BILL ANALYSIS �
SENATE HEALTH
COMMITTEE ANALYSIS
Senator Ed Hernandez, O.D., Chair
BILL NO: AB 714
A
AUTHOR: Atkins
B
AMENDED: June 23, 2011
HEARING DATE: June 29, 2011
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REFERRAL: Judiciary
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CONSULTANT:
4
Bain
SUBJECT
Health care coverage: California Health Benefit Exchange
SUMMARY
Establishes health care eligibility notification
requirements for individuals who are enrolled in, or who
cease to be enrolled in, publicly funded state health care
programs. Requires an application for coverage to be made
on their behalf through the California Health Benefits
Exchange (Exchange), and allows individuals to decline
health care coverage in a manner to be prescribed by the
Exchange.
CHANGES TO EXISTING LAW
Existing federal law:
Requires, under the federal Patient Protection and
Affordable Care Act (PPACA) (Public Law 111-148), as
amended by the Health Care Education and Reconciliation Act
of 2010 (Public Law 111-152), each state, by January 1,
2014, to establish an American Health Benefit Exchange
(Exchange) that makes qualified health plans available to
qualified individuals and qualified employers. If a state
does not establish an Exchange, the federal government
Continued---
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administers the Exchange. Federal law establishes
requirements for the Exchange, for health plans
participating in the Exchange, and defines who is eligible
to receive coverage in the Exchange. Among other duties,
the Exchange is required to inform individuals of
eligibility requirements for the Medicaid program (Medi-Cal
in California), the Children's Health Insurance Program
(the Healthy Families Program, or HFP, in California), or
any applicable state or local public program. The Exchange
is required if, through screening of the application, the
Exchange determines that such individuals are eligible for
any such program, to enroll such individuals in such
program.
Allows through PPACA, effective January 1, 2014, eligible
individual taxpayers whose household income equals or
exceeds 100 percent, but does not exceed 400 percent of the
federal poverty level (FPL), an advanceable and refundable
tax credit for a percentage of the cost of premiums for
coverage under a qualified health plan offered in the
Exchange. PPACA also requires a reduction in cost-sharing
for individuals with incomes below 250 percent of the FPL,
and a lower maximum limit on out-of-pocket expenses for
individuals whose incomes are between 100 percent and 400
percent of the FPL. Legal immigrants with household
incomes less than 100 percent of the FPL who are ineligible
for Medicaid because of their immigration status are also
eligible for the premium tax credit and the cost-sharing
reductions.
Requires, through PPACA, numerous changes to Medicaid,
including expanding eligibility to adults without minor
children with incomes equal to or less than 133 percent of
the FPL, disregarding (or not counting) an additional five
percent in income (making the Medicaid income eligibility
effectively 138 percent of the FPL), eliminating the asset
test and switching to a new method for calculating income
known as modified adjusted gross income (MAGI) for certain
populations.
Requires, through PPACA, each individual (with specified
exceptions), and any dependent of the individual, to
maintain minimum essential coverage, provides exemptions
from the individual mandate (such as for affordability,
hardship, and for individuals with incomes below the income
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tax filing threshold), and establishes penalties for
violations.
Existing state law:
Establishes several programs which provide limited health
care services to eligible individuals, including the
following:
� AIDS Drug Assistance Program (ADAP)
� Ryan White HIV/AIDS Programs
� Breast and Cervical Cancer Treatment Program (BCCTP) and
Breast Cancer Control Program
� Family Planning, Access, Care, and Treatment (Family
PACT)
Provides comprehensive health care coverage to eligible
individuals under the following programs:
� HFP
� Access for Infants and Mothers Program (AIM)
� Major Risk Medical Insurance Program (MRMIP)
� Federal Temporary High Risk Pool
Provides for the regulation and licensure of hospital
facilities by the Department of Public Health (DPH).
Establishes the California Health Benefits Exchange
(Exchange) in state government, and specifies the duties
and authority of the Exchange. Requires the Exchange be
governed by a board that includes the Secretary of the
Health and Human Services Agency and four members with
specified expertise who are appointed by the Governor and
the Legislature.
