BILL ANALYSIS
SENATE HEALTH
COMMITTEE ANALYSIS
Senator Elaine K. Alquist, Chair
BILL NO: AB 786
A
AUTHOR: Jones
B
AMENDED: June 30, 2009
HEARING DATE: July 15, 2009
7
CONSULTANT:
8
Park/
6
SUBJECT
Individual health care coverage: coverage choice categories
SUMMARY
Requires the Director of the Department of Managed Health
Care (DMHC) and the Commissioner of the California
Department of Insurance (CDI) to jointly develop a system
to categorize all health coverage products sold to
individuals, as specified, as well as standard definitions
and terminology for covered benefits and cost-sharing
provisions for individual coverage. Requires health plans
and health insurers to set the maximum limit on
out-of-pocket costs in individual health care service plan
contracts and health insurance policies issued, amended, or
renewed on or after April 1, 2011, at ($10,000) per person,
per year. Requires the Office of Patient Advocate (OPA) to
develop and maintain on its Internet website a uniform
benefits matrix of all available individual health plan
contracts and individual health insurance policies arranged
by coverage choice category.
CHANGES TO EXISTING LAW
Existing law:
Existing law provides for regulation of health plans by the
Continued---
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Department of Managed Health Care and for regulation of
health insurers by the California Department of Insurance.
Existing law establishes the Office of the Patient Advocate
to represent the interests of health plan enrollees.
Existing law authorizes health plans to offer and sell
health care service plan contracts and authorizes health
insurers to offer and sell health insurance policies, as
specified. Existing law requires every health plan and
every health insurer, to cover, or offer coverage for,
specified mandated benefits or types of coverage, with
different benefit requirements applicable to health plans
under DMHC and health insurers under CDI.
Existing law requires full-service health plans and health
insurance policies in the individual market to have written
policies, procedures, or underwriting guidelines
establishing the criteria and process under which the plan
makes decisions to provide or to deny coverage and sets the
rate for that coverage.
Existing law requires individual health plan contracts
under the jurisdiction of DMHC to offer basic health care
services, as defined, as well as other specific types of
health care services. Existing law requires certain
individual health insurance policies under the jurisdiction
of CDI to offer specific types of health care services, but
not basic health care services.
Existing law requires health care service plans to use
disclosure forms or materials containing information
regarding the benefits, services, and terms of the plan
contract as the Director of the DMHC (Director) may
require, so as to afford the public, subscribers, and
enrollees with a full and fair disclosure of the provisions
of the plan in readily understood language and in a clearly
organized manner.
Existing law allows the Director to require that the
materials be presented in a reasonably uniform manner to
facilitate comparisons between plan contracts of the same
or other types of plans. Existing law requires the
disclosure form to provide for specified information,
including the principal benefits and coverage of the plan,
including
coverage for acute care and subacute care; the exceptions,
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reductions, and limitations that apply to the plan; the
full premium cost of the plan; and any copayment,
coinsurance, or deductible requirements that may be
incurred by the member or the member's family in obtaining
coverage under the plan; a description of any limitations
on the patient's choice of primary care physician,
specialty care physician, or non-physician health care
practitioner, based on service area and limitations on the
patient's choice of acute care hospital care, subacute or
transitional inpatient care, or skilled nursing facility;
and general authorization requirements for referral by a
primary care physician to a specialty care physician or a
non-physician health care practitioner.
Existing law also requires the Director to require each
plan offering a contract to an individual or small group to
provide, with the disclosure form, a uniform health plan
benefits and coverage matrix containing the plan' s major
provisions in order to facilitate comparisons between and
among plan contracts. Existing law requires the uniform
matrix to include the following category descriptions,
together with the corresponding copayments and limitations
in the following sequence: deductibles; lifetime maximums;
professional services; outpatient services; hospitalization
services; emergency health coverage; ambulance services;
prescription drug coverage; durable medical equipment;
mental health services; chemical dependency services; home
health services, and other.
Existing law imposes similar, but somewhat less extensive,
disclosure requirements on health insurers offering health
insurance policies under the jurisdiction of CDI.
