BILL ANALYSIS �
AB 151
Page 1
ASSEMBLY THIRD READING
AB 151 (Monning)
As Introduced January 18, 2011
Majority vote
HEALTH 14-4 APPROPRIATIONS 12-5
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|Ayes:|Monning, Ammiano, Atkins, |Ayes:|Fuentes, Blumenfield, |
| |Bonilla, Eng, Gordon, | |Bradford, Charles |
| |Hayashi, | |Calderon, Campos, Davis, |
| |Roger Hern�ndez, Bonnie | |Gatto, Hall, Hill, Lara, |
| |Lowenthal, Mitchell, | |Mitchell, Solorio |
| |Nestande, Pan, | | |
| |V. Manuel P�rez, Williams | | |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Logue, Garrick, Mansoor, |Nays:|Harkey, Donnelly, |
| |Smyth | |Nielsen, Norby, Wagner |
| | | | |
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SUMMARY : Allows an individual enrolled in a Medicare Advantage
(MA) plan who drops MA coverage because there is an increase in
his or her premium to enroll in Medicare supplement coverage by
the same issuer of the MA plan. If the MA plan issuer, as
specified, does not offer Medicare supplement coverage allows
the individual to enroll in Medicare supplement coverage from
any issuer under specified circumstances. Specifically, this
bill :
1)Requires guaranteed issue to an individual enrolled in a MA
plan for Medicare supplement coverage by the same issuer of
the MA plan if there is an increase in his/her premium.
2)Requires guaranteed issue to an individual enrolled in a MA
plan for supplement coverage from any issuer if his/her MA
plan issuer, a subsidiary of the parent company of the issuer,
or a network that contracts with the parent company of the
issuer does not offer supplement plans and any of the
following occur:
a) A reduction in benefits;
b) An increase in cost sharing;
AB 151
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c) An increase in premiums; or,
d) A discontinuation of its relationship or contract under
the plan with a provider currently furnishing services to
the individual for other than good cause relating to
quality of care.
3)Revises existing law to recognize two new Medicare supplement
plans (Plans M and N) and deletes obsolete references to
Medicare supplement plans (Plans H, I, and J) in existing law,
and makes other technical, clarifying changes.
EXISTING LAW :
1)Provides for the regulation of health plans by the Department
of Managed Health Care (DMHC) under the Knox-Keene Health Care
Service Plan Act of 1975, and for the regulation of health
insurers by the California Department of Insurance (CDI) under
provisions of the Insurance Code.
2)Requires guaranteed issue to an individual enrolled in a MA
plan that reduces any of its benefits, or increases cost
sharing, or terminates certain relationships with providers,
for Medicare supplement coverage that is issued by the same
issuer of his or her MA plan or by a subsidiary of, or a
network that contracts with, the parent company of that
issuer.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, minor, absorbable costs to DMHC and CDI to continue
oversight of MA and Medigap plans.
COMMENTS : According to the author, the recent federal Patient
Protection and Affordable Care Act (PPACA), among other things,
will begin to reduce the subsidy paid to Medicare Advantage
plans in 2012 and use the savings to close the prescription drug
coverage gap, provide additional Medicare preventive services,
and implement other improvements. MA plans have been paid about
13% more than the amount paid for coverage in Original Medicare,
a subsidy that will be reduced under a complex formula. This
subsidy has enabled Medicare Advantage plans in different
geographic areas to provide coverage or benefits that would not
have been possible without the subsidy. The author states that
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in some cases this has meant plans offer coverage in higher
costs areas that they would otherwise have shunned. In other
cases, this has meant that plans offered additional benefits
that would not otherwise have been offered. The new formula
will provide less total subsidy to these Medicare Advantage
plans, but will provide additional payments to high performing
plans. The author states that this bill will ensure that all
Medicare recipients in a Medicare Advantage plan facing
increased costs or reduced benefits have the option to enroll in
Original Medicare and purchase a Medigap plan to help cover the
costs of coinsurance, copayments, and deductibles.
Proponents (American Association of Retired Persons (AARP), the
sponsor of this bill, California Health Advocates, American
Federation of State, County and Municipal Employees (AFSCME),
Health Access California, Congress of California Seniors and
others) support this bill because it ensures Medicare enrollees
have the option to switch to plans that are the most affordable
and meet their needs. Opponents (America's Health Insurance
Plans, Association of California Live and Health Insurance
Companies (ACLHIC), and the California Association of Health
Plans) fear that enrollees will game the system and switch in
order to utilize medical services in a broader provider/facility
network. ACLHIC states that shifting risk to Medicare
supplement policies will lead to higher premiums for these
products, and make them a less affordable option for those who
choose to supplement their Medicare coverage through an
insurance plan rather than enroll in a MA plan.
Analysis Prepared by : Teri Boughton / HEALTH / (916) 319-2097
FN: 0000520