BILL ANALYSIS
SENATE HEALTH
COMMITTEE ANALYSIS
Senator Elaine K. Alquist, Chair
BILL NO: AB 1825
A
AUTHOR: De La Torre
B
AMENDED: As Introduced
HEARING DATE: June 23, 2010
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CONSULTANT:
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Chan-Sawin/ jl
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SUBJECT
Maternity services
SUMMARY
Requires every individual or group health insurance policy,
as specified, to cover maternity services, as defined.
CHANGES TO EXISTING LAW
Existing federal law:
Requires employers, under the Federal Civil Rights Act,
that offer health insurance, and have 15 or more employees,
to cover maternity services benefits at the same level as
other health care benefits.
Defines, under the federal health reform law, the Patient
Protection and Affordable Care Act (PPACA), a list of
"essential health benefits package," including maternal and
newborn care, which health insurance coverage and group
health plans must provide, beginning in 2014.
Existing law:
Provides for the regulation of health plans and insurers by
the Department of Managed Health Care (DMHC) and the
California Department of Insurance (CDI), respectively.
Continued---
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Requires DMHC-regulated health plans to provide all
medically necessary basic health care services, as defined.
Permits DMHC to define the scope of the services and to
exempt plans from the requirement for good cause.
Specifies that basic health care services include 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. No similar provision is applicable to
health insurers regulated by CDI.
Prohibits health plans and insurers from issuing contracts
and policies that contain a copayment or deductible for
inpatient hospital or ambulatory care for maternity
services that exceeds the most common amount charged for
the same type of care and service provided for other
covered medical conditions.
Prohibits health plans and insurers that provide maternity
benefits 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 or insurer.
This bill:
Requires any health insurer with a pending or approved
individual or group health insurance policy form on file
with 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. Also requires new forms
for individual or group policies submitted to CDI after
January 1, 2011 to provide coverage for maternity services.
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.
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.
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Exempts specialized health insurance, Medicare supplement
insurance, short-term limited duration health insurance,
Civilian Health and Medical Program of the Uniformed
Services (CHAMPUS)-supplemental insurance, or TRI-CARE
supplemental insurance, or hospital indemnity,
accident-only, or specified disease insurance.
Makes various findings and declarations.
FISCAL IMPACT
According to the Assembly Appropriations Committee
analysis, which references the California Health Benefits
Review Program (CHBRP) analysis on this bill, there is no
direct state fiscal impact to publicly supported health
coverage programs, including Medi-Cal, CalPERS, or Healthy
Families. This bill would result in increased aggregate
premium costs in the individual insurance market of $120
million annually. Increased premium costs would be largely
offset by a reduction in out-of-pocket costs for women who
would otherwise pay for a variety of services not covered
by insurance in the absence of this mandate.
BACKGROUND AND DISCUSSION
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, in order to sell cheaper
products to target populations. As employer-sponsored
coverage declines, the author contends that insurance
companies are increasingly targeting the young and
uninsured with products that do not include maternity
services, even though 25 percent of these individuals are
women of childbearing age. These types of 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, who are required by law to
cover maternity services, and health insurers regulated by
CDI who are not, the author points to a 2008 report from
the National Women's Law Center entitled, "Nowhere to Turn:
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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.
Value of prenatal care in California
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 percent; for every dollar invested in
the program $1.37 was saved.
An American College of Obstetricians and Gynecologists
study of over 3,000 women estimated that each dollar cut
from prenatal care could cost taxpayers up to $3.33 in
neonatal care for sick babies. The March of Dimes reports
that premature birth is among the most common, serious, and
costly problems facing infants in the United States, and is
responsible for about half of all infant hospitalizations.
According to the California Department of Public Health, in
2006, 85.9 percent of births were to mothers who initiated
prenatal care in the first trimester. Only 0.6 percent of
California women received no prenatal care. Overall in
California, there are approximately 75 maternal
pregnancy-related deaths and 3,000 infant deaths per year.
Infant mortality is most frequently caused by birth defects
(23.5 percent of deaths), followed by prematurity and
low-birth weight (15.6 percent of deaths), maternal
complications of pregnancy (6.0 percent of deaths), and
SIDS (5.2 percent of deaths).
The California Health Benefits Review Program (CHBRP)
Pursuant to AB 1996 (Thomson), Chapter 795, Statutes of
2002, and SB 1704 (Kuehl), Chapter 684, Statutes of 2006,
the University of California is requested to assess
legislation proposing a mandated benefit or service, or the
repeal of a mandated benefit or service, through the
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California Health Benefits Review Program (CHBRP). CHBRP
prepares a written analysis of the public health, medical,
and economic impacts of such measures. The following are
highlights from the CHBRP analysis:
Assumptions of the analysis
This report focus on outcomes associated with prenatal
services. Since a majority of births occur in the
hospital setting regardless of insurance status, use
of prenatal services would be most affected by the
potential for out-of-pocket costs and thus most
directly impacted by this bill. AB 1825 would not
affect coverage for infants, nor would it impact the
number of deliveries, since the birth rate is not
expected to change post-mandate.
