BILL ANALYSIS
AB 119
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Date of Hearing: April 22, 2009
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Kevin De Leon, Chair
AB 119 (Jones) - Introduced: January 15, 2009
Policy Committee: Health Vote:13-6
Urgency: No State Mandated Local Program:
Yes Reimbursable: No
SUMMARY
This bill eliminates the authority in current law for health
plans and insurers to charge different health care premiums to
women and men, if such differences are based on valid
statistical and actuarial data.
FISCAL EFFECT
No direct fiscal impact on the California Department of Managed
Health Care (DMHC) or the California Department of Insurance
(CDI) to continue oversight of the individual insurance market.
Current law prohibits discriminatory health plan and insurer
practices based on demographic factors including race, color,
national origin, ancestry, religion, marital status, sexual
orientation, or age. According to regulators, the author, and
health plans and insurers, the pricing behavior addressed in
this bill has only recently occurred, since 2007.
COMMENTS
1)Rationale . This bill is sponsored by the American College of
Obstetricians and Gynecologists (ACOG) to eliminate price
discrimination based on sex in premium pricing (gender rating)
in the individual insurance market. The author and sponsor
indicate many insurers do not use gender rating, while others
charge as much as 40-50% more to women of reproductive age
than their male counterparts. Under current law, insurers may
charge higher prices to non-elderly women who utilize more
health services and lower prices to older women who have lower
health care utilization, if such pricing differences are based
on statistical and actuarial data. This bill ends this pricing
practice.
AB 119
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2)The Individual Insurance Market . This bill eliminates an
exception in current law regarding insurance pricing in the
individual market based on sex. While most Californians
receive health coverage via employer-sponsored plans or public
programs such as Medi-Cal or Healthy Families, 2.6 million
individuals purchase health coverage in the individual
insurance market, which has distinctly different underwriting
rules than either the small-employer or large-employer group
insurance markets. Medical underwriting and diversity in
product offerings in the individual market translates to
widely varying benefit packages and premiums. This bill
reduces this variation based on sex and gender.
2)Gender Rating in Health Insurance . Ten other states already
prohibit gender rating in the individual insurance market,
while two other states limit the practice. Federal and state
laws prohibit employers from charging men and women different
rates for employer-sponsored health insurance. Current
California law prohibits gender rating for employer groups of
two to 50 employees. Under the California Fair Employment and
Housing Act and the Unruh Civil Rights Act, gender
discrimination in housing, employment, and other public
accommodations and services is prohibited.
3)Litigation . In February 2009, the City Attorney of San
Francisco filed a lawsuit in Superior Court against the State
of California, the Director of DMHC, and the California
Insurance Commissioner. The City Attorney asserts that current
law governing health plans and insurers deny women their right
to equal protection under the California Constitution, and
thus are void and unenforceable. San Francisco is the public
payer for women unable to afford individual market premiums
due to pricing differentials. The city pays for uninsured
patients at San Francisco General Hospital, Laguna Honda
Hospital, and community clinics.
4)Concerns . Health plans and insurers oppose this bill. These
opponents indicate health care costs for women younger than 50
range from 20% to 80% higher than their male counterparts,
depending on whether maternity coverage is included in an
evaluation of costs. They indicate this bill will lead to
young, healthy men dropping coverage due to premium increases
that may result in the individual market. In addition,
opponents are concerned that this bill leads to community
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rating, in which all enrollees are charged a similar price.
5)Related Legislation . SB 54 (Leno), pending in the Senate, is
very similar to AB 119.
Analysis Prepared by : Mary Ader / APPR. / (916) 319-2081