BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 2244|
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THIRD READING
Bill No: AB 2244
Author: Feuer (D)
Amended: 7/1/10 in Senate
Vote: 21
SENATE HEALTH COMMITTEE : 6-1, 6/23/10
AYES: Alquist, Cedillo, Leno, Negrete McLeod, Pavley,
Romero
NOES: Aanestad
NO VOTE RECORDED: Strickland, Cox
SENATE APPROPRIATIONS COMMITTEE : 7-4, 8/12/10
AYES: Kehoe, Alquist, Corbett, Leno, Price, Wolk, Yee
NOES: Ashburn, Emmerson, Walters, Wyland
ASSEMBLY FLOOR : 50-25, 6/1/10 - See last page for vote
SUBJECT : Health care coverage
SOURCE : Health Access California
DIGEST : This bill requires guaranteed issue of health
plan and health insurance products for children in 2011 and
adults in 2014, establishes standard individual market
rating factors (age, geographic region, family composition
and health benefit plan designs, and limits premium
variation for children's coverage until 2014 by requiring
health plans and health insurers to use "rate bands" that
limit premium variation to no more than a specified
percentage of a standard rate for a child in each
CONTINUED
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particular rating category and benefit plan.
ANALYSIS :
Existing federal law
1 Requires each health insurance issuer that offers health
insurance coverage in the individual or group market to
accept every employer and individual that applies for
such coverage. This requirement is known as "guaranteed
issue." PPACA allows a health insurance issuer to
restrict enrollment in coverage to open or special
enrollment periods. Additionally, a health insurance
issuer must establish special enrollment periods for
qualifying events. The federal Secretary of the
Department of Health and Human Services (DHHS) must
promulgate regulations regarding enrollment periods and
qualifying events.
2. Establishes rating factors for individual and small
group health insurance, effective January 1, 2014, that
prohibit rates from varying with respect to the
particular plan only by the following factors.
A. Whether the plan or coverage covers an
individual or family.
B. The geographic rating area (each state must
establish one or more rating areas within the
state).
C. Age, except that rates are prohibited from
varying by more than 3 to 1 for adults, consistent
with federal law.
D. Tobacco use, except that rates are prohibiting
from varying by more than 1.5 to 1.
3. Prohibits a group or individual health plan from
imposing any pre-existing condition exclusion. This
provision becomes effective for adults in 2014 and for
children on September 23, 2010.
4. Establishes a requirement to maintain minimum essential
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health coverage, establishes phased-in tax penalties for
failure to maintain such coverage, and allows exemptions
from this requirement, such as for religious reasons,
hardship, or because an individual is low-income. The
requirement to maintain minimum essential health
coverage takes effect January 1, 2014 and is referred to
as the "individual mandate."
Existing state law
1. Licenses and regulates health plans, by the Department
of Managed Health Care (DMHC), and health insurers, by
the California Department of Insurance (CDI).
2. Does not require guarantee issue or limit the premiums
for individuals in the individual health insurance
market, except premiums are regulated for individuals
eligible under federal law who previously had 18 months
of group coverage and who have exhausted COBRA/Cal-COBRA
coverage.
3. Existing law establishes requirements for health plans
that provide coverage to small employers. Specifically,
this body of law:
A. Requires health plans to fairly and
affirmatively offer, market, and sell health
coverage to small employers. This is known as
"guaranteed issue."
B. Requires health plans to offer, market, and sell
all of the health plan's contracts that are sold to
small employers, to any small employers in each
service area in which the plan provides health care
services. This is known as an "all products"
requirement.
C. Requires renewal of coverage, at the option of
the policyholder, unless there is fraud or
nonpayment of premium or the health plan leaves the
market. This is known as "guaranteed renewal."
D. Restricts a plan's ability to set initial and
renewal premium rates to a group of specified risk
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categories (age, region, family size, and health
benefit plan) and allows only a limited premium
variance of plus or minus 10 percent from a
standard rate based on health status. The
limitation on premium variance is referred to as
"rate bands."
E. Limits pre-existing condition exclusions to six
months from the individuals' effective date of
coverage, with a requirement that health plans
credit policyholders for the time the individual
was covered under previous coverage.
4. Prohibits pre-existing condition exclusions of more than
12 months in policies and contracts covering one or two
individuals, with a requirement that plans credit
enrollees for the time the individual was covered under
prior coverage.
This bill:
1. Requires health plans/insurers, effective January 1,
2011, to offer coverage to the responsible party for any
child that seeks coverage (the responsible party is an
adult with custody and the right to make medical
decisions for the child).
2. Requires health plans/ insurers, effective January 1,
2014, to offer coverage to any adult who seeks coverage.
This is known as "guaranteed issue."
3. Requires, effective January 1, 2011, health
plans/insurers to fairly and affirmatively offer,
market, and sell all of the plan's health plan contracts
that are offered and sold to the responsible party for a
child.
4. Requires, effective January 1, 2014, a health plan to
fairly and affirmatively offer, market, and sell all of
the plan/insurer's health plan contracts that are sold
to adults. This is known as an "all products"
requirement.
