BILL ANALYSIS �
SENATE COMMITTEE ON HEALTH
Senator Ed Hernandez, O.D., Chair
BILL NO: AB 43
AUTHOR: Monning
AMENDED: May 27, 2011
HEARING DATE: June 13, 2012
CONSULTANT: Bain
SUBJECT : Medi-Cal: eligibility.
SUMMARY : Requires the Department of Health Care Services (DHCS)
to establish Medi-Cal eligibility for any person under 65 years
of age who meets specified criteria and whose income does not
exceed 133 percent of the federal poverty level (FPL).
Existing law:
1.Establishes the Medi-Cal program, administered by DHCS, under
which health care services are provided to eligible low-income
persons.
2.Requires states, under federal health care reform, known as
the Patient Protection and Affordable Care Act (ACA) (Public
Law 111-148), as amended by the federal Health Care and
Education Reconciliation Act of 2010 (Public Law 111-152),
beginning January 1, 2014, as a condition of receiving federal
Medicaid funds, to provide health care services to persons who
meet all of the following:
a. Under 65 years of age;
b. Not pregnant;
c. Not entitled to, or enrolled for, benefits under
Medicare Part A, or enrolled for benefits under Medicare
Continued---
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Part B; and
d. Income does not exceed 133 percent of the FPL.
3.Requires DHCS, pursuant to federal approval of a demonstration
project, to authorize local Low Income Health Programs (LIHPs)
to provide health care services to eligible low-income
individuals under certain circumstances. LIHPs are established
at local option, and are authorized to cover individuals up to
200 percent of the FPL (200 percent of the FPL is at or below
$22,340 for an individual in 2012).
This bill:
1.Requires DHCS, by January 1, 2014, to establish eligibility
for Medi-Cal benefits for any person who meets all of the
following, as referenced in federal law:
a. Under 65 years of age;
b. Not pregnant;
c. Not entitled to, or enrolled for, benefits under
Medicare Part A, or enrolled in Medicare Part B;
d. Not otherwise Medicaid-eligible; and
e. Income does not exceed 133 percent of the FPL
applicable to a family of the size involved.
1.Permits DHCS to phase-in coverage for these individuals.
2.Requires DHCS, in accordance with the Special Terms and
Conditions (STCs) of California's Bridge to Reform Medicaid
waiver from 2010, to prepare and submit for approval to the
federal Centers for Medicare and Medicaid Services (CMS) an
initial transition plan that contains all of the following:
a. An outline of the process for determining
eligibility for persons described in 1) above, including,
but not limited to, the transition of enrollees in the
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LIHP that does not require the enrollees to submit a new
application;
b. A plan to manage the transition to new eligibility
levels in 2014 by considering, reviewing, and
preliminarily determining new applications beginning as
early as July 1, 2013, including in counties that have
not established a LIHP or that has limited LIHP
enrollment;
c. Criteria for provider participation and the means of
securing provider agreements for the transition;
d. The schedule of implementation activities for the
state to make the transition plan operational; and
e. The process the state will use to ensure adequate
primary care and specialty provider networks.
3.Requires DHCS to submit the initial transition plan to the
appropriate legislative policy and fiscal committees.
4.Prohibits this bill from being construed to limit eligibility
for Medi-Cal benefits authorized by any other provision of
law.
FISCAL EFFECT : According to the Assembly Appropriations
Committee:
1.Unknown, likely significant costs, potentially in the
millions, for systems changes, staffing, and other
administrative activities to implement the eligibility
expansion required under federal law. Further federal guidance
and state planning are needed in order to estimate the
administrative costs associated with the expansion. Since the
eligibility expansion is required under federal law, the state
would likely incur these costs even in the absence of this
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bill.
2.Estimated federal expenditures associated with coverage of the
newly eligible population are up to $2.7 billion beginning in
state fiscal year 2013-14, and up to $5.5 billion for the
first full year of implementation in 2014-15 (the newly
eligible population is initially funded with 100 percent
federal funds). The actual expenditures and timing of
expenditures will depend on the take-up rate and how quickly
individuals enroll. Beginning in 2014, state and federal
authorities will implement a number of changes related to
health care coverage, including the individual mandate to
obtain health care coverage. It is unknown what number of
individuals will apply for Medi-Cal coverage due specifically
to the eligibility expansion in this bill, as compared to
other changes.
