BILL ANALYSIS
AB 1887
Page 1
Date of Hearing: May 19, 2010
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 1887 (Villines) - As Amended: April 28, 2010
Policy Committee: Health Vote:17-0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill establishes the framework for the operation of
California's temporary high risk pool related to requirements of
federal health reform, the Patient Protection and Affordable
Care Act (PL-111-148). State-run high risk pools are to be
operational by June 23, 2010, six months after the enactment of
the federal law. Specifically, this bill:
1)Requires the Managed Risk Medical Insurance Board (MRMIB) to
establish a temporary high risk pool to provide health
coverage to individuals who are uninsured because of
pre-existing health conditions. Requires MRMIB to apply for
federal funding to support the operation of the pool.
2)Specifies eligibility requirements for individuals accessing
coverage in the high risk pool including legal status, lack
access to coverage, and the existence of a pre-existing health
condition.
3)Requires health coverage in the pool to have an actuarial
value of at least 65% which means at least 65 cents of each
premium dollar is spent on health benefits. Specifies
parameters for premium pricing in the pool.
FISCAL EFFECT
1)According to preliminary information provided by the federal
government, California will receive $761 million (100%
federal) to administer a state-run high risk pool until
January 1, 2014 when broader insurance market reforms and
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coverage expansions occur.
2)Funding will be used to support MRMIB workload as the pool
administrator and to provide premium support to enrollees
whose premium costs exceed a specified level. The eligibility
for the risk pool as well as the product design of the
coverage offered will determine how quickly the fixed
allocation of federal funding is spent.
3)The federal government proposes to allocate state funds based
on a formula used for the Children's Health Insurance Program,
which relies on a combination of factors including nonelderly
population, proportion of uninsured, and geographic cost
variation.
4)Under current law, California's high risk pool has only 7,000
enrollees, due to funding limitations. According to estimates,
several hundred thousand Californians may lack access to
health coverage due to pre-existing conditions. The risk pool
established pursuant to this bill may be able to support an
additional 20,000 to 25,000 enrollees.
5)Per federal requirements, premium pricing in the high risk
pool must be similar to the rates found in the individual
insurance market and cannot vary by a person's age by more
than a four to one ratio.
COMMENTS
1) Rationale . This bill establishes the framework for the state
option to establish a temporary high risk pool until broader
provisions of federal health reform are implemented in 2014.
2) High Risk Pools . California, along with 34 other states, has
a high risk insurance pool to accommodate individuals who
have been unable to obtain health coverage in the individual
market. The Major Risk Medical Insurance Program (MRMIP) was
established in 1991 and provides health insurance to
individuals unable to obtain coverage due to medical reasons.
Enrollee premium costs above a certain level are subsidized
with a blend of public funding sources. Under current law,
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MRMIP faces insufficient and unstable funding sources to meet
the demand for the program. Only 7,000 individuals are
currently served in the program while several hundred
thousand individuals may need such coverage. In contrast,
other states have many more individuals in their high risk
pools. For example, Minnesota has 31,000; Texas has 28,000;
Oregon has 15,000; and Wisconsin has 19,000 enrollees. Under
current law four large insurers participate in MRMIP and
monthly premium costs range from $435 to $1,120 for an
individual 50 to 54 years old.
3) Related Legislation . SB 227 (Alquist), pending on the
Suspense File of this committee, makes significant
changes to the funding and operation of California's current
law high risk pool, MRMIP.
Several bills in the current session address features and
requirements of federal health reform.
a) AB 1595 (Jones), pending on the Suspense File of this
committee, requires the California Department of Health
Care Services (DHCS) to expand Medi-Cal eligibility to
individuals with family income up to 133% of the federal
poverty level (FPL) without regard to family status.
b) AB 1602 (J. Perez), pending on the Suspense File of this
committee, establishes California's health insurance
exchange and enacts a series of insurance market reforms.
c) AB 2244 (Feuer), also being heard in this committee
today, enacts health insurance underwriting reforms for
children effective January 1, 2011 and adults effective
January 1, 2014.
d) AB 2477 (Jones), pending on the Suspense File of this
committee, eliminates mid-year status reports for children
on Medi-Cal.
e) SB 900 (Alquist), pending in the Senate, establishes the
California Health Benefits Exchange within the California
Health and Human Services Agency.
f) SB 1088 (Price), pending in the Senate, increases the
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limiting age of dependent health coverage until the
dependent's 26th birthday.
g) SB 1163 (Leno), pending in the Senate, requires detailed
health plan and insurer data and actuarial justification
for premium increases and non-standard premium charges.
Analysis Prepared by : Mary Ader / APPR. / (916) 319-2081