Existing law requires a health plan or insurer to permit,
at least once each year, an individual who has been covered
for at least 18 months under an individual plan contract
issued by the health plan or insurer to transfer, without
medical underwriting, as defined, to another individual
plan contract offered by the health plan or insurer having
equal or lesser benefits, as specified. Existing law
requires a plan and an insurer to rank its products for
these purposes and post the ranking on its Internet website
or make the ranking available upon request.
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This bill:
This bill would require DMHC and CDI, by December 31, 2011,
to jointly develop by regulation standard definitions and
terminology for covered benefits and cost-sharing
provisions, including, but not limited to, copayments,
coinsurance, deductibles, limitations, and exclusions,
applicable to all health care service plan contracts and
health insurance policies to be offered and sold to
individuals, on or after September 1, 2012. The bill would
authorize the regulations to require the submission of any
information needed to develop the standard definitions and
terminology required by this section.
The bill would require all individual health care service
plan contracts and health insurance policies issued,
amended, or renewed on or after January 1, 2011, to contain
a maximum limit on out-of-pocket costs, including, but not
limited to, copayments, coinsurance, and deductibles, for
covered benefits provided by contracted providers. The bill
would set the maximum limit on out-of-pocket costs in
individual health care service plan contracts and health
insurance policies issued, amended, or renewed on or after
April 1, 2011, at ($10,000) per person, per year.
The bill would require DMHC and CDI, by December 31, 2011,
to jointly develop, by regulation and in consultation with
health care service plans, health insurers, and consumer
representatives, a system to categorize all health care
service plan contracts and health insurance policies to be
offered and sold to individuals on and after September 1,
2012, into coverage choice categories in order to
facilitate transparency and consumer comparison shopping.
The bill would require these coverage choice categories to
reflect a reasonable continuum between the coverage choice
category with the lowest level of health care benefits, and
the coverage choice category with the highest level of
health care benefits, based on the actuarial value of each
product. The bill would require that the coverage choice
categories be based on the benefits covered and the
out-of-pocket costs, and be developed to ensure ease of
consumer comparison and understanding of the benefit design
choices in the individual market.
The bill would require that the system be developed with
the lowest number of choice categories necessary to include
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the full range of individual products into meaningful
categories, but would limit the total number to no more
than 10 coverage choice categories across all products
offered and sold to individuals, including health care
service plan contracts and health insurance policies. The
bill would require at least two categories to be in common
between products in DMHC and CDI. The bill would require
the first coverage choice category to provide the most
comprehensive benefits and the lowest cost sharing, and be
comparable to the coverage provided by large employers to
their employees.
The bill would require the Insurance Commissioner to
require health insurers, agents, and brokers selling
products in the coverage choice category with the lowest
benefits to provide a standard written notice to potential
purchasers as follows:
Insurance products in this category include
significant limits on benefits and the health
care services that are covered. If you have a
serious injury, a serious illness such as a heart
attack or cancer, or ongoing health care costs
associated with a chronic condition such as
diabetes or heart disease, coverage under this
product may not pay for a substantial share of
the costs of doctors, hospitals, or other
treatments. You may face additional out-of-pocket
costs for doctors, hospitals, and other services
even if you have met your deductible or
out-of-pocket maximum. This product does not
provide maternity coverage. Please examine this
product carefully before purchasing.
The bill would require that the regulations developed by
DMHC and CDI identify and require the submission of any
information needed to categorize each individual health
care service plan contract and individual health insurance
policy, including, but not limited to, the copayments,
coinsurance, deductibles, limitations, exclusions, and
premium rates applicable to, and the actuarial value of,
each contract or policy. The bill would require a health
care service plan and health insurer to submit the
information required by DMHC or CDI to implement these
provisions no later than February 1, 2012, for all new
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individual contracts to be offered or sold on or after
September 1, 2012.
The bill would require the Director of DMHC and Insurance
Commissioner to categorize each individual health care
service plan contract to be offered by a plan and each
individual health insurance policy to be offered by an
insurer into the appropriate coverage choice category on or
before June 30, 2012.
