BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 1543|
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THIRD READING
Bill No: AB 1543
Author: Jones (D) and Fletcher (R), et al
Amended: 6/23/09 in Senate
Vote: 27 - Urgency
SENATE HEALTH COMMITTEE : 8-0, 6/17/09
AYES: Alquist, Strickland, Aanestad, Cox, DeSaulnier,
Leno, Pavley, Wolk
NO VOTE RECORDED: Cedillo, Maldonado, Negrete McLeod
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : 76-0, 6/2/09 (Consent) - See last page for
vote
SUBJECT : Medicare supplement coverage
SOURCE : Department of Insurance
DIGEST : This bill makes conforming changes to the
requirements and standards that apply to Medicare
supplement contracts and policies (collectively Medigap
policies), for the purpose of complying with recent federal
law changes affecting the benefits, the issuance, and the
pricing of Medigap policies.
ANALYSIS :
Existing federal law:
CONTINUED
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1. Establishes the Medicare program as a
government-administered health insurance program for
people age 65 or older and certain people younger than
age 65, such as those with disabilities and those who
have permanent kidney failure.
2. Requires states to adopt by September 24, 2009, specific
modernization changes to Medigap policies, as outlined
in the model regulations developed by the National
Association of Insurance Commissioners (NAIC), and
consistent with requirements in the Medicare
Improvements for Patients and Providers Act (MIPPA).
MIPPA reduces from 14 to 11 the number of standardized
Medigap policies, and makes other changes to Medigap
coverage including changes to benefit and cost-sharing
requirements, and changes to disclosure and issuance
requirements.
3. Prohibits a health insurer, including issuers of Medigap
policies, from denying or conditioning the issuance,
effectiveness, or pricing of the policy on the basis of
genetic information, and requires states to enact
conforming changes to Medigap policies by July 1, 2009.
Existing state law:
1. Provides for regulation of health plans by the
Department of Managed Health Care (DMHC), under
Knox-Keene, and for regulation of health insurers by the
Department of Insurance (CDI) under the Insurance Code.
2. Establishes standards for Medigap policies sold in
California, which provide Medicare beneficiaries with
coverage for benefits and cost-sharing not covered by
Medicare. Medigap policies are subject to the
jurisdiction of either DMHC or CDI depending on the type
of policy, in a manner generally consistent with federal
laws applicable to Medigap policies, including benefit
and cost-sharing requirements for 14 standardized
benefit plans, open enrollment and guaranteed issue of
Medigap policies for specified individuals, and
specified notices and disclosures that must be provided
to Medigap policy applicants and enrollees.
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This bill makes conforming changes in state law regarding
standards applicable to Medigap policies to comply with the
federal MIPPA and the Genetic Information Nondiscrimination
Act of 2008.
Existing law entitles individuals to an annual open
enrollment period, commencing with the individual's
birthday, during which time the individual may purchase any
Medicare supplement contract or policy that offers benefits
equal to or lesser than those provided by the previous
coverage, as specified.
This bill identifies the Medicare supplement plans, based
on the modernization changes described above, that provide
equal coverage for purposes of this provision.
Existing law provides that a person is eligible for the
guaranteed issue of a Medicare supplement contract or
policy if the person is enrolled under an employee welfare
benefit plan that provides health benefits that supplement
the benefits under Medicare, and the plan either terminates
or ceases to provide all of those supplemental health
benefits.
This bill provides that a person is eligible for the
guaranteed issue of a Medicare supplement contract or
policy if the person is enrolled under an employee welfare
benefit plan that provides health benefits that supplement
the benefits under Medicare, the plan either terminates or
ceases to provide all of those supplemental health
benefits, or the employer no longer provides the individual
with insurance that covers all of the payment for the 20
percent coinsurance.
Background
Medicare is the federal health insurance program that
provides payment for certain medical expenses for most
people age 65 and older; certain disabled people under age
65, and people of all ages with end-stage renal disease
(permanent kidney failure treated with dialysis or a
transplant). Medicare is the nation's largest health
insurance program and covers nearly 40 million Americans.
