BILL ANALYSIS                                                                                                                                                                                                    




                   Senate Appropriations Committee Fiscal Summary
                           Senator Christine Kehoe, Chair

                                           591 (De La Torre)
          
          Hearing Date:  8/2/2010         Amended: 7/15/2010
          Consultant: Katie Johnson       Policy Vote: Health 5-2
          _________________________________________________________________ 
          ____
          BILL SUMMARY:  AB 591, an urgency measure, would impose limits  
          on a health care service plan and health insurer's ability to  
          increase premiums charged to enrollees and policyholders, as  
          specified. 
          _________________________________________________________________ 
          ____
                            Fiscal Impact (in thousands)

           Major Provisions         2010-11      2011-12       2012-13     Fund
                                                                  
          CDI regulations and tracking    $1,200             
          $2,060$2,060Special*
          of premium increases

          DMHC regulations and     likely over $2 million  
          annuallySpecial**
          tracking of premium increases

          *Insurance Fund
          **Managed Care Fund
          _________________________________________________________________ 
          ____

          STAFF COMMENTS: This bill meets the criteria for referral to the  
          Suspense File.
          In order to promulgate any necessary regulations, to track  
          health plan and insurer premium increases from year to year, and  
          to field help center calls, the California Department of  
          Insurance (CDI) would need approximately $1.2 million in FY  
          2010-2011, and $2.06 million annually ongoing. The Department of  
          Managed Health Care (DMHC) would need resources of at least $1  
          million in FY 2010-2011 and at least $2 million annually ongoing  
          to perform similar functions as CDI.

          Specifically, this bill would prohibit a health care service  
          plan or health insurer from:
             1)   Increasing its premium rate for a period of 90 days  










               commencing on the effective date of this bill; this  
               specific provision would sunset at the end of the 90 day  
               period;
             2)   Commencing the day after the 90 day period, increasing  
               the premium rate that it charges a subscriber of an  
               individual plan contract or policy by more than the average  
               percentage increase in the medical care component of the  
               consumer price index for the immediately preceding calendar  
               year, as calculated by the United States Bureau of Labor  
               Statistics;
             3)   Commencing the day after the 90 day period, increasing  
               the premium rate it charges a subscriber or policyholder of  
               an individual plan more than once annually.
          This bill would exempt any health care service plan contract or  
          health insurance policy that is issued through a publicly funded  
          state health care coverage program. This bill would not affect  
          the California Public Employees Retirement System since it only  
          pertains to insurance products in the individual market.