5. Prohibits, effective January 1, 2011, health plans and
health insurers offering contracts to children from
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excluding or limiting coverage due to any pre-existing
condition.
6. Prohibits, effective January 1, 2014, health
plans/insurers offering contracts to adults from
excluding or limiting coverage due to any pre-existing
condition.
7. Defines the rating period as the period for which
premium rates established by a plan/insurer are in
effect and, requires the rating period to be no less
than 12 months.
8. Requires all health benefit plans offered to an adult or
a child to provide at least all of the basic health care
services in this bill.
9. Establishes standard rating categories of age,
geographic region, family composition and health benefit
plan design selected. Limits, until January 1, 2014,
the age categories for children to two categories:
under ages 0-1 and ages 1-19. Prohibits the rate from
varying more than two to one for children.
10.Establishes, for rating purposes, six family size
categories:
Single
More than one child and no adults
Married couple or registered domestic partners
One adult and one child
One adult and children
Married couple and child or children, or registered
domestic partners and child or children.
11.Prohibits, effective January 1, 2011, a health
plan/insurer from excluding any child who would
otherwise be entitled to health care services on the
basis of an actual or expected health condition of that
child.
12.Prohibits a health plan contract from limiting or
excluding coverage for a child by type of illness,
treatment, medical condition, or accident. Applies
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these prohibitions to coverage for adults, effective
January 1, 2014.
13.Requires health plan contracts to be guaranteed
renewable except for nonpayment of premium or fraud or
misrepresentation.
14.Requires premiums for a child in a particular risk
category to be no more than 120 percent or no less than
80 percent of the plan's standard risk rate until
January 1, 2012. Effective January 1, 2012, this factor
may not be more than 110 percent or less than 90
percent. The limit on premium variance is referred to
as "rate bands." The standard risk rates must remain in
effect for no less than 12 months.
15.Requires disclosures in plan and insurer solicitation
and sales materials of specified information, including
a summary brochure that summarizes all of its plan
contracts.
16.Permits DMHC and CDI to issue regulations to carry out
the purpose of this bill.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
According to the Senate Appropriations Committee analysis:
Fiscal Impact (in thousands)
Major Provisions 2010-11 2011-12
2012-13 Fund
CDI oversight $365 $0 $0 Special*
DMHC oversight likely in
the hundreds of thousands Special**
of dollars in FY 2010-2011
*Insurance Fund
**Managed Care Fund
SUPPORT : (Verified 8/17/10)
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Health Access California (source)
AARP
American Federation of State, County and Municipal
Employees, AFL-CIO
California School Employees Association
Congress of California Seniors
Consumers Union
The 100% Campaign
OPPOSITION : (Verified 8/17/10)
Anthem Blue Cross
Association of California Life & Health Insurance Companies
California Association of Health Plans
ARGUMENTS IN SUPPORT : This bill is sponsored by Health
Access California (HAC) and supported by children's and
consumer groups, which argue no child should be denied
health insurance because of a pre-existing medical
condition, that no child should be sold insurance that does
not cover pre-existing conditions, and premiums for
children should be based on age and geographic region and
not health status. HAC intends this measure to provide
early implementation of federal health reform for a segment
of the market that already has substantial subsidies
available (through Medi-Cal and Healthy Families coverage
up to 250 percent of the federal poverty level) for low-
and moderate-income children. HAC also intends this bill
to provide a transition to health reform modeled on the
successful small employer market rules by phasing in
modified community rating, and by limiting and then
eliminating premium variation based on health status. HAC
argues that not all families with children who are eligible
for Medi-Cal and Healthy Families can afford premiums for
private insurance, but HAC argues a greater number could
afford it if premiums for private insurance were no longer
increased due to health conditions, and that this could
produce state savings to the General Fund in the tens or
hundreds of millions of dollars from reduced enrollment in
Healthy Families and Medi-Cal.
ASSEMBLY FLOOR :
AYES: Ammiano, Arambula, Bass, Beall, Block, Blumenfield,
Bradford, Brownley, Buchanan, Caballero, Charles
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Calderon, Carter, Chesbro, Coto, Davis, De La Torre, De
Leon, Eng, Evans, Feuer, Fong, Fuentes, Furutani,
Galgiani, Hall, Hayashi, Hernandez, Hill, Huber, Huffman,
Jones, Lieu, Bonnie Lowenthal, Ma, Mendoza, Monning,
Nava, V. Manuel Perez, Portantino, Ruskin, Salas,
Saldana, Skinner, Solorio, Swanson, Torlakson, Torres,
Torrico, Yamada, John A. Perez
NOES: Adams, Anderson, Bill Berryhill, Conway, Cook,
DeVore, Emmerson, Fletcher, Fuller, Gaines, Garrick,
Gilmore, Hagman, Harkey, Jeffries, Knight, Logue, Miller,
Nestande, Niello, Nielsen, Norby, Silva, Smyth, Tran
NO VOTE RECORDED: Tom Berryhill, Blakeslee, Audra
Strickland, Villines, Vacancy
CTW:do 8/17/10 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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