BILL ANALYSIS �
SENATE HEALTH
COMMITTEE ANALYSIS
Senator Ed Hernandez, O.D., Chair
BILL NO: SB 155
S
AUTHOR: Evans
B
AMENDED: As Introduced
HEARING DATE: April 27, 2011
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CONSULTANT:
5
Tadeo
5
SUBJECT
Maternity services
SUMMARY
Requires every individual or group health insurance policy,
as specified, to cover maternity services, as defined.
CHANGES TO EXISTING LAW
Existing federal law:
Requires employers, under the Federal Civil Rights Act,
that offer health insurance and have 15 or more employees,
to cover maternity services benefits at the same level as
other health care benefits.
Defines, under the Patient Protection and Affordable Care
Act (PPACA) (Public Law 111-148), as amended by the Health
Care Education and Reconciliation Act of 2010 (Public Law
111-152), a list of "essential health benefits package,"
including maternal and newborn care, which health insurance
coverage and group health plans must provide beginning in
2014.
Existing state law:
Provides for the regulation of health plans and insurers by
the Department of Managed Health Care (DMHC) and the
Continued---
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California Department of Insurance (CDI), respectively.
Requires DMHC-regulated health plans to provide all
medically necessary basic health care services, as defined.
Permits DMHC to define the scope of the services and to
exempt plans from the requirement for good cause.
Specifies that basic health care services include maternity
services necessary to prevent serious deterioration of the
health of the enrollee or the enrollee's fetus, and
preventive health care services, specifically including
prenatal care. No similar provision is applicable to
health insurers regulated by CDI.
Prohibits health plans and insurers from issuing contracts
and policies that contain a copayment or deductible for
inpatient hospital or ambulatory care for maternity
services that exceeds the most common amount charged for
the same type of care and service provided for other
covered medical conditions.
Prohibits health plans and insurers that provide maternity
benefits from attaching any exclusions, reductions, or
limitations to coverage for involuntary complications of
pregnancy, unless those provisions apply to all of the
benefits paid by the plan or insurer.
Prohibits health plans and insurers from gender rating, or
charging differential premiums based on gender for
contracts issued, amended, or renewed on or before January
1, 2011.
This bill:
Requires any health insurer with a pending or approved
individual or group health insurance policy form on file
with CDI as of January 1, 2012, to submit to CDI, on or
before March 1, 2012, a revised policy form that provides
coverage for maternity services. Also requires new forms
for individual or group policies submitted to CDI after
January 1, 2012, to provide coverage for maternity
services.
Requires the corresponding policy, issued, amended, or
renewed on or after 30 days following CDI's approval of the
revised form, to include coverage for maternity services.
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Defines maternity services to include prenatal care,
ambulatory care for maternity services, involuntary
complications of pregnancy, neonatal care, and inpatient
hospital maternity care, including labor and delivery, and
postpartum care.
Exempts specialized health insurance, Medicare supplement
insurance, short-term limited duration health insurance,
Civilian Health and Medical Program of the Uniformed
Services supplemental insurance, TRI-CARE supplemental
insurance, and hospital indemnity, accident-only, or
specified disease insurance from these requirements.
FISCAL IMPACT
According to the Senate Appropriations Committee analysis
of AB 1825 (De La Torre) of the 2009-2010 session, which
was substantially similar to SB 155, counties would have
incurred costs of $47,000 to $467,000 in FY 2010-11, and
$93,000 to $934,000 in FYs 2011-12 and 2012-13, each year,
to provide care for newly uninsured persons from the
increased premiums resulting from this bill. The analysis
notes that these costs could be shared equally between
county and federal funds, or could be all county funds.
The analysis also states that CDI would have incurred costs
of approximately $75,000 in FY 2010-11 and $145,000 in FY
2011-2012 to fund staff counsel to review the new and
updated policies, and ongoing costs to CDI would be
absorbable.