The bill would require the Office of Patient Advocate (OPA)
to develop and maintain on its Internet website a uniform
benefits matrix of all available individual health plan
contracts and individual health insurance policies arranged
by coverage choice category. The bill would require this
uniform benefit matrix to include, but not be limited to:
The telephone number or numbers that may be used by an
applicant to contact either DMHC or CDI, as appropriate,
for additional assistance;
A link to provider network information on the Internet
website of the corresponding health care service plan or
health insurer, for each health care service plan
contract or health insurance policy included in the
matrix; and,
Specified benefit information submitted by health plans
and by health insurers, including, but not limited to:
standard rates by age, family size, and geographic
region; deductibles; copayments or coinsurance, as
applicable; annual out-of-pocket maximums; professional
services; outpatient services; preventive services;
hospitalization services; emergency health services;
ambulance services; prescription drug coverage; durable
medical equipment; mental health and substance abuse
services; and home health services.
The bill would authorize OPA to utilize the information
provided by health care service plans and health insurers
to develop additional information and tools to facilitate
consumer comparison shopping of individual health care
service plan contracts and individual health insurance
policies.
The bill would require a health plan, health insurer,
solicitor, solicitor firm, broker, or agent, when marketing
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or selling a health plan contract or health insurance
policy in the individual market, to make the prospective
enrollee or insured aware of the availability and contents
of the benefit matrix developed by OPA pursuant to the
provisions above, and would make this requirement
applicable only after OPA has developed the benefit matrix.
This bill would exempt Medicare supplement plans and
coverage offered by specialized health care service plans
or under government-sponsored programs under the
jurisdiction of DMHC from these provisions, and provide
that nothing in the provisions under the Insurance Code
shall be construed to limit disability insurance,
including, but not limited to, hospital indemnity, accident
only, and specified disease insurance that pays benefits on
a fixed benefit, cash payment only basis, from being sold
as supplemental insurance.
FISCAL IMPACT
According to the Assembly Appropriations Committee, the
bill would result in annual fee-supported special fund
costs of $1 million, combined, to the DMHC and CDI to
establish the system to categorize all individual health
coverage into standard categories and continue oversight of
the provisions established by this bill.
BACKGROUND AND DISCUSSION
The author states that this bill is needed because, despite
the large number of Californians who are covered in the
individual market, it is nearly impossible for consumers to
make price comparisons for individual health insurance,
since each product from each insurer has different
deductibles, copayments, out-of-pocket maximums, benefits,
or networks. The author states that it is hard for
consumers to determine what their plan covers or how
comprehensive their coverage is, and the result is that
some consumers think they are well covered, but find out
otherwise, only when it is too late. The author asserts
that some coverage is marketed as quality coverage, but may
actually only cover hospitalization, while some plans leave
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consumers with significant gaps in coverage, with unlimited
exposure to medical bills. The author states that this
measure would organize the individual insurance market and
make it understandable for consumers. The author adds that
the bill would also weed out "junk" insurance, such as
coverage with no maximum on out-of-pocket expenses, which
deceptively offers coverage, but leaves consumers with
large medical bills.
The Individual Health Insurance Market
The individual health insurance market is made up of
individuals and families who pay for their own coverage,
generally because group coverage is not available. Health
plans and insurers selling individual coverage conduct
medical underwriting, the process of reviewing an applicant
or applicants' medical history to determine the financial
risk posed by the applicant or applicants, and may deny an
applicant health insurance, limit a benefit package, or
charge a higher premium based on the assessed level of
risk. Numerous individual health coverage contracts and
policies, with varying levels of costs and benefits, are
offered by health plans and health insurers under CDI and
DMHC.
According to data published in 2005 by the California
HealthCare Foundation (CHCF), almost 30 percent of
California adults are potential purchasers in the
individual market, but only eight percent purchase
coverage. The average monthly premium for individual
coverage was $211 in 2002. The data suggested that "people
in the individual market pay varying amounts for the same
coverage, pointing to the importance of information and
shopping." Nationally, the percent of nonelderly with
individual coverage has declined from 7.4 percent in 1988
to 6.5 percent in 2003. The percentage of nonelderly who
are market candidates has increased from 21.8 percent to
26.1 percent in the same time period, while percent of
market candidates with individual coverage has declined
from 33.9 percent to 24.8 percent.
