BILL ANALYSIS
------------------------------------------------------------
|SENATE RULES COMMITTEE | SB 1088|
|Office of Senate Floor Analyses | |
|1020 N Street, Suite 524 | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
------------------------------------------------------------
THIRD READING
Bill No: SB 1088
Author: Price (D)
Amended: 6/1/10
Vote: 21
SENATE HEALTH COMMITTEE : 5-0, 4/21/10
AYES: Alquist, Leno, Negrete McLeod, Pavley, Romero
NO VOTE RECORDED: Strickland, Aanestad, Cedillo, Cox
SENATE APPROPRIATIONS COMMITTEE : 7-3, 5/27/10
AYES: Kehoe, Alquist, Corbett, Leno, Price, Wolk, Yee
NOES: Denham, Walters, Wyland
NO VOTE RECORDED: Cox
SUBJECT : Health care coverage
SOURCE : Author
DIGEST : This bill requires health care service plans and
health insurers that currently offer coverage to dependents
to offer that coverage to dependents who are less than 26
years of age, pursuant to federal health care reform.
ANALYSIS : Existing federal law:
Existing law, the federal Patient Protection and Affordable
Care Act (the federal health reform act), (Public Law
111-148), among other things, requires group health plans,
and health insurers offering group and individual policies,
to allow young people, up to their 26th birthday, to remain
CONTINUED
SB 1088
Page
2
on their parents' health plan contract or health insurance
policy beginning October 1, 2010.
The federal health reform act also directs the federal
Secretary of Health and Human Services to promulgate
regulations to define "dependents."
Existing law, the federal Reconciliation Act of 2010 (the
federal health reform reconciliation act), (Public Law
111-152) makes changes to the federal health reform act
and, among other things, clarifies the definition of an
adult dependent, as it relates to the income definition
under the Internal Revenue Code of 1986, as any child of a
taxpayer who, as of the end of the taxable year, has not
attained their 27th birthday.
Provisions in the federal health reform reconciliation act
specify that the dependent coverage provisions in federal
health reform apply to married individuals who are still
dependent on his or her parent.
Existing state law:
Existing law provides for the regulation of health care
health plans by the Department of Managed Health Care and
for the regulation of health insurers by the Department of
Insurance.
Existing law allows for the use of a limiting age (as
specified in the health plan contract or health insurance
policy) as a condition of coverage for dependents.
Existing law also specifically prohibits health plan
contracts and health insurance policies that provide
dependent coverage, where coverage terminates upon
attainment of the limiting age specified in the contract or
policy, from terminating coverage for a child who meets
certain conditions, as specified.
Existing law prevents a health plan or health insurer from
excluding any eligible dependent who would otherwise be
entitled to health care services on the basis of their
health status, medical condition, the claims experience,
the medical history, the genetic information, or the
disability or evidence of insurability including conditions
arising out of acts of domestic violence of that employee
SB 1088
Page
3
or dependent, except in the case of a "late enrollee," or
for satisfaction of a preexisting condition clause in the
case of initial coverage of an eligible employee. Existing
law also defines "late enrollee" and "preexisting
condition."
This bill:
This bill prohibits health plans and health insurers from
setting the limiting age for dependent children covered by
their parent's health plan contract or health insurance
policy at less than 26 years of age. This bill also
allows, but does not require, employers to pay premiums
associated with extending dependent coverage for dependents
between the ages of 23 and 26 years.
This bill states the intent of the Legislature to enact
conforming legislation extending the coverage of dependent
children, per the requirements of the federal health reform
law, including:
1.Requiring all group health plan contracts and group
health insurance policies to offer dependent coverage;
2.Defining dependents to be children up to 26 years of age,
regardless of marital status, state of residency,
employment status, income level, and whether he or she
has children;
3.Allowing parents to cover dependents under their health
plan or health policy even after the dependent has ceased
to be covered under that plan or policy. These
dependents would be exempt from the definition of "late
enrollee," and thus not subject to medical underwriting;
4.Requiring plans and policies to cover a dependent,
regardless of any preexisting medical conditions, until
federal requirements banning use of preexisting
conditions as a condition for coverage in January 1,
2014; and,
5.Allowing, but not requiring, employers to pay a portion
of the premium for an enrollee's covered dependent.
