BILL ANALYSIS Ó
AB 185
Page 1
Date of Hearing: April 5, 2011
ASSEMBLY COMMITTEE ON HEALTH
William W. Monning, Chair
AB 185 (Roger Hernández) - As Introduced: January 25, 2011
SUBJECT : Maternity services.
SUMMARY : Requires every individual or group health insurance
policy, as specified, to cover maternity services, as defined.
Specifically, this bill :
1)Requires a health insurer with respect to a pending or
approved individual or group health insurance policy form on
file with the California Department of Insurance (CDI) as of
January 1, 2012 to submit to CDI, on or before March 1, 2012,
a revised policy form that provides coverage for maternity
services.
2)Requires that the corresponding policy issued, amended, or
renewed on or after 30 days following CDI's approval of the
revised form to include coverage for maternity services.
3)Defines "maternity services" to include prenatal care,
ambulatory care maternity services, involuntary complications
of pregnancy, neonatal care, and inpatient hospital maternity
care, including labor and delivery and postpartum care.
4)Exempts from the provisions of this bill specialized health
insurance, Medicare supplement insurance, short-term limited
duration health insurance, Civilian Health and Medical Program
of the Uniformed Services (CHAMPUS)-supplement insurance, or
TRI-CARE supplemental insurance, or hospital indemnity,
accident-only, or specified disease insurance.
5)Makes the following findings and declarations:
a) Health care service plans (health plans) are required by
the Knox-Keene Health Care Service Plan Act of 1975
(Knox-Keene) to provide maternity services as a basic
health care benefit;
b) Existing law does not require health insurers to provide
designated basic health care services and, therefore, they
are not required to provide coverage for maternity
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services; and,
c) It is essential to clarify that all health coverage made
available to California consumers, whether issued by health
plans regulated by the Department of Managed Health Care
(DMHC) or disability insurers who sell health insurance
(health insurers) regulated by CDI, must include maternity
services.
EXISTING FEDERAL LAW :
1)Requires employers, under the Federal Civil Rights Act, that
offer health insurance, and have 15 or more employees, to
cover maternity services benefits at the same level as other
health care benefits.
2)Defines, under the federal health reform law, the Patient
Protection and Affordable Care Act (PPACA), a list of
"essential health benefits package," including maternal and
newborn care, which health insurance coverage and group health
plans must provide, beginning in 2014.
EXISTING LAW :
1)Provides for the regulation of health plans by DMHC under
Knox-Keene and for the regulation of health insurers by CDI
under the Insurance Code.
2)Requires health plans under Knox-Keene to cover a number of
basic health care services and permits DMHC to define the
scope of the services and to exempt plans from the requirement
for good cause.
3)Provides, under Knox-Keene, that "basic health care services"
include: a) physician services, including consultation and
referral; b) hospital inpatient services and ambulatory care
services; c) diagnostic laboratory and diagnostic and
therapeutic radiological services; d) home health services; e)
preventive health services; f) emergency health care services,
including ambulance and ambulance transport services and
out-of-area coverage; and, g) hospice care.
4)Requires, under Knox-Keene, health plans to provide all
medically necessary basic health care services, including
maternity services necessary to prevent serious deterioration
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of the health of the enrollee or the enrollee's fetus, and
preventive health care services, specifically including
prenatal care.
5)Prohibits health plans and health insurers from issuing
contracts and policies that contain a copayment or deductible
for inpatient hospital or ambulatory care maternity services
that exceed the most common amount charged for the same type
of care and services provided for other covered medical
conditions.
6)Prohibits health plans and health insurers providing maternity
benefits for a person covered continuously from conception
from attaching any exclusions, reductions, or limitations to
coverage for involuntary complications of pregnancy unless
those provisions apply to all of the benefits paid by the plan
or insurer.
FISCAL EFFECT : This bill has not yet been heard by a fiscal
committee.
