BILL ANALYSIS
AB 119
Page 1
ASSEMBLY THIRD READING
AB 119 (Jones)
As Introduced January 15, 2009
Majority vote
HEALTH 13-6 APPROPRIATIONS 10-5
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|Ayes:|Jones, Ammiano, Block, |Ayes:|De Leon, Ammiano, Charles |
| |Carter, De La | |Calderon, Davis, Fuentes, |
| |Torre, De Leon, Hall, | |Hall, John A. Perez, |
| |Hayashi, Hernandez, | |Price, Skinner, Torlakson |
| |Bonnie Lowenthal, Nava, | | |
| |V. Manuel Perez, Salas | | |
| | | | |
|-----+--------------------------+-----+---------------------------|
|Nays:|Fletcher, Adams, Conway, |Nays:|Nielsen, Duvall, Harkey, |
| |Emmerson, Gaines, Audra | |Miller, |
| |Strickland | |Audra Strickland |
| | | | |
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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.
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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.
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
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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 : According to the Assembly Appropriations
Committee, no direct fiscal impact on DMHC or CDI to continue
oversight of the individual health insurance market.
COMMENTS : 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 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 overcrowded
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.
Currently, 10 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.
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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.
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 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.
According to an April 2007 Report by The Commonwealth Fund
(TCF), "Women and Health Coverage: The Affordability Gap", men
and women face challenges with regard to health insurance, but
women face unique barriers to becoming insured. On average,
women have lower incomes than men and therefore 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 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,
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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, 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, 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.
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
General Hospital, Laguna Honda Hospital, and the networks of
community clinics.
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
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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 counterproductive, 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.
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 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)
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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.
Analysis Prepared by : Deborah Kelch / HEALTH / (916) 319-2097
FN: 0000428