BILL ANALYSIS
AB 2244
Page 1
CORRECTED - 06/02/2010 Technical change (Member name)
ASSEMBLY THIRD READING
AB 2244 (Feuer)
As Amended April 27, 2010
Majority vote
HEALTH 11-6 APPROPRIATIONS 12-5
-----------------------------------------------------------------
|Ayes:|Monning, Ammiano, Carter, |Ayes:|Fuentes, Ammiano, |
| |Caballero, Eng, Hayashi, | |Bradford, |
| |Hernandez, Jones, Bonnie | |Charles Calderon, Coto, |
| |Lowenthal, | |Davis, |
| |V. Manuel Perez, Salas | |Monning, Ruskin, Skinner, |
| | | |Solorio, |
| | | |Torlakson, Torrico |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Fletcher, Conway, |Nays:|Conway, Harkey, Miller, |
| |Emmerson, Gaines, Smyth, | |Nielsen, Norby |
| |Audra Strickland | | |
| | | | |
-----------------------------------------------------------------
SUMMARY : Prohibits, effective January 1, 2011 for children and
January 1, 2014 for adults, a health care service plan or health
insurer (collectively 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.
AB 2244
Page 2
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
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
AB 2244
Page 3
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
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 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.
13)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.
14)Requires that during the first 60 days after the effective
AB 2244
Page 4
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.
15)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.
16)Requires all carrier contracts or policies, offered to an
individual or child, to provide to subscribers and enrollees
at least all basic health care services, as specified.
17)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; and,
c) 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. 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;
AB 2244
Page 5
18)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
delivery of health care services to its enrollees, as
specified.
19)Requires all contracts and policies to be renewable at the
option of the enrollee, with specified exceptions.
20)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.
21)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 and service areas.
22)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.
23)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.
24)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.
AB 2244
Page 6
25)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
writing, specifying the reasons that the carrier contract is
not in compliance with the requirements, as specified.
26)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.
27)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.
28)Requires each carrier to maintain at its principal place of
business all of the information required to be filed with
regulators.
29)Requires each carrier to make available to regulators, on
request, the risk adjustment factor used in determining the
rate for any particular child.
30)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 : According to the Assembly Appropriations
Committee:
1)Fee-supported (health plan fees) special fund costs of
$600,000 to $700,000, combined, the Department of Managed
Health Care and the California Department of Insurance 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 excess of
AB 2244
Page 7
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 : 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 because of a pre-existing condition.
On March 23, 2010, President Obama signed the Patient Protection
and 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.
Analysis Prepared by : Tanya Robinson-Taylor / HEALTH / (916)
319-2097
FN: 0004614