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Medicare has three types of benefits:
1. Part A . The "hospital insurance program" covers
inpatient care in hospitals, skilled nursing facilities
after a hospital stay, and Religious Nonmedical Health
Care Institutions. Part A also helps cover hospice
services and home health care services. Most people are
automatically enrolled in Part A with no premium. The
deductible for Part A (which is calculated for each
"benefit period," which is defined as the period
beginning on the first day of hospitalization and
extending until the beneficiary has not been an
inpatient of a hospital or skilled nursing facility for
60 consecutive days) is more than $1,000 for calendar
years 2008 and 2009.
2. Part B . The "supplementary medical insurance program"
covers a wide range of medical services, including
physicians' services and outpatient hospital services,
as well as equipment and supplies, such as prosthetic
devices. Part B is optional and most people will pay
the standard monthly Part B premium ($96.40 for 2008),
but some people will pay a higher premium based on their
income. The deductible for Part B in calendar years
2008 and 2009 is $135. Coinsurance for Part B is
generally 20 percent of the Medicare-approved amount for
the service, but the beneficiary may also be subject to
"excess charges," or charges above the Medicare rate
from physicians or suppliers who do not accept the
Medicare rate.
3. Part D . The "voluntary prescription drug benefit
program" covers outpatient prescription drugs not
otherwise covered by Part B.
Beneficiaries can get their Part A and B benefits in two
ways. Under ''Original Medicare,'' beneficiaries get their
Part A and Part B benefits directly from the federal
government. Beneficiaries can also choose to get their
Part A and B benefits through private health plans, such as
HMOs [health maintenance organizations], that contract with
Medicare, which come under Part C of Medicare, called the
Medicare Advantage Program.
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FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
SUPPORT : (Verified 6/23/09)
Department of Insurance (source)
America's Health Insurance Plans
ARGUMENTS IN SUPPORT : The author's office states that
this bill conforms California law related to Medigap
policies to requirements in two new federal laws: GINA
[Genetic Information Nondiscrimination Act] and MIPPA. The
author's office states that MIPPA requires states to
conform state Medigap law to changes made by the NAIC model
Medigap regulation as a result of the two new federal laws,
and failure to enact the changes in the NAIC model act by
the specified deadlines will result in California losing
its ability to regulate Medigap policies.
The Department of Insurance, sponsor of this bill, states
that this bill is urgently needed because if California
fails to adopt the revisions by the mandated deadlines, the
state will be deemed to be out of compliance with federal
law, and thereby, lose the authority to regulate the
Medigap market. America's Health Insurance Plans, the
national association representing health insurance plans,
writes in support of this bill that the timeliness with
which these conforming provisions must take effect and
consistency with the NAIC model regulation are essential to
ensuring that Medicare supplement policies are available to
millions of California seniors.
ASSEMBLY FLOOR :
AYES: Adams, Ammiano, Anderson, Arambula, Beall, Tom
Berryhill, Blakeslee, Blumenfield, Brownley, Buchanan,
Caballero, Charles Calderon, Carter, Chesbro, Conway,
Cook, Coto, Davis, De La Torre, De Leon, DeVore, Duvall,
Emmerson, Eng, Evans, Feuer, Fletcher, Fong, Fuentes,
Fuller, Furutani, Gaines, Galgiani, Garrick, Gilmore,
Hagman, Harkey, Hayashi, Hernandez, Hill, Huber, Huffman,
Jeffries, Jones, Knight, Krekorian, Lieu, Logue, Bonnie
Lowenthal, Ma, Mendoza, Miller, Monning, Nava, Nestande,
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Niello, Nielsen, John A. Perez, V. Manuel Perez,
Portantino, Price, Ruskin, Salas, Saldana, Silva,
Skinner, Smyth, Solorio, Audra Strickland, Swanson,
Torlakson, Torres, Torrico, Tran, Villines, Yamada
NO VOTE RECORDED: Bill Berryhill, Block, Hall, Bass
CTW:mw 6/23/09 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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