BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 499|
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THIRD READING
Bill No: SB 499
Author: Ducheny (D)
Amended: As introduced
Vote: 21
SENATE HEALTH COMMITTEE : 11-0, 4/15/09
AYES: Alquist, Strickland, Aanestad, Cedillo, Cox,
DeSaulnier, Leno, Maldonado, Negrete McLeod, Pavley, Wolk
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
SUBJECT : Managed Care Administrative Fines and Penalties
Fund:
California Major Risk Medical Insurance
Program
SOURCE : Author
DIGEST : This bill requires the Managed Risk Medical
Insurance Board to report to the Legislature no later than
March 1, 2010, and annually thereafter, on the amount and
use of moneys transferred to the Major Risk Medical
Insurance Fund from the Managed Care Administrative Fines
and Penalties Fund.
ANALYSIS :
Existing law:
1. Establishes the California Major Risk Medical Insurance
CONTINUED
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Program (MRMIP), which is administered by the Managed
Risk Medical Insurance Board (MRMIB) to provide major
risk medical coverage to eligible persons who have been
rejected for coverage by at least one private health
plan.
2. Creates the Major Risk Medical Insurance Fund for
purposes of MRMIP.
3. Provides for the licensure and regulation of health care
service plans by the Department of Managed Health Care.
Existing law requires the deposit of fines and
administrative penalties assessed against health care
service plans in the Managed Care Administrative Fines
and Penalties Fund.
4. Requires, beginning September 1, 2009, that any amount
over the first $1,000,000 deposited in the fund be
transferred to the Major Risk Medical Insurance Fund to
be used, upon appropriation by the Legislature, for
purposes of MRMIP.
This bill requires MRMIB to report to the Legislature no
later than March 1, 2010, and annually thereafter, on the
amount and use of moneys transferred to the Major Risk
Medical Insurance Fund from the Managed Care Administrative
Fines and Penalties Fund and the effect of those moneys on
the waiting list for MRMIP.
Background
MRMIP began covering enrollees in 1991, providing
comprehensive health insurance benefits to individuals who
are unable to purchase private coverage because they were
denied individual coverage or were offered it at high
rates. Subscribers are charged a monthly premium ranging
from 125 percent to 137.5 percent of their plan's standard
average individual rate. Subscriber contributions cover 62
percent of the MRMIP's cost. Premiums for the program are
subsidized with Proposition 99 cigarette and tobacco tax
funds, and enrollment in the program is capped, based on
the availability of funds.
Due to the cap on subscriber premiums and the set amount of
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available Proposition 99 monies, MRMIP has historically
been unable to meet the demand for the program. MRMIP had
a waiting list its first year of operation in 1999, which
had grown to 7,098 people in 2001. In order to address the
growing waiting list for MRMIP, the Legislature passed AB
1401 (Thomson) Chapter 794, Statutes of 2002, which
established the Guaranteed Issue Pilot Program (GIP).
Under GIP, subscribers were automatically disenrolled from
MRMIP after 36 months, after which subscribers were able to
select guaranteed continued coverage from insurers in the
individual market. The program sunset in December 2007.
Several issues remain with funding MRMIP. Although the
current wait list stands at 52 individuals (four due to
closed enrollment, and 48 due to a post-enrollment waiting
period), several reasons may account for the historically
low number of individuals on the waiting list, including
growing inability of many to afford the premiums and the
$75,000 annual cap on benefits.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
SUPPORT : (Verified 4/27/09)
American Federation of State, County and Municipal
Employees
California Medical Association
ARGUMENTS IN SUPPORT : The author's office states that
this bill allows for legislative oversight and
accountability of funds applied through SB 1379 (Ducheny),
Chapter 607, Statutes of 2008, which requires that the
first one million dollars in fines and penalties levied on
HMOs be diverted to the Steven M. Thompson Physician Loan
Repayment Program and the remainder to MRMIP under MRMIB.
The author's office states that, upon enactment of SB 1379,
$10 million of the fines and penalties collected by DMHC
last year were transferred directly to MRMIP, and that
MRMIP's wait list, which had grown to a high of 1,000
uninsured individuals in July 2008 due to policy changes
brought about by the sunset of the Guaranteed Issue Pilot
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Program within MRMIP in December 2007, immediately went
from almost 700 uninsurable individuals in October 2008 to
zero (excluding those who voluntarily deferred enrollment).
The author's office notes that amounts deposited into the
fund from year to year will fluctuate, and this bill will
allow for legislative oversight and accountability for the
funds applied through SB 1379 of last year and in the
future.
CTW:do 4/27/09 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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