BILL ANALYSIS
AB 1825
Page 1
Date of Hearing: April 20, 2010
ASSEMBLY COMMITTEE ON HEALTH
William W. Monning, Chair
AB 1825 (De La Torre) - As Introduced: February 11, 2010
SUBJECT : Maternity services.
SUMMARY : Requires every individual or group health insurance
policy, as specified, to cover maternity services, as defined.
Specifically, this bill :
1)Requires a health insurer with respect to a pending or
approved individual or group health insurance policy form on
file with the California Department of Insurance (CDI) as of
January 1, 2011 to submit to CDI, on or before March 1, 2011,
a revised policy form that provides coverage for maternity
services.
2)Requires that the corresponding policy issued, amended, or
renewed on or after 30 days following CDI's approval of the
revised form to include coverage for maternity services.
3)Defines maternity services to include prenatal care,
ambulatory care maternity services, involuntary complications
of pregnancy, neonatal care, and inpatient hospital maternity
care, including labor and delivery and postpartum care.
4)Exempts from the provisions of this bill specialized health
insurance, Medicare supplement insurance, short-term limited
duration health insurance, Civilian Health and Medical Program
of the Uniformed Services (CHAMPUS)-supplement insurance, or
TRI-CARE supplemental insurance, or hospital indemnity,
accident-only, or specified disease insurance.
5)Makes the following findings and declarations:
a) Health care service plans (health plans) are required by
the Knox-Keene Health Care Service Plan Act of 1975
(Knox-Keene) to provide maternity services as a basic
health care benefit;
b) Existing law does not require health insurers to provide
designated basic health care services and, therefore, they
are not required to provide coverage for maternity
services; and,
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c) It is essential to clarify that all health coverage made
available to California consumers, whether issued by health
plans regulated by the Department of Managed Health Care
(DMHC) or disability insurers who sell health insurance
(health insurers) regulated by CDI, must include maternity
services.
EXISTING LAW :
1)Provides for the regulation of health plans by DMHC under
Knox-Keene and for the regulation of health insurers by CDI
under the Insurance Code.
2)Requires health plans under Knox-Keene to cover a number of
basic health care services and permits DMHC to define the
scope of the services and to exempt plans from the requirement
for good cause.
3)Provides, under Knox-Keene, that "basic health care services"
include: a) physician services, including consultation and
referral; b) hospital inpatient services and ambulatory care
services; c) diagnostic laboratory and diagnostic and
therapeutic radiological services; d) home health services; e)
preventive health services; f) emergency health care services,
including ambulance and ambulance transport services and
out-of-area coverage; and, g) hospice care.
4)Provides, under Knox-Keene, that health plans must provide all
medically necessary basic health care services, including
maternity services necessary to prevent serious deterioration
of the health of the enrollee or the enrollee's fetus, and
preventive health care services, specifically including
prenatal care.
5)Prohibits health plans and health insurers from issuing
contracts and policies that contain a copayment or deductible
for inpatient hospital or ambulatory care maternity services
that exceed the most common amount charged for the same type
of care and services provided for other covered medical
conditions.
6)Prohibits health plans and health insurers providing maternity
benefits for a person covered continuously from conception
from attaching any exclusions, reductions, or limitations to
coverage for involuntary complications of pregnancy unless
those provisions apply to all of the benefits paid by the plan
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or insurer.
FISCAL EFFECT : This bill has not yet been analyzed by a
fiscal committee.
COMMENTS :
1)PURPOSE OF THIS BILL . The author asserts that one of the
latest trends in the individual market is for insurers to
exclude maternity care from their basic plan benefits to sell
cheaper products to target populations. As more employers are
dropping employee health coverage, the author contends that
insurance companies are increasingly targeting the young,
uninsured population of the market with non-maternity
products, even though 25% of these individuals are women of
childbearing age. The author argues that these types of
non-maternity products delay and restrict access to prenatal
care, which can lead to serious health complications for both
the mother and the baby, and force more women into
state-funded programs, such as Medi-Cal or Access for Infants
and Mothers (AIM). As evidence of the need to level the
playing field between health plans regulated by DMHC that are
required to cover maternity services and health insurers
regulated by CDI that currently are not, the author points to
a 2008 report from the National Women's Law Center entitled,
"Nowhere to Turn: How the Individual Health Insurance Market
Fails Women," which found that it is difficult and costly for
women to find health insurance that covers pregnancy-related
care.
2)BACKGROUND . Numerous studies have shown that prenatal care
pays for itself by helping to minimize the prevalence and
severity of low- and very low-birth weight babies. A 2004
study in the Journal of Perinatal and Neonatal Nursing
evaluated the effects of augmented prenatal care on women at
high risk for having a low-birth weight baby who were enrolled
in a special program that provided basic prenatal care,
prenatal education, and case management. The program saved
about $13,962 per single low-birth weight birth prevented,
and, after program costs were considered, the return on
investment equaled 37%; for every dollar invested in the
program $1.37 was saved. In addition, a March of Dimes report
indicated that hospital charges for premature, low-birth
weight infants totaled $37.7 billion in 2003. The report
stated that premature birth was among the most common,
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serious, and costly problems facing infants in the United
States and is responsible for about half of all infant
hospitalizations.