Requires, if a hospital bills a patient who has not
provided proof of coverage by a third party at the time the
care is provided or upon discharge, the hospital to provide
the patient as part of that billing with a clear and
conspicuous notice that includes specified information,
including a statement of charges for services rendered by
the hospital.
This bill:
Requires the Department of Health Care Services (DHCS), the
Managed Risk Medical Insurance Board (MRMIB), and DPH to
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provide a notice in materials otherwise provided to
individuals enrolled in the health care coverage programs
listed below (or individuals who previously were enrolled
in those programs) that they may be eligible for
reduced-cost coverage through the Exchange, and for no-cost
coverage through Medi-Cal, if the individual has low
income. This notice requirement would be in effect from
January 1, 2013 to June 30, 2013. The programs include:
� ADAP
� Ryan White HIV/AIDS Programs
� BCCTP and Breast Cancer Control Program
� Family PACT
� HFP
� AIM, for women who cease to be enrolled
� MRMIP, for individuals who cease to be enrolled
� Federal Temporary High Risk Pool, for individuals who
cease to be enrolled.
� Full-scope Medi-Cal for which there is federal financial
participation, for individuals who cease to be enrolled.
Requires, effective July 1, 2013, DHCS, MRMIB and DPH (for
the programs listed above) to provide an additional notice
in the materials they otherwise provide that an application
for coverage through the Exchange is being made for the
individual, that coverage will not begin until January 1,
2014, and that the individual is not required to accept
coverage from the Exchange. The notice would also notify
the individual that if he or she made significantly less or
more this year than he or she made last year, he or she
should report the change to the Exchange, so that charges
are based on their current income, and that if the
individual's income is too low, that he or she may qualify
for no-cost coverage through Medi-Cal.
Requires DHCS, MRMIB and DPH to seek approval from the
federal Department of Health and Human Services to transfer
the minimum information necessary to initiate an
application for enrollment in the Exchange. Requires,
effective January 1, 2013, DHCS, MRMIB and DPH to provide
to the Exchange the name, most recent address, clinical
information, recent providers, other information that is in
the possession of the program, and any other information
that the Exchange may require, in a manner to be prescribed
by the Exchange that is strictly necessary to determine
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eligibility, complete enrollment and maximize continuity of
care. Requires the information to be kept confidential in
a manner consistent with a specified provision of PPACA.
Requires the provision of this information to the Exchange
to initiate an application for enrollment in coverage.
Requires an individual to have the opportunity to decline
health care coverage in a manner prescribed by the
Exchange.
Requires a separate notice to individuals enrolled in HFP
aimed at informing the parents of HFP-enrolled individuals
that, if they have health coverage costs that exceed 10
percent of their household income, they may be eligible for
reduced-cost coverage through the Exchange.
Requires hospitals, as part of the existing notice provided
to patients who have not provided proof of coverage by a
third-party at the time the care is provided or upon
discharge, to also include information about the
availability of coverage through the Exchange, and that
Exchange coverage will be available effective January 1,
2014. Requires an application for coverage through the
Exchange to be furnished, in addition to the existing
requirement that a Medi-Cal and HFP application be
furnished. These requirements would take effect January 1,
2013.
FISCAL IMPACT
According to the Assembly Appropriations Committee
analysis:
1)Minor, absorbable costs to include a notification about
coverage availability in the Exchange. Some costs could
likely be offset by federal funding for outreach through
HFP, Medi-Cal, or the Pre-Existing Condition Insurance
Plan (PCIP) program.
2)Potential significant state screening and enrollment
costs to the Exchange and/or Medi-Cal that would
otherwise not occur, in the range of millions to tens of
millions of dollars.
3)Unknown, potentially significant state information
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technology costs to transfer data from several different
enrollment systems to the Exchange.
4)Potentially significant state savings to the extent that
this bill speeds the transition of individuals from
General Fund (GF)-funded services to the Exchange, or to
new eligibility categories of Medi-Cal covered 100
percent by federal funds.
