BILL ANALYSIS �
SENATE COMMITTEE ON HEALTH
Senator Ed Hernandez, O.D., Chair
BILL NO: AB 1526
AUTHOR: Monning
AMENDED: August 24, 2012
HEARING DATE: August 29, 2012
CONSULTANT: Bain
PURSUANT TO SENATE RULE 29.10
SUBJECT : California Major Risk Medical Insurance Program.
SUMMARY : Allows the Managed Risk Medical Insurance Board
(MRMIB) to further subsidize the premium contributions paid by
individuals receiving coverage in the Major Risk Medical
Insurance Program (MRMIP) from January 1, 2013, to December 31,
2013.
Existing law:
1.Establishes MRMIP, administered by MRMIB, to provide major
risk medical coverage to residents who have been rejected for
coverage by at least one private health plan, or if the only
private health coverage that the applicant can secure would:
a. Impose substantial waivers or provide limited coverage
that MRMIB determines would leave a subscriber without
adequate coverage for medically necessary services; or
b. Offer coverage only at an excessive price, which MRMIB
determines is significantly above standard average
individual coverage rates.
2.Sets the premium subscribers in MRMIP pay at 125 to 137.5
percent of the standard average individual risk rate the
enrollee would pay for comparable coverage.
This bill:
1.Permits MRMIB, for the period from January 1, 2013, to
December 31, 2013, to further subsidize MRMIP subscriber
contributions so that the amount paid by each MRMIP subscriber
is below 125 percent, but no less than 100 percent, of the
standard average individual risk rate for comparable coverage.
2.Requires, for purposes of calculating premiums for the
products listed below, MRMIP subscriber contributions to be
construed to mean subscriber contributions without the
additional subsidies permitted by:
Continued---
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a. Standard benefit plans that former MRMIP subscribers are
enrolled in under a pilot program that limited enrollment
in MRMIP to 36 months and that required subscribers to pay
10 percent above MRMIP rates with the costs in excess of
those amounts split between the state and the subscriber's
health plan.
b. Health care service plan contracts and health benefit
plans provided through a preferred provider organization
(PPO) for federally eligible defined individuals (known as
HIPAA individual market coverage after the federal law) who
have a right to a guaranteed issue individual health
insurance product under federal law and in which state law
prohibits the premiums, and premium increases from
exceeding average MRMIP premiums and ties premium increases
to MRMIP premium increases.
c. Conversion coverage required to be offered by health
plans and health insurers (conversion coverage is offered
when a group health plan is discontinued); conversion
premiums, by statute, are tied to HIPAA individual market
coverage.
3.Prohibits this bill from being construed to require MRMIB to
adopt and readopt regulations to implement the changes made by
this bill. Requires, if MRMIB adopts regulations, the adoption
and readoption of regulations by MRMIB to implement the
changes made by this bill to be deemed to be an emergency and
necessary to avoid serious harm to the public peace, health,
safety, or general welfare. Exempts MRMIB from the requirement
that it describe facts showing the need for immediate action
and from review by the Office of Administrative Law.
FISCAL EFFECT : According to the Senate Appropriations Committee
analysis of the previous version of this bill:
� One-time costs of about $16 million (Proposition 99 funds) in
2013 due to elimination of annual and lifetime benefit caps.
� On average over the last year, the program has seen about 150
new enrollees per month. Assuming that the changes to the
enrollment process in the bill speed the enrollment process by
one month, costs would be about $100,000 (Proposition 99
funds) in 2013.
� Minor costs to change program eligibility and cost sharing
rules (Proposition 99 funds).
PRIOR VOTES : Prior votes on this bill are not relevant.
COMMENTS :
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1.Author's statement. This bill is needed to allow MRMIB to
reduce the premiums in MRMP to more closely align MRMIP
premiums with premiums in the federally subsidized
Pre-Existing Condition Insurance Program (PCIP). The premiums
in the PCIP program are significantly lower than in MRMIP
(although MRMIP has a lower deductible) and in some cases,
approximately 1/2 to 1/4 of those in the MRMIP. The most
common reason MRMIP subscribers disenroll from MRMIP coverage
is the inability to afford the program's premiums. In January
2011, MRMIP surveyed 395 subscribers who disenrolled from
MRMIP, and of the 115 individuals who responded to the survey,
52 individuals (45 percent) indicated the reason for
disenrollment was that they could not afford the MRMIP program
costs. In addition, for states to be eligible to run a PCIP,
the state must agree to not reduce the annual amount the state
expended for the operation of its high-risk pool (known as a
maintenance of effort or MOE). While California's MOE requires
the state to maintain funding for MRMIP at $31.8 million
during the time PCIP is in operation, MRMIP enrollment has
gradually declined since PCIP has been in effect, and current
MRMIP enrollment (5,971) is over 2,000 individuals less than
the program's 8,000 person enrollment cap. Because current
state law requires premiums to be set based on at least 125
percent of the standard rate in the private market for a
similar level of benefits, MRMIB cannot reduce MRMIP premiums
without this bill.
