BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 1088|
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UNFINISHED BUSINESS
Bill No: SB 1088
Author: Price (D)
Amended: 8/20/10
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
SENATE FLOOR : 21-13, 6/02/10
AYES: Alquist, Calderon, Cedillo, Corbett, DeSaulnier,
Ducheny, Florez, Hancock, Kehoe, Leno, Liu, Lowenthal,
Negrete McLeod, Padilla, Pavley, Price, Romero, Simitian,
Steinberg, Wolk, Yee
NOES: Aanestad, Ashburn, Cogdill, Cox, Denham, Dutton,
Harman, Hollingsworth, Huff, Runner, Strickland, Walters,
Wyland
NO VOTE RECORDED: Correa, Oropeza, Wiggins, Wright,
Vacancy, Vacancy
ASSEMBLY FLOOR : 50-27, 8/23/10 - See last page for vote
SUBJECT : Health care coverage
SOURCE : Author
CONTINUED
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DIGEST : This bill prohibits, with specified exceptions,
the limiting age for dependents covered by health plan
contracts and health insurance policies from being less
than 26 years of age beginning on or after September 23,
2010, and prohibits health plan contracts and health
insurance policies from being required to cover a child of
a child receiving dependent coverage.
Assembly Amendments specified timelines for health care
service plan contracts for those 26 years of age, clarified
circumstances for young adults who previously lost or were
denied dependent health coverage, and required health plans
to provide written notice related to those circumstances.
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
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:
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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
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:
1. Prohibits the limiting age for dependents covered by
health plan contracts and health insurance policies from
being less than 26 years of age with respect to plan and
policy years beginning on or after September 23, 2010,
except under specified circumstances.
2. Permits, for plan and policy years beginning before
January 1, 2014, group health plan contracts and group
health insurance policies that qualify as grandfathered
health plans under federal law, and that make available
dependent coverage of children, to exclude from coverage
an adult child who has not attained the age of 26 years
only if the adult child is eligible to enroll in an
employer-sponsored health plan other than a group health
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plan of a parent.
3. Clarifies circumstances of coverage for young adults who
previously lost or were denied dependent health
coverage, consistent with the recently enacted federal
Patient Protection and Affordable Care Act, and any
additional federal guidance or regulations issued by the
U.S. Secretary of Health and Human Services.
4. Requires health plans and health insurers to provide
written notice in accordance with 3) above and allows
the notice to be provided to the dependent's parent on
behalf of the dependent. Requires the notice to be
prominent if it is included with enrollment materials
for a group plan or policy.
5. Provides that a dependent enrolling in a group plan or
policy for coverage pursuant to this bill must be
treated as a special enrollee, as specified.
6. Requires health plans and health insurers to offer the
recipient of the notice all of the benefit packages
available to similarly situated individuals who did not
lose coverage by reason of cessation of dependent
status. Specifies that any difference in benefits or
cost-sharing requirements constitutes a different
benefit package.
7. Prohibits dependents enrolling in coverage provided by
group plan and policies pursuant to 6) above from being
required to pay more for coverage than similarly
situated individuals who did not lose coverage by reason
of cessation of dependent status.
8. Clarifies that nothing in this bill requires a plan
contract or insurance policy to cover a child of a
covered dependent.
9. Prohibits this bill from being construed to modify the
definition of "dependent" for tax treatment purposes, as
specified.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
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According to the Assembly Appropriations Committee, annual
increased costs of $85 million General Fund to the
California Public Employees' Retirement System to provide
the employer share of health premium costs to 29,000 young
adults gaining access to health coverage through the
increase in the limiting age established by this bill.
SUPPORT : (Verified 8/24/10)
AARP
ACOG
AFSCME
California School Employees Association
California State Association of Counties
CMA
Health Access
OPPOSITION : (Verified 8/24/10)
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.
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.
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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
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
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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.
ASSEMBLY FLOOR :
AYES: Ammiano, Arambula, Bass, Beall, Block, Blumenfield,
Bradford, Brownley, Buchanan, Caballero, Charles
Calderon, Carter, Chesbro, Coto, Davis, De La Torre, De
Leon, Eng, Evans, Feuer, Fong, Fuentes, Galgiani, Gatto,
Hall, Hayashi, Hernandez, Hill, Huber, Huffman, Jones,
Lieu, Bonnie Lowenthal, Ma, Mendoza, Monning, Nava, V.
Manuel Perez, Portantino, Ruskin, Salas, Saldana,
Skinner, Solorio, Swanson, Torlakson, Torres, Torrico,
Yamada, John A. Perez
NOES: Adams, Anderson, Bill Berryhill, Tom Berryhill,
Conway, Cook, DeVore, Fletcher, Fuller, Gaines, Garrick,
Gilmore, Hagman, Harkey, Jeffries, Knight, Logue, Miller,
Nestande, Niello, Nielsen, Norby, Silva, Smyth, Audra
Strickland, Tran, Villines
NO VOTE RECORDED: Furutani, Vacancy, Vacancy
CTW:nl 8/24/10 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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