BILL ANALYSIS                                                                                                                                                                                                    Ó




                   Senate Appropriations Committee Fiscal Summary
                           Senator Christine Kehoe, Chair


          AB 1761 (J. Perez) - California Health Benefit Exchange.
          
          Amended: As introduced.         Policy Vote: Health 9-0
          Urgency: No                     Mandate: Yes
          Hearing Date: August 13, 2012                          
          Consultant: Brendan McCarthy    
          
          This bill does not meet the criteria for referral to the 
          Suspense File.
          
          
          Bill Summary: AB 1761 prohibits an individual or entity from 
          holding himself, herself, or itself out as representing the 
          California Health Benefit Exchange, without an agreement with 
          the Exchange to do so.

          Fiscal Impact: 
              The Department of Managed Health Care indicates that it may 
              incur enforcement costs in the tens of thousands (Managed 
              Care Fund).

              Enforcement costs to the Department of Insurance are 
              expected to be minor (Insurance Fund).

              Enforcement costs to the California Health Benefit Exchange 
              are expected to be minor (federal funds).

          Background: Under the federal Patient Protection and Affordable 
          Care Act (Affordable Care Act) states are required to establish 
          American Health Benefit Exchanges. If a state does not create an 
          Exchange, the federal government will do so. Within the 
          Exchanges, individuals will be able to purchase health care 
          coverage with standardized benefit packages and actuarial 
          values. In addition, individuals with incomes between 100 
          percent and 400 percent of the federal poverty level will be 
          eligible for subsidies for coverage purchased in the Exchanges.

          Proposed Law: AB 1761 prohibits an individual or entity from 
          holding himself, herself, or itself out as representing the 
          California Health Benefit Exchange, without an agreement with 
          the Exchange to do so.









          AB 1761 (J. Perez)
          Page 1


          The bill makes a violation of this prohibition an unfair 
          business practice under the Knox-Keene Act (Health and Safety 
          Code, applicable to health plans and their representatives) or 
          an unfair method of competition under the Insurance Code 
          (applicable to health insurers and their representatives).

          Related Legislation: 
              SB 900 (Alquist, Chapter 659, Statutes of 2009) established 
              the California Health Benefit Exchange as an independent 
              public entity.
              AB 1602 (J. Perez, Chapter 655, Statutes of 2010) specifies 
              the powers and duties of the California Health Benefit 
              Exchange.

          Staff Comments: Subsequent to the creation of the California 
          Health Benefit Exchange, internet searches for the Exchange 
          brought up the website of a private company engaged in brokerage 
          of health plans and health insurance. Concerns have been raised 
          that if, in the future, unscrupulous individuals sell health 
          coverage outside of the Exchange while indicating that the 
          coverage is being purchased through the Exchange, consumers 
          would not receive the coverage subsidies they are entitled to.

          The only costs that would be imposed on a local government 
          relate to crimes and infractions. Such costs are not 
          reimbursable by the state under the California Constitution.

          Proposed Author Amendments: The proposed author's amendments 
          make a technical correction.