BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 1761|
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THIRD READING
Bill No: AB 1761
Author: John A. Pérez (D), et al.
Amended: 8/14/12 in Senate
Vote: 21
SENATE HEALTH COMMITTEE : 9-0, 6/20/12
AYES: Hernandez, Harman, Alquist, Anderson, Blakeslee, De
León, DeSaulnier, Rubio, Wolk
SENATE APPROPRIATIONS COMMITTEE : 7-0, 8/13/12
AYES: Kehoe, Walters, Alquist, Dutton, Lieu, Price,
Steinberg
ASSEMBLY FLOOR : 74-0, 4/26/12(Consent) - See last page for
vote
SUBJECT : California Health Benefit Exchange
SOURCE : Author
DIGEST : This bill prohibits an individual or entity from
holding himself, herself, or itself out as representing,
constituting, or otherwise providing services on behalf of
the Exchange unless that individual or entity has a valid
agreement with the Exchange to engage in those activities.
ANALYSIS : Existing law:
1.Requires, under the federal Patient Protection and
Affordable Care Act (ACA), as amended by the Health Care
CONTINUED
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Education and Reconciliation Act of 2010, each state, by
January 1, 2014, to establish an American Health Benefit
Exchange that makes qualified health plans available to
qualified individuals and qualified employers. If a
state does not establish an Exchange, the federal
government administers the Exchange. The ACA establishes
requirements for the Exchange and for health plans
participating in the Exchange, and the ACA defines who is
eligible to receive coverage in the Exchange.
2.Allows, under the ACA and effective January 1, 2014,
eligible individual taxpayers, whose household income
equals or exceeds 100 percent, but does not exceed 400
percent, of the federal poverty level (FPL), an
advanceable and refundable tax credit for a percentage of
the cost of premiums for coverage under a qualified
health plan offered in the Exchange. The ACA also
requires a reduction in cost sharing for individuals with
incomes below 250 percent of the FPL, and a lower maximum
limit on out-of-pocket expenses for individuals whose
incomes are between 100 and 400 percent of the FPL.
Legal immigrants with household incomes less than 100
percent of the FPL who are ineligible for Medicaid
because of their immigration status are also eligible for
the premium tax credit and the cost-sharing reductions.
3.Defines, under the Insurance Code, unfair methods of
competition and unfair and deceptive acts or practices in
the business of insurance. Makes any person who engages
in any unfair method of competition or any unfair or
deceptive act or practice liable to the state for a civil
penalty to be fixed by the Insurance Commissioner, not to
exceed $5,000 for each act or, if the act or practice was
willful, a civil penalty not to exceed $10,000 for each
act.
4.Permits, under the Knox-Keene Health Care Service Act of
1975 (Knox-Keene Act), the Director of the Department of
Managed Health Care (DMHC) to require that solicitors and
solicitor firms and principal persons engaged in the
supervision of solicitation for plans of solicitor firms
to meet such reasonable and appropriate standards with
respect to training, experience, and other qualifications
as the Director finds necessary and appropriate in the
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public interest or for the protection of subscribers,
enrollees, and plans.
5.Prohibits plans, solicitors, solicitor firms, or
representatives from using or permitting the use of any
advertising or solicitation which is untrue or
misleading, or any form of evidence of coverage which is
deceptive.
This bill:
1.Prohibits an individual or entity from holding himself,
herself, or itself out as representing, constituting, or
otherwise providing services on behalf of the Exchange
unless that individual or entity has a valid agreement
with the Exchange to engage in those activities. Makes
any individual or entity who aids or abets another
individual or entity in violation of this prohibition to
also be in violation of this prohibition.
2.Makes it an unfair business practice under the Knox-Keene
Act for a solicitor or solicitor firm to hold himself,
herself, or itself out as representing, constituting, or
otherwise providing services on behalf of the Exchange
unless the solicitor or solicitor firm has a valid
agreement with the Exchange to engage in those
activities.
3.Makes it an unfair business practice for a health plan to
hold itself out as representing, constituting, or
otherwise providing services on behalf of the Exchange
unless the plan has a valid agreement with the Exchange
to engage in those activities.
4.Makes it an unfair method of competition and an unfair
and deceptive act or practice in the business of
insurance, under the Insurance Code, to hold oneself out
as representing, constituting, or otherwise providing
services on behalf of the Exchange without a valid
agreement with the Exchange to engage in those
activities.