CHBRP also noted that, in 2009, California passed a
law that prohibits insurers from gender rating, or
charging differential premiums based on gender for
contracts issued, amended, or renewed on or before
January 1, 2011. The premium and cost calculations in
the CHBRP report assumes all gender-rated policies
would be converted to gender-neutral pricing prior to
the implementation of AB 1825.
Potential impact of federal health care reform
In March of this year, the President signed the
federal health reform law, the Patient Protection and
Affordable Care Act (PPACA). PPACA would make drastic
changes to the California health insurance market and
its regulatory environment. Effective January 1,
2014, PPACA requires health plans and insurers to
provide coverage for "essential health benefits," as
defined by the Secretary of the Department of Health
and Human Services. Included in the list of required
"essential health benefits" is coverage of maternity
and newborn care. How these provisions are
implemented in California would depend on regulations
from federal agencies, and statutory and regulatory
actions taken by the state.
PPACA also includes provisions that are enacted by
September 2010, which would expand the number of
Californians with insurance, such as requiring
coverage for dependents up to age 26. This would
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decrease the number of uninsured and increase the
number of people impacted by this mandate. The CHBRP
analysis does not reflect the impact from
implementation of federal health reform requirements.
Medical effectiveness
Studies utilizing randomized controlled trials have
consistently found no statistically significant
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 in producing
better birth outcomes for mothers and infants. These
services include smoking cessation counseling, folic
acid to prevent neural tube defects, treatment and
monitoring of hypertensive disorders, treatment
related to preeclampsia or other complications,
screening for various genetic and sexually transmitted
diseases, and diagnostic ultrasounds, among others.
Impact on coverage
This bill requires CDI-regulated insurance policies to
cover maternity services. About 2,438,000
Californians, or 13 percent of enrollees in health
insurance plans and policies subject to state
regulation, are in the CDI-regulated market.
According to CHBRP, 61 percent of Californians
enrolled in CDI-regulated policies already have
coverage for prenatal care and maternity services,
while all enrollees have coverage for complications of
pregnancy. All enrollees in CDI-regulated large and
small group insurance markets currently have maternity
benefits - thus AB 1825 only impacts CDI-regulated
products in the individual market.
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. The CDI-regulated individual market is becoming
more segmented as individuals are choosing not to
purchase policies that include maternity benefits.
To illustrate this point, CHBRP points to an analysis
of a similar measure published in 2004, which showed
that approximately 82 percent of enrollees in the
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CDI-regulated individual market had maternity benefits
at that time. CHBRP estimates that approximately
8,298 pregnancies would be newly covered under CDI
insurance policies as a result of this bill.
CHBRP concluded 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. The report
attributes this to the fact that almost 70 percent of
the women in CDI-regulated policies currently are in
high deductible health plans (HDHPs). HDHPs generally
do not exempt maternity or prenatal services from high
deductibles, so a high level of cost sharing is
required for maternity services. As reported by the
federal Internal Revenue Service prenatal care is
usually subject to an HDHP minimum annual deductible
of $1,200 for individual policies, and $2,400 for
family policies. CHBRP further points out that even
women currently enrolled in non-HDHPs frequently face
high cost-sharing requirements in the CDI-regulated
individual market, and some might choose to switch to
HDHPs as a result of this bill in order to save on
premiums.
Impact on utilization
CHBRP notes that standard prenatal care is almost
always bundled with delivery services and paid for as
a single lump-sum fee to physicians. To the extent
that they are bundled as a fixed charge and women are
aware of this fee structure, it is unlikely that AB
1825 would have a large impact on utilization of
standard prenatal care services.
Impact on cost
CHBRP estimates that total statewide health
expenditures for all enrollees in both DMHC and
CDI-regulated policies will increase by 0.1 percent,
or about $40 million, as a result of this mandate.
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 one percent, and average premiums by
five percent. Monthly premiums are estimated to
increase on average $8.48 per individual. Most of
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that increase would be concentrated among those
between ages 19 and 29.
Insurance premiums in the individual market are
stratified by age bands, so premiums are likely to
increase more for younger individuals, particularly
those ages 19 to 29, than for older individuals. 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 percent to 28 percent
depending on the age of the enrollee. Additionally,
among those in the CDI-regulated individual market who
currently have maternity benefits, AB 1825 is expected
to decrease average premiums by 0.5 percent to 20
percent.
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, as
they experience the greatest premium increases.
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
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maintains, would differentially reduce the out-of
pocket-costs for women enrollees.
CHBRP notes that, in California, there are 3,000
infant deaths each year and 10.9 percent of babies are
born preterm, with each premature birth costing
society approximately $51,600. CHBRP notes that, to
the extent that this bill increases the utilization of
effective prenatal care that can reduce preterm births
and infant mortality, there's a potential to reduce
morbidity and mortality and associated societal costs.
Arguments in support
The co-sponsor of this bill, 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
College of Obstetricians and Gynecologists, District IX,
also a co-sponsor, 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.