BACKGROUND AND DISCUSSION
The author states that current law requires health
maintenance organizations and group insurers to include
maternity coverage, but individual market plans are not
subject to that requirement. As a result, the author
asserts that one of the latest trends in the individual
market is for insurers to exclude maternity care from their
basic plan benefits in order to sell cheaper products to
target populations. The author contends that, as
employer-sponsored coverage declines, insurance companies
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are increasingly targeting the young and uninsured with
products that do not include maternity services, even
though 25 percent of these individuals are women of
childbearing age. The author argues that these types of
products delay and restrict access to prenatal care, which
can lead to serious health complications for both the
mother and the newborn, and force more women into
state-funded programs, such as Medi-Cal or Access for
Infants and Mothers. The author points out that the
percentage of policies containing maternity coverage has
dropped from 82 percent in 2004 to only 19 percent in 2009,
leaving a growing number of women priced out of the
insurance market. The author also argues that, in some
areas, policies with maternity coverage may not be
available at any cost.
Value of prenatal care
A 2008 report from the National Women's Law Center entitled
"Nowhere to Turn: How the Individual Health Insurance
Market Fails Women" found that it is difficult and costly
for women to find health insurance that covers
pregnancy-related care.
Numerous studies have shown that prenatal care pays for
itself by helping to minimize the prevalence and severity
of low- and very low birthweight babies. A 2004 study in
the Journal of Perinatal and Neonatal Nursing evaluated the
effects of augmented prenatal care on women at high-risk
for having a low-birth weight baby who were enrolled in a
special program that provided basic prenatal care, prenatal
education, and case management. The program saved about
$13,962 per single, low birthweight birth prevented, and,
after program costs were considered, the return on
investment equaled 37 percent (for every dollar invested in
the program $1.37 was saved).
An American College of Obstetricians and Gynecologists
study of over 3,000 women estimated that each dollar cut
from prenatal care could cost taxpayers up to $3.33 in
neonatal care for sick babies. The March of Dimes reports
that premature birth is among the most common, serious, and
costly problems facing infants in the United States, and is
responsible for about half of all infant hospitalizations.
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According to the California Department of Public Health, in
2006, 85.9 percent of births were to mothers who initiated
prenatal care in the first trimester. Only 0.6 percent of
California women received no prenatal care. Overall in
California, there are approximately 75 maternal
pregnancy-related deaths and 3,000 infant deaths per year.
Infant mortality is most frequently caused by birth defects
(23.5 percent of deaths), followed by prematurity and low
birthweight (15.6 percent of deaths), maternal
complications of pregnancy (6.0 percent of deaths), and
Sudden Infant Death Syndrome (5.2 percent of deaths).
The California Health Benefits Review Program (CHBRP)
analysis of SB 155
Pursuant to AB 1996 (Thomson), Chapter 795, Statutes of
2002, and SB 1704 (Kuehl), Chapter 684, Statutes of 2006,
the University of California is requested to assess
legislation proposing a mandated benefit or service, or the
repeal of a mandated benefit or service, through CHBRP.
CHBRP prepares a written analysis of the public health,
medical, and economic impacts of such measures. The
following are highlights from the CHBRP analysis of SB 155:
Assumptions of the analysis
The medical effectiveness and public health impacts
sections of the report focus on outcomes associated
with prenatal services. Since a majority of births
occur in the hospital setting regardless of insurance
status, use of prenatal services would be most
affected by the potential for out-of-pocket costs and
thus most directly impacted by this bill. SB 155
would not affect coverage for infants, nor would it
impact the number of deliveries, since the birth rate
is not expected to change after the imposition of the
mandate.
The benefit coverage, utilization, and cost impacts
analysis includes the full range of services that are
considered to be "maternity."
Potential impact of federal health care reform
PPACA is expected to dramatically affect the
California health insurance market and its regulatory
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environment, with most changes becoming effective in
2014. PPACA requires health plans and insurers to
provide coverage for Essential Health Benefits (EHBs),
as defined by the Secretary of the U. S. Department of
Health and Human Services. How these provisions are
implemented in California will largely depend on
pending legal actions, funding decisions, regulations
to be promulgated by federal agencies, and future
California statutory and regulatory actions.