COMMENTS :
1)PURPOSE OF THIS BILL . According to the author, preterm birth
is the leading cause of newborn deaths in the United States
(U.S.). The author cites the Centers for Disease Control and
Prevention which stated in 2008 that, 10.5% of all child
births in California were preterm births. Moreover, 11% or
57,770 of all preterm child births in the U.S. were in
California. In addition to a high preterm birth rate,
California has the highest number of all babies born with
low-birth weight; 37,598 out of 347,209 births. The author
argues that these birth complications are exacerbated by the
lack of proper prenatal and postnatal care for expecting
mothers. The author maintains that low income minority
communities are especially impacted by the lack of maternity
care making this a significant pregnancy-related health
disparity.
The author argues that health plans under the Knox-Keene are
required to cover "basic health care services," including
maternity services, while insurers in the individual insurance
markets exclude maternity care within their basic plan
benefits. According to the author, this bill would ensure
fair and affordable access to quality maternity coverage in
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all health insurance policies.
2)BACKGROUND . Numerous studies have shown that prenatal care
pays for itself by helping to minimize the prevalence and
severity of low- and very low-birth weight babies. A 2004
study in the Journal of Perinatal and Neonatal Nursing
evaluated the effects of augmented prenatal care on women at
high risk for having a low-birth weight baby who were enrolled
in a special program that provided basic prenatal care,
prenatal education, and case management. The program saved
about $13,962 per single low-birth weight birth prevented,
and, after program costs were considered, the return on
investment equaled 37%; for every dollar invested in the
program $1.37 was saved. In addition, a March of Dimes report
indicated that hospital charges for premature, low-birth
weight infants totaled $37.7 billion nationally in 2003. The
report stated that premature birth was among the most common,
serious, and costly problems facing infants in the U.S. and is
responsible for about half of all infant hospitalizations.
3)CALIFORNIA HEALTH BENEFITS REVIEW PROGRAM . AB 1996 (Thomson),
Chapter 795, Statutes of 2002, requests the University of
California to assess legislation proposing a mandated benefit
or service, and prepare a written analysis with relevant data
on the medical, economic, and public health impacts of the
proposed health plan and health insurance benefit mandate
legislation. The California Health Benefits Review Program
(CHBRP) was created in response to AB 1996 and extended for
four additional years in SB 1704 (Kuehl), Chapter 684,
Statutes of 2006. Following are some of the findings of
CHBRP's analysis of this bill:
a) Medical Effectiveness . According to CHBRP, studies of
the impact of the number of prenatal care visits that
pregnant women receive have consistently found no
correlation between the number of prenatal visits and birth
outcomes for either infants or mothers. However, there is
clear and convincing evidence that specific services
provided during, or in conjunction with, prenatal care
visits are effective. These services include smoking
cessation counseling, blood pressure monitoring, screening
for various genetic and sexually-transmitted diseases, and
diagnostic ultrasounds.
b) Utilization, Cost, and Coverage Impacts . This bill
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requires the entire CDI-regulated market to cover maternity
services. Since all group policies are required to, and in
practice, currently cover maternity services, this bill
would impact only those enrollees in individual
CDI-regulated policies. According to CHBRP, most
Californians enrolled in CDI-regulated policies (59%) have
coverage for prenatal care and maternity services. In the
individual insurance market, about 1,184,000 enrollees
currently lack maternity benefits, including 246,000 women
between the childbearing ages of 19 and 44. CHBRP
estimates that approximately 8,574 pregnancies would be
newly-covered under CDI insurance policies as a result of
this bill. Overall, the mandate in this bill is estimated
to have no impact on the number of deliveries since the
birth rate is not expected to change as a result of this
bill. CHBRP concludes that most women are likely to
continue to face large out-of-pocket costs for maternity
services regardless of whether or not their insurance
policy includes maternity benefits and attributes this to
almost 76% of the women in CDI-regulated policies currently
being in high deductible health plans (HDHPs). According
to CHBRP, prenatal care is usually subject to an HDHP
minimum annual deductible of $1,200 for individual plans
and $2,400 for family plans as reported by the federal
Internal Revenue Service. According to CHBRP, HDHPs
generally do not exempt maternity/prenatal services from
the high deductibles, so a high level of cost sharing is
required for maternity services. CHBRP further states that
even women currently enrolled in non-HDHPs frequently face
high cost-sharing requirements in the CDI-regulated
individual market, and some might also choose to switch to
HDHPs as a result of this bill in order to save on
premiums.