A 2007 study supported by CHCF, found that the actuarial
value of individual coverage declined dramatically over
time. In 2003, individual market policies paid 75 percent
of medical costs on average, while three years later, that
figure dropped to 55 percent. The same study found that
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individual market premiums increased by 23 percent between
2002 and 2006.
According to a RAND study on consumer decision making in
California's individual health insurance market, funded by
the California HealthCare Foundation and published in
Health Affairs in May 2006, reducing the complexity of
shopping for individual coverage could increase
participation as much as, if not more than, price
subsidies. The study also found that, in California, the
individual market is an important source of long-term
coverage for a sizable fraction of those who purchase it.
California Health Benefits Review Program
Pursuant to AB 1996 (Thomson), Chapter 795, Statutes of
2002, and SB 1704 (Kuehl), Chapter 684, Statutes of 2006,
which asks the University of California to assess
legislation proposing a mandated benefit or service, or the
repeal of a mandated benefit or service, the California
Health Benefits Review Program (CHBRP) prepared a written
analysis of the public health, medical, and economic
impacts of this measure. The Assembly Health Committee
requested that CHBRP analyze the introduced version of this
bill, because it required all health insurance policies to
cover physicians, hospitals, and preventive services.
CHBRP determined that any benefits that would be mandated
as a result of this bill are not specified, but assigned to
DMHC and CDI to define, and concluded that a traditional
CHBRP mandate analysis was not feasible. The following are
highlights from the analysis:
Enrollees . In 2006, 17.7 million, or 6.8 percent, of the
non-elderly U.S. population purchased health insurance in
the private individual market. In contrast, in
California, a larger portion of the non-elderly
population-about 2 million, or 11.5 percent of those who
are commercially insured-purchased products in the
individual market.
Premiums . Prices for individual policies vary
considerably. Nationally, average annual premiums are
$2,613 for single coverage and $5,799 for family plans.
In California, as of September 2008, CHBRP estimates that
the average annual premium in the individual market was
$7,146 for a family of 2.99 persons and $2,905 for single
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individual coverage.
Deductibles . In 2006, the average deductible in
single-coverage individual plans/policies in California
was $2,136, with out-of-pocket maximums averaging $3,998.
(A deductible is the amount the consumer must spend
before the coverage begins, although specified services,
such as preventive services, may be exempt from the
deductible.) According to data CHBRP collected from the
seven largest carriers in California, from 2006 to 2009,
high deductible health plans (HDHPs) ($1,000 or more for
an individual or $2,000 or more for a family) represented
over half of the individual insurance market. (The IRS
currently defines a HDHP, for the purpose of using a
tax-free Health Savings Accoun t, as a health plan/policy
with an annual deductible that is not less than $1,150
for single coverage, or $2,300 for family coverage, with
annual out-of-pocket expenses not to exceed $5,800 for
single coverage or $11,600 for family coverage.)
Out-of-pocket costs . CHBRP cited one study of the six
leading insurance carriers in California which found that
Californians with individual coverage are all in plans
with some out-of-pocket maximum . CHBRP noted that if this
bill is interpreted to require the regulatory agencies to
establish out-of-pocket maximums, this bill could have
implications for the use of health care services and the
costs of insurance. (An alternative interpretation is
that the bill may require health plans insurers to simply
disclose out-of-pocket costs to facilitate price
comparisons by consumers.) Using comprehensive benefit
packages as the base for comparison (i.e., non-HDHPs),
premium increases would range from 1 percent to 25
percent, depending on the maximum level of the
out-of-pocket costs established by regulators. Products
associated with less comprehensive benefit packages would
likely face greater premium effects, when altering just
out-of-pocket maximums, and holding all other plan/policy
design elements constant.
Minimum benefits and coverage . CHBRP identified the
differences between DMHC-regulated health plans and
CDI-regulated health insurance policies, including the
requirement for DMHC-regulated plans to offer basic
health care services, as defined. CHBRP notes that the
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major differences between the two are that CDI-regulated
products are not required to cover preventive services,
hospitalization, or maternity services. CHBRP also noted
that trends in health care delivery suggest that
plans/policies that only cover hospital care are no
longer adequate to prevent people from incurring
catastrophic expenditures, given that the volume and
range of services provided outside acute care hospitals
has grown dramatically since the mid-1980s due to
technological innovations and changes in reimbursement
policy. CHBRP noted other factors in its report that are
no longer relevant to the current version of this bill,
as it no longer requires all individual market products
to cover physician services, hospitals, and preventive
services and meet existing coverage requirements.
