BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
SB 155 (Evans)
Hearing Date: 5/16/2011 Amended: 5/4/2011
Consultant: Katie Johnson Policy Vote: Health 7-1
_________________________________________________________________
____
BILL SUMMARY: SB 155 would require all health insurance policies
to provide coverage for maternity services, as defined,
commencing January 1, 2012.
_________________________________________________________________
____
Fiscal Impact (in thousands)
Major Provisions 2011-12 2012-13 2013-14 Fund
Cost pressure to provide $49 - $244 $98 - $489 $98 -
$489 County/*
care for newly Federal
uninsured persons
*Costs could be shared equally between county and federal funds,
or could be all county funds. See staff comments.
_________________________________________________________________
____
STAFF COMMENTS: This bill meets the criteria for referral to the
Suspense File.
This bill would require that every individual or group policy of
health insurance that is submitted to the department after
January 1, 2012, provide coverage for maternity services and,
for any pending or approved policies on file with CDI prior to
January 1, 2012, health insurers would be required to submit
updated policies that provide coverage for maternity services by
March 1, 2012. This bill would define "maternity services" as
including prenatal care, ambulatory care maternity services,
involuntary complications of pregnancy, neonatal care, and
inpatient hospital maternity care. This bill would provide that
once federal regulations related to the essential health
benefits provided for in federal health care reform were
released, their definition of maternity and newborn care would
replace the definition above. Any increased CDI workload to
review these policies would be minor and absorbable.
SB 155 (Evans)
Page 1
Interaction with the ACA's Essential Health Benefits
Existing federal law, Section 1302 of the Patient Protection and
Affordable Care Act (Public Law 111-148), as amended by the
Health Care Education and Reconciliation Act of 2010 (Public Law
111-152), (ACA) would require all health plans and insurers to
provide maternity and newborn care commencing January 1, 2014,
as part of an essential health benefits package. However, the
Secretary for Health and Human Services (HHS) has yet to define
the scope of benefits for maternity and newborn care.
This bill would define maternity services as described above
until HHS issues regulations and guidance that define the scope
of benefits that will constitute the definition of maternity
services. The federal guidance would then serve as the
definition of that term pursuant to these provisions. Section
1311 of the ACA provides that a state may require health plans
and insurers to provide coverage for benefits not included in
the essential health benefits, but that, within state health
benefits exchanges, the state would be required to assume the
cost of those additional benefits. Since this bill provides that
the federal definition of maternity and newborn care would apply
to these provisions, there would be no expected additional cost
to the state.
CHBRP Analysis
According to a 2011 California Health Benefits Review Program
(CHBRP) analysis of
SB 155, this bill would affect approximately 17 percent of
privately funded insurance subject to California regulation,
including 65 percent of the individual insurance market. In
CDI-regulated large and small group insurance markets,
approximately 100 percent of enrollees have maternity benefits.
Therefore, this bill would only affect enrollees of
CDI-regulated individual insurance market policies.
Approximately 12 percent of all and 13 percent of female
enrollees aged 20 to 44 currently have maternity coverage. CHBRP
estimates that of those enrollees who do not currently have
coverage for maternity services, about 25 percent are women of
childbearing age (19 to 44). This bill would not impact
publicly-funded California health care programs such as
Medi-Cal, Healthy Families, or the California Public Employees
Retirement System (CalPERS), since these plans are not subject
to this bill; they are regulated by the DMHC, not CDI.
SB 155 (Evans)
Page 2
Fiscal Effect of Newly Uninsured
Due to the increase in premiums, CHBRP estimates that
approximately 9,778 people would drop coverage and become newly
uninsured. If they were to seek medical care in a clinic or a
hospital emergency department, there would be cost pressure on
county and federal funds, such as the Safety Net Care Pool, to
reimburse providers for care to the uninsured. For example, if
10 - 50 percent of the newly uninsured individuals incurred
costs of $100 per year, it would total $97,780 - $488,900
annually.
The Access for Infants and Mothers program (AIM) serves women
with private insurance with incomes between 200 and 300 percent
of the federal poverty level with out-of-pocket maternity costs
of greater than $500. To the extent that this bill provides
women with maternity coverage that makes them ineligible for
AIM, there may be a small savings to the state; however, a cost
shift would be unlikely since women would probably continue to
have out of pocket costs above $500. AIM is funded primarily by
65 percent federal funds and 35 percent state tobacco tax
revenue and subscriber contributions. AIM would be the secondary
payer if women retain their private insurance policies; the
program could seek reimbursement from insurers to the extent
allowable.
To the extent that this bill provides coverage for pregnant
women who would otherwise have turned to state programs or have
had pre-term babies for whom the state would have paid, there
could be indeterminate cost avoidance to the state. It is
unclear how often these situations would occur.
The Governor vetoed SB 1555 (Speier, 2004), AB 1962 (De La
Torre, 2008), AB 98 (De La Torre, 2009), and AB 1825 (De La
Torre, 2011), which were all substantially similar to this bill,
due to concerns that this additional mandate would increase
health insurance premiums, make insurance unaffordable, and
increase the number of uninsured Californians.