CHBRP estimates that total statewide health expenditures by
or for all enrollees in both DMHC and CDI-regulated
policies will increase by .02%, or about $22.2 million, as
a result of this bill. All of the cost impacts of this
bill would be concentrated in the individual CDI-regulated
insurance market, where total premium expenditures are
estimated to increase by .52% and premiums by 3.48%. Per
member per month premium expenditures are estimated to
increase by an average of $8.48. Most of the increase
would be concentrated among those aged 19-29. For the
majority of individuals in the CDI-regulated individual
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market who do not currently have maternity benefits, CHBRP
estimates that this bill would increase average premiums
from 2% to 28% depending on the age of the enrollee. CHBRP
also notes that in 2009, California passed AB 119 (Jones),
Chapter 365, Statutes of 2009, which prohibits insurers
from gender rating, or charging differential premiums based
on gender for contracts issued, amended, or renewed on or
before January 1, 2011. Therefore, CHBRP maintains that
the premium and cost calculations in their analysis assumes
all gender-rated policies would be converted to
gender-neutral pricing prior to the implementation of THIS
BILL. Additionally, among those in the CDI-regulated
individual market who currently have maternity benefits,
this bill is expected to decrease average premiums by .5%
to 23%.
c) Public Health Impact . CHBRP reports that it is unable
to estimate what the impact of this bill would be on the
utilization of prenatal care and concludes that the overall
public health impact most likely lies somewhere between a
lower bound estimate that would assume no increase in the
utilization of effective prenatal care services because
these pregnant women would probably still face high levels
of cost sharing found in the cheapest insurance plans and
an upper bound estimate that would assume an increase in
utilization and a corresponding improvement in health
outcomes if all 8,574 newly covered pregnancies would have
financial barriers to prenatal care removed.
According to CHBRP, women enrolled in plans in the individual
health insurance market without coverage for maternity
benefits are currently paying $121.5 million out of pocket
for non-covered maternity services. This bill would shift
these costs from women enrollees to increase premiums
across both men and women enrollees. Therefore, this bill,
CHBRP maintains would differentially reduce the out-of
pocket-costs for women enrollees.
Lastly, CHBRP reports that 10.1% of babies are born preterm
in California and there are 3,000 infant deaths each year.
According to CHBRP, it is estimated that each premature
birth costs society approximately an average of $51,600.
To the extent that this bill increases the utilization of
effective prenatal care that can reduce outcomes such as
preterm births and related infant mortality, CHBRP asserts,
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there is a potential to reduce morbidity and mortality and
the associated societal costs.
4)FEDERAL ESSENTIAL HEALTH BENEFITS . On March 30, 2010,
President Obama signed into law PPACA, which requires
qualified health plans to cover specified categories of
essential health benefits (EHBs), including maternity
services, by 2014. The federal Department of Health and Human
Services Secretary (DHHS) is tasked with defining these
benefit categories through regulation so that they mirror
those benefits offered by a "typical" employer plan.
Qualified plans are required to cover EHBs by 2014. Federal
guidance with respect to EHBs is expected later this year and
in 2012.
In a January 2011 issue brief by CHBRP focusing on the federal
requirement to cover EHBs, CHBRP notes that there is
considerable legal ambiguity over how state mandates requiring
the coverage of the treatment for a specific condition or
disease will interact with federal law. CHBRP states that
these mandates often extend across multiple benefit
categories. CHBRP cites, as an example, California's mandate
to cover breast cancer treatment, which implicitly requires
coverage for screening and testing, medically necessary
physician services, ambulatory services, prescription drugs,
hospitalization, and surgery. CHBRP writes that it is unclear
how California benefit mandates that overlap across several
EHB categories would be evaluated in relation to the EHB
package.
5)SUPPORT . The California National Organization for Women (CA
NOW) writes in support that California cannot continue to
allow insurance companies to refuse coverage for a condition
that impacts such a large segment of our population. CA NOW
argues the failure to treat maternity coverage as a standard
part of health care places serious impediments in the way of
mothers and fathers in beginning and expanding their families,
and penalizes women for the decision to become mothers.
