BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
1600 (Beall)
Hearing Date: 7/15/2010 Amended: As Introduced
Consultant: Katie Johnson Policy Vote: Health 6-0
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BILL SUMMARY: AB 1600 would require that health care service
plan contracts and health insurance policies issued, amended, or
renewed on or after January 1, 2011, provide coverage for the
diagnosis and medically necessary treatment of a mental illness
under the same terms and conditions as other medical conditions,
as specified. The bill would define a mental illness as a mental
disorder defined in the Diagnostic and Statistical Manual IV and
would provide that the definition would include substance abuse
diagnosis and treatment.
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Fiscal Impact (in thousands)
Major Provisions 2010-11 2011-12 2012-13 Fund
DMHC regulations update$135 $125 $0 Special*
*Managed Care Fund
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STAFF COMMENTS:
AB 1600 would require that health care service plan contracts
and health insurance policies issued, amended, or renewed on or
after January 1, 2011, provide coverage for the diagnosis and
medically necessary treatment of a mental illness under the same
terms and conditions as other medical conditions, as specified.
This bill would:
1) Define a mental illness as a mental disorder defined in
the Diagnostic and Statistical Manual IV (DSM IV), which
was first published in 1952 by the American Psychiatric
Association and there have been four major revisions. It is
the standard classification of mental disorders used by
mental health professionals. It is expected that DSM-V will
be published after 2011.
2) Provide that the definition would include substance
abuse diagnosis and treatment, and,
3) Require that upon subsequent publishing of the DSM IV,
the definition of mental illness should conform to that in
the new manual and that the definition should be updated in
California law via the promulgation of joint regulations by
the Department of Managed Health Care (DMHC) and the
California Department of Insurance (CDI).
Costs to CDI would be minor and absorbable and costs to DMHC to
update their mental health parity regulations would be
approximately $135,000 in FY 2010-2011 and $125,000 in FY
2011-2012.
Page 2
AB 1600 (Beall)
According to a 2010 report on AB 1600 by the California Health
Benefits Review Program (CHBRP), the Healthy Families Program
(Healthy Families), Major Risk Medical Insurance Program
(MRMIP), and the Access for Infants and Mothers program (AIM)
combined would incur costs of $691,000 in the first year of
implementation.
However, there would be no fiscal impact on Healthy Families or
AIM because mental health and substance abuse parity was part of
the program reauthorization at the federal level in the
Children's Health Insurance Program Reauthorization Act of 2009
(CHIPRA). According to HFP regulations, as of October 1, 2010,
HFP will be in compliance with both mental health and substance
abuse parity provisions of this bill. AIM regulations are
planned to be updated too.
CHBRP estimates a total increase of $0.08 per member per month
for MRMIP. When multiplied by the 7,000 MRMIP enrollees, costs
would be minor and absorbable. MRMIP provides health care
coverage to individuals who cannot otherwise purchase insurance
on the individual market and is funded through a combination of
about 60 percent subscriber premiums and 40 percent state
contribution made up of tobacco tax revenue. Since the program
receives generally a fixed amount of about $30 million from the
Cigarette and Tobacco Products Surtax Fund, by default, any
increase in costs to the program would likely be borne by
subscribers. MRMIP premiums are set between 125 and 137.5
percent of standard market rates.
Program costs beyond January 1, 2014, are unpredictable due to
the recently enacted federal health care reform bill, the
Patient Protection and Affordable Care Act (PPACA). PPACA
requires that mental health and substance treatments be covered
as a basic benefit in state-run health insurance exchanges and
requires that health plans and insurers offer coverage to people
without regard to previously existing medical conditions
commencing January 1, 2014.
This bill would exempt contracts entered into between the
Department of Health Care Services (DHCS) and health care
service plan for enrolled Medi-Cal beneficiaries and contracts
with the California Public Employees' Retirement System
(CalPERS) unless the CalPERS board chooses to purchase a plan or
contract that provides mental health coverage. CalPERS currently
complies with the 2008 federal mental health parity
requirements. Accident-only, specified disease, hospital
indemnity, Medicare supplement, dental-only, or vision-only
health plan contracts or insurance policies would also be
exempt.
Previous Legislation
This bill is similar to AB 244 (Beall, 2009), AB 1887 (Beall,
2008), and AB 423 (Beall, 2007), which were each vetoed due to
concerns about the costs of health benefit mandates.