5)Potentially significant state Medi-Cal costs (50 percent
GF) if individuals are found to be eligible for Medi-Cal
under existing eligibility rules, to the extent that this
bill causes more individuals to become enrolled in
Medi-Cal more quickly than would otherwise occur.
6)Federal funding is available for Exchange-related
activities through federal Exchange implementation
grants. Subject to federal approval, some of the
activities mandated in this bill may be eligible for
funding through these grants.
7)Reduced cost pressure to counties to fund otherwise
uncompensated care, to the extent this bill results in
more individuals enrolled more quickly into comprehensive
health care coverage.
BACKGROUND AND DISCUSSION
According to the author, this bill would "pre-enroll" in
Exchange coverage or Medi-Cal those Californians who fall
into three groups: (1) have some linkage to an existing
public program that has limited benefits such as Family
PACT as well as AIM, breast, cervical, and prostate cancer
programs, and the high risk pools; (2) are about to "age
out" of a public program such as Medi-Cal or HFP; or (3)
receive discounted care or charity care from a hospital.
The author states that in order to accelerate enrollment of
those likely to be eligible for Exchange coverage or
Medi-Cal in 2014, this bill contains the following
provisions. First, in 2012 and 2013, those likely to be
eligible are given notice of the availability of low-cost
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or no-cost coverage through the Exchange or Medi-Cal,
effective in 2014. Second, in 2013, those already enrolled
in existing public programs with limited benefits, or
covered by Medi-Cal or HFP but about to lose coverage, will
be pre-screened and pre-enrolled in coverage through the
Exchange or Medi-Cal.
Federal health care reform and the Exchange
Federal health care reform makes numerous changes to reduce
the number of uninsured Americans. In Medicaid (Medi-Cal
in California), PPACA expands eligibility to adults without
minor children with incomes equal to or less than 133
percent of the FPL, disregards (or not counting) an
additional five percent in income (making Medicaid income
eligibility effectively 138 percent of the FPL), and
eliminates the asset test and switching to MAGI for certain
populations. To make coverage more affordable for
individuals with incomes above Medicaid income levels,
premium tax credits and cost-sharing reductions are
available to individuals with incomes below specified
levels who are purchasing coverage in the Exchange. In
addition, PPACA has an "individual mandate" that requires
individuals to have minimum essential health coverage, with
exceptions.
According to estimates in a recent study in the health
policy journal Health Affairs by Peter Long and Jonathan
Gruber, PPACA will provide health insurance for an
additional 3.4 million people in California in 2016. The
authors state this will mean that nearly 96 percent of
documented residents of California under age 65 will be
insured. The authors estimate enrollment in Medi-Cal is
expected to increase by 1.7 million people, while 4.0
million people are expected to enroll in the state's
Exchange. Employer-sponsored insurance and spending on
health insurance will decline slightly. The authors
conclude that low-income households will experience
substantial financial benefits, but families at the highest
income levels will pay more.
Related bills
AB 792 (Bonilla) would require, effective January 1, 2013,
courts, health plans, health insurers, employers and the
Employment Development Department (EDD) to provide a notice
of the availability of coverage in the California Health
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Benefit Exchange effective January 1, 2014. Would require,
health plans, health insurers, and employers, for employees
or dependents who have experienced a death, loss of
employment or a reduction in hours, divorce or the loss of
dependent status that results in a loss of health
insurance, to transfer information to the Exchange to
initiate an application for enrollment in the Exchange if
the individual consents. Would require an individual
electing to decline coverage from the Exchange to elect to
do so in writing. AB 792 is scheduled to be heard in the
Senate Health Committee on June 29, 2011.
AB 1296 (Bonilla) would enact the Health Care Eligibility,
Enrollment, and Retention Act and would require, by January
1, 2012, the California Health and Human Services Agency,
in consultation with DHCS, MRMIB, the Exchange, counties,
health care services plans, consumer advocates, and other
stakeholders to undertake a planning process to develop
plans and procedures to implement PPACA related to
eligibility, enrollment, and retention with regard to
public health coverage programs, and would make various
changes to eligibility processing. AB 1296 is scheduled to
be heard on July 6, 2011.