According to Health Access, those most likely to buy
individual insurance without maternity coverage are precisely
those most likely to need it unexpectedly - persons in the
prime childbearing years of ages 25-39. As a society, Health
Access maintains, California has a vested interest in assuring
that all pregnant women receive timely prenatal care. Kaiser
Permanente (Kaiser) writes in support that health care costs
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are rising and we must find ways to keep health insurance
affordable. However, according to Kaiser, excluding maternity
coverage will not reduce overall health care costs. Such a
strategy merely shifts costs by segmenting the market. Kaiser
further argues that cost cutting solutions must be equitable
and that we cannot allow costs to be contained by carving out
specific medical conditions and shifting the cost for that
care onto the individuals impacted. Kaiser asserts that we
would not tolerate an insurance product sold to individuals
that excluded care for cancer or AIDS and we should not
tolerate insurance products that exclude maternity services.
6)OPPOSITION . The America's Health Insurance Plans (AHIP) write
in opposition that the 18 different health insurance mandates
placed before the California Legislature during the 2011
session threaten efforts to provide consumers with meaningful
health care choices and affordable coverage options. AHIP
argues that beginning in 2014, California will be able to
enroll in health coverage through a Health Benefits Exchange
with an essential benefits package currently being defined by
the federal DHHS. AHIP maintains that the cost of any
additional benefits required by state law beyond the essential
health benefits must be borne by the states. AHIP also
asserts that health insurance plans offer
competitively-priced, quality products to consumers by
striving to provide access to medical care that is both
medically necessary and adherent to evidence-based principles
of patient safety. AHIP warns when a state passes a benefit
mandate, the mandate remains static and often does not reflect
changes in the practice of medicine, new medical technology,
or other medical advances or knowledge that may make the
mandate obsolete - even harmful - to patients. AHIP argues
the adoption of benefit mandates that do not promote
evidence-based medicine may lead to lower quality of care,
over utilization, and high costs for possibly non-effective
treatments.
7)RELATED LEGISLATION . SB 155 (Evans) is nearly identical to
this bill. SB 155 has been referred to the Senate Health
Committee.
8)PRIOR LEGISLATION .
a) AB 119 (Jones), Chapter 365, Statutes of 2009, prohibits
gender discrimination in individual health insurance and
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health plan rates.
b) AB 1825 (De La Torre) of 2010, AB 98 (De La Torre) of
2009, AB 1962 (De La Torre) of 2008, and SB 1555 (Speier)
of 2004 were all nearly identical to this bill. These four
bills were vetoed by the Governor. In his veto messages,
Governor Schwarzenegger acknowledged that the bills present
a difficult choice between protecting access to affordable
health insurance when costs continue to rise for employers
and individuals, or mandating that every person who pays
for their own health insurance must buy maternity services.
The Governor stated that he must continue to veto
one-sided mandates that only increase costs to the overall
health care system.
c) SB 897 (Speier) of 2003 contained similar provisions to
SB 1555 and was reviewed by CHBRP, but was not heard in any
committee.
d) SB 1411 (Speier), Chapter 880, Statutes of 2002,
prohibits health plans and health insurers from charging a
higher copayment for maternity services than for other
medical services.
9)POLICY COMMENT . This bill is one of several health mandates
introduced for legislative consideration this year. The
author may wish to address the extent to which the need for
this bill and others similar to it are premature, given that
federal regulations to define the parameters of the EHB
package have yet to be promulgated.
REGISTERED SUPPORT / OPPOSITION :
Support
American Congress of Obstetricians and Gynecologists District IX
California
American Federation of State, County and Municipal Employees
Blue Shield of California
California Communities United
California Immigrant Policy Center
California Medical Association
California National Organization for Women
California School Employees Association
Health Access
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Kaiser Permanente
March of Dimes
NARAL Pro-Choice California
Opposition
America's Health Insurance Plans
California Chamber of Commerce
Analysis Prepared by : Tanya Robinson-Taylor / HEALTH / (916)
319-2097