BILL ANALYSIS
SB 227
Page 1
( Without Reference to File )
SENATE THIRD READING
SB 227 (Alquist)
As Amended June 21, 2010
2/3 vote. Urgency
SENATE VOTE :Vote not relevant
HEALTH 18-0 APPROPRIATIONS 14-0
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|Ayes:|Monning, Fletcher, |Ayes:|Fuentes, Conway, Ammiano, |
| |Ammiano, Carter, Conway, | |Bradford, Charles |
| |De La Torre, De Leon, | |Calderon, Coto, De |
| |Eng, Gaines, Hayashi, | |Leon, Hall, Harkey, |
| |Hernandez, Jones, Bonnie | |Miller, Nielsen, Skinner, |
| |Lowenthal, V. Manuel | |Solorio, Torlakson |
| |Perez, Salas, Smyth, | | |
| |Audra Strickland, | | |
| |Nestande | | |
| | | | |
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SUMMARY : Requires the Managed Risk Medical Insurance Board
(MRMIB) to enter into an agreement with the federal Department
of Health and Human Services (DHHS) to administer a qualified
high risk pool to provide health coverage, until January 1, 2014
to individuals who have pre-existing conditions, consistent with
the Patient Protection and Affordable Care Act, Public Law
111-148 (PPACA). Specifically, this bill :
1)Authorizes MRMIB to administer the federal temporary high risk
pool consistent with PPACA, including eligibility, enrollment,
participation requirements, determine high risk medical
coverage, including scope of benefits and subscriber cost
sharing and establish subscriber premiums and plan rates.
2)Authorizes MRMIB to provide coverage by contracting with
licensed health plans or by contracting with third party
administrators to provide or administer the coverage.
3)Authorizes expenditures from the Federal Temporary High Risk
Health Insurance Fund for covered, medically necessary
services that exceed the subscriber's contribution,
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administration of the program, and marketing and outreach.
4)Requires MRMIB to do the following:
a) Establish the scope and content of high risk medical
coverage, and adopt benefit and eligibility standards as
specified;
b) Maintain enrollment and expenditures to ensure that the
program costs do not exceed the federal funds as allocated;
c) Implement a plan for marketing and outreach; and,
d) Implement a procedure for transition of subscribers into
qualified health plans through the exchange established
under PPACA.
5)Prohibits plan rates from being excessive, inadequate, or
unfairly discriminatory and requires rates to be adequate to
pay claims and services.
6)Provides for appeals of program decisions concerning
eligibility and coverage decisions through a procedure to be
established by MRMIB, as specified. Allows for appeals of
coverage decisions that are within the jurisdiction of the
Department of Managed Health Care (DMHC) to be exempted.
7)Allows subscribers to change plans as prescribed.
8)Adds information about the federal temporary high risk pool to
existing notice requirements health plans and insurers provide
to applicants who are denied individual coverage or are
offered coverage at a rate higher than the standard rate and
requires it to be placed on the DMHC and Department of
Insurance Web sites.
9)Terminates coverage through the federal high risk pool on
January 1, 2014, requires all claims to be submitted within 18
months following the delivery of service and sunsets this bill
January 1, 2020.
10)Appropriates $ 761 million in federal funds.
11)Makes enactment contingent on the enactment of AB 1887
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(Villines).
FISCAL EFFECT : According to the Assembly Appropriations
Committee:
1)According to information provided by the federal government,
California will receive $761 million (100% federal) to
administer the high risk pool until January 1, 2014 when
broader insurance market re reforms and coverage expansions
occur. This allocation results in about $218 million
(federal) on an annualized basis. This funding will be used
to provide premium support to previously uninsured
individuals. Depending on the average monthly premium charged
for coverage, between 25,000 and 35,000 individuals will
benefit from this funding support.
2)The federal government proposes to allocate state funds based
on a formula used for the Children's Health Insurance Program,
which relies on a combination of factors including nonelderly
population, proportion of uninsured, and geographic cost
variation. The federal government will reassess state high
risk pool allocations within two years. States, like
California, that have high rates of medically uninsured
individuals may pursue aggressive enrollment strategies to
ensure continued optimal funding when expenditures are
reassessed by the federal government.
3)This bill authorizes MRMIB to pursue General Fund (GF) loans
only to the extent needed to ensure continuity of operation.
The pool will be a new federally-funded, state-administered
program, and full guidance on the timing of federal
reimbursement mechanisms is not yet available. Providing GF
loan authority to MRMIB will ensure continuity of funding
support and program administration. Other provisions of the
bill require MRMIB to maintain enrollment and expenditures in
line with federal funds, ensure that subsidies do not exceed
the amount of federal funding available, and ensure no state
funds are spent in support of the high risk pool.
COMMENTS : According to the author, this bill is needed to
establish a high-risk pool that meets federal requirements
because Major Risk Medical Insurance Program (MRMIP) and the
federal high-risk pool program established by PPACA differ in
their eligibility criteria, benefits, coverage, and premiums in
ways that would prevent MRMIP, as it is currently structured,
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from being used as the federal high-risk pool. The author
argues that although most Californians obtain health insurance
through their employer, many Californians do not have access to
employer-sponsored health coverage and cannot buy private health
insurance at any price because they have a pre-existing medical
condition.
The author further points out that having a pool run at the
state level by a public board allows for better public
participation, on-going monitoring, and transparency. MRMIB
could provide a single point of application for people applying
for either high risk pool, and the federal government has not
directly administered a program similar to this before.
Additionally, having similar programs run by different levels of
government is confusing for the public and makes coordination of
enrollment and outreach more difficult.
On March 23, 2010, President Obama signed into law the PPACA to
provide coverage for over 90% of the presently uninsured
population, adopt broad-reaching reforms in insurance practices,
and make major new investments in public health. PPACA requires
states to create health insurance exchanges by 2014 that will
serve as competitive market places for individuals and small
businesses to be able to purchase health insurance products.
Insurers participating in the exchange will be barred from
discriminating based on pre-existing conditions, health status,
and gender.
Until the implementation of state exchanges in 2014, certain
individuals with pre-existing conditions, who have not had
coverage for the prior six months and will be eligible for the
temporary high risk pool program. PPACA specifically gave the
DHHS the authority to run the temporary high risk health
insurance pool program or to contract with states or non-profits
to provide coverage for high risk individuals. In response to
an April 2010 letter from Kathleen Sebelius, Secretary of DHHS,
Governor Arnold Schwarzenegger sent a letter indicating
California's intent to contract with the federal government to
operate a temporary high risk health insurance pool program.
The Governor's letter indicated that MRMIB would operate the
temporary high risk health insurance pool program alongside
MRMIP. On May 10, 2010, DHHS released the solicitation for
states proposing to establish the temporary federal high risk
pool. A total of $5 billion in federal funds has been
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appropriated to support the program. California has been
allocated $761 million over the life of the program. To date,
29 states plus Washington, D.C. have elected to operate their
own, 18 have elected to have DHHS run it, two have deferred the
decision and one has not indicated.
MRMIB has consulted PricewaterhouseCoopers, who has provided
preliminary estimates of premiums compared to the existing MRMIP
premiums. According to a report to the MRMIB on June16, 2010,
plan premium rates in the new federal high risk pool could range
from a high of $585 to a low of $545 depending on various
factors including deductibles, as compared to existing MRMIP
products that range up to $900 and have annual limits of
$75,000.
Analysis Prepared by : Marjorie Swartz / HEALTH / (916)
319-2097 FN:
0004917