3)CALIFORNIA HEALTH BENEFITS REVIEW PROGRAM . AB 1996 (Thomson),
Chapter 795, Statutes of 2002, requests the University of
California to assess legislation proposing a mandated benefit
or service, and prepare a written analysis with relevant data
on the medical, economic, and public health impacts of the
proposed health plan and health insurance benefit mandate
legislation. The California Health Benefits Review Program
(CHBRP) was created in response to AB 1996 and extended for
four additional years in SB 1704 (Kuehl), Chapter 684,
Statutes of 2006.
On March 30, 2010, President Obama signed into law the federal
Patient Protection and Affordable Care Act (P.L. 111-148),
which was amended by the Health Care and Education
Reconciliation Act (P.L. 111-152). These laws came into
effect after CHBRP received a request for analysis for AB
1825. There are provisions in P.L. 111-148 that have
effective dates of 2014 and beyond that would dramatically
affect the California health insurance market and its
regulatory environment. Given the uncertainty surrounding
implementation of these provisions and given P.L. 111-148 was
only recently enacted, it is important to note that the
potential effects of these short-term provisions are not taken
into account in the baseline estimates presented in CHBRP's
analysis of AB 1825. Following are some of the findings of
CHBRP's analysis of AB 1825:
a) Medical Effectiveness . Studies of the impact of the
number of prenatal care visits that pregnant women receive
have consistently found no correlation between the number
of prenatal visits and birth outcomes for either infants or
mothers. However, there is clear and convincing evidence
that specific services provided during, or in conjunction
with, prenatal care visits are effective. These services
include smoking cessation counseling, blood pressure
monitoring, screening for various genetic and
sexually-transmitted diseases, and diagnostic ultrasounds.
b) Utilization, Cost, and Coverage Impacts . This bill
requires the entire CDI-regulated market to cover maternity
services. Since all group policies are required to, and in
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practice, currently cover maternity services, this bill
would impact only those enrollees in individual
CDI-regulated policies. According to CHBRP, most
Californians enrolled in CDI-regulated policies (61%) have
coverage for prenatal care and maternity services. In the
individual insurance market, about 963,000 enrollees
currently lack maternity benefits, including 240,700 women
between the childbearing ages of 19 and 44. CHBRP
estimates that approximately 8,298 pregnancies would be
newly-covered under CDI insurance policies as a result of
this bill. Overall, the mandate in this bill is estimated
to have no impact on the number of deliveries since the
birth rate is not expected to change as a result of this
bill. CHBRP concludes that most women are likely to
continue to face large out-of-pocket costs for maternity
services regardless of whether or not their insurance
policy includes maternity benefits and attributes this to
almost 70% of the women in CDI-regulated policies currently
being in high deductible health plans (HDHPs). According
to CHBRP, prenatal care is usually subject to an HDHP
minimum annual deductible of $1,200 for individual plans
and $2,400 for family plans as reported by the federal
Internal Revenue Service. According to CHBRP, HDHPs
generally do not exempt maternity/prenatal services from
the high deductibles, so a high level of cost sharing is
required for maternity services. CHBRP further states that
even women currently enrolled in non-HDHPs frequently face
high cost-sharing requirements in the CDI-regulated
individual market, and some might also choose to switch to
HDHPs as a result of this bill in order to save on
premiums.
CHBRP estimates that total statewide health expenditures by
or for all enrollees in both DMHC and CDI-regulated
policies will increase by .1%, or about $40 million, as a
result of this bill. All of the cost impacts of AB 1825
would be concentrated in the individual CDI-regulated
insurance market, where total premium expenditures are
estimated to increase by 1% and premiums by 5%. Per member
per month premium expenditures are estimated to increase by
an average of $8.48. Most of the increase would be
concentrated among those aged 19-29. For the majority of
individuals in the CDI-regulated individual market who do
not currently have maternity benefits, CHBRP estimates that
AB 1825 would increase average premiums from 2% to 28%
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depending on the age of the enrollee. CHBRP also notes
that in 2009, California passed AB 119 (Jones), Chapter
365, Statutes of 2009, which prohibits insurers from gender
rating, or charging differential premiums based on gender
for contracts issued, amended, or renewed on or before
January 1, 2011. Therefore, CHBRP maintains that the
premium and cost calculations in their analysis assumes all
gender-rated policies would be converted to gender-neutral
pricing prior to the implementation of AB 1825.
Additionally, among those in the CDI-regulated individual
market who currently have maternity benefits, AB 1825 is
expected to decrease average premiums by .5% to 20%.