Prior legislation
SB 900 (Alquist), Chapter 659, Statutes of 2010,
establishes the Exchange as an independent public entity
within state government, and requires the Exchange to be
governed by a board composed of the Secretary of California
Health and Human Services Agency, or his or her designee,
and four other members appointed by the Governor and the
Legislature who meet specified criteria.
AB 1602 (John A. P�rez), Chapter 655, Statutes of 2010,
specifies the powers and duties of the Exchange relative to
determining eligibility for enrollment in the Exchange and
arranging for coverage under qualified health plans,
requires the Exchange to provide health plan products in
all five of the federal benefit levels (platinum, gold,
silver, bronze and catastrophic), requires health plans
participating in the Exchange to sell at least one product
in all five benefit levels in the Exchange, requires health
plans participating in the Exchange to sell their Exchange
products outside of the Exchange, and requires health plans
that do not participate in the Exchange to sell at least
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one standardized product designated by the Exchange in each
of the four levels of coverage, if the Exchange elects to
standardize products.
Arguments in support
Health Access California (HAC), the sponsor of this bill,
writes that this bill would jump-start enrollment of those
newly eligible for Medi-Cal or the Exchange in 2014 by
pre-enrollment of those already enrolled in limited
coverage programs or who are disenrolling from public
programs. HAC states that, in 2014, millions of
Californians will be newly eligible for subsidized coverage
through the Exchange or no-cost coverage through Medi-Cal.
In the past, programs such as HFP were slow to enroll those
newly eligible. HAC states that it estimates between two
and three million Californians could be enrolled in
coverage effective January 1, 2014 through pre-enrollment,
that those newly eligible for coverage are 100 percent
federally funded, and that many of the newly enrolled would
be leaving public programs that are funded in part from the
GF and would become newly eligible for coverage through
Medi-Cal or the Exchange.
HAC states that getting people enrolled in coverage
involves at least five steps: (1) informing them of the
availability of coverage; (2) getting them to the door of
the Exchange; (3) undergoing an eligibility determination
process to determine whether they are eligible for Exchange
subsidies or Medi-Cal; (4) picking a health plan; and (5)
picking a specific health plan product. HAC states this
bill addresses the first two steps, and that the Exchange
has the authority and the responsibility to design an
enrollment system that accomplishes the last three. HAC
states it recognizes that not all of those who are eligible
will enroll and that some may find other coverage, but that
if 80 percent of those currently enrolled in one of the
public programs listed in this bill enroll, then California
would enroll 2.5 million people on January 1, 2014.
Arguments in opposition
The California Right to Life Committee, Inc. (CRLC) writes
in opposition that it values cost-reducing efficiency and
the privacy and security of one's personal information.
CRLC states it does not believe this bill reflects either
one of these values. In addition, CRLC objects to using
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federal taxpayer dollars to publicize the implementation of
PPACA, and that PPACA is currently in the federal courts so
this bill may be premature. CRLC concludes that is does
not want to see taxpayer dollars used for the promotion of
family planning services, and that public money would have
to be used to contact individuals enrolled in Family PACT.
PRIOR ACTIONS
Assembly Health: 13- 6
Assembly Appropriations:12- 5
Assembly Floor: 51- 25
COMMENTS
1. Notices. This bill requires a notice (as part of
materials otherwise provided) to be sent, from January 1,
2013 to June 30, 2013, that informs people about the
Exchange, and that it begins enrollment in January 1, 2014.
The sponsor indicates this notice is intended to educate
those enrolled in limited coverage programs about their
coverage options after January 1, 2014.
2. Coverage opt in. Under current law, the Exchange is
required to inform individuals of the eligibility
requirements for the Exchange, Medi-Cal, Healthy Families,
or any applicable state or local public program. The
Exchange is required, if through screening of the
application, the Exchange determines that such individuals
are eligible for any such program, to enroll such
individuals in such program.