3.The estimated state fiscal impact associated with coverage of
the newly eligible population is up to $150 million in state
General Fund (GF) beginning in state fiscal year 2016-17, and
up to $450 million GF by 2018-19.
4.The state is expected to realize cost savings in various
smaller state health care programs because a significant
portion of the population currently served by these programs
will likely seek comprehensive health care coverage through
Medi-Cal when eligibility is expanded. The California Health
and Human Services Agency (CHHSA) estimates that the state
will save approximately $1.4 billion ($600 million GF)
annually in 2014-15, the first full year of the eligibility
expansion, as compared to projected expenditures. The majority
of these savings will likely be due to the expansion of
Medi-Cal eligibility.
PRIOR VOTES :
Assembly Health: 13- 6
Assembly Appropriations:12- 5
Assembly Floor: 49- 25
COMMENTS :
1.Author's statement. According to the author, the purpose of
this bill is to implement the ACA requirement that states
include as a mandatory covered group, individuals over age 19
and under age 65, who are not otherwise eligible for Medi-Cal
as long as their income does not exceed 133 percent of the FPL
(set at $14,856 annually for individuals for 2012) using the
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new Modified Adjusted Gross Income (MAGI) eligibility
standard. In addition, this bill is needed as a vehicle for a
transition from the Bridge to Reform Demonstration to the
Medi-Cal implementation required by the ACA in 2014. This will
ensure that California meets the CMS requirement that the
state submit an initial transition plan by July 1, 2012 and
begin transition activities July 1, 2013. Even though most
counties are expected to enroll and provide coverage to
members of this population by participating in the LIHP in
some capacity, this is not expected to cover the entire
eligible population. Full implementation in 2014 is expected
to include over one million adults. The Medi-Cal system must
be prepared to absorb this entire population. Legislation is
needed to enact the necessary statutory changes to the
Medi-Cal eligibility and enrollment provisions in order to
conform to new federal requirements. This bill is a companion
piece to SB 677 (Hern�ndez), pending in Assembly Health
Committee that will also contain necessary eligibility and
enrollment provisions.
2.Medi-Cal eligibility changes. On March 23, 2010, President
Obama signed the ACA into law. The new health care law aims to
increase access to health insurance through more accessible
private insurance and an expansion of Medicaid (Medi-Cal in
California). The ACA makes numerous changes to Medicaid,
including eliminating the asset test and switching to a new
method of counting income known as Modified Adjusted Gross
Income (MAGI) for certain populations, and extending coverage
to former foster youth up to age 26.
This bill addresses the expansion of Medicaid coverage through
the ACA to adults without minor children, who are not
currently Medicaid-eligible without a federal waiver.
Currently, adults are not eligible for Medi-Cal coverage
unless they have minor children living at home, have a
disability, are over the age of 65, or are pregnant. Under the
ACA, starting January 1, 2014, Medi-Cal will expand coverage
to most adults who are at or below 133 percent of the FPL
(including disregarding �or not counting] an additional five
percent in income, which makes Medicaid income eligibility
effectively 138 percent of the FPL). For a single adult, 138
percent FPL is currently approximately $1,284 per month
($15,415 per year).
Federal regulations issued in March 2012 to implement the ACA
Medicaid provisions simplify the current eligibility rules and
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systems in the Medicaid and Children's Health Insurance
Program (CHIP) programs (known as Healthy Families in
California). The federal regulations: (a) reflect the
statutory minimum Medicaid income eligibility level of 133
percent of the FPL across the country for most non-disabled
adults under age 65; (b) eliminate obsolete eligibility
categories and collapse other categories into four primary
coverage groups: children, pregnant women, parents, and the
new adult group; (c) modernize eligibility verification rules
to rely primarily on electronic data sources; (d) codify the
streamlining of income-based rules and systems for processing
Medicaid and CHIP applications and renewals for most
individuals; and (e) ensure coordination across Medicaid,
CHIP, and the Exchanges. According to a recent study in the
health policy journal Health Affairs, an additional 1.7
million individuals are estimated to be enrolled in Medi-Cal
in California in 2016 at full implementation of the ACA.