Lastly, CHBRP states that the estimated premium increases
could result in adding 9,335 individuals to the ranks of
the newly uninsured; these individuals are likely to be
younger individuals and women, if they experience the
greatest premium increases.
c) Public Health Impact . CHBRP reports that it is unable
to estimate what the impact of AB 1825 would be on the
utilization of prenatal care and concludes that the overall
public health impact most likely lies somewhere between a
lower bound estimate that would assume no increase in the
utilization of effective prenatal care services because
these pregnant women would probably still face high levels
of cost sharing found in the cheapest insurance plans and
an upper bound estimate that would assume an increase in
utilization and a corresponding improvement in health
outcomes if all 8,298 newly covered pregnancies would have
financial barriers to prenatal care removed.
According to CHBRP, women enrolled in plans in the individual
health insurance market without coverage for maternity
benefits are currently paying $108.8 million out of pocket
for non-covered maternity services. AB 1825 would shift
these costs from women enrollees to increase premiums
across both men and women enrollees. Therefore, this bill,
CHBRP maintains would differentially reduce the out-of
pocket-costs for women enrollees.
Lastly, CHBRP reports that 10.9% of babies are born preterm
in California and there are 3,000 infant deaths each year.
According to CHBRP, it is estimated that each premature
birth costs society approximately an average of $51,600.
To the extent that AB 1825 increases the utilization of
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effective prenatal care that can reduce outcomes such as
preterm births and related infant mortality, CHBRP asserts,
there is a potential to reduce morbidity and mortality and
the associated societal costs.
4)SUPPORT . The California Commission on the Status of Women,
writes that women should not have to pay more for what amounts
to essential medical care and this bill will ensure fair,
affordable access to maternity coverage in all health
insurance policies. The American Congress of Obstetricians
and Gynecologists, District IX, asserts that women should not
be required to pay significantly more for coverage for their
basic medical needs that are part of their biology and such
gender discrimination is exacerbated by a lesser ability to
pay for these policies when women still earn less than
80-cents on the dollar of that of men. The California Medical
Association points out that reproductive health coverage is
preventive medicine that, in its absence, can pose significant
health problems for both the mother and baby. Health Access
California states that this bill closes a gap in existing law;
and if an insurer fails to provide maternity coverage, the
state picks up the cost, whether for prenatal care provided
through a public program or the costs associated with lack of
prenatal care. The California Academy of Family Physicians
(CAFP) asserts that the point of insurance is to pool
resources and risk, share the cost of medical care and protect
individuals from financial harm due to a medical condition.
CAFP further maintains that women will never need treatment
for prostate cancer as men will never need treatment for
cervical cancer and childless couples will never need
pediatric care. CAFP argues that it is to all of our
advantage to be included in a collective risk pool.
5)OPPOSITION . The Association of California Life and Health
Insurance Companies (ACLHIC) contends in opposition that since
federal law already requires group insurance policies to
include maternity benefits, the mandate in this bill is an
individual market competition issue, rather than a health
insurance access or equity issue. ACLHIC notes that
approximately 93% of births in California are covered by some
form of insurance and current law also ensures maternity
benefits are offered on the same terms and conditions as other
health benefits so there is no consumer equity issue that
needs to be addressed. Anthem Blue Cross writes that, by
eliminating choice, this bill negatively impacts women and men
who have made a conscious decision not to buy maternity
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services, or women who are unable to have children, by forcing
them to purchase coverage for services they do not want or
need. The California Chamber of Commerce (Cal Chamber) states
that this bill is premature and could further exacerbate
California's budget crisis if the benefits mandated in this
bill exceed the benefits mandated in federal health care
reform. Cal Chamber further maintains that this bill will
increase costs to the private sector at a time that this state
is still struggling through an economic crisis, evidenced by
one of the highest unemployment rates in the nation.
6)PREVIOUS LEGISLATION .
a) AB 119 (Jones), Chapter 365, Statutes of 2009, prohibits
gender discrimination in individual health insurance and
health plan rates.
b) AB 98 (De La Torre) of 2009, AB 1962 (De La Torre) of
2008, and SB 1555 (Speier) of 2004 were all nearly
identical to this bill. These three bills were vetoed by
the Governor. In his veto messages, Governor
Schwarzenegger acknowledged that the bills present a
difficult choice between protecting access to affordable
health insurance when costs continue to rise for employers
and individuals, or mandating that every person who pays
for their own health insurance must buy maternity services.
The Governor stated that he must continue to veto
one-sided mandates that only increase costs to the overall
health care system.
c) SB 897 (Speier) of 2003 contained similar provisions to
SB 1555 and was reviewed by CHBRP, but was not heard in any
committee.
d) SB 1411 (Speier), Chapter 880, Statutes of 2002,
prohibits health plans and health insurers from charging a
higher copayment for maternity services than for other
medical services.
REGISTERED SUPPORT / OPPOSITION :
Support
American Congress of Obstetricians and Gynecologists, District
IX/California (sponsor)
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California Commission on the Status of Women (sponsor)
Blue Shield of California
California Academy of Family Physicians
California Medical Association
California School Employees Association
California Teachers Association
Health Access California
March of Dimes
Planned Parenthood Affiliates of California
Opposition
Association of California Life & Health Insurance Coverage
Anthem Blue Cross
California Chamber of Commerce
Analysis Prepared by : Tanya Robinson-Taylor / HEALTH / (916)
319-2097