BILL ANALYSIS
AB 2608
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Date of Hearing: May 5, 2010
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 2608 (Chesbro) - As Introduced: February 19, 2010
Policy Committee: P.E.R. &
S.S.Vote: 4-0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill extends, until January 1, 2012, the Rural Health Care
Equity Program and makes the program available to all state
employees and retired annuitants living in rural areas.
FISCAL EFFECT
According to the Department of Personnel Administration,
reinstatement of the program for 2011 would result in additional
GF costs of between $17 million and $20 million in 2010-11 and
2011-12 combined.
COMMENTS
1)Purpose . According to the author, the bill is intended to
restore a program that was created through the collective
bargaining process to provide relief to employees and retirees
living in rural areas and facing high health costs.
2)Background . The State of California offers its employees and
retirees a number of health plan options including at least
one low-cost Health Maintenance Organization (HMO) plan. In
some rural areas of California there are no HMO plans
available to state employees and retirees, requiring residents
in these areas to use one of the higher cost health care
options.
The Rural Health Care Equity Program was created by SB 514
(Chesbro), Chapter 743, Statutes of 1999 to provide subsidies
that offset the higher health care costs paid by individuals
in these rural areas. The subsidy is equal to the difference
AB 2608
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between the lowest cost Preferred Provider Organization (PPO)
premium and the weighted-average HMO premium. Additionally,
the state will reimburse for an employee or dependent's
out-of-pocket expenses, such as deductibles and co-insurance
costs.
Recent budget actions have curtailed the program. Subsidy
payments were eliminated for retirees in 2008, and for all
active employees except Bargaining Unit (BU) 5 (Highway
Patrol) employees in 2009. The BU 5 employees retain access to
this program, pursuant to their active bargaining agreement,
until the expiration of the agreement on July 2, 2010.
3)Fiscal Issue . Elimination of the Rural Health Care Equity
Program is one of many difficult budget decisions that were
taken during the past couple of years. Given the major budget
shortfalls that continue to face the state, restoration of
this program would come at the expense of other high priority
state programs in areas such as education, health, social
services and public safety. For these reasons, the Legislature
may wish to consider whether restoration of this program
should be evaluated as part of the 2010-11 budget.
Analysis Prepared by : Brad Williams / APPR. / (916) 319-2081