BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
SB 757 (Lieu)
Hearing Date: 5/16/2011 Amended: 4/28/2011
Consultant: Katie Johnson Policy Vote: Health 6-3
Judiciary 3-2
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BILL SUMMARY: SB 757 would require every group health care
service plan contract and every group health insurance
certificate marketed, issued, or delivered to a resident of
California to provide coverage to the subscriber's registered
domestic partner, regardless of the situs of the contract,
subscriber, or master group policyholder.
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Fiscal Impact (in thousands)
Major Provisions 2011-12 2012-13 2013-14 Fund
DMHC enforcement unknown, potentially minor to
significant* Special**
*See Staff Comments
**Managed Care Fund
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STAFF COMMENTS: This bill may meet the criteria for referral to
the Suspense File.
This bill would require that every group health care service
plan contract and every group health insurance certificate
marketed, issued, or delivered to a resident of California that
provides hospital, medical, or surgical expense benefits provide
equal coverage to employers or guaranteed associations for the
registered domestic partner of an employee or subscriber to the
same extent, and subject to the same terms and conditions, as
provided to a spouse of the employee, subscriber, or
policyholder, regardless of the situs of the contract,
subscriber, or master group policyholder.
Health care coverage and insurance is regulated by two entities:
the Department of Managed Health Care (DMHC) and the California
SB 757 (Lieu)
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Department of Insurance (CDI). Any costs to oversee the
provisions of this bill would be minor and absorbable for CDI.
However, DMHC and CDI only have jurisdiction over those entities
licensed or certificated by the state; it is unclear how either
department would be able to exercise any authority over
out-of-state contract or policyholders. CDI estimates that this
would happen rarely and that it could bring an injunction
against the insurer.
Staff notes that to the extent that DMHC and CDI receive
complaints from California citizens covered by out-of-state
insurers that are not subject to California law, there could be
enforcement costs. Although the likely number of complaints is
small, the cost of enforcing this type of provision is unknown
and could be either minor, if the enforcement was within their
normal course of business, or potentially significant if the
departments had no other recourse than legal action. The type of
enforcement action would depend on the individual situation.
Existing law, AB 2208 (Kehoe), Chapter 488, Statutes of 2004,
establishes the California Insurance Equality Act, which
requires all types of insurance, including health insurance, to
provide coverage to registered domestic partners equal to that
provided to a spouse.
This bill, with the words "regardless of the situs of the
contract or master policyholder," seeks to clarify that this
parity requirement extends to insurance provided to California
residents by employers located out-of-state with out-of-state
insurance contracts or policies.
In the majority of states, the laws of the state where the
insurance company is licensed apply. However, a state may
exercise extraterritorial jurisdiction in that the health plans
and insurers must provide benefits consistent with the state law
in which an employee resides. 12 states currently exercise such
authority: Alaska, Arkansas, Connecticut, Delaware, Indiana,
Kansas, Mississippi, Montana, North Carolina, Oklahoma, Utah,
and Washington. This bill would add California to the list.
SB 757 (Lieu)
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