BILL ANALYSIS Ó
AB 1761
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Date of Hearing: April 18, 2012
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 1761 (John A. Pérez) - As Introduced: February 17, 2012
Policy Committee: HealthVote:19-0
Urgency: No State Mandated Local Program:
Yes Reimbursable: No
SUMMARY
This bill prohibits individuals and entities, including those
regulated by the Department of Managed Health Care (DMHC) and
the Department of Insurance (CDI), from holding themselves out
as representing, constituting, or otherwise providing services
on behalf of the California Health Benefits Exchange (Exchange)
unless the individual or entity has a valid agreement with the
Exchange to engage in those activities. Specifically, this bill:
1)Specifies that no individual or entity shall engage in such
misrepresentation.
2)Defines such misrepresentation as an unfair business practice
for a solicitor, a solicitor firm, or a health care service
plan.
3)Adds such misrepresentation to a list of "unfair methods of
competition and unfair and deceptive acts in the practice of
insurance" for all persons engaged in the business of
insurance.
FISCAL EFFECT
Potential for minor, absorbable enforcement workload and
associated administrative fine and penalty revenue to CDI and
DMHC.
COMMENTS
1)Rationale . The author states this bill will help prevent
deceptive marketing of health care plans and policies that
will be made available through the Exchange beginning in late
AB 1761
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2013. He notes that under federal law, individuals will be
required to maintain health coverage beginning in 2014 and
will likely be presented with health plan marketing
information from a variety of sources.
The author further explains that the Health and Safety Code
defines "unfair business practices" for entities regulated by
DMHC, the Insurance Code defines "unfair methods of
competition and unfair deceptive acts or practices in the
business of insurance" for entities regulated by CDI, and the
Government Code establishes the duties of the Exchange, but
none of these code sections address the issue of deceptive
marketing of the Exchange. A supporter points out that there
already have been misleading websites put up by agents and
brokers that appear to be the official website of the
Exchange.
2)Background . The federal Patient Protection and Affordable
Care Act (ACA) describes basic responsibilities of state-based
health insurance exchanges, which are intended to function as
risk-pooling mechanisms and marketplaces that offer for sale a
variety of standardized health plans to individuals and small
businesses. California's Exchange was established by AB 1602
(John A. Pérez), Chapter 655, Statutes of 2010 and SB 900
(Alquist), Chapter 659, Statues of 2010, and the five-member
Exchange Board has been meeting monthly since April 2011 to
address numerous issues related to launching the state's
Exchange. The Exchange Board recently commissioned the
drafting of a marketing and outreach plan that is to be rolled
out later this year, with the intent to inform and enroll
populations between 133% and 400% of the FPL who will be
eligible for subsidies. Because subsidies will only be
available to families when coverage is purchased inside the
Exchange, it is particularly important that consumers are not
misled about whether plans are actually authorized for sale in
the Exchange.
Analysis Prepared by : Lisa Murawski / APPR. / (916) 319-2081