BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
AB 1800 (Ma) - Health care coverage.
Amended: August 6, 2012 Policy Vote: Health 5-3
Urgency: No Mandate: Yes
Hearing Date: August 13, 2012
Consultant: Brendan McCarthy
This bill meets the criteria for referral to the Suspense File.
Bill Summary: AB 1800 would require health plans and health
insurers to provide an annual limit on subscriber out-of-pocket
expenses for all covered benefits.
Fiscal Impact:
One-time costs of $135,000 for the Department of Insurance
to review insurance plan compliance with the bill (Insurance
Fund).
One-time costs of $195,000 for the Department of Managed
Care to review health plan filings, respond to consumer
complaints, and provide for increased independent medical
review proceedings. Ongoing costs for independent medical
review proceedings are anticipated to be about $60,000 per
year. (Managed Care Fund.)
Unknown potential cost increases to CalPERS to provide
health benefits to its members. CalPERS contracted plans are
generally compliant with the requirements of the bill.
However, some CalPERS plans have exclusions from
out-of-pocket maximums (for example non-preferred brand
drugs). If a member's higher out-of-pocket costs for a
non-preferred brand drug was counted against the annual
out-of-pocket limit, this could have the result of shifting
costs from the member to CalPERS, increasing state costs (55
percent General Fund, 45 percent special funds).
Background: Beginning in 2014, the federal Patient Protection
and Affordable Care Act (Affordable Care Act) requires health
plans and health insurers to provide an annual limit on
subscriber out-of-pocket expenses for all covered benefits. This
provision of the Affordable Care Act clearly applies to health
AB 1800 (Ma)
Page 1
plans and insurers in the individual and small group markets.
The Affordable Care Act is less clear as to whether this
requirement applies to the large group market.
Proposed Law: AB 1800 would require health plans and health
insurers to provide an annual limit on subscriber out-of-pocket
expenses for all covered benefits. This provision would go into
effect on January 1, 2014. The limit on out-of-pocket
expenditures would apply to all essential health benefits. The
annual out-of-pocket limit is based on the thresholds for
federally-authorized high deductible health plans. In 2013, this
limit will be $6,050 for an individual and $12,100 for a family.
The bill also specifies that if a health plan delegates certain
services to a subcontractor (for example a medical group), the
health plan is still responsible to comply with all the
requirements of the Knox-Keene Act.
Related Legislation: AB 1000 (Perea) would prohibit health plans
and health insurers that cover prescription drugs and
chemotherapy treatment from imposing higher copayments,
deductibles, or coinsurance for oral anticancer drugs than would
be imposed for intravenous anticancer drugs. That bill is on the
Senate floor.
Staff Comments: Most state health care programs, such as
Medi-Cal managed care plans, either have limited cost sharing or
comply with the out-of-pocket limits required under the bill.
Under the bill, the only costs that may be incurred by a local
agency relate to crimes or infractions. Under the California
Constitution, such costs are not reimbursable by the state.