BILL ANALYSIS �
------------------------------------------------------------
|SENATE RULES COMMITTEE | AB 1453|
|Office of Senate Floor Analyses | |
|1020 N Street, Suite 524 | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
------------------------------------------------------------
THIRD READING
Bill No: AB 1453
Author: Monning (D), et al.
Amended: 8/23/12 in Senate
Vote: 21
SENATE HEALTH COMMITTEE : 6-3, 6/27/12
AYES: Hernandez, Alquist, De Le�n, DeSaulnier, Rubio, Wolk
NOES: Harman, Anderson, Blakeslee
SENATE APPROPRIATIONS COMMITTEE : 5-2, 8/16/12
AYES: Kehoe, Alquist, Lieu, Price, Steinberg
NOES: Walters, Dutton
ASSEMBLY FLOOR : 50-25, 5/14/12 - See last page for vote
SUBJECT : Essential health benefits
SOURCE : Author
DIGEST : This bill designates the Kaiser Small Group HMO
as Californias benchmark plan to serve as the essential
health benefit (EHB) standard.
Assembly Amendments make technical and clarifying changes
and add co-authors.
ANALYSIS :
Existing federal law:
CONTINUED
AB 1453
Page
2
1. Establishes the Patient Protection Affordable Care Act
(ACA), which among other provisions, imposes new
requirements on individuals, employers, and health
plans; restructures the private health insurance market;
sets minimum standards for health coverage; establishes
health benefit exchanges; and provides financial
assistance to certain individuals and small employers.
2. Requires, under the ACA, each state, by January 1,
2014, to establish an American Health Benefit Exchange
(Exchange) that facilitates the purchase of qualified
health plans by qualified individuals and qualified
small employers.
3. Requires, under the ACA, health plans and health
insurers that offer coverage in the small group or
individual market, both inside and outside of the
Exchange, to ensure coverage includes the EHB package.
Existing state law:
1. Provides for regulation of health insurers by the
Department of Insurance (CDI) under the Insurance Code,
and provides for the regulation of health plans by the
Department of Managed Health Care (DMHC), pursuant to
the Knox-Keene Health Care Service Plan Act of 1975.
2. Requires health plan contracts and health insurance
policies to cover various benefits.
3. Establishes the Exchange to facilitate the purchase of
qualified health plans by qualified individuals and
qualified small employers by January 1, 2014.
This bill:
1. Requires individual and small group health plan
contracts, both inside and outside of the Exchange, to
cover EHBs, as defined.
2. Defines EHBs as the benefits and services covered by
Kaiser Small Group HMO, including the categories
identified in the ACA.
CONTINUED
AB 1453
Page
3
3. Requires the services and benefits to be covered to the
extent they are medically necessary. Prohibits scope
and duration limits from exceeding the scope and
duration limits imposed on those services by the Kaiser
Small Group HMO plan contract.
4. Requires habilitative services to be provided for the
same services as, and under the same terms and
conditions of, the plan contract for rehabilitative
services.
5. Requires the same services and benefits for pediatric
oral care as provided by a specified federal plan to be
provided as an EHB.
6. Prohibits plans from indicating or implying a contract
or policy meets the EHB standard unless it covers EHBs,
as defined.
7. Exempts self-insured group health plans, large group
market health plans, or grandfathered health plans.
8. Requires this bill go into effect to the extent that
federal health benefits are required, and that medically
necessary basic health services are covered.
Background
Effective January 1, 2014, federal law requires Medicaid
benchmark and benchmark-equivalent plans, plans sold
through the Exchange and the Basic Health Program (if
enacted), and health plans and health insurers providing
coverage to individuals and small employers to ensure
coverage of EHBs, as defined by the Secretary of the
Department of Health and Human Services (HHS). HHS is
required to ensure that the scope of EHBs is equal to the
scope of benefits provided under a typical employer plan,
as determined by the Secretary.
Under federal law, EHBs must include 10 general categories
and the items and services covered within the following
categories:
Ambulatory patient services;
CONTINUED
AB 1453
Page
4
Emergency services;
Hospitalization;
Maternity and newborn care;
Mental health and substance use disorder services,
including behavioral health treatment;
Prescription drugs;
Rehabilitative and habilitative services and devices;
Laboratory services;
Preventive and wellness services and chronic disease
management; and
Pediatric services, including oral and vision care.
EHB Bulletin . On December 16, 2011, the HHS CCIIO released
an EHB Bulletin proposing that EHBs be defined using a
benchmark approach. This gives states the flexibility to
select a benchmark plan that reflects the scope of services
offered by a "typical employer plan." If a state does not
choose a benchmark health plan, the default benchmark plan
for the state would be the largest plan by enrollment in
the largest product in the small group market.
