BILL ANALYSIS �
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|SENATE RULES COMMITTEE | SB 757|
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THIRD READING
Bill No: SB 757
Author: Lieu (D)
Amended: 4/28/11
Vote: 21
SENATE HEALTH COMMITTEE : 6-3, 4/27/11
AYES: Hernandez, Alquist, De Le�n, DeSaulnier, Rubio, Wolk
NOES: Strickland, Anderson, Blakeslee
SENATE JUDICIARY COMMITTEE : 3-2, 5/3/11
AYES: Evans, Corbett, Leno
NOES: Harman, Blakeslee
SENATE APPROPRIATIONS COMMITTEE : 6-2, 5/16/11
AYES: Kehoe, Alquist, Lieu, Pavley, Price, Steinberg
NOES: Emmerson, Runner
NO VOTE RECORDED: Walters
SUBJECT : Discrimination
SOURCE : Equality California
DIGEST : This bill requires 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.
ANALYSIS :
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Existing law:
1. Provides for the regulation of health care service plans
(health plans) by the Department of Managed Health Care.
2. Provides for the regulation of all forms of insurance,
including health insurance, by the California Department
of Insurance.
3. Provides that every disability insurance policy covering
hospital, medical or surgical expenses, that is
advertised, issued, or delivered to a California
resident, regardless of the location of the contract or
master group policyholder, is subject to all
requirements in the California Insurance Code, except
those policies issued outside California to an employer
whose principal place of business and majority of
employees are outside California.
4. Requires group health plans, health insurers, and all
other forms of insurance that provide dependent coverage
to provide coverage for a registered domestic partner
that is equal to the coverage provided to a spouse.
5. Provides that any group health plan contract, health
insurance policy, or any other insurance policy, shall
be deemed to provide coverage for a registered domestic
partner that is equal to the coverage provided to a
spouse.
This bill requires that every policy or certificate for
health insurance that is marketed, issued, or delivered to
a resident of California, regardless of the situs of the
contract or master group policy holder must offer or
provide coverage for a registered domestic partner that is
equal to the coverage provided to the spouse of an
employee, insured, or policyholder.
Background
Extraterritoriality . Employers located in one state often
employ individuals who reside in another state, or have
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employees in multiple states. Many such employers purchase
a single group health plan or insurance policy covering all
of their employees, wherever they are located, which
results in such group plans and policies providing coverage
to residents of more than one state. In most states, the
location of the employer's headquarters dictates which
state's insurance regulations apply, not the location of
the employee, as is the case with individual insurance
products. For example, if an employer is headquartered in
New York and has some employees living in New Jersey, New
York insurance regulations will apply to the insurance
coverage of those employees who live in New Jersey. This
is similar to California law.
An exception to this rule occurs in states that choose to
exercise territorial jurisdiction; these states are known
as extraterritorial states. States with extraterritorial
laws require health insurers to provide benefits based on
the laws of the state where an employee resides, regardless
of where the employer is located.
There are currently 12 states that exercise territorial
jurisdiction of insurance laws for health insurance
policies. They include Alaska, Arkansas, Connecticut,
Delaware, Indiana, Kansas, Mississippi, Montana, North
Carolina, Oklahoma, Utah and Washington. Any other state's
group health insurance laws do not apply in these states.
This means that a policy issued by a New York-based insurer
to a New York employer for an employee residing in
Connecticut is subject to Connecticut's insurance
regulations and the New York insurer must issue a
certificate of insurance that complies with Connecticut
insurance law.
Comment
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
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this parity requirement extends to insurance provided to
California residents by employers located out-of-state with
out-of-state insurance contracts or policies.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
According to the Senate Appropriations Committee:
Fiscal Impact (in thousands)
Major Provisions 