BILL ANALYSIS �
AB 1083
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Date of Hearing: May 18, 2011
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 1083 (Monning) - As Amended: May 10, 2011
Policy Committee: HealthVote:13-6
Urgency: No State Mandated Local Program:
Yes Reimbursable: No
SUMMARY
This bill contains a number of provisions that conform
California's small-group and individual health insurance market
laws to the federal Patient Protection and Affordable Care Act
(PPACA), with most provisions operative beginning in 2014. It
also makes several changes that are not required under federal
law. Specifically, this bill:
1)Conforms state law governing the individual and small-group
market to federal law with respect to guaranteed issuance of
health care coverage and insurance, risk adjustment, premium
rate variation, preexisting condition exclusions, and coverage
exclusions for "late" enrollees who do not take up group
coverage when it is initially offered. It also makes other
technical, conforming changes.
2)Limits the variation in compensation for insurance agents and
brokers such that they cannot be paid more for selling
products outside of the California Health Benefit Exchange.
3)Requires carrier rates to be in effect for at least 12, rather
than six, months.
4)Requires carriers to notify small employers of the
availability of coverage through the Exchange.
5)Decreases the minimum hours an employee must work to be
eligible under other specified circumstances to 10 (from 20)
hours per normal work week for at least 50% of the weeks in
the previous calendar quarter.
6)Permits a self-employed individual with specified income to,
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at his or her discretion, enroll in the Exchange as an
individual rather than a small employer.
7)Requires carriers to file a notice of material modification
with their respective regulators at least 60 calendar days
(rather than 20 business days) prior to renewing or amending a
plan contract.
FISCAL EFFECT
Minor and absorbable state costs as a result of this bill. The
numerous provisions in this bill, including several that go
beyond federal law, largely affect the individual and
small-group private insurance markets and have negligible cost
implications for the state. The Department of Managed Health
Care and the Department of Insurance regulate health plans and
insurers, and in the normal course of their existing regulatory
duties would respond to complaints and provide oversight to
ensure that plans and insurers were complying with state laws
governing how health insurance must be offered and sold. There
may be minor up-front costs to departments to respond to the
health care coverage and insurance market changes, but these
would happen under existing federal law.
COMMENTS
1)Rationale . This bill is intended to conform California law to
federal law in order to bring more uninsured into coverage.
PPACA includes several significant reforms to the health
insurance market, including numerous provisions that interact
with California's small group laws. According to the author,
implementation of PPACA small group reforms in California has
the potential to bring millions of people into the small group
market. This bill also makes conforming changes in California
law that apply to the individual and group market. In
addition, other provisions that go beyond federal law serve to
increase transparency, expand coverage, and remove any
financial incentives for agents and brokers to steer people
away from the newly created California Health Benefit
Exchange.
2)PPACA . The PPACA makes several significant changes to the
group and individual insurance markets. As an example, PPACA
eliminates the pricing of premiums based on health status,
limits the range of premiums based on age, adds the
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self-employed to those eligible for guaranteed issue of
coverage, and expands the rules to employers with one to 100
employees. This bill aligns state law with these and other
provisions.
3)California Health Benefit Exchange (Exchange) . The Exchange
was created in 2010 to organize the health insurance market
for individual and small-group markets. Beginning in 2014,
individuals eligible for federal subsidies to purchase
coverage will be able to purchase them through the Exchange.
The Exchange is intended to enhance competition and provide
the same advantages available to large employer groups by
organizing the private insurance market, including a more
stable risk pool. Health insurance products offered through
the Exchange must be available in the same form to consumers
purchasing coverage outside the exchange.
4)Opposition . The California Association of Health Plans (CAHP)
opposes this bill unless it is amended to carefully and
precisely conform to federal law. CAHP believes this bill is
ambitious and notes that several provisions are not contained
in the federal law or differ from the federal law, such as a
provision that makes changes to how (broker and agent)
commissions are handled, how employers calculate coverage for
part time employees and notification requirements. The
California Association of Health Underwriters (CAHU) are
specifically opposed to the "anti-steering" language in this
bill. CAHU asserts that this creates a situation where the
California Health Benefit Exchange is setting commissions for
agents, even for products outside the Exchange.
Analysis Prepared by : Lisa Murawski / APPR. / (916) 319-2081