BILL ANALYSIS
AB 2244
Page 1
Date of Hearing: April 20, 2010
ASSEMBLY COMMITTEE ON HEALTH
William W. Monning, Chair
AB 2244 (Feuer) - As Amended: April 5, 2010
SUBJECT : Health care coverage.
SUMMARY : Prohibits, effective January 1, 2011 for children and
January 1, 2014 for adults, a health care service plan or health
insurer (collectively carriers) notwithstanding any other
provision of state law or regulation, carriers from excluding or
limiting coverage due to any preexisting condition. Prohibits a
carrier contract or policy from limiting or excluding coverage
for a child by type of illness, treatment, medical condition, or
accident. Specifically, this bill :
1)Provides that, until January 1, 2014, only the following age
categories can be used in determining premium rates for
carriers: under age five; age five-15; and, age 15-19.
2)Prohibits carrier premium rates from varying more than two to
one for children.
3)Requires carriers to base rates for individuals and children
using only the following family size categories: single;
married couple; one adult and child or children; and, married
couple and child or children.
4)Requires a carrier that operates statewide to use the
geographic regions, as specified, in determining rates for
individuals and children. Requires that nothing in this bill
be construed to require a carrier to establish a new service
area or to offer health coverage on a statewide basis, outside
of the carrier's existing service area.
5)Requires, effective January 1, 2011 for children and January
1, 2014 for adults, carriers to offer coverage any person that
seeks coverage.
6)Prohibits, effective January 1, 2011 for children and January
1, 2014 for adults, notwithstanding any other provision of
state law or regulation, carriers from excluding or limiting
coverage due to any preexisting condition. Excludes coverage
for which an employer makes any contribution, contracts or
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policies for coverage of Medicare services pursuant to
contracts with the United States government, Medicare
supplement, Medi-Cal contracts with the State Department of
Health Services, Healthy Families, long-term care coverage, or
specialized carrier contracts or policies.
7)Requires, effective January 1, 2010 for children and January
1, 2014 for adults, a carrier to fairly and affirmatively
offer, market, and sell all of the carrier's contracts and
policies that are offered and sold to individuals.
8)Prohibits, effective January 1, 2011 for children and January
1, 2014 for adults, a carrier from rejecting an application
for a carrier contract or policy.
9)Prohibits a carrier, or solicitor, directly or indirectly,
from:
a) Encouraging or directing an individual or responsible
party for a child to refrain from filing an application for
coverage with a carrier because of the health status,
claims experience, industry, occupation of the individual
or child, or geographic location provided that it is within
the carrier's approved service area; and,
b) Encouraging or directing individuals or children to seek
coverage from another carrier because of the health status,
claims experience, industry, occupation of the individual
or child, or geographic location, provided that it is
within the carrier's approved service area.
10)Prohibits a carrier from, directly or indirectly, entering
into any contract, agreement, or arrangement with a solicitor
that provides for or results in the compensation paid to a
solicitor for the sale of a carrier contract or policy to be
varied because of the health status, claims experience,
industry, occupation, or geographic location of the individual
or child. Prohibits this from applying to a compensation
arrangement that provides compensation to a solicitor on the
basis of percentage of premium, provided that the percentage
does not vary because of the health status, claims experience,
industry, occupation, or geographic area of the individual or
child.
11)Prohibits, effective January 1, 2011, a carrier contract or
policy that covers a child from establishing rules for
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eligibility, including continued eligibility, of an
individual, or dependent of an individual, to enroll under the
terms of the carrier plan or policy based on specified health
status-related factors.
12)Requires, effective January 1, 2014, the provisions in 1) to
11) above to apply to all individuals and children obtaining
coverage with no contribution from an employer.
13)Requires the carriers, after an individual or the responsible
party for a child submits a completed application form for a
carrier contract or policy, within 30 days, to notify the
individual or responsible party for a child of actual premium
charges for that carrier contract or policy. Requires the
individual or responsible party for a child to have 30 days in
which to exercise the right to buy coverage at the quoted
premium charges.
14)Requires that when an individual or the responsible party for
a child submits a premium payment, based on the quoted premium
charges, and that payment is delivered or postmarked,
whichever occurs earlier, within the first 15 days of the
month, coverage under the carrier contract or policy becomes
effective no later than the first day of the following month.
Requires that when that payment is neither delivered nor
postmarked until after the 15th day of a month, coverage
becomes effective no later than the first day of the second
month following delivery or postmark of the payment.
15)Requires that during the first 60 days after the effective
date of the carrier contract or policy, the individual or
responsible party for a child to have the option of changing
coverage to a different carrier contract or policy offered by
the same carrier, as specified.
16)Prohibits, effective January 1, 2011 for children and January
1, 2014 for adults, a carrier from excluding coverage for
someone who would otherwise be entitled to health care
services on the basis of an actual or expected health
condition. Prohibits a carrier contract or policy from
limiting or excluding coverage by type of illness, treatment,
medical condition, or accident.