The federal matching rate for newly eligible Medi-Cal
beneficiaries under the ACA is significantly higher than the
state's current rate. For federal fiscal year (FFY) 2014
through FFY 2016, the newly eligible population is 100 percent
federally funded. The federal funding percentage then falls to
95 percent for FFY 2017, to 94 percent for FFY 2018, to 93
percent for FFY 2019, and to 90 percent for FFY 2020 and
beyond. This federal matching rate only applies to the new
eligibility category established in this bill; expenditures
for Medi-Cal beneficiaries enrolled under current eligibility
categories are matched at the state's normal rate of 50
percent.
3.Federal waiver and early implementation of federal Medicaid
coverage expansion. AB 342 (John A. P�rez), Chapter 723,
Statutes of 2010, and SB 208 (Steinberg), Chapter 714,
Statutes of 2010, were a two-bill package that implements a
new federal demonstration project entitled California's
"Bridge to Reform." AB 342 authorizes the LIHPs (originally
called Coverage Expansion and Enrollment Demonstration) that
built upon the Health Care Coverage Initiatives (HCCIs)
established under the 2005 demonstration project. AB 342
extends the 10 "legacy" HCCIs funded under the 2005
demonstration project, and authorized the expansion of the
HCCIs statewide using an early implementation option created
by the ACA. The ACA requires states, by January 1, 2014, to
cover adults under age 65 and with family incomes up to 138
percent of the FPL (at or below $15,414 in 2012) in their
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Medicaid program. Under the ACA, states have the option of
drawing down federal funds for early implementation of this
provision.
4.Background on LIHPs. LIHPs are established at county option,
and services provided through LIHPs are not an entitlement.
The state match used to draw down federal Medicaid funds for
LIHPs comes from local entity funds. Existing law prohibits
state GF moneys from being used to fund LIHP services or any
related administrative costs incurred by counties. LIHPs are
authorized to cover two populations:
� The Medicaid Coverage Expansion (MCE) population,
consisting of low-income individuals 19 to 64 years of age,
who are not pregnant, with family incomes at or below 133
percent of the FPL (at or below $14,856 for an individual
in 2012), who are not eligible for the Medi-Cal program or
the Healthy Families Program, have satisfactory immigration
status, and meet county of residence requirements.
� The HCCI population, consisting of low-income
individuals 19 to 64 years of age, who are not pregnant,
with family incomes above 133 percent through 200 percent
of the FPL (between $14,856 and $22,340 for an individual
in 2012), who are not eligible for the Medicare Program,
the Medi-Cal program, the Healthy Families Program, or
other third-party coverage, have satisfactory immigration
status, and meet county of residence requirements.
The federal STCs governing the demonstration project limit the
operation of the LIHPs to December 31, 2013. The STCs require
California to prepare and revise a transition plan for
individuals enrolled in the LIHPs, including details on how
California plans to coordinate the transition of these
individuals to a coverage option available under the ACA
without interruption in coverage to the maximum extent
possible. As of January 2012, LIHP enrollment was 321,825
individuals.
1.AB 1296 stakeholder process. AB 1296 (Bonilla), Chapter 641,
Statutes of 2011, enacted the Health Care Reform Eligibility,
Enrollment, and Retention Planning Act, which requires CHHSA,
in consultation with DHCS, and other state entities and other
stakeholders, to plan and develop standardized single,
accessible application forms and related renewal procedures
for state health subsidy programs. A report must be provided
to the Legislature by July 1, 2012, on the policy and
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statutory changes needed to develop and implement the proposed
system for health coverage. CHHSA and DHCS, in collaboration
with the California Health Benefits Exchange, the Managed Risk
Medical Insurance Board, legislative staff, the Western Center
on Law & Poverty, and the California Welfare Directors
Association, have organized the AB 1296 Health Care and
Eligibility Expansion Stakeholder Meetings to consult key
stakeholders on policy and other issues central to
eligibility, enrollment and retention in subsidized health
coverage programs. These activities are intended to inform the
implementation of the provisions of the ACA in California
related to the Medi-Cal program. The state has a number of
policy choices to make prior to implementation of the ACA,
such as what the benefit package should be for individuals
newly eligible for Medi-Cal, what methodology to use for
determining federal matching funds for the newly eligible, the
household composition for Medi-Cal eligibility purposes, and
whether to cover individuals in Medicaid with incomes above
138 percent of the FPL. The Administration has indicated it
will have draft statutory language at the end of June 2012 on
a number of Medicaid ACA-related provisions. This bill and SB
677 (Hernandez) will likely be substantially amended to
incorporate additional Medicaid ACA-related provisions.
