BILL ANALYSIS �
AB 589
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Date of Hearing: May 4, 2011
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 589 (Perea) - As Amended: April 11, 2011
Policy Committee: Business and
Professions Vote: 6-3
Urgency: No State Mandated Local Program:
No Reimbursable: No
SUMMARY
This bill establishes the Steven M. Thompson Medical School
Scholarship Program and, beginning January 1, 2014, redirects
funding currently earmarked for the Major Risk Medical Insurance
Program to the newly established scholarship program.
Specifically, this bill:
1)Creates the Steven M. Thompson Medical School Scholarship
Program within the Office of Statewide Health Planning and
Development (OSHPD).
2)Establishes guidelines to evaluate scholarship applicants,
giving preference to applicants with ability to speak a
Medi-Cal threshold language, who come from a economically
disadvantaged background, who specialize in primary care,
and/or who would practice in a medically underserved area.
3)Provides that up to $105,000 in loans per scholarship shall be
made available to applicants who agree to serve for three
years in a medically underserved area (MUA).
4)Authorizes OSHPD to recover scholarship payments made to an
applicant who does not meet the minimum three years of
service.
5)Ends the transfer of funding over the first $1,000,000
annually from the Managed Care Administrative Fines and
Penalties Fund to the Major Risk Medical Insurance Fund
effective January 1, 2014, and instead begins the transfer of
those funds to the scholarship program on that date.
AB 589
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FISCAL EFFECT
Annual SF/GF costs in the range of low millions to several
million dollars annually, depending upon the amount of penalty
revenue that would be transferred to the program.
If this penalty revenue is not allocated to the scholarship
program pursuant to this bill, it could instead be redirected to
offset GF costs for other programs.
COMMENTS
1)Rationale . According to the author, this bill intends to
address the problems of physician workforce shortages in
medically underserved areas by providing financial assistance
to scholarship applicants who agree to work in medically
underserved areas. In addition, the author states that the
cost of a medical education is increasingly a barrier to entry
for students from economically disadvantaged backgrounds.
2)Managed Care Administrative Fines and Penalties Fund. This
penalty fund receives revenues from penalties assessed on
health care service plans for violation of the Knox-Keene Act.
Currently, the first million collected annually is
transferred to the Medically Underserved Account for
Physicians within the Health Professionals Education Fund and
is, upon appropriation by the Legislature, used for the Steven
J. Thompson Physician Corps Loan Repayment Program. Moneys
over the first million are transferred to the Major Risk
Medical Insurance Fund, which is used to fund the Major Risk
Medical Insurance Program (MRMIP), the state's high-risk pool
program for individuals who have been denied coverage on the
individual market. Penalty revenues are unpredictable and
depend on administrative actions taken against health plans.
Approximately $3.5 million in penalty revenue is projected to
be transferred to MRMIP in 2011-12.
3)Federal Health Care Reform Implementation . The federal Patient
Protection and Affordable Care Act (ACA) contains a variety of
far-reaching provisions that will significantly change the
health care market in California. The California Health and
Human Services Agency has identified both significant state
costs and cost savings associated with the implementation of
federal health care reform. An expansion of eligibility in
Medi-Cal and federal subsidies to purchase coverage in new
AB 589
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health insurance exchanges will reduce the demand for health
care coverage through other existing programs such as MRMIP.
Some programs, including MRMIP, may not be necessary to
maintain, while other programs such as Medi-Cal are expected
to experience significantly increased costs.
Many of the most significant changes are effective January 1,
2014, including the individual mandate to have insurance,
guaranteed issuance of health care coverage, and the
availability of coverage through a new health insurance
exchange. Because issuance of insurance coverage is
guaranteed beginning in 2014, persons receiving coverage
through MRMIP should be able to purchase coverage on the open
market at that time.
4)Related Legislation . SB 1379 (Ducheny), Chapter 607, Statutes
of 2008 created the Managed Care Administrative Fines and
Penalties Fund and provided the distribution of funding to the
Medically Underserved Account for Physicians and the Major
Risk Medical Insurance Fund.
AB 920 (Aghazarian) Chapter 317, Statutes of 2005, transferred
administration of the Loan Repayment Program from the Medical
Board of California (MBC) to the Foundation.
AB 982 (Firebaugh) Chapter 1131, Statutes of 2002, established
the California Physician Corps Loan Repayment Program, which
awards loan repayments of up to $105,000 to physicians willing
to practice in MUAs, within the MBC.
Analysis Prepared by : Lisa Murawski / APPR. / (916) 319-2081