BILL ANALYSIS �
AB 1083
Page 1
ASSEMBLY THIRD READING
AB 1083 (Monning)
As Amended May 24, 2011
Majority vote
HEALTH 13-6 APPROPRIATIONS 11-6
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|Ayes:|Monning, Ammiano, Atkins, |Ayes:|Fuentes, Blumenfield, |
| | | |Bradford, Charles |
| |Bonilla, Eng, Gordon, | |Calderon, Campos, Davis, |
| |Hayashi, | |Hall, Hill, Lara, |
| |Roger Hern�ndez, Bonnie | |Mitchell, Solorio |
| |Lowenthal, Mitchell, Pan, | | |
| |V. Manuel P�rez, Williams | | |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Logue, Garrick, Mansoor, |Nays:|Harkey, Donnelly, Gatto, |
| |Nestande, Silva, Smyth | |Nielsen, Smyth, Wagner |
| | | | |
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SUMMARY : Effective January 1, 2014, conforms state law to
provisions in the federal Patient Protection and Affordable Care Act
(PPACA). Requires solicitors to notify the small employer of the
availability of coverage through the California Health Benefit
Exchange (Exchange), makes premium rates established by health care
service plans and health insurers (carriers) in effect for 12
months, prohibits solicitors and health insurance agents from
entering into arrangements with carriers for varied compensation
based on health status, claims experience, industry, occupation, or
geographic location. Specifically, this bill :
CONFORMING :
1)Expands the definition of eligible employee by calculating the
hours in a normal work week as an average of, rather than at least
30 hours per week over the course of a month.
2)Prohibits, effective January 1, 2014, carriers from limiting or
excluding coverage for any individual based on a preexisting
condition, whether or not any medical advice, diagnosis, care, or
treatment was recommended or received before that date.
Eliminates the ability of carriers to impose a risk adjustment
factor to premium rates effective January 1, 2014.
3)Allows premium rate variation based upon age of no more than three
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to one for adults effective January 1, 2014.
4)Maintains existing state definition of small employer (two to 50
eligible employees) until January 1, 2014, and implements federal
option to define small employer as one to 50 until December 31,
2016. Adds to the definition, on or after January 1, 2014, a
self-employed individual who obtains at least 50% of annual income
from self-employment as demonstrated through personal income tax
filings for the current or prior year.
5)Implements federal definition of small employer as having at least
one, but no more than 100 eligible employees, as specified, on or
after January 1, 2017.
BEYOND CONFORMING :
6)Permits a self-employed individual with specified income to, at
his or her discretion, enroll in the Exchange as an individual
rather than a small employer.
7)Requires solicitors to notify the small employer of the
availability of coverage through the Exchange.
8)Makes premium rates established by the carrier in effect for 12
(rather than six) months.
9)Extends to solicitors and agents the same prohibition that
currently applies to carriers which prevents them from entering
into arrangements for compensation with solicitors and agents for
the sale of health insurance that vary based on health status,
claims experience, industry, occupation, or geographic location.
Requires carriers to file with their regulators any and all
compensation agreements with solicitors and agents so that the
regulators may monitor for compliance.
10)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,
as specified.
EXISTING LAW :
1)Provides for the regulation of health plans by the Department of
Managed Health Care (DMHC) under the Knox-Keene Health Care
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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 carriers to fairly and affirmatively offer, market, and
sell all of the plan's contracts that are sold to small employers
to all small employers in the state.
3)Defines "preexisting condition" provision as a contract provision
that excludes coverage for charges or expenses incurred during a
specified period following the employee's effective date of
coverage, as to a condition for which medical advice, diagnosis,
care, or treatment was recommended or received during a specified
period immediately preceding the effective date of coverage.
4)Establishes the following risk categories for rating purposes:
age, geographic region, and family composition, plus the health
benefit plan selected by the small employer. Specifies age
categories, family size categories, and nine geographic regions.
5)Prohibits a plan from, directly or indirectly, entering into any
contract, agreement, or arrangement with a solicitor that provides
for or results in the compensation paid to a solicitor for the
sale of a health plan contract to be varied because of the health
status, claims experience, industry, occupation, or geographic
location of the small employer.
6)Prohibits a policy or contract that covers two or more employees
from establishing rules for eligibility, including continued
eligibility, of an individual, or dependent of an individual, to
enroll under the terms of the plan based on any of the following
health status-related factors: health status; medical condition,
including physical and mental illnesses; claims experience;
receipt of health care; medical history; genetic information;
evidence of insurability, including conditions arising out of acts
of domestic violence; and, disability.
FISCAL EFFECT : According to the Assembly Appropriations Committee,
minor and absorbable state costs as a result of this bill. The
numerous provisions in this bill, including some that go beyond
federal law, largely affect the individual and small-group private
insurance markets and have negligible cost implications for the
state. DMHC and CDI 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
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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 : Approximately 3.4 million Californians enjoy the
protections brought about by California's landmark small employer
group health insurance rating and underwriting rules which have
applied to employer groups with two to 50 workers since 1993. These
rules require carriers to offer health plan contracts and insurance
policies (health insurance) to small employer purchasers on a
guaranteed issue (accept a group applying for coverage regardless of
the health status or claims experience of group members). They also
require carriers to offer renewal contracts, limit the rating
factors carriers can employ in pricing small group products, require
carriers to guarantee issue all small employer products to all small
group purchasers, and limit the ways in which carriers can exclude
coverage for existing health care conditions. 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 is intended to revise
California law to conform to the federal law in order to bring more
uninsured into coverage.
There are some provisions in this bill that go beyond PPACA. For
example, this bill limits the variation in compensation for
insurance agents and brokers so that they cannot be paid more for
selling products outside of the California Health Benefit Exchange
(in effect steering employers away from participating in the
Exchange). Also, this bill requires carrier rates to be in effect
for no less than 12, rather than six months, and requires carriers
to notify small employers of the availability of coverage through
the Exchange. This bill also makes conforming changes in California
law that applies to the individual and group market.
This bill is cosponsored by the Small Business Majority and Health
Access California. Proponents believe it is important to strengthen
safeguards in California consistent with PPACA and to make health
insurance more available to small business owners, their employees
and self-employed Californians.
The California Association of Health Plans and the Association of
California Life and Health Insurance Companies have opposed unless
amended positions on this bill because this bill does not precisely
conform to federal law. The California Association of Health
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Underwriters (CAHU) was opposed to a provision in a previous version
of this bill and is pleased with the progress that has been made to
address their concerns thus far. CAHU looks forward to continuing
discussions.
Analysis Prepared by : Teri Boughton / HEALTH / (916) 319-2097
FN:
0000812