCF, the individual health
insurance market in California serves approximately 2.6
million people, and is the primary potential source of
coverage for California's 6.6 million uninsured. The vast
majority of individual subscribers are women. As a growing
number of employers are reducing or eliminating health
insurance for employees due to tough economic times, many of
their employees will seek health insurance on the individual
market. According to the Kaiser Family Foundation (KFF), 6%
of women nationally are using individually purchased coverage
as their primary source of health care coverage. KFF also
reports that the individual insurance market can be a
difficult place to buy coverage, especially for people who are
in less-than-perfect health. Access to and the cost of
coverage is very much dependent on a person's health status,
age, place of residence, and other factors. Common
circumstances leading people to seek such individual coverage
include self-employment, early retirement, working part-time,
divorce or widowhood, or "aging off" a parent's policy.
6)SAN FRANCISCO LAWSUIT . In February 2009, the City and County
of San Francisco (San Francisco) filed a complaint for
declaratory and injunctive relief against the State of
California, the Director of DMHC, and the Insurance
Commissioner, asking the Superior Court to declare that the
existing provisions of Knox-Keene and the Insurance Code
allowing rate differentials based on sex discriminate on the
basis of sex, deny women their right to equal protection under
the California Constitution, and thus are void and
unenforceable. In the filing, San Francisco alleges that it
is legally obligated to provide medical services to persons
without insurance and bears these costs at San Francisco
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General Hospital, Laguna Honda Hospital, and the networks of
community clinics.
7)SUPPORT . The American College of Obstetricians and
Gynecologists (ACOG), District IX, California, sponsor of this
bill, writes in support that the increasing number of women
losing employer coverage leaves them to seek health coverage
through the individual market. ACOG argues that because women
still have less buying power than men ($.77 to every $1 earned
by men), the higher individual rates for women make it even
more difficult for them to afford coverage. San Francisco
writes in support and points out that gender rating denies
women equal access to health care and violates the California
Constitutional guarantee of equal protection. San Francisco
argues that the higher health insurance premiums for women
cannot be explained by increased costs associated with care
related to pregnancy and delivery. San Francisco points out
that even policies excluding maternity have price
differentials ranging from no difference between men and women
for one health insurer to 35% more for women in another. San
Francisco states that these differences suggest that the price
differentials are not actuarially based but possibly more
arbitrary. The American Civil Liberties Union (ACLU) writes
that eliminating gender rating stops health plans and health
insurers from essentially imposing a financial penalty for
women seeking recommended preventive health care services.
ACLU points out that insurers claim that women use more
services because they are accessing preventive care services.
ACLU points out that the basic recommended preventive care for
women, including screening exams for breast, cervical and
uterine cancer, exceeds recommended care levels for men.
Charging more for this effectively charges women more for
being women. Penalizing women for accessing recommended
prevention services is also counter productive, costly, and
inherently discriminatory. Supporters state that gender
rating is currently prohibited in the group market and this
bill simply eliminates this inconsistency in the individual
market. Supporters of this bill also argue that the practice
of gender rating is illegal in other areas of the law and
eliminating discrimination based on gender will greatly
improve access to vital health care for women.
8)OPPOSITION . State Farm writes in opposition to this bill
stating that in no line of insurance is everyone charged the
same, different people present different risks, and this bill
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would prohibit the price differential where a different price
is justified because of an increased risk. The Association of
California Life and Health Insurance Companies (ACLHIC) and
Aetna, oppose this bill and state that individual market
premiums are determined by objective statistical evidence,
factors typically used are age, family size, geographic
region, health status, age, and gender. ACLHIC and Aetna make
the argument that older men (aged 50-55) utilize more health
care services than women in this age group and are therefore
charged higher premiums than women in the same age group.
Opponents argue that eliminating gender rating would likely
have the unintended consequence of raising average community
rates for everyone, including increasing the premiums for
lower use, healthier individuals, making coverage less
attractive for them. Opponents suggest that low use
individuals may ultimately choose not to purchase health
insurance coverage. The California Chamber of Commerce writes
in opposition that if healthier individuals choose not to
purchase coverage, while those who need health care services
the most continue to purchase coverage, this could increase
the total risk to the purchasing pool, lead to higher premiums
for all, and ultimately increase the number of uninsured.
9)PREVIOUS AND RELATED LEGISLATION .
a) AB 1218 (Jones), pending in the Assembly, requires
health plans and health insurers, effective July 1, 2009,
to annually submit for prior approval to DMHC and CDI any
increase in the rate charged to a subscriber or insured, as
specified, and imposes on DMHC and CDI specific rate review
criteria, timelines and hearing requirements.
b) SB 54 (Leno), pending in the Senate, prohibits health
plans and health insurers from charging a premium, price or
charge differential for health care coverage because of the
sex of the prospective subscriber, enrollee, policyholder
or insured.
c) AB 1554 (Jones) of 2008 was substantially similar to AB
1218 and would have required health plans and health
insurers, effective July 1, 2009, to annually submit for
prior approval to DMHC and CDI any increase in the rate
charged to a subscriber or insured, as specified, and would
have imposed on DMHC and CDI specific rate review criteria,
timelines and hearing requirements.
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d) AB 1586 (Koretz), Chapter 421, Statutes of 2005, defines
the term "sex," which prohibits health plans and insurers
from specified discriminatory acts, to have the same
meaning as "gender," as defined under the Penal Code,
including a person's gender identity and gender related
appearance and behavior, whether or not stereotypically
associated with the person's assigned sex at birth.
Permits premium, price, or charge differentials, unless
otherwise prohibited by law, because of the sex of any
individual when based on objective, valid, and up-to-date
statistical and actuarial data or sound underwriting
practices.
10)POLICY ISSUE . Current law prohibits gender discrimination in
health insurance, with an exception provided for pricing
differentials based on sex, where the differentials are based
on "objective, valid and up-to-date statistical and actuarial
data" in the case of health plans and "statistical and
actuarial data or sound underwriting practices" in the case of
health insurers. While both health plans and health insurers
are required to establish actuarially sound rates and to
submit related information to DMHC and CDI, there is currently
no actuarial review by either department, of the rates, or the
actuarial justification, to determine if the pricing
differentials are justified. Absent this review, how can the
Legislature be assured that rate differentials being charged
to women are in fact actuarially justified as argued by health
plans and health insurers ?
REGISTERED SUPPORT / OPPOSITION :
Support
American College of Obstetrics and Gynecologists, District IX/CA
(sponsor)
American Civil Liberties Union
California Alliance for Retired Americans
California Commission on the Status of Women
California Communities United Institute
California Medical Association
California National Organization for Women
California Nurses Association
California School Employees Association
City and County of San Francisco
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City and County of San Francisco, Office of the City Attorney
Congress of California Seniors
Health Access California
MomsRising.Org
Physicians for Reproductive Choice and Health
Planned Parenthood Affiliates of California
Opposition
Aetna
Association of California Life & Health Insurance Companies
California Association of Health Plans
California Chamber of Commerce
State Farm
Analysis Prepared by : Deborah Kelch / HEALTH / (916) 319-2097