BILL ANALYSIS
AB 163
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Date of Hearing: May 6, 2009
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Kevin De Leon, Chair
AB 163 (Emmerson) - As Amended: April 13, 2009
Policy Committee: HealthVote:17-0
Urgency: No State Mandated Local Program:
Yes Reimbursable: No
SUMMARY
This bill requires health plans and health insurers to provide
coverage for amino acid-based elemental formulas (AAEF) for the
diagnosis and treatment of eosinophilic disorders (ED).
FISCAL EFFECT
1)According to the California Health Benefits Review Program
(CHBRP), annual costs of $478,000 (60% GF) to CalPERS to
comply with the requirements of this bill. The GF portion of
these expenditures account for state-related health benefits
and not the costs of coverage associated with local
jurisdictions that contract with CalPERS as a benefits
administrator. The annual costs of treating AAEF is
approximately $13,900 per person when paid out-of-pocket by
families.
2) Additional costs of $7 million in
premiums paid in the private health insurance market
associated with individual and group coverage. Most of this
increase is offset by reduced out-of-pocket costs paid by
families for AAEF prior to the mandate.
COMMENTS
1)Rationale . This bill is sponsored by the American Partnership
for Eosinophilic Disorders. This bill requires health plans
and health insurers to provide coverage for formulas
prescribed by a physician and deemed medically necessary,
regardless of the delivery method for rare, serious
conditions. AAEF are nutritional formulas designed for
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individuals who have an immune response to allergens found in
whole foods or formulas composed of whole proteins, fats,
and/or carbohydrates.
Health coverage often pays for the costs of elemental formulas
when administered by a gastric feeding tube, or G-tube, but
not when consumed orally, which costs considerably less. This
bill provides coverage regardless of mode of delivery. Under
current law, 99% of insurance policies provide coverage AAEF
delivered through a feeding tube, while only 35% of insurance
policies cover for AAEF administered orally. As a result of
this bill, an estimated 600 people needing coverage statewide
will gain coverage for AAEF.
2)Background . ED occurs when eosinophils, a type of white blood
cell, is found in above-normal amounts in the body including
in the esophagus, stomach, and small and large intestines.
Producing too many eosinophils can cause chronic inflammation,
resulting in tissue damage. Common symptoms include
difficulty swallowing, nausea and vomiting, failure to thrive,
malnutrition, abdominal or chest pain, and difficulty
sleeping. ED is a rare condition impacting 8,500 Californians.
3)Industry Cost Concerns . Opponents of this bill indicate
legislatively mandated health benefits increase costs and
limit insurer, employer, and individual choices with respect
to a variety of health benefits. Opponents indicate health
mandates can hinder compliance with evidence-based medical
standards that reflect new medical technology or other
advances in knowledge. When considered together, mandates may
also hinder the ability of insurers and employers to offer a
wide range of affordable products to consumers with a variety
of health care needs.
4)Related Legislation . There are more than two dozen current law
health mandates, established over the last two decades, to
provide coverage for specified services such as cancer
screenings and treatment. There are another handful of
mandates to offer coverage for a number of other health
services.
AB 2174 (Laird) in 2008 was similar to this bill and was held on
the Suspense File of the Senate Appropriations Committee.
AB 30 (Evans) in 2008 required specified health plans and
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insurers to provide coverage of testing for, and treatment of,
inborn errors of metabolism (IEM). AB 30 was vetoed due to
cost concerns of health mandates.
5)Other Health Mandates in the Current Session .
a) There are nine health mandates under legislative
consideration this year, including AB 163. Other proposed
health mandates include:
i) AB 56 (Portantino): mammography notification
ii) AB 98 (De La Torre): maternity coverage
iii) AB 214 (Chesbro): durable medical equipment coverage
iv) AB 244 (Beall): mental health parity
v) AB 259 (Skinner): access to nurse midwives
vi) AB 513 (De Leon): lactation consultant coverage
vii) SB 158 (Wiggins): HPV vaccine coverage
viii) SB 161 (Wright): chemotherapy treatment
b) Two other bills address specification of current law
mandates with respect to minimum coverage or loosening of
current law mandates. These two bills are:
i) AB 786 (Jones): standardization of individual market
products
ii) SB 92 (Aanestad): out-of-state carrier coverage
Analysis Prepared by : Mary Ader / APPR. / (916) 319-2081