BILL ANALYSIS �
AB 151
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Date of Hearing: May 4, 2011
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 151 (Monning) - As Introduced: January 18, 2011
Policy Committee: HealthVote:14-4
Urgency: No State Mandated Local Program:
Yes Reimbursable: No
SUMMARY
This bill expands an individual's ability to purchase Medicare
supplemental health coverage (Medigap) plans. Specifically,
this bill:
1)Adds premium increases to the list of circumstances qualifying
individuals to leave Medicare Advantage (MA) plans and seek
guaranteed issuance of Medigap coverage from the same issuer.
2)Allows individuals currently enrolled in MA plans guaranteed
issuance of Medigap plans from any provider, if the individual
has a circumstance that would otherwise qualify them for
guaranteed issuance of Medigap coverage but the company
providing the MA plan does not also issue Medigap plans.
3)Makes technical, clarifying changes to conform state law to
federal Medicare law with respect to the types of Medigap
plans available for purchase.
FISCAL EFFECT
Minor, absorbable costs to the Department of Insurance and
Department of Managed Health Care to continue oversight of MA
and Medigap plans.
COMMENTS
1)Rationale . According to the author, seniors enrolled in
Medicare Advantage (MA) plans will likely face reduced
benefits or increased cost-sharing beginning in 2012 because
of a planned reduction in the federal subsidy paid to these
plans. The author states that seniors faced with this
AB 151
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situation, who would like to leave the MA plan to enroll in
traditional, fee-for-service Medicare program and purchase a
Medicare supplemental plan to cover gaps in the coverage
(Medigap plan), will not be able to, absent the protections in
this bill.
2)Background . Medicare Advantage plans are HMO-style Medicare
plans that combine Medicare Part A (hospital services), Part B
(physician services), and a range of other services, including
in some cases Part D (prescription drug) coverage. Individuals
currently have the option to enroll in these plans at annual
open enrollment. Partially because of federal subsidies to
these plans, they are often able to offer richer benefits or
lower cost-sharing than traditional Medicare.
Traditional Medicare covers 80% of hospital and physician
services. Individuals and employers often purchase Medigap
plans to supplement the coverage offered by Medicare. In
California, the Department of Managed Health Care currently
licenses and conducts financial oversight of MA plans, while
the Department of Insurance regulates Medigap policies.
3)Policy Context . Insurance companies can deny an individual
access to a Medigap plans based on health status, whereas
individuals can enroll in a MA plan any time at open
enrollment. This increases the significance of expanding
guaranteed issuance of coverage for Medigap plans, as they are
often underwritten and there are presently only limited
circumstances under which individuals are guaranteed issuance.
Because the Medigap plans have broader provider networks and
the premiums are significantly more expensive than that of MA
plans, the Association of California Life and Health Insurance
Companies (ACLHIC) has voiced concerns that individuals who
need significant medical procedures may seek to jump from an
MA plan to a Medigap policy for their procedure, and then
return to the cheaper MA plan, shifting significant risk onto
the Medigap plans without corresponding revenue.
Analysis Prepared by : Lisa Murawski / APPR. / (916) 319-2081