CHBRP points out that the definition of EHBs
explicitly include maternity and newborn care. When
promulgating regulations on EHBs, the U.S. Department
of Health and Human Services must ensure that the EHB
floor is equal to the scope of benefits provided under
a typical employer plan. Virtually all employer
coverage includes maternity services, and the scope of
services under SB 155 is considered standard maternity
care coverage under most employer-based plans, for
example prenatal care, ambulatory care maternity
services, involuntary complications of pregnancy,
neonatal care, and inpatient hospital maternity care,
including labor and delivery and postpartum care.
Therefore, it is highly likely that any impacts of SB
155 projected in the CHBRP analysis beyond 2014 would
be mitigated by these PPACA requirements.
Due to the fact that maternity services, as defined
under SB 155, are considered standard coverage for
employer-based plans, and because it is likely to be
considered part of EHBs, it is unlikely that there
would be an additional fiscal liability to the state
as a result of this mandate for qualified health plans
offered in the state's health benefits exchange.
Medical effectiveness
Studies utilizing randomized controlled trials have
consistently found no statistically significant
correlation between the number of prenatal visits and
birth outcomes for either infants or mothers.
However, there is clear and convincing evidence that
specific services provided during, or in conjunction
with, prenatal care visits are effective in producing
better birth outcomes for mothers and infants. These
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services include smoking cessation counseling, folic
acid to prevent neural tube defects, treatment and
monitoring of hypertensive disorders, treatment
related to preeclampsia or other complications,
screening for various genetic and sexually transmitted
diseases, and diagnostic ultrasounds, among others.
Impact on coverage
The enactment of SB 155 would require all
CDI-regulated individual policies that do not cover
maternity service to do so, thus expanding maternity
services coverage to 1,184,000 enrollees, including
263,600 women ages 19 to 44 years.
There is no evidence that the proposed mandate would
change the per-unit cost of individual services, for
example, for prenatal screenings, or the package of
maternity services. This is because almost all births
are already covered by group plans and public
programs.
Impact on utilization
CHBRP estimates that approximately 8,574 pregnancies
would be newly covered under CDI-regulated individual
policies as a result of SB 155. Overall, SB 155 is
estimated to have no impact on the number of
deliveries, as the birthrate is not expected to
change.
Certain types of screening tests are not included in
the standard prenatal care fee and might be used more
frequently if they are part of the maternity benefit,
thereby affecting costs. The amount of the increase is
difficult to estimate, as these tests would be subject
to HDHP deductibles, and women may treat them as
out-of-pocket costs. The length of stay is likely to
be shorter for mothers who are self-pay or for those
women whose obstetricians or midwives are paid a fixed
fee for postpartum care. However, the latter would
not change as a result of the enactment of SB 155, and
women in HDHPs are likely to pay the obstetrician or
midwife fee out of their deductible, implying that the
mandate would have little impact on the number of
women who self-pay. For this reason, CHBRP estimates
no overall impact on maternity-related length of stay.
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Impact on total health care costs
Among all enrollees in state-regulated policies (both
CDI-regulated and DMHC-regulated), total annual health
expenditures are estimated to increase by $22.2
million, or 0.02 percent, as a result of SB 155. As
the total number of deliveries and average cost
associated with each delivery is not expected to
increase, the mandate primarily shifts costs from
individuals to insurers. The increase in total
expenditures is a total of the following:
All of the cost impacts of this bill
would be concentrated in the individual
CDI-regulated insurance market, where total
premium expenditures are estimated to increase by
1.66 percent, or $111.5 million;
On average, monthly premiums are
estimated to increase by 3.5 percent, or $6.92
per individual;
The increase in out-of-pocket
expenditures for maternity benefits covered by
insurance (copayments and deductibles) amounts to
$32.1 million; and,
The reduction in out-of-pocket
expenditures for maternity benefits not currently
covered by insurance amounts to $121.5 million.
Lastly, CHBRP states that the estimated premium
increases could result in adding 9,778 individuals to
the ranks of the newly uninsured. These individuals
are likely to be younger individuals (aged 19 to 29
years) and women, since they experience the greatest
premium increases and because they are price sensitive
purchasers.
