BILL ANALYSIS
SB 499
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SENATE THIRD READING
SB 499 (Ducheny)
As Introduced February 26, 2009
Majority vote
SENATE VOTE :35-0
HEALTH 17-0 APPROPRIATIONS 17-0
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|Ayes:|Jones, Fletcher, Adams, |Ayes:|De Leon, Conway, Ammiano, |
| |Ammiano, Block, De La | | |
| |Torre, De Leon, Emmerson, | |Charles Calderon, Coto, |
| |Gaines, Hall, Hayashi, | |Davis, |
| |Hernandez, Bonnie | |Fuentes, Hall, Harkey, |
| |Lowenthal, Nava, V. | |Miller, |
| |Manuel Perez, Salas, | |Nielsen, John A. Perez, |
| |Audra Strickland | |Skinner, |
| | | |Solorio, Audra |
| | | |Strickland, Torlakson, |
| | | |Hill |
|-----+--------------------------+-----+--------------------------|
| | | | |
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SUMMARY : Requires the Managed Risk Medical Insurance Board
(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 (Managed
Care Fund), pursuant to existing law, and the effect of the
transferred funds on the waiting list for the Major Risk Medical
Insurance Program (MRMIP).
EXISTING LAW :
1)Provides for the licensure and regulation of health care
service plans (health plans) by the Department of Managed
Health Care (DMHC) under the Knox-Keene Health Care Service
Plan Act of 1975 (Knox-Keene), and requires administrative
penalties levied under Knox-Keene to be paid into the Managed
Care Fund.
2)Establishes MRMIP, administered by MRMIB, to provide health
coverage for individuals rejected by at least one private
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health plan, or individuals who can only secure limited
coverage that would leave the individual without adequate
coverage, as specified.
3)Requires each health plan to pay to the director of DMHC an
amount estimated by the director for the ensuing fiscal year
as reimbursement of its share of all costs and expenses in
administering Knox-Keene. If the director determines that the
charges and assessments in existing law for any year are in
excess of the amount necessary, or are insufficient, to meet
DMHC administrative costs for that year, the assessments and
charges for the following year must be adjusted to recover the
actual costs of administration.
4)Creates a Managed Care Administrative Fines and Penalties Fund
(Fund), and requires administrative fines and penalties
collected under Knox-Keene to be deposited into the Fund.
Prohibits the fines and penalties authorized under Knox-Keene
from being used to reduce the assessments imposed on health
plans.
5)Requires, beginning September 1, 2009, and annually
thereafter, the first $1 million in Knox-Keene fines and
administrative penalties to be transferred from the Fund to
the Medically Underserved Account for Physicians within the
Health Professions Education Foundation (Foundation) and upon
appropriation by the Legislature, to be used for purposes of
the Steven M. Thompson Physician Corps Loan Repayment Program
(Thompson Program).
6)Requires fines and administrative penalties paid for
violations of Knox-Keene in amounts over the first $1 million,
including accrued interest in the Fund, to be paid to the
Major Risk Medical Insurance Fund. Requires, upon
appropriation by the Legislature, the fines and administrative
penalties to be used for MRMIP.
7)Requires, following the passage of SB 1379 (Ducheny), Chapter
607, Statutes of 2008, an urgency statute, DMHC to make a
one-time transfer of fine and administrative penalty revenue
from the Managed Care Fund of $1 million, to be used for
purposes of the Thompson Program; and, $10 million to the
MRMIP Fund, to be used for MRMIP.
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FISCAL EFFECT : According to the Assembly Appropriations
Committee, no direct fiscal impact to MRMIB to provide the
required information to the Legislature each year.
COMMENTS : The author states that this measure allows for
legislative oversight and accountability of funds made available
to MRMIP in 2008 by SB 1379. SB 1379 requires on an annual
basis the first $1 million in fines and penalties levied against
Knox-Keene health plans to be diverted to the Thompson Program
and any remaining funds to be made available to subsidize health
care coverage provided through MRMIP. The author notes that
amounts deposited into the Fund from year to year will
fluctuate, and this bill will allow for legislative oversight
and accountability, and ensure that the Legislature can closely
monitor the allocation of funds as well as the financial status
of MRMIP.
MRMIP provides state-subsidized coverage through four private
health plans to individuals with preexisting conditions or poor
health histories who are denied coverage in the individual
market or whose premiums exceed MRMIP premiums. Premiums paid
by individuals enrolled in MRMIP are set at 125-137.5% of what
the MRMIP benefit package would cost in the commercial market.
In 2007, premiums paid by MRMIP enrollees paid for 66% of MRMIP
costs, and the remaining 34% came from state tobacco tax funds.
Premiums for MRMIP 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 available Proposition
99 funds, MRMIP has historically been unable to meet the demand
for the program. The $10 million allocation from SB 1379
eliminated the waiting list of 700 uninsurable individuals in
October 2008 to zero (excluding those whose coverage was pending
fulfillment of a waiting period). However, the program again
has a waiting list and, as of August 24, 2009, the waiting list
stands at 205 individuals (150 due to closed enrollment, and 55
due to a post-enrollment waiting period).
Analysis Prepared by : Deborah Kelch / HEALTH / (916) 319-2097
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