BILL ANALYSIS
SB 900
Page 1
SENATE THIRD READING
SB 900 (Alquist and Steinberg)
As Amended August 16, 2010
Majority vote
SENATE VOTE :21-12
HEALTH 13-6 APPROPRIATIONS 12-5
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|Ayes:|Monning, Ammiano, Carter, |Ayes:|Fuentes, Bradford, |
| | | |Huffman, Coto, Davis, De |
| |De La Torre, De Leon, | |Leon, Gatto, Hall, |
| |Eng, Hayashi, Hernandez, | |Skinner, Solorio, |
| |Jones, Bonnie Lowenthal, | |Torlakson, Torrico |
| |Nava, V. Manuel Perez, | | |
| |Salas | | |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Fletcher, Conway, Gaines, |Nays:|Conway, Harkey, Miller, |
| |Smyth, Audra Strickland, | |Nielsen, Norby |
| |Silva | | |
| | | | |
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SUMMARY : Establishes the California Health Benefits Exchange
(Exchange), and states that it is the intent of the Legislature
to implement the provisions of the federal Patient and
Protection and Affordable Care Act (PPACA) that require the
establishment of an American Health Benefit Exchange.
Specifically, this bill :
Executive Board
1)Establishes the Exchange as an independent public entity not
affiliated with an agency or department. Requires the
Exchange to be governed by a five-member board, with the
Secretary of the California Health and Human Services Agency
(CHHSA) serving as a voting, ex officio member and other
members appointed by the Governor, the Senate Rules Committee,
and the Assembly Speaker, as specified. Requires board
members to have demonstrated and acknowledged expertise in at
least two of six specified areas related to health care
coverage and benefits, health care finance, health care
delivery system administration, and health plan purchasing.
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Requires appointing authorities to consider the expertise of
board members and attempt to make appointments so that the
composition reflects a diversity of experience. Requires
appointing authorities to also take into consideration the
cultural, ethnic, and geographical diversity of California so
that the composition reflects the state's communities.
2)Requires board members to have the responsibility and duty to
meet the requirements of this bill, PPACA, and all applicable
state and federal laws and regulations, to serve the public
interest of the individuals and small businesses seeking
health care coverage through the Exchange, and to ensure the
operational well-being and fiscal solvency of the Exchange.
3)Prohibits Exchange board members and staff from being a
member, a board member, or an employee of a trade association
of carriers, health facilities, health clinics or health care
providers. Prohibits board or staff members from being a
health care provider unless he or she receives no compensation
for rendering services as a provider and does not have an
ownership interest in a professional health care practice.
4)Prohibits board members from receiving compensation for
service on the board, but permits the receipt of per diem and
reimbursement for travel and other necessary expenses, as
specified.
5)Prohibits board members from making, participate in making, or
in any way attempting to use his or her official position to
influence the decision making that he or she knows or has
reason to know will have a reasonable foreseeable material or
financial effect on him or her or a member of his or her
immediate family, on any source of income, as specified, or on
any business entity in which the member is a director officer,
partner, trustee, employee, or holds any management position.
6)Prohibits any liability in a private capacity on the part of
the board or any board member or employee for or on account of
any act performed or obligation entered into in an official
capacity, when done in good faith and without intent to
defraud, and in connection with the administration,
management, or conduct under this bill.
7)Requires the board to hire an executive director, who is
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exempt from civil service and serves at the pleasure of the
board, to organize, administer, and manage the operations of
the Exchange.
8)Requires the board to be subject to the Bagley-Keene Opening
Meeting Act, except that closed sessions may be held when
considering matters related to litigation, personnel,
contracting, and rates.
9)Requires the board to apply for available federal planning and
establishment grants, as specified. Requires the CHHSA, upon
the request of the board, to apply for those grants if an
executive director of the Exchange has not been hired by the
time the federal grants are made available. Requires CHHSA,
if a majority of the board has not been appointed when the
federal grants are made available, to submit the initial
application. Requires any subsequent applications to be made
once a majority of board members have been appointed. Requires
the board to be responsible for using federal grant funds for
the planning and establishment of the Exchange consistent with
PPACA.
Internet Portal
10) Requires Commissioner of the California Department of
Insurance (CDI) and the Department of Managed Health Care
(DMHC) Director, in coordination with each other, to review
the Internet portal developed by the United States Secretary
of Health and Human Services (HHS), and any enhancements to
that portal expected to be implemented on or before January 1,
2015.
11) Requires the review to examine whether the Internet portal
provides sufficient information regarding all health benefit
products offered by health plans and insurers in the
individual and small employer markets in California to
facilitate fair and affirmative marketing of all individual
and small employer plans, particularly outside the Exchange.
12) Requires the CDI Commissioner and DMHC Director, if it is
determined that the Internet portal does not adequately
achieve those purposes, to jointly develop and maintain an
electronic clearinghouse to achieve those purposes. Requires
the CDI Commissioner and DMHC Director, in performing this
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function, to routinely monitor individual and small employer
benefit filings with, and complaints submitted by individuals
and small employers to, their respective departments, and to
use any other available means to maintain the clearinghouse.
FISCAL EFFECT : According to the Assembly Appropriations
Committee:
1)This bill establishes the Exchange. Together with a companion
bill, AB 1602 (J. Perez), this bill will generate annual costs
in 2011 through 2014 of $1 million (100% federal) to $2
million (100% federal) to provide support in establishing the
Exchange.
