BILL ANALYSIS
AB 2244
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Date of Hearing: May 19, 2010
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 2244 (Feuer) - As Amended: April 27, 2010
Policy Committee: Health Vote: 11-6
Urgency: No State Mandated Local Program:
Yes Reimbursable: No
SUMMARY
This bill enacts health insurance underwriting reforms for
children effective January 1, 2011 and adults effective January
1, 2014. Some of the provisions of this bill are connected to
requirements of federal health reform, the Patient Protection
and Affordable Care Act (PL-111-148) and others are in addition
to recent requirements of federal law. Specifically, this bill:
1)Adapts several insurance underwriting reforms enacted by AB
1672 (Margolin), Chapter 1128, Statutes of 1992 to the
individual insurance market. AB 1672 made medical insurance
more accessible to small employers through guarantee issue and
renewability provisions.
2)Prohibits health plans and insurers (carriers) from excluding
or limiting health coverage on the basis of a pre-existing
health condition or denying health coverage, effective January
1, 2011 for children and January 1, 2014 for adults.
3)Establishes specified health coverage rate requirements with
respect to age and geography to implement a phased
implementation of modified community rating. Modified
community rating allows premiums to vary on the basis of age
and region.
4)Limits and then eliminates premium variation based on health
status. Variation on health status is initially authorized to
range from +/- 20%, then move to +/-10% in 2012, with
variation to be eliminated entirely by 2014.
FISCAL EFFECT
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1)Fee-supported (health plan fees) special fund costs of
$600,000 to $700,000, combined, to the Department of Managed
Health Care (DMHC) and the California Department of Insurance
(CDI) to establish regulation related to the requirements of
this bill. Absorbable on-going workload to each department to
continue oversight of the individual insurance market.
2)Unknown, potentially significant state savings in the tens of
millions of dollars to the extent this bill reduces enrollment
in or reimbursements by Medi-Cal, Healthy Families, or the
California Children's Services (CCS) programs. Because this
bill increases the availability of private health insurance to
children with pre-existing health conditions, children and
families may rely less on publicly funded health programs. For
example, California currently spends about $2 billion (all
funds) on the CCS program. Some of these costs will likely
shift to private health coverage.
COMMENTS
1)Rationale . This bill is sponsored by Health Access to enact
insurance underwriting reforms related to the federal Patient
Protection and Affordable Care Act. Provisions related to
children are to be established earlier than those for adults.
While most Californians receive health coverage via
employer-sponsored plans or public programs such as Medi-Cal
or Healthy Families, about two million individuals purchase
health coverage in the individual insurance market, which has
distinctly different underwriting rules than either the
small-employer or large-employer group insurance markets.
Medical underwriting and diversity in product offerings in the
individual market translates to widely varying benefit
packages and premiums. This bill increases access to health
coverage and reduces premium cost variation.
2)Background . The recently enacted federal health reform law
provides children protections against pre-existing conditions
exclusions used by insurers to deny health coverage or make it
unaffordable. According to the author and sponsor, the most
frequent reasons both children and adults are denied health
coverage include health problems for which treatment has not
been sought, health problems with no explanation, and health
problems for which treatment is ongoing. According to the
author, children are sometimes charged higher premiums because
AB 2244
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of allergies or ear infections.
AB 1672, on which many features of this bill is modeled, made
medical insurance more accessible to small employers through
guaranteed issue and renewability provisions, the regulation
of pre-existing conditions limitations, underwriting
protections, and disclosure requirements. This bill brings
many of these reforms to the individual insurance market.
3)Related Legislation . 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 1887 (Villines), also being heard in this committee
today, establishes California's temporary high risk pool to
expand the number of insured individuals with pre-existing
conditions.
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
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