EHBs must include coverage of services and items in all 10
statutory categories listed above, but states would choose
one of the following benchmark health insurance plans:
One of the three largest small group plans in the state
by enrollment-in California, these options are Anthem
PPO licensed by CDI, Kaiser HMO licensed by DMHC, or
Anthem PPO licensed by DMHC;
One of the three largest state employee health plans by
enrollment-in California, these options are CalPERS Blue
Shield Basic HMO, CalPERS Choice, or CalPERS Kaiser HMO;
CONTINUED
AB 1453
Page
5
One of the three largest federal employee health plan
options by enrollment, which are Government Employee
Health Association, Blue Cross and Blue Shield (BCBS)
Basic, or BCBS Standard; or
The largest HMO plan offered in the state's commercial
market by enrollment, which is the Kaiser Large Group
Commercial HMO.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
According to the Senate Appropriations Committee:
One-time costs of about $350,000 to adopt regulations
and review health plan filings by DMHC Fund.
Ongoing costs of about $100,000 per year to respond to
consumer complaints by DMHC Fund.
One-time costs of about $2 million to adopt regulations
and review insurance policy filings by the CDI
(Insurance Fund). The much higher projected costs to
reflect the fact that the adoption of comprehensive EHBs
requirements will have a pose a much larger change in
business practices on health insurers than health plans.
Therefore, there will be greater workload to adopt
regulations and review changes to insurance policies.
No anticipated costs to subsidize the costs of state
benefit mandates for health plans sold in the Exchange.
SUPPORT : (Verified 8/24/12)
Association of Regional Center Agencies
Autism Speaks
California Association for Behavior Analysis
California Black Health Network
California Children's Health Coverage Coalition
California Commission on Aging
California Communities United Institute
California Council of Community Mental Health Agencies
California Coverage & Health Initiatives
CONTINUED
AB 1453
Page
6
California Pan-Ethnic Health Network
California Physical Therapy Association
California Podiatric Medical Association
California Primary Care Association
California Psychiatric Association
California Speech-Language Hearing Association
Children Now
Children's Defense Fund-California
Children's Partnership
Congress of California Seniors
Consumers Union
Greenlining Institute
Health Access California
Jericho
Mental Health America of California
National Alliance on Mental Illness, California
National Health Law Program (if amended)
Planned Parenthood Affiliates of California
SEIU California
United Ways of California
Western Center on Law and Poverty
OPPOSITION : (Verified 8/24/12)
California Association of Alcohol and Drug Program
Executives
California Chiropractic Association
ARGUMENTS IN SUPPORT : The California Children's Health
Coverage Coalition writes, in support of this bill, that
the selection of a robust EHB benchmark is the first step
towards providing children in the Exchange with the most
comprehensive coverage possible. The California Pan-Ethnic
Health Network supports this bill writing the bill will
ensure that California's EHB package covers a comprehensive
package of health care services both inside and outside of
the Exchange. Consumers Union writes that the marketplace
today is flooded with plans offering skimpy coverage and
argues this bill will ensure California's EHB will cover a
comprehensive package of health services.
ARGUMENTS IN OPPOSITION : The California Chiropractic
Association (CCA) writes that in California seven of the
benchmark plan options include a chiropractic benefit. CCA
CONTINUED
AB 1453
Page
7
is opposed to this bill and asks that the legislature
re-examine the possible choices for an EHB plan to select
one that includes chiropractic benefits. Any health care
reform program should rely on access to chiropractic
treatment to achieve the most positive health and financial
results.
The California Association of Alcohol and Drug Program
Executives writes in opposition that this bill selects a
benchmark plan that does not meet the mental health and
substance abuse mandates in both the ACA and federal Mental
Health parity law.
ASSEMBLY FLOOR : 50-25, 5/14/12
AYES: Alejo, Allen, Ammiano, Beall, Block, Blumenfield,
Bonilla, Bradford, Brownley, Buchanan, Butler, Charles
Calderon, Campos, Carter, Cedillo, Chesbro, Davis,
Dickinson, Eng, Feuer, Fong, Fuentes, Furutani, Galgiani,
Gatto, Gordon, Hall, Hayashi, Roger Hern�ndez, Hill,
Huber, Hueso, Huffman, Lara, Bonnie Lowenthal, Ma,
Mendoza, Mitchell, Monning, Pan, V. Manuel P�rez,
Portantino, Skinner, Solorio, Swanson, Torres,
Wieckowski, Williams, Yamada, John A. P�rez
NOES: Achadjian, Bill Berryhill, Conway, Cook, Donnelly,
Beth Gaines, Garrick, Gorell, Grove, Hagman, Halderman,
Harkey, Jeffries, Jones, Knight, Logue, Mansoor, Miller,
Morrell, Nielsen, Norby, Olsen, Silva, Smyth, Wagner
NO VOTE RECORDED: Atkins, Fletcher, Nestande, Perea,
Valadao
CTW:d 8/24/12 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
**** END ****
CONTINUED