This bill requires DHCS, MRMIB and DPH, beginning July 1,
2013, to provide an additional notice in materials
otherwise provided that an application for coverage through
the Exchange is being made for the individual. This bill
requires an individual to have the opportunity to decline
health care coverage in a manner prescribed by the
Exchange.
In effect, people are "opted in" to applying for coverage
through the Exchange but allowed to decline coverage. The
advantage of this method is it will increase the likelihood
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that people will have continuous coverage, reduce gaps in
coverage, and increase the likelihood of compliance with
the individual mandate requirement in PPACA. In the case
of this bill, this provision will enroll people who are in
limited scope public programs will be enrolled in more
comprehensive coverage through Medi-Cal or the Exchange.
However, individuals enrolled in public programs who have
had a change in income that makes that no longer eligible
for a public program may not wish to affirmatively enroll
in coverage through the Exchange (rather than being opted
in and having to decline coverage), such as individuals who
has become Medicare-eligible or individuals who have
obtained job-based health coverage. For individuals moving
from public programs to coverage in the Exchange that they
have to pay out-of-pocket for, the Exchange would have to
determine whether individuals are enrolled in coverage in
advance or after paying premiums, and would have to develop
a methodology to enroll individuals in a particular health
plan if they are eligible for coverage in the Exchange (the
Exchange has to offer at least four tiers of products).
3. Changing the wording of statutorily worded notices.
This bill places in statute the notices that are to be
provided to individuals. Existing law, as enacted by AB
1540 (Committee on Health), Chapter 298, Statutes of 2011,
among several provisions, gives the director of the
Department of Managed Health Care the authority to adopt a
regulation to modify the wording of any notice required by
the Knox-Keene Act for purposes of clarity, readability,
and accuracy, except that a modification cannot change the
substantive meaning of the notice. Should a state entity,
or all of the affected state entities (MRMIB, DPH, DHCS, or
the Exchange) have the authority to modify the content of
the notice for purposes of clarity, readability, and
accuracy, through the adoption of a regulation?
4. Definition of recent providers. This bill requires
DHCS, MRMIB and DPH to provide to the Exchange the
individual's name, most recent address, clinical
information, names of recent providers, and other
information that is in the possession of their respective
programs to enable the Exchange to determine eligibility,
complete enrollment and maximize continuity of care for the
individual. The requirement that clinical information and
information on recent providers be provided to the Exchange
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is intended to ensure continuity of care for individuals
undergoing a course of treatment. Committee staff
recommends an amendment to define "recent provider" as
someone who the individual has seen in the previous 12
months.
5. Privacy. This bill requires the various departments
and MRMIB to report information on potential enrollees in
the Exchange. The information is to include clinical
information and recent providers, which is medical
information that goes beyond the information that
constitutes the minimum information necessary to initiate
an application for enrollment. The federal PPACA section
that this bill references deals with basic enrollment
information and ensures that it is protected. Committee
staff recommends an amendment to require that the
furnishing of information be consistent with other state
and federal medical privacy laws.
6. Double referral. Because this bill is double referred,
any amendments will need to be adopted in the Senate
Judiciary Committee.
POSITIONS
Support: Health Access California (sponsor)
100% Campaign
American Cancer Society
American Federation of State, County and
Municipal Employees
California Medical Association
California Optometric Association
California Pan-Ethnic Health Network
California Primary Care Association
California Rural Legal Assistance Foundation
Children Now
Children's Defense Fund California
The Children's Partnership
Congress of California Seniors
Consumers Union
Having Our Say
Latino Health Alliance
National Association of Social Workers,
California Chapter
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PICO California
Planned Parenthood Advocacy Project Los Angeles
County
Planned Parenthood Affiliates of California
SEIU California
Unitarian Universalist Legislative Ministry
Action Network, CA
United Nurses Associations of California/Union of
Health Care Professionals
Western Center on Law and Poverty
Oppose: California Right to Life Committee, Inc.
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