Background
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During the 2009-10 Session, the Legislature passed and
then-Governor Schwarzenegger signed into law two bills
establishing the California Health Benefit Exchange. SB
900 (Alquist), Chapter 659, Statutes of 2010, established
the Exchange as an independent public entity within state
government and requires the Exchange to be governed by a
board composed of the Secretary of the California Health
and Human Services Agency, or his or her designee, and four
other members appointed by the Governor and the Legislature
who meet specified criteria. AB 1602 (John A. Pérez),
Chapter 655, Statutes of 2010, specifies the powers and
duties of the Exchange relative to determining eligibility
for enrollment in the Exchange and arranging for coverage
under qualified health plans and establishes requirements
for health plans in and outside the Exchange.
According to estimates in a recent study in the health
policy journal Health Affairs by Peter Long and Jonathan
Gruber, the ACA will provide health insurance for an
additional 3.4 million people in California in 2016. The
authors state this will mean that nearly 96 percent of
documented residents of California under age 65 will be
insured. The authors estimate 4 million people are
expected to enroll in the state's Exchange.
At some point following the signing of those bills into law
and when the Exchange began having public board meetings,
Google searches for the California Health Benefit Exchange
identified a website operated by a private company of
health benefit consultants and brokers, instead of the
official site maintained by the Exchange. When the
Exchange begins offering health coverage, people going to
such a website to purchase coverage could end up paying
more for health coverage as the state-administered Exchange
is the only place where consumers can purchase individual
coverage with premium and cost-sharing subsidies and a
lower out-of-pocket maximum.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
According to the Senate Appropriations Committee:
The Department of Managed Health Care indicates that it
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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).
SUPPORT : (Verified 8/14/12)
ACCESS Women's Health Justice
California Association of Health Underwriters
California Black Health Network
California Chiropractic Association
California Immigrant Policy Center
California Pan-Ethnic Health Network
California Rural Legal Assistance Foundation
California Teachers Association
Children Now
Children's Defense Fund California
The Children's Partnership
Having Our Say Coalition
Health Access California
Insurance Brokers and Agents of the West
National Association of Insurance and Financial Advisors of
California
United Ways of California
Western Center on Law and Poverty
ARGUMENTS IN SUPPORT : Western Center on Law & Poverty
(WCLP) writes in support that there are websites using the
Exchange name when in fact they are run by private
entities. WCLP states Californians need a trusted place to
go for reliable information about their health coverage
options, and only the Exchange itself and those entities
with whom it contracts should be permitted to hold itself
out as the Exchange. The Insurance Brokers and Agents of
the West, the California Association of Health Underwriters
and the National Association of Insurance and Financial
Advisors of California write this bill is an important
element to help to deter unauthorized persons or entities
from conducting misleading advertising or solicitations.
Health Access California states that almost from the moment
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that the Exchange was created, there have been misleading
websites put up by agents and brokers that appear to be the
official website of the Exchange, and this bill takes the
simple step of saying that only an individual or entity
with a valid, in-force agreement with the Exchange can hold
themselves out as acting on behalf of the Exchange.
ASSEMBLY FLOOR : 74-0, 4/26/12
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Beall,
Bill Berryhill, Block, Blumenfield, Bonilla, Bradford,
Brownley, Buchanan, Butler, Charles Calderon, Campos,
Carter, Chesbro, Conway, Cook, Davis, Dickinson,
Donnelly, Eng, Feuer, Fletcher, Fong, Fuentes, Beth
Gaines, Galgiani, Garrick, Gatto, Gordon, Gorell, Grove,
Hagman, Hall, Hayashi, Roger Hernández, Hill, Huber,
Hueso, Huffman, Jeffries, Knight, Lara, Logue, Bonnie
Lowenthal, Ma, Mansoor, Mendoza, Miller, Mitchell,
Monning, Morrell, Nestande, Nielsen, Norby, Olsen, Pan,
Perea, V. Manuel Pérez, Portantino, Silva, Skinner,
Solorio, Swanson, Torres, Valadao, Wagner, Wieckowski,
Williams, Yamada, John A. Pérez
NO VOTE RECORDED: Cedillo, Furutani, Halderman, Harkey,
Jones, Smyth
CTW:n 8/14/12 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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