2)Federal funding to establish the Exchange will be available
from 2011 until January 1, 2015, at which time the Exchange
must be self-sustaining. The federal government recently
announced the availability of an initial allocation of $1
million per state to help states begin to establish exchanges.
Applications for state funding are due September 1, 2010. AB
1602 (J. Perez) contains authority to establish self-funding
mechanisms.
3)A key function of the Exchange will be to administer federally
funded premium subsidies for low-income individuals. According
to estimates, by 2016, between three million and eight million
individuals and employees of small firms will be purchasing
coverage through the Exchange.
COMMENTS : According to the author, one of the critical pieces
of the federal health reform legislation is the establishment of
an American Health Benefit Exchange. Each state is required to
establish such an Exchange by January 1, 2014, or the federal
government will establish operate the Exchange. This bill would
require the establishment of the Exchange as an independent
public entity that would be governed by a five member board that
holds public meetings to ensure accountability and transparent
decision-making. The appointed board members are required to
have demonstrated expertise in two of six health-related areas,
and would be charged with serving the interest of individuals
and small businesses seeking coverage in the Exchange and
ensuring the operational well-being and fiscal solvency of the
Exchange. To ensure conflict-free decision making in the
interest of individuals receiving coverage in the Exchange,
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Exchange board members and staff are prohibited from being
employed by, or a consultant to, a health plan, health insurer,
health care provider or health care facility during their term
of service on the Exchange, and for one year immediately
following his or her term of service (with an exception for a
health care provider who receives no compensation from rendering
services as a health care provider). SB 900 is a companion bill
and joined to AB 1602 (Perez), which would place specific
requirements on the Exchange, such as offering products in the
five benefit levels and selectively contracting with health
plans.
On March 23, 2010, President Obama signed the PPACA (Public Law
111-148), as amended by the Health Care and Education
Reconciliation Act of 2010 (Public Law 111-152). Among other
provisions, the new law makes statutory changes affecting the
regulation of and payment for certain types of private health
insurance.
Each state is required to establish an American Health Benefit
Exchange and a Small Business Health Options Program Exchange by
2014 for individuals and small employers with 50 to 100
employees; after 2017, states have the option of opening the
small business exchange to employers with more than 100
employees. States can opt to provide a single exchange for
individuals and small employers. Groups of states can form
regional exchanges or states can form more than one in-state
exchange, but the exchanges must serve a geographically distinct
area. While the individual and small-group markets will not be
replaced by the exchanges, the same market rules will apply
inside and outside the exchanges. Premium subsidies can be used
only for plans purchased through the exchanges. If the federal
HHS determines in 2013 that a state will not have an exchange
operational by 2014, HHS is required to establish and operate an
exchange in the state. In 2017, states will have the
opportunity to opt out of the federal requirements to establish
insurance exchanges through a five-year waiver; if they are able
to demonstrate that they can offer all residents coverage at
least as comprehensive and affordable as that required by this
bill.
Federal responsibilities. HHS' responsibilities with respect to
the exchanges include: establishing certification criteria for
"qualified health plans" that will be sold through the
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exchanges; requiring such plans to provide the essential
benefits package; requiring that the licensed insurance carriers
issuing plans offer at least one qualified health plan at the
silver and gold levels and meet marketing requirements; ensuring
a sufficient choice of providers; and, ensuring that essential
community providers are included in networks, are accredited on
quality, implement a quality improvement strategy, use a uniform
enrollment form, present plan information in a standard format,
and provide data on quality measures. In addition, the HHS
Secretary will develop a rating system for qualified health
plans and a model template for an exchange's Internet portal,
and determine an initial and open enrollment period as well as
special enrollment periods for people under varying
circumstances. The HHS Secretary is also required to establish
procedures under which states may allow agents or brokers to
enroll individuals in qualified health plans and assist them in
applying for subsidies. Such procedures may include the
establishment of rate schedules for broker commissions paid by
health plans offered through the exchange.
State responsibilities. The state exchanges will be required to
certify qualified health plans, operate a toll-free hotline and
Web site, rate qualified health plans, present plan options in a
standard format, inform individuals of the eligibility
requirements for Medicaid (Medi-Cal in California) and the
Children's Health Insurance Program (Healthy Families in
California), provide an electronic calculator to calculate plan
costs, and grant certifications of exemption from the individual
requirement to have health insurance. Exchanges will be
required to be self-sustaining by 2015 and will be allowed to
charge assessments or user fees to participating health
insurance issuers or otherwise generate funding to support their
operations. The exchanges also will award grants to
"navigators" who will educate the public about qualified health
plans, distribute information on enrollment and subsidies,
facilitate enrollment, and provide referrals on grievances.
Navigators may include trade and professional organizations,
farming and commercial fishing organizations, community and
consumer-focused nonprofit groups, chambers of commerce, unions,
or licensed insurance agents or brokers.
Qualified employers purchasing through the exchange. Employers
that are qualified to offer coverage to their employees through
the Exchange may provide premium support for a level of coverage
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(bronze, silver, gold, platinum) and employees may choose a plan
within the designated level.
Analysis Prepared by : Melanie Moreno / HEALTH / (916)
319-2097
FN: 0006056