Public health impact
CHBRP's analysis finds that SB 155 has the potential
to positively affect public health outcomes to the
extent that 8,574 newly covered pregnant women utilize
prenatal services that could potentially be covered
under SB 155.
Department of Labor National Compensation Survey (NCS)
PPACA instructs the Secretary of Labor to conduct a survey,
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the NCS, of employer-sponsored coverage to determine the
benefits typically covered by employers and to report the
results of the NCS to the Secretary of Health and Human
Services. The NCS on selected medical benefits, released
on April 15, 2011, consists of 12 selected benefits for
which sufficient data was available. These services
include maternity care, emergency room visits, ambulance
services, diabetes care management, kidney dialysis,
physical therapy, durable medical equipment, prosthetics,
infertility treatment, sterilization, gynecological exams
and services, and organ and tissue transplantation.
The NCS points out that maternity care can refer to a
variety of services. For the purpose of the study,
maternity care was defined as the medical coverage
throughout the woman's pregnancy and included such
diagnostic testing as ultrasounds and fetal monitor
procedures.
Plan documents often separated maternity care into three
stages: prenatal, delivery, and postnatal. The stages
included different types of services; in some cases the
stages were covered differently. Hospitalization for
delivery was often covered the same as regular inpatient
care; prenatal care was sometimes subject to a copayment
per office visit or per pregnancy.
When there were different stages in coverage, provisions
for prenatal care were reported. In addition, when
coverage varied by the type of doctor performing the
treatment, the copayment rate for a specialist was reported
rather than the copayment rate for a primary care
physician.
Two-thirds of the medical care participants in the NCS were
covered by maternity care, with almost all of the remaining
one-third in plans in which the benefit was not mentioned.
Related bills
AB 185 (Hernandez) is identical to SB 155. This bill is
currently on the Assembly Appropriations Committee Suspense
File.
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Prior legislation
Governor's veto
SB 155 is similar to or identical to four bills that
Governor Schwarzenegger vetoed in the past. In his veto
message of AB 1825 (De La Torre) of 2010, Governor
Schwarzenegger stated:
I am returning Assembly Bill 1825 without my
signature. While I acknowledge the author's effort to
address the reason for the last three vetoes on
similar measures, the bill continues to represent a
significant barrier to affordable coverage. I can
appreciate the policy arguments, but none of the
organizations lobbying for this bill's passage must
represent the individuals and families struggling to
pay for their existing health coverage. Nor are any
of these organizations offering to help families pay
for their increasingly expensive coverage. It is a
familiar effort in
which supporters demand more and better coverage,
until the cost for that coverage is added up.
Ironically, some of these same organizations then turn
around and blame the health insurance companies for
charging too much for the benefits they themselves
demanded. I firmly believe you can't have it both
ways.
The passage of federal health reform will have broad
and consequential impacts across our state and nation.
Affordability is the one area in which the hard
decisions remain unresolved. However, if left
unaddressed, the lack of affordability will undermine
the entire reform effort.
Leaders, at both a national and state level, must
accept this responsibility and be willing to make the
decisions that are politically unpopular, but
represent a long-range solution to the problem. This
bill represents a one-sided solution that hurts many
hard-working Californians by increasing costs as well
as the number of uninsured. For these reasons, I
cannot sign this bill.
AB 1825 (De La Torre) of 2010, AB 98 (De La Torre) of 2009,
AB 1962 (De La Torre) of 2008, and SB 1555 (Speier) of 2004
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were substantively similar to this bill. All four bills
were vetoed by the Governor.
AB 119 (Jones), Chapter 365, Statutes of 2009, eliminates
the exception in current law that allows health plans and
insurers to use gender as a basis for premium, price, or
charge differentials, when based on valid statistical and
actuarial data.
SB 54 (Leno) of 2009 as introduced was nearly identical
bill to AB 119. This bill was substantively changed to
address a different issue.