2.Related legislation. SB 677 would prohibit DHCS from applying
an assets or resources test for purposes of determining
eligibility for Medi-Cal, except for certain populations. SB
677 would also require DHCS to use the MAGI of an individual,
or the household income of a family, if applicable, for the
purposes of determining income eligibility for Medi-Cal,
except for certain populations. The provisions of SB 677 bill
would be implemented to the extent required by federal law,
and would become operative on January 1, 2014. SB 677 is
scheduled for hearing in the Assembly Health Committee on June
26, 2012.
SB 1487 (Hernandez) required DHCS to extend Medi-Cal
eligibility to youth who were formerly in foster care and who
are under 26 years of age, subject to federal financial
participation being available and to the extent required by
federal law. SB 1487 also made legislative findings and
declarations regarding the ACA, and stated legislative intent
to ensure full implementation of the ACA and to enact into
state law any provision of the ACA that may be struck down by
the United States Supreme Court. SB 1487 was held on the
Senate Appropriations Committee suspense file.
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3.Prior legislation. AB 1296, the Health Care Eligibility,
Enrollment, and Retention Act, requires CHHSA, in consultation
with other state departments and stakeholders, to undertake a
planning process to develop plans and procedures regarding
these provisions relating to enrollment in state health
programs and federal law. AB 1296 also requires that an
individual would have the option to apply for state health
programs through a variety of means.
4.Support. The Western Center on Law and Poverty (WCLP) writes
in support of this bill to expand Medi-Cal to "childless
adults" under the ACA and to transition adults from the
county-based LIHPs to Medi-Cal without requiring LIHP
enrollees to submit information they have already provided or
that the county possesses. WCLP argues Californians have much
to gain from this expansion which will make an estimated three
million more people eligible for Medi-Cal. WCLP states the
childless adult population is largely uninsured today, and
Medi-Cal will provide more comprehensive, stable coverage with
statewide standards and provider networks. Additionally, WCLP
supports the requirement in this bill for a process to
transition childless adults from the LIHP as early as July
2013, and with an estimated 500,000 people estimated to be
enrolled in the LIHPs by 2013, the state cannot wait until the
last minute to take the steps to transition them into
Medi-Cal. Consumers moving from LIHP to Medi-Cal in counties
with more than one Medi-Cal managed care plan should have a
choice of what plan to enroll into. For those who do not
choose a plan on their own we support matching them up with
the Medi-Cal plan that would allow them to stay with their
LIHP medical home if possible. WCLP concludes that low-income
Californians, our state's health care economy, and counties
will all benefit from the Medi-Cal expansion.
5.Opposition. The Department of Finance wrote in opposition last
year that this bill is premature because federal guidance on
eligibility expansion requirements is pending, and any
expansion activities implemented before the final federal
guidance is released puts the state at risk of implementing
activities not required by the federal government.
SUPPORT AND OPPOSITION :
Support: American Federation of State, County and Municipal
Employees, AFL-CIO
California Alliance for Retired Americans
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California Chiropractic Association
California Commission on Aging
California Communities United Institute
California Mental Health Directors Association
California Primary Care Association
California State Association of Counties
Congress of California Seniors
Council of Community Clinics
County Health Executives Association of California
County Welfare Directors Association
Health Access California
Laborers' Locals 777 & 792
National Alliance on Mental Illness California
National Association of Social Workers
Planned Parenthood Affiliates of California
Santa Clara County Board of Supervisors
Western Center on Law and Poverty
Oppose: Department of Finance
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