BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
1825 (De La Torre)
Hearing Date: 8/12/2010 Amended: As Introduced
Consultant: Katie Johnson Policy Vote: Health 6-0
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BILL SUMMARY: AB 1825 would require health insurance policies
that cover hospital, medical, or surgical expenses to also
provide coverage for maternity services.
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Fiscal Impact (in thousands)
Major Provisions 2010-11 2011-12 2012-13 Fund
CDI review of policies $75 $145 $0 Special*
Cost pressure to provide $47 - $467 $93 - $934 $93 -
$934 County/**
care for newly Federal
uninsured persons
*Insurance Fund
**Costs could be shared equally between county and federal
funds, or could be all county funds. See staff comments.
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STAFF COMMENTS: SUSPENSE FILE.
Existing federal law, the Federal Civil Rights Act, requires
that employers that offer health insurance and have 15 or more
employees must cover maternity services. Additionally, state
law, the Knox-Keene Health Care Service Plan Act of 1975,
requires health care service plans to provide maternity services
as a basic health care benefit. Health insurance policies
regulated by the California Department of Insurance (CDI),
however, are not required to cover maternity services.
This bill would require that every individual or group policy of
health insurance that covers hospital, medical, or surgical
expenses and that is issued, amended, renewed, or delivered on
or after January 1, 2011, must also provide coverage for
maternity services, defined as including prenatal care,
ambulatory care maternity services, involuntary complications of
pregnancy, neonatal care, and inpatient hospital maternity care.
Health insurers would be required to submit updated policies
that provide coverage for maternity services by March 1, 2011.
CDI would incur costs of approximately $75,000 in FY 2010-11 and
$145,000 in FY 2011-2012 to fund staff counsel to review the new
and updated policies. Ongoing costs to CDI would be absorbable.
The recently passed federal Patient Protection and Affordable
Care Act (PPACA) would require all health plans and insurers to
provide maternity coverage commencing January 1, 2014, as part
of an essential health benefits package, but the Secretary for
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AB 1825 (De La Torre)
Health and Human Services (HHS) has yet to define the scope of
benefits for maternity care. The fiscal impact of this bill is
unknown beyond January 1, 2014.
According to a 2010 California Health Benefits Review Program
(CHBRP) analysis of AB 1825, this bill would have no fiscal
impact on publicly-funded California health care programs such
as Medi-Cal, Healthy Families, or the California Public
Employees Retirement System (CalPERS), since these plans already
cover maternity services. In addition to providing services to
uninsured women, the Access for Infants and Mothers program
(AIM) serves women with private insurance with incomes between
200 and 300 percent of the federal poverty level with
out-of-pocket maternity costs of greater than $500. To the
extent that this bill provides women with maternity coverage
that makes them ineligible for AIM, there may be a small savings
to the state; however, a cost shift would be unlikely since
women would probably continue to have out of pocket costs above
$500. AIM is funded primarily by 65 percent federal funds and 35
percent state tobacco tax revenue and subscriber contributions.
CHBRP estimates that this bill could cause a 4.7 percent
increase in premiums, or an average of $8.48 per member per
month, in individual market health insurance products. For
individuals without maternity benefits, premiums would increase.
For individuals with maternity benefits, premiums would
decrease. It is estimated that annual expenditures for
individuals in the private individual health insurance market
would increase by $40 million.
Due to the increase in premiums, CHBRP estimates that
approximately 9,335 people would drop coverage and become newly
uninsured. If they were to seek medical care in a clinic or a
hospital emergency department, there would be cost pressure on
county and federal funds, such as the Safety Net Care Pool, to
reimburse providers for care to the uninsured. For example, if
each uninsured individual incurred costs of $100 per year, it
would total $933,500 annually.
The Governor vetoed SB 1555 (Speier, 2004), AB 1962 (De La
Torre, 2008), and AB 98 (De La Torre, 2009) due to concerns that
this additional mandate would increase health insurance
premiums.