Arguments in support
The California Commission on the Status of Women and the
American Congress of Obstetricians and Gynecologists,
sponsors of SB 155, argue that since only women are
biologically able to have children, they are the ones who
need to buy the more expensive policies and bear the burden
of the increased cost. The sponsors add that this economic
burden is magnified by the fact that women on average make
only 77 percent of men's wages, have less ability to pay
expensive health costs, and the burden is more substantial
for women of color whose average wages are less. The
sponsors contend that the resulting disproportionate costs
for men and women to obtain coverage for their basic
medical needs constitutes gender discrimination, that
maternity care is basic and preventive health care; and
that the law should not allow the sale of insurance
policies that discriminate against women.
Proponents of SB 155 state that DMHC-regulated health plans
are already required to include maternity services and this
bill would bring CDI-regulated policies into conformity,
pointing out that insurance products in the individual
market that do not carry comprehensive maternity coverage
offer selective health care that is not in the best
interest of women. Proponents add that lack of coverage
for prenatal care, delivery, and perinatal services can
have serious health and cost ramifications for both the
mother and the newborn. Proponents of SB 155 contend that
if an insurer fails to provide maternity coverage, the
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state picks up the cost, whether for prenatal care provided
through a public program or the costs associated with lack
of prenatal care and that this bill closes a gap in
existing law.
Arguments in opposition
Opponents of SB 155 include health insurers and the
California Chamber of Commerce who argue that, because
federal law already requires group insurance policies to
include maternity benefits, the mandate in this bill is an
individual market competition issue, rather than a health
insurance access or equity issue. Opponents argue that by
eliminating choice, this bill negatively impacts women and
men who have made a conscious decision not to buy maternity
services, and women who are unable to have children, by
forcing them to purchase coverage for services they do not
want or need.
Opponents argue that the 15 mandate bills introduced this
session add to over 87 mandates already in statute and will
further erode affordable health insurance options for
insureds. Opponents contend that this bill is premature
and could further exacerbate California's budget crisis if
the benefits mandated in this bill exceed the benefits
mandated in federal health care reform. In addition, this
bill will increase costs in the private sector at a time
when the state is still struggling through an economic
crisis, as evidenced by one of the highest unemployment
rates in the nation.
COMMENTS
1. Definition of maternity services in SB 155 should be
consistent with PPACA. Federal guidance and regulations
that will define the scope of benefits to be provided under
a maternity benefits mandate are anticipated. The author
may wish to provide an amendment to conform the definition
of maternity services in SB 155 to the federal definition
at that time. The following is a suggested amendment:
Page 2, lines 26-29:
(c) For purposes of this section, "maternity services"
include prenatal care, ambulatory care maternity
services, involuntary complications of pregnancy,
neonatal care, and inpatient hospital maternity care,
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including labor and delivery and postpartum care. This
definition shall remain in effect until federal
regulations and guidance issued pursuant to the Patient
Protection and Affordable Care Act define the scope of
benefits to be provided under the maternity benefit
requirement, at which time the federal definition shall
be adopted.
POSITIONS
Support: American Congress of Obstetricians &
Gynecologists, District IX
(co-sponsor)
American Civil Liberties Union
American Federation of State, County and
Municipal Employees
Blue Cross of California
California Academy of Family Physicians
California Association of Physician Groups
California Commission on the Status of Women
(co-sponsor)
California Family Health Council
California Medical Association
California National Organization for Women
California Nurses Association
California Pan-Ethnic Health Network
California Primary Care Association
California Teachers Association
California Women's Law Center
Having Our Say
Health Access California
Kaiser Permanente
Local Health Plans of California
March of Dimes
Maternal and Child Health Access
NARAL Pro-Choice California
National Association of Social Workers,
California Chapter
Nevada County Citizens for Choice
Planned Parenthood Advocacy Project Los Angeles
County
Planned Parenthood Affiliates of California
Planned Parenthood Mar Monte
Planned Parenthood of Santa Barbara, Ventura and
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San Luis Obispo
Six Rivers Planned Parenthood
United Nurses Associations of California/Union of
Health Care Professionals
Oppose: America's Health Insurance Plans
Association of California Life and Health
Insurance Companies
California Chamber of Commerce
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