BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 1449
                                                                  Page  1

          Date of Hearing:   May 6, 2009

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                Kevin De Leon, Chair

                AB 1449 (De Leon) - As Introduced:  February 27, 2009 

          Policy Committee:                              HealthVote:19-0

          Urgency:     No                   State Mandated Local Program:  
          No     Reimbursable:              

           SUMMARY  

          This bill clarifies consumer protections in the individual  
          health insurance market established by AB 2569 (De Leon),  
          Chapter 604, Statutes of 2008. Specifically, this bill: 

          1)Adds sales representatives to individuals required to assist  
            applicants in answering application questions accurately and  
            completely. 

          2)Requires individuals assisting applicants in the completion  
            of, rather than submission of, a health insurance application  
            to aid in providing application accuracy and completeness. 

           FISCAL EFFECT  

          No direct fiscal impact to the California Department of Managed  
          Health Care (DMHC) or the California Department of Insurance  
          (CDI) to continue oversight of the individual health insurance  
          market.

           COMMENTS  

            1) Rationale  . This bill is sponsored by the author to clarify  
             provisions of AB 2569, which requires health plans and  
             insurers to allow an individual who was covered under an  
             individual healthy policy and subject to rescission, to  
             transfer to another policy offered by that insurer if the  
             policy is of equal or lesser value. This bill makes several  
             clarifying changes in the provisions enacted by the author in  
             2008. 

            2)Post-Claims Underwriting and Rescission  . The practice of  








                                                                  AB 1449
                                                                  Page  2

             waiting for a major health care claim to be submitted for  
             payment, then investigating a patient's medical history, and  
             canceling or rescinding the policy retroactively is known as  
             post-claims underwriting. Post-claims underwriting means  
             health plans and insurers are using the underwriting process  
             after the fact, instead of before coverage is offered.  
             Rescission involves a determination by the plan or insurer  
             that, as a result of application errors or omissions, the  
             contract between plan and enrollee never existed, and  
             therefore any health care services the enrollee received are  
             not covered by the health plan or insurer and are to be paid  
             by the enrollee. When a health plan rescinds a policy, this  
             affects not only the enrollee but also medical providers who  
             rendered services.  


           Analysis Prepared by  :    Mary Ader / APPR. / (916) 319-2081