SB 1088
Page
4
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
According to the Senate Appropriations Committee:
Fiscal Impact (in thousands)
Major Provisions 2010-11 2011-12
2012-13 Fund
Premium increases
approximately $110 million annually General/*
depends on employer premiumSpecial/
payment decisions and enrollmentOther
CalPERS IT system updates unknown, potentially over
$50General/*
Special/
Other
*55 percent General Fund, 45 percent Special Funds and
Other Funds
SUPPORT : (Verified 6/1/10)
AARP
ACOG
AFSCME
California School Employees Association
California State Association of Counties
CMA
Health Access
OPPOSITION : (Verified 6/1/10)
ACHLIC
Anthem Blue Cross
California Association of Health Plans
ARGUMENTS IN SUPPORT : According to the author's office,
recently passed federal health care legislation requires
insurers to expand coverage to dependents up to their 26th
birthday, beginning in September 2010. This bill seeks to
provide statutory implementation guidelines for the State
of California to comply with federal law.
SB 1088
Page
5
According to research, young adults compose one of the
largest and fastest growing segments of the uninsured.
Young adults often lose health coverage at age 19, as a
result of being dropped from their parent's policy, or
because of losing eligibility for public programs, like
Medi-Cal or Healthy Families.
In addition, the author points out that one-third of
college graduates will be uninsured in the year following
graduation. Only half of 19 to 29 year olds are eligible
for coverage offered by their employers as compared to 75
percent of 30 to 64 year old workers.
The American Congress of Obstetricians and Gynecologists
(ACOG) writes in support, stating that SB 1088 provides an
avenue for young adults, still dependent on their parents
for financial support, to be able to maintain coverage
during the transition to independence. ACOG further states
that it is particularly important for young women to
maintain coverage, as the mid-twenties are crucial years
for reproductive health.
Writing in support, the California Medical Association
states that young adults in this age group are particularly
vulnerable to being uninsured due to not having access to
health coverage through their employer or being unable to
afford to buy comprehensive coverage. As a result, they
are often targeted by health plan marketing of policies
with high-deductibles and out-of-pocket costs, or skinny
policies that do not offer meaningful coverage and can lead
to high medical debt when a serious health issue arises.
CMA further argues that this bill ensures that the health
insurance marketplace works for young people who may be
struggling to make ends meet and get their careers off the
ground.
Health Access California also supports the bill, stating
that young adults represent the largest and fastest growing
segment among the uninsured: 30 percent of the uninsured
are young adults, though they represent just 17 percent of
the population generally, according to a study by the
Commonwealth Fund. Furthermore, Health Access points out
that SB 1088 takes the first step in implementing
SB 1088
Page
6
provisions in federal health reform around dependent
coverage.
ARGUMENTS IN OPPOSITION : Anthem Blue Cross (Blue Cross)
writes in opposition, stating that, despite a provision
allowing insurers to institute a surcharge for families
with overage dependents, this bill will result in higher
premiums for families during challenging economic times.
Blue Cross believes that insurers would not be able to
establish a surcharge and, instead, will increase the cost
of family coverage to account for a larger average family
size and the adverse selection associated with overage
dependents in a guaranteed issue environment. Blue Cross
points out that when similar legislation passed in
Colorado, it accounted for a premium increase of 1.5-2
percent. Blue Cross also believes that the definition of
dependent may run afoul of federal rules related to health
care reform.
The Association of California Life & Health Insurance
Companies (ACLHIC) opposes the bill as it makes some
deviations from federal legislation. For instance, the
federal law only requires health insurers that currently
provide dependent coverage to make coverage available to
dependents until age 26, this bill goes beyond that and
requires all insurers to offer extended dependent coverage,
regardless of whether they currently offer the coverage.
ACLHIC states that federal law is sufficient, and it would
be easier and more cost efficient to only require health
insurers to comply with one federal law.
CTW:nl 6/1/10 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
**** END ****