Impact of standardizing information
CHBRP cited research that found that many individuals in
the United States have a limited understanding of health
insurance products and thus struggle with selecting a
health plan/policy, and that individuals can only process
a limited number of factors when making a decision,. The
research showed that many individuals do not become
familiar with the specific attributes of their health
insurance plan/policy until they use health care
services. A 2006 survey of California adults enrolled in
HMOs found that more than 40 percent of HMO consumers
reported a problem with their HMO in the last year, with
12 percent of adults enrolled in HMOs discovering that
important benefits they needed were not covered, and 10
percent reporting they had misunderstood their coverage
or benefits. CHBRP noted that both Massachusetts and the
Centers for Medicare and Medicaid Services provide
standardized information on insurance product offerings,
the latter related to Medicare beneficiaries.
CHBRP noted that, in the early 1990s, supplemental
Medicare plans (Medigap policies) were required to adhere
to 1 of 10 standardized benefit packages, and researchers
found that the Medigap reform resulted in reduced
confusion among policyholders, broader benefit packages,
increased coverage for certain benefits, reduced
marketing abuses, and reduced consumer complaints.
Risk segmentation . According to CHBRP, risk segmentation
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occurs when consumers are offered a choice of products
that vary in the scope of benefits. Healthier consumers
tend to select the lowest price, lowest benefit plans
while persons with health concerns or conditions,
anticipating the need for health care services, tend to
select more comprehensive and more expensive products.
As CHBRP points out, benefit package design is a tool for
insurers to segment enrollees by health care risk. CHBRP
concludes that this type of risk segmentation in
individual products means that individuals with the
greatest health care needs bear a greater financial risk,
which can lead to more uninsured and underinsured
persons. One consequence of the increase in
high-deductible individual plan products has been greater
risk segmentation in the market.
Other policy considerations . CHBRP's issue brief also
pointed out several other policy considerations related
to this bill, including: some insurance products
regulated by CDI may not be affected by this bill because
they are excluded from the existing definition of health
insurance in the Insurance Code, such as policies that
pay daily cash benefits during a hospital stay.
Arguments in support
Consumer, labor, and provider organizations support this
bill as a way to help consumers more effectively comparison
shop among individual coverage options. Health Access
California, sponsor of this bill, writes that this bill
will help organize the individual insurance market so that
consumers can shop knowledgably, and prevent insured
consumers from being surprised with significant medical
debt. Health Access also argues that this bill would
eliminate junk insurance-plans with no maximum on
out-of-pocket expenses, which deceptively offer coverage
but leave consumers with unlimited exposure-by establishing
a $10,000 out-of-pocket maximum for all coverage.
AARP writes that the complexity of the individual health
insurance market can be daunting for consumers, leading to
misunderstanding of coverage details and uninformed
choices. The American Federation of State, County, and
Municipal Employees states that it believes in providing
Californians with quality insurance, along with clear
information on the services provided within each plan. The
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California Psychological Association writes that the bill
empowers individuals to know what level of service they are
getting before they purchase the coverage, including
coverage for mental health.
The California Public Interest Research Group (CALPIRG)
writes that consumers may spend a lot [on individual
coverage] without realizing they are getting very little.
CALPIRG writes that, in our weakening economy, Californians
are in more danger than ever from medical debt, and if
consumers inadvertently pick a plan that isn't right for
them, they run the risk of having huge medical bills not
covered by their insurance, or of having to file for
bankruptcy. CALPIRG believes that this measure will give
working Californians the power to make the right health
care choices for their families.
Western Center on Law and Poverty writes that maximum
limits on out-of-pocket costs are needed in our current
market. WCLP notes that, in 2007 an estimated 25 million
nonelderly adults were underinsured, which represented a 60
percent increase since 2003.
Arguments in opposition
Health plans, insurers, and some business organizations
oppose this bill. The California Association of Health
Plans (CAHP) opposes this bill expressing concerns that it
could negatively impact the ability of health plans to
provide flexible products to individuals at affordable
prices. According to CAHP, the individual market is
currently accessible to nearly all who apply for coverage.