17)Requires all carrier contracts or policies, offered to an
individual or child, to provide to subscribers and enrollees
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at least all basic health care services, as specified.
18)Prohibits a carrier from being required to offer coverage, or
accept coverage applications, in the following cases:
a) To an individual or child, if the individual or child
who is to be covered by the carrier contract or policy does
not work or reside within the carrier's approved service
areas;
b) Within a specific service area or portion of a service
area, if the carrier reasonably anticipates and
demonstrates to the satisfaction of regulators that it will
not have sufficient health care delivery resources to
ensure that health care services will be available and
accessible because of its obligations to existing enrollees
or insureds. Prohibits a carrier that cannot offer
coverage because it is lacking in sufficient health care
delivery resources from offering coverage in the area until
the carrier notifies regulators that it has the ability to
deliver services and certifies that it will enroll all
individuals requesting coverage in that area, unless the
plan has met the requirements, as specified. Requires that
nothing in this bill be construed to limit the regulator
authority to develop and implement a plan of rehabilitation
for a carrier whose financial viability or organizational
and administrative capacity has become impaired;
c) To an individual or child that, within 12 months of
application for coverage, disenrolled from a carrier
contract or policy offered by the carrier; and,
d) A carrier's regulator approves a certification, as
specified, that the number of eligible employees and
dependents enrolled exceeds 10% of the total enrollment of
the carrier in California as of December 31 of the
preceding year for self-funded plans or 8% of the total
enrollment of the carrier in California as of December 31
of the preceding year non-self-funded plans. Prohibits, if
that certification is approved, the carrier from offering
coverage to small employers during the remainder of the
current year.
19)Permits regulators to require a carrier to discontinue the
offering of contracts or policies or acceptance of
applications from any individual or child upon a determination
that the carrier does not have sufficient financial viability
or organizational and administrative capacity to ensure the
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delivery of health care services to its enrollees, as
specified.
20)Requires all contracts and policies to be renewable at the
option of the enrollee, with specified exceptions.
21)Requires, effective January 1, 2011 and only for coverage for
children, the premium to be determined for an eligible child
in a particular risk category after applying a risk adjustment
factor to the carrier's standard risk rates, as specified.
22)Requires, in connection with the offering coverage for
children, each carrier to make a reasonable disclosure, as
part of its solicitation and sales materials, regarding rates,
guaranteed issue, benefit plan designs, service areas,
23)Requires carriers to prepare a brochure that summarizes all
of its carrier contracts or policies offered to children and
to make this summary available to any responsible party for a
child and to solicitors upon request, as specified. Requires
carriers to prepare a more detailed evidence of coverage, as
specified, and make it available to responsible parties,
solicitors, and solicitor firms upon request. Requires
carriers to provide, upon request, and as specified standard
risk rates. Requires carriers to provide copies of the
current summary brochure to all solicitors and solicitor firms
contracting with the carrier, as specified.
24)Requires every solicitor or solicitor firm contracting with
one or more carriers to solicit enrollments or subscriptions
from responsible parties for children, notify and advise the
responsible party of specified information related to rates
and benefit design.
25)Requires solicitors to, prior to filing an application for a
responsible party for a child for a particular contract or
policy, to provide the child's responsible party with
specified information about benefits, evidence of coverage,
and rates.
26)Requires, at least 30 business days prior to offering,
renewing, or amending a contract or policy, carrier to file a
notice of material modification with regulators, as specified.
Requires any regulatory action to disapprove, suspend, or
postpone the carrier's use of a carrier contract to be in
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writing, specifying the reasons that the carrier contract is
not in compliance with the requirements, as specified.
27)Requires, prior to making any changes in the risk categories,
risk adjustment factors, or standard risk rates filed with
regulators, carriers to file as an amendment a statement
setting forth the changes and certifying that the carrier is
in compliance, as specified.
28)Permits periodic changes to the standard risk rate that a
carrier proposes to implement over the course of up to 12
consecutive months to be filed in conjunction with the
certified statement, as specified.
29)Requires each carrier to maintain at its principal place of
business all of the information required to be filed with
regulators.
30)Requires each carrier to make available to regulators, on
request, the risk adjustment factor used in determining the
rate for any particular child.
31)Permits the Department of Managed Health Care Director or the
California Department of Insurance Commissioner to issue
regulations that are necessary to carry out the purposes of
this bill, as specified.
FISCAL EFFECT : This bill has not yet been analyzed by a fiscal
committee.
COMMENTS :
1)PURPOSE OF THIS BILL. According to the author, the newly
enacted federal health care reform law prohibits use of
pre-existing condition exclusions for children in the
individual market. The author maintains there was a dispute
between insurers and the federal government about whether the
new federal law requires guaranteed issue and this bill would
clarify that for California. According to the author, the new
federal law also does not specifically address rating rules in
the individual market prior to 2014 or prohibit insurers from
refusing to sell to entire market segments. The author
maintains that this bill will align California law with the
federal health care reform law and will ensure that children
cannot be denied health insurance coverage or be charged more
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because of a pre-existing condition.