Planned Parenthood Affiliates of California (PPAC) writes
that women who buy insurance without maternity coverage may
still find themselves in need of this coverage, as almost
half of all pregnancies are unintended. Lack of insurance
often results in inadequate prenatal care, which is a
factor in the premature birth of one in ten California
babies. PPAC also points out that a woman with late or no
prenatal care is three times more likely than normal to
have a premature baby.
The California Medical Association asserts that
reproductive health coverage is preventive medicine and its
absence can pose significant health problems for both the
mother and baby. 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
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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. The California Nurses Association argues that
insurance products in the individual market that do not
carry comprehensive maternity coverage offer selective
health care that is not in the best interest of women.
Blue Shield of California notes that, while it does not
generally support benefit mandates, maternity services are
a fundamental health care need that should always be a part
of any insurance coverage. Blue Shield also points out
that allowing some policies to exclude maternity services
will only exacerbate existing access and affordability
problems. The effect of allowing insurers to offer
individual policies without such coverage undermines a
basic purpose of insurance, which is to spread treatment
costs for fundamental health care needs over a large
population in order to keep costs reasonable for all.
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.
Arguments in opposition
The Association of California Life & Health Insurance
Companies (ACLHIC) contends 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 percent
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 services, or women
who are unable to have children, by forcing them to
purchase coverage for services they do not want or need.
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They also point out that it provides their members the
opportunity to shift from a non-maternity health coverage
product to one that includes maternity services, if the
member does become pregnant.
The California Chamber of Commerce (CalChamber) 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. CalChamber further asserts that this bill will
increase costs in the private sector at a time when this
state is still struggling through an economic crisis, as
evidenced by one of the highest unemployment rates in the
nation.
The Department of Finance writes that this legislation
would likely result in increased medical insurance
premiums, which would force Californians who purchase their
own coverage out of the health insurance market altogether.
DMHC raises concerns that this legislation may not conform
to PPACA, as the scope of services for maternity and
newborn care has not yet been defined in federal
regulations. Unless amended to ensure conformity to
federal law, DMHC is opposed to this bill.
Governor's veto
This bill is virtually identical to three bills that
Governor Schwarzenegger vetoed in the last four years. In
his veto message of AB 98 (De La Torre) of 2009, Governor
Schwarzenegger stated:
I have vetoed similar bills twice before. The addition
of this mandate must be considered in the larger
context of how it will increase the overall cost of
health care. This, like other mandates, only increases
premiums in an environment in which health coverage is
increasingly expensive.
Maternity coverage is offered and available in today's
individual insurance market. Consumers can choose
whether they want to purchase this type of coverage,
and the pricing is reflective of that choice. While the
perfect world would allow for all health conditions to
be covered, including maternity, I cannot allow the
perfect to become the enemy of the good. There is a
reason the individual insurance market regulated by the
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Department of Insurance is growing - consumers are
choosing policies they can afford.
Essentially, I am faced with choosing between covering
fewer people, but with better coverage - or allowing
more people to buy a policy that offers reduced
benefits at a lower cost. It is not an easy choice.
However, because I continue to have serious concerns
about the rising costs of healthcare and believe the
potential benefits of a mandate of this magnitude will
translate to fewer individuals being able to afford
coverage, I cannot support this bill.
Related bills
AB 119 (Jones), Chapter 365, Statutes of 2009, eliminates
the exception in current law that allows health plans and
insurers to use gender as a basis for premium, price, or
charge differentials, when based on valid statistical and
actuarial data.
SB 54 (Leno) of 2009 as introduced, was nearly identical
bill to AB 119. This bill was substantively changed to
address a different issue.
Prior legislation
AB 98 (De La Torre) of 2009, AB 1962 (De La Torre) of 2008,
and SB 1555 (Speier) of 2004 were substantively similar to
this bill. All three bills were vetoed by the Governor.
SB 897 (Speier) of 2003 contained similar provisions to SB
1555 (Speier) of 2004, and was reviewed by CHBRP, but was
not heard in any committee.
SB 1411 (Speier), Chapter 880, Statutes of 2002, prohibits
health plans and insurers from charging a higher copayment
for maternity services than for other medical services.
PRIOR ACTIONS
Assembly Health: 12- 6
Assembly Appropriations: 12- 5
Assembly Floor: 48-25
POSITIONS
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Support: American Congress of Obstetricians &
Gynecologists, District IX
(co-sponsor)
California Commission on the Status of Women
(co-sponsor)
American Federation of State, County and Municipal
Employees, AFL-CIO
Blue Shield of California
California Academy of Family Physicians
California Medical Association
California Nurses Association
California School Employees Association
California Teachers Association
Commission on the Status of Women
Health Access California
Kaiser Permanente
March of Dimes
Planned Parenthood Affiliates of California
Planned Parenthood of Santa Barbara, Ventura and San
Luis Obispo Counties
Oppose: Anthem Blue Cross
Association of California Life & Health Insurance
Companies
California Chamber of Commerce
Department of Finance
Department of Managed Health Care
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