CAHP points to a 2007 survey by America's Health Insurance
Plans that found that nine out of ten applicants who went
through an application process for individual coverage were
offered coverage. CAHP argues that health plans are
currently able to keep policies affordable by ensuring that
health risk is accurately assessed and through flexibility
in product design to lower premiums.
The Association of California Life and Health Insurance
Companies (ACLHIC) writes that it supports transparency of
health plan choices so that individuals can compare
options, but that this bill goes beyond that and may
eliminate lower cost options in the market. ACLHIC
believes that the bill also assumes that CDI products are
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less comprehensive than DMHC-licensed products, and puts
CDI products at a competitive disadvantage, based on the
disclosure requirement that applies to CDI products only.
ACLHIC also writes that the requirement to establish
standard definitions and terminology for covered benefits
and cost-sharing provisions may create a considerable
operational burden and believes the time frames in the bill
are unworkable.
Health Net writes that the standard definitions and
terminology requirement may require massive revamping of
information technology systems and retraining of staff, and
also opposes the disclaimer required by the Insurance Code
that benefits may not include maternity coverage or may not
pay a substantial portion of costs, absent determination by
regulators about what the categories are and where the
benefit plans should go.
Anthem Blue Cross (Blue Cross) writes that it is opposed to
the measure, unless it is amended to categorize health care
products in the individual market based on actuarial value,
and set the annual out-of-pocket maximum for in-network
medical services at $15,000 per person, to be updated
annually, according to the medical consumer price index.
Blue Cross additionally echoes many of the objections
stated above. The California Association of Health
Underwriters (CAHU) writes that it is opposed to mandating
maximum out-of-pocket expenses at $10,000, and believes
that this will have the effect of regulating product design
and premium rates. CAHU states that the medical consumer
price index has risen twice as fast as wages for the last
20 years, and that, over time, it will limit carriers'
ability to design affordable products.
Prior legislation
SB 1522 (Steinberg) of 2008 would have required DMHC and
the CDI to jointly develop a system to categorize into five
coverage choice categories health coverage sold to
individuals, as specified. Failed on the Assembly floor.
ABX1 1 (Nunez) of 2007 a comprehensive health care reform
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proposal, included, among other elements, provisions that
would have significantly reformed the individual health
insurance market, including provisions identical to the
introduced version of this bill. ABX1 1 would have
required DMHC and CDI to develop, by regulation, a system
to categorize health plan contracts and insurance policies
into five choice categories, reflecting a reasonable
continuum of benefits and prices; would have required
health plans and insurers to offer coverage to individuals
without medical underwriting and regardless of their health
status or claims history, as specified; and would have
required individuals to have health insurance coverage,
with certain exceptions. ABX1 1 failed passage in the
Senate Health Committee.
AB 8 (Nunez) of 2007 also a comprehensive reform measure,
contained similar provisions to ABX1 1 with regard to
individual insurance market reforms, but did not require
all individuals to have health insurance coverage. Vetoed
by Governor. Schwarzenegger who stated in his veto message,
"AB 8 does not achieve coverage for all, a critical step
needed to reduce health care costs for everyone.
Comprehensive reform cannot leave Californians vulnerable
to loss or denial of coverage when they need it most.
Finally, to be sustainable, comprehensive reform cannot
place the majority of the financial burden on any one
segment of our economy."
SB 48 (Perata) of 2007 would have enacted product and
underwriting reforms in the individual market and other
health care system reforms. These provisions were deleted
from SB 48.
AB 2889 (Frommer), Chapter 826, Statutes of 2006, requires
health plans and health insurers to permit an individual
who has been covered for at least 18 months under an
individual benefit plan to transfer, without medical
underwriting, to any other individual benefit plan with
equal or lesser benefits, as specified.
AB 2281 (Chan) of 2006 would have established standards and
disclosure requirements affecting individual benefit plans
with annual deductibles, and would have required DMHC and
CDI to develop a consumer guide on individual benefit plans
with annual deductibles to assist consumers in evaluating
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competing products in the market. Failed passage on the
Assembly floor.