2)FEDERAL HEALTH CARE REFORM . On March 23, 2010, President
Obama signed the Patient Protection and Affordable Care Act
(the Affordable Care Act); P. L. 111-148, as amended by the
Health Care and Education Reconciliation Act of 2010; P. L.
111-152. Among other provisions, the new law prohibits group
health plans or individual health insurance carriers from
imposing any preexisting condition exclusion on coverage. The
rollout of the law begins with children. On September 23,
2010, insurers will no longer be able to exclude children with
preexisting conditions from being covered by their family
policies. For current policies, that means insurers will have
to rescind pre-existing-condition exclusions. Insurers will
not have to take the same steps for adults until January 2014.
According to a March 28, 2010 New York Times news article, just
days after the President signed the Affordability Act, there
was a dispute over the language in the law regarding the
pre-existing conditions coverage provisions. The New York
Times article stated that while insurers agreed that health
insurance carriers offering individual or group coverage were
unable to impose preexisting condition exclusions beginning in
September, insurers initially disagreed that the law required
them to write insurance at all for the child or family,
providing what they call in the insurance world "guaranteed
issue" until 2014.
The Secretary of the federal Department of Health and Human
Services (DHHS) issued clarification in a letter to the
president of the America's Health Insurance Plans (AHIP)
stating that, "To ensure that there is no ambiguity on this
point, I am preparing to issue regulations in weeks ahead
ensuring that the preexisting condition exclusion applies to
both a child's access to a plan and his or her benefits once
he or she is in the plan." The Secretary further noted that
regulations would make clear that by September, "children with
pre-existing conditions may not be denied access to their
parents' health insurance plans." In response, AHIP's
president wrote to the Secretary that AHIP would accept the
clarification of the new law and, fully comply with it. AHIP
further added that, "AHIP members would be ready to work with
DHHS to implement the new regulations."
3)PRE-EXISTING CONDITIONS . Private health plans and insurers
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use "medical underwriting" to screen applicants for individual
health coverage and determine the individual's risk profile
and potential need for health care services. Health insurers
typically deny coverage or charge higher rates to individuals
with pre-existing serious health conditions, such as cancer or
heart disease. In addition, individuals with any previous
health service use, even for conditions that no longer exist
or with chronic conditions that are successfully being treated
(such as mental illness, diabetes, or asthma) are also often
denied coverage. In many cases, other health-related factors,
such as being overweight or being a tobacco user can result in
a coverage denial. There is limited data on the extent of
coverage denials in the individual health insurance market
because health plans and insurers are not required to report
the data. A September 2006 Commonwealth Fund national survey
found that 89% of working-age adults who sought coverage in
the individual market during the past three years ended up
never buying a plan. A majority (58%) found it very difficult
or impossible to find affordable coverage. One-fifth (21%) of
those who sought to buy coverage were turned down, were
charged a higher price because of a pre-existing condition, or
had a health problem excluded from coverage.
4)SUPPORT . According to the California School Employees
Association (CSEA), health care should be a right and not a
privilege. CSEA maintains that under no circumstances should
a child be denied health insurance because of a preexisting
condition or sold insurance that does not cover preexisting
conditions. PICO California and The 100% Campaign, a
collaborative effort of The Children's Partnership, Children
Now, and Children's Defense Fund state that a child in
California should not be denied coverage or charged more
because they have asthma, diabetes, or risk factors for those
conditions.
5)RELATED LEGISLATION.
AB 1887 (Villines) establishes the state temporary high risk
pool program in order to be eligible for high risk pool funds
under the Affordable Care Act. AB 1887 is set for hearing on
April 20, 2010 in the Assembly Health Committee.
AB 2345 (De La Torre) requires carriers, after January 1,
2011, to meet the requirements of specified provisions of the
federal Public Health Service Act, related to federal health
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care reform. AB 2345 is set for hearing on April 20, 2010 in
the Assembly Health Committee.
AB 2477 (Jones) deletes the provision that requires Mid-Year
Status Reports for children from January 1, 2011 to July 1,
2012, therefore establishes continuous eligibility for
children in the Medi-Cal Program. AB 2477 is pending in the
Assembly Appropriations Committee.
SB 900 (Alquist) establishes the California Health Benefits
Exchange within the California Health and Human Services
Agency and would requires the Exchange to, among other things,
implement specified functions imposed by the Affordable Care
Act. SB 900 is set for hearing in the Senate Health Committee
on April 21, 2010.
SB 1088 (Price) prohibits, with a specified exceptions, the
limiting age for dependent children from being less than 27
years of age. SB 1088 is set for hearing in the Senate Health
Committee on April 21, 2010.
REGISTERED SUPPORT / OPPOSITION :
Support
Health Access California (sponsor)
Alliance of Californians for Community Empowerment
California School Employees Association
Congress of California Seniors
Consumers Union
PICO California
100% Campaign
Opposition
None on file.
Analysis Prepared by : Tanya Robinson-Taylor / HEALTH / (916)
319-2097