2.MRMIP. Although most Californians obtain health insurance
through their employer, many Californians do not have access
to employer-sponsored health coverage and cannot buy private
health insurance because they have a pre-existing medical
condition. Since 1991, California has operated a high-risk
pool known as MRMIP to provide the medically uninsurable with
health coverage. Premiums paid by individuals receiving
coverage are supplemented with state Proposition 99 tobacco
tax revenues to fund coverage through the program. Subscribers
are charged a monthly premium ranging from 125 percent to
137.5 percent of their plan's standard average individual rate
adjusted for the MRMIP benefit package. MRMIP premiums are
also used as a base point to limit premiums for three other
types of health plan products.
There are two major private health plans that voluntarily
participate in MRMIP (Blue Cross and Kaiser) and one local
health plan, Contra Costa Health Plan. MRMIP premiums vary
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based on the age and region of the subscriber and the health
plan they choose. For example, in Sacramento County, the 2012
premiums for a person age 50-54 are $594 per month for the
Kaiser Permanente HMO plan, and $1,112 per month for the Blue
Cross PPO.
3.PCIP. In March 2010, President Obama signed into law the
Patient Protection and Affordable Care Act (ACA) (Public Law
111-148), as amended by the Health Care and Education
Reconciliation Act of 2010 (Public Law 111-152), to provide
coverage for over 90 percent of the presently uninsured
population. Until the implementation of the health insurance
exchanges in 2014, individuals with pre-existing conditions,
who have not had coverage for the prior six months and who
meet certain citizen or residency requirements will be
eligible for the temporary high-risk pool program created by
the ACA. The ACA appropriated $5 billion in federal funds to
support the high-risk pool program. To be eligible to enter
into a contract with the federal Department of Health and
Human Services (HHS) Secretary, a state must agree to not
reduce the annual amount the state expended for the operation
of its high-risk pool (known as a MOE). California's MOE
requires the state to maintain funding for MRMIP at $31.8
million during the time PCIP is in operation. As of May, 2012,
there were 10,947 subscribers enrolled in PCIP.
4.Prior legislation. SB 227 (Alquist), Chapter 31, Statutes of
2010, requires MRMIB to enter into an agreement with DHHS to
administer a qualified high-risk pool to provide health
coverage (known as PCIP), until January 1, 2014, to
individuals who have pre-existing conditions, consistent with
the ACA. SB 227 established the authority and requirements for
MRMIB in administering the federal pool, consistent with
federal law, and appropriated $761 million from the Federal
Trust Fund to MRMIB.
AB 1887 (Villines), Chapter 32, Statutes of 2010, established
the Federal Temporary High Risk Health Insurance Fund (Fund)
for PCIP and requires money in the Fund to be continuously
appropriated to the MRMIB for the purpose of establishing a
federal temporary high-risk pool established under SB 227 for
individuals with a pre-existing medical condition.
5.Recent amendments. The most recent amendments allow MRMIB to
reduce MRMIP subscriber premiums for one year. Prior to these
amendments, this bill would have allowed MRMIP to eliminate
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its annual and lifetime benefit limits to conform to PCIP
coverage without having the additional cost of this provision
passed on to MRMIP subscribers' premiums. In addition, this
bill previously would have allowed MRMIP applicants to use a
note from a health care provider documenting a pre-existing
condition to establish eligibility for MRMIP. These provisions
were amended out of the bill by the August 24, 2012
amendments. The approach taken in the current version of this
bill to reduce MRMIP subscriber premiums was raised as an
alternative in the Department of Finance analysis to the
previous version of this bill.
SUPPORT AND OPPOSITION :
Support (prior version):AARP
American Cancer Society
American Federation of State, County and
Municipal Employees
California Academy of Physician Assistants
California Managed Risk Medical Insurance
Board
California Podiatric Medical Association
Health Access California
Kaiser Permanente
Western Center on Law and Poverty
Oppose (prior version):Department of Finance
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