AB 977 (Nava) of 2006 would have required health plans and
health insurers to apply to DMHC and CDI for approval prior
to offering for sale any health coverage product that
includes any deductible, copayment, or other out-of-pocket
cost or limitation on benefits or coverage, and would have
required a public notice and comment period for review of
the product approval applications. Failed passage in the
Senate Banking, Finance and Insurance Committee.
AB 356 (Chan), Chapter 526, Statutes of 2005, requires
health plans and insurers selling individual benefit plans
to disclose specified information to individuals applying
for coverage, and to those who have such coverage, and to
report a general description of their rating and
underwriting criteria and policies to DMHC and CDI.
PRIOR ACTIONS
Assembly Floor: 48-28
Assembly Appropriations:10-5
Assembly Health: 13-6
COMMENTS
1.Comparison to SB 1522 (Steinberg) of 2008.
Last year, this committee passed out SB 1522, a similar
bill, which contained a maximum of five coverage choice
categories that were to be uniform between health plans
and health insurers regulated by their respective
entities. That bill also required health insurance
policies under the jurisdiction of CDI to cover
preventive services, physicians, and hospitals, which
this bill does not.
2.Maximum out-of-pocket expenditure.
The bill would set the maximum limit on out-of-pocket
costs in individual health care service plan contracts
and health insurance policies issued, amended, or renewed
on or after April 1, 2011, at ten thousand dollars
($10,000) per person per year. Given that families may be
covered under individual plan contracts and policies, the
author may want to adjust the out-of-pocket maximum for
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families to be less than $10,000 per person, per year.
3.Technical amendments.
a) The bill would authorize the regulations developed
by DMHC and CDI to require the submission of any
information needed to develop the standard definitions
and terminology required by this section. Staff
recommends that the bill require plans and insurers to
provide information identified by DMHC and CDI as
necessary to develop standard definitions and
terminology.
Page 4, lines 11-14:
(b) The regulations developed by the
department and the Department of Insurance
pursuant to this section may identify and
require the submission of any information
needed to develop the standard definitions
and terminology required by this section.
Page 7, lines14-18:
(b) The regulations developed by the
department and the Department of Managed
Health Care pursuant to this section may
identify and require the submission of any
information needed to develop the standard
definitions and terminology required by this
section.
b) Exemptions for Medicare supplement and other
specialized health insurance under the jurisdiction of
DMHC should be duplicated in the Insurance Code.
Page 9, line 10:
(d) The commissioner shall categorize each
individual health insurance policy to be offered
by an insurer into the appropriate coverage
choice category on or before June 30, 2012.
(e) This section shall not apply to Medicare
supplement policies or certificates or to
coverage offered through specialized health
insurance policies or government-sponsored
STAFF ANALYSIS OF ASSEMBLY BILL 786 (Jones) Page
18
programs.
(e) (f) Nothing in this section shall be
construed to limit disability insurance,
including, but not limited to, hospital
indemnity, accident only, and specified disease
insurance that pays benefits on a fixed benefit,
cash payment only basis, from being sold as
supplemental insurance.
POSITIONS
Some of the letters from the organizations listed below
were written in reference to the prior version of the bill.
It is not clear whether recent amendments would change any
of these groups' positions.
Support: Health Access California (sponsor)
American Association of Retired Persons
American College of Obstetricians and Gynecologists,
District IX / CA
American Federation of State, County and Municipal
Employees, AFL-CIO
California Chiropractic Association
California Federation of Teachers
California Immigrant Policy Center
California Medical Association
California Pan-Ethnic Health Network
California Psychological Association
California Public Interest Research Group (CALPIRG)
California Retired Teachers Association
California Society for Clinical Social Work
California Teachers Association
Congress of California Seniors
Consumers Union
Disability Rights Education & Defense Fund
Having Our Say!
National Multiple Sclerosis Society
Service Employees International Union
Western Center on Law and Poverty
Oppose: Anthem Blue Cross (unless amended)
Association of California Life and Health Insurance
Companies
STAFF ANALYSIS OF ASSEMBLY BILL 786 (Jones) Page
19
Blue Shield of California
California Association of Health Plans
California Association of Health Underwriters
California Chamber of Commerce
Health Net
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