BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
AB 1636 (Monning) - Health and wellness programs.
Amended: June 25, 2012 Policy Vote: Health 5-3
Urgency: No Mandate: No
Hearing Date: August 16, 2012
Consultant: Brendan McCarthy
SUSPENSE FILE.
Bill Summary: AB 1636 requires the Department of Managed Health
Care, in collaboration with other state agencies, to convene a
special committee to evaluate the use of health and wellness
programs and incentives by health plans, health insurers, and
employers.
Fiscal Impact:
One-time costs up to $150,000 (Managed Care Fund) to the
Department of Managed Health Care to provide staff support
for the committee and the public process required in the
bill.
One-time costs up to $75,000 (various funds) to the
Department of Insurance, the California Health Benefit
Exchange, and the Department of Public Health to provide
staff support to the committee.
Background: Beginning in 2014, under the federal Patient
Protection and Affordable Care Act (Affordable Care Act), health
plans and health insurers that offer coverage in the individual
market or state-established health exchanges are required to
accept every employer or individual that wishes to purchase
coverage and to renew coverage at the individual or employer's
request. The Affordable Care Act prohibits health plans or
insurers from imposing any exclusion of coverage based on a
preexisting condition. Federal law also limits the "rating
factors" used to determine the price of a health plan or
insurance policy to a narrow list of factors, including age,
geographic region, family size, and tobacco use.
Also under the Affordable Care Act, employers are authorized to
utilize wellness programs as part of the health care coverage
AB 1636 (Monning)
Page 1
they provide. The Affordable Care Act limits any financial
rewards offered to wellness program participants to 20 percent
of the cost of employee-only coverage or family coverage, and
includes several other restrictions on the use of wellness
plans.
Proposed Law: AB 1636 requires the Department of Managed Health
Care, in collaboration with the Department of Insurance, the
California Health Benefit Exchange, and the Department of Public
Health, to convene a special committee to review and evaluate
health and wellness programs offered by health plans, health
insurers, and employers.
The committee is directed to evaluate wellness programs for
their effectiveness and whether they may result in
discrimination against some individuals based on medical history
or other factors.
The bill specifies certain criteria for members of the committee
(for example, a member of the health care coverage industry, a
representative of low income consumers, two employer
representatives, etc.).
The bill require the committee to report to the Legislature by
March 30, 2014.
Related Legislation:
AB 1453 (Monning) would designate the Kaiser Small Group
HMO as the state's essential health benefit benchmark plan.
That bill will be heard in this committee.
AB 1461 (Monning) would require health plans to comply with
federal requirements in the individual market. That bill
will be heard in this committee.
SB 951 (Hernandez) would designate the Kaiser Small Group
HMO as the state's essential health benefit benchmark plan.
That bill is in the Assembly Appropriations Committee.
SB 961 (Hernandez) would require health plans to comply
with federal requirements in the individual market. That
bill is in the Assembly Appropriations Committee.
Staff Comments: Proponents of health and wellness plans indicate
that their use can educate people about ways to improve their
health and encourage or incentivize them to do so, saving both
the employer and the individual health care costs. Others have
AB 1636 (Monning)
Page 2
raised concerns that the design of wellness programs could be
used to get around the prohibition on using health status as a
rating factor for setting health care premiums. For example, a
wellness program that provided significant financial incentives
to employees to participate in physically demanding activity may
have the effect of excluding employees with ongoing health
problems from participating in a health plan or insurance
policy.