BILL ANALYSIS �
SB 635
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Date of Hearing: August 8, 2012
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
SB 635 (Hernandez) - As Amended: May 31, 2012
Policy Committee: HealthVote:18-0
Urgency: No State Mandated Local Program:
No Reimbursable: No
SUMMARY
This bill, upon a finding by the Department of Finance that the
Major Risk Medical Insurance Program (MRMIP) is inoperative,
halts transfers of specified revenues from the Managed Care
Administrative Fines and Penalties Fund to the MRMIP program,
and instead transfers the funds to a newly created Song-Brown
Program Account, which supports training for health care
professionals.
This bill also specifies the funds are to be used upon
appropriation by the Legislature for workforce development
purposes specified in the Song-Brown Health Care Workforce
Training Act.
FISCAL EFFECT
Annual SF/GF costs in the range of low millions to several
million dollars annually, depending upon the amount of penalty
revenue that would be transferred to the program.
If this penalty revenue is not allocated to the specified
program pursuant to this bill, it could instead be redirected to
offset GF costs for other programs.
COMMENTS
1)Rationale . The author states California has a shortage of
health care professionals, and expects this situation to
worsen as access to health care expands due to federal health
reform implementation. He indicates boosting funding for
Song-Brown workforce training programs will allow California
to train more primary care health professionals.
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2)The Song-Brown program eencourages universities and primary
care health professionals to provide healthcare in medically
underserved areas, and provides financial support to family
practice residency, nurse practitioner, physician assistant,
and registered nurse (RN) education programs throughout
California. The program distributed $7.3 million (special
fund) in grants last year.
3)Managed Care Administrative Fines and Penalties Fund. This
penalty fund receives revenues from penalties assessed on
health care service plans for violation of the Knox-Keene Act.
Currently, the first million collected annually is
transferred to the Medically Underserved Account for
Physicians within the Health Professionals Education Fund and
is, upon appropriation by the Legislature, used for the Steven
J. Thompson Physician Corps Loan Repayment Program. Moneys
over the first million are transferred to the Major Risk
Medical Insurance Fund, which is used to fund the Major Risk
Medical Insurance Program (MRMIP), the state's high-risk pool
program for individuals who have been denied coverage on the
individual market. Penalty revenues are unpredictable and
depend on administrative actions taken against health plans.
Approximately $1-3 million in penalty revenue has been
transferred annually to MRMIP over the last 3 years.
4)Federal Health Care Reform Implementation . The federal Patient
Protection and Affordable Care Act (ACA) contains a variety of
far-reaching provisions that will significantly change the
health care market in California. Many major changes
associated with ACA are operative January 1, 2014, including
the individual mandate to have insurance, guaranteed issuance
of health care coverage, and the availability of coverage
through a new health insurance exchange.
An expansion of eligibility in Medi-Cal and federal subsidies
to purchase coverage in new health insurance exchanges will
reduce the demand for health care coverage through existing
programs such as MRMIP. Because issuance of insurance
coverage is guaranteed beginning in 2014, persons receiving
coverage through MRMIP should be able to purchase coverage on
the open market at that time.
The California Health and Human Services Agency has identified
both significant state costs and cost savings associated with
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the implementation of federal health care reform. Given these
significant changes, it is expected that savings will result
as MRMIP may not be necessary to maintain. On the other hand,
other programs such as Medi-Cal are expected to experience
significantly increased costs.
5)Related Legislation . SB 1416 (Rubio, Hern�ndez) creates the
Graduate Medical Education Trust Fund and requires moneys in
the fund to be used by the Office of Statewide Health Planning
and Development (OSHPD) to fund grants to medical residency
training programs for the creation of additional residency
positions. SB 1416 is pending in the Assembly Health
committee.
A prior version of AB 589 (Perea), in 2011, in a similar
fashion to this bill, redirected revenues in the Managed Care
Administrative Fines and Penalties Fund to a newly established
Steven M. Thompson Medical School Scholarship Program. The
bill was subsequently amended in this committee to be
operative contingent on receipt of federal and private funds,
and was later held on the Suspense File in the Senate
Appropriations committee.
6)Prior Legislation . SB 1379 (Ducheny), Chapter 607, Statutes of
2008 created the Managed Care Administrative Fines and
Penalties Fund and provided the distribution of funding to the
Medically Underserved Account for Physicians and the Major
Risk Medical Insurance Fund.
Analysis Prepared by : Lisa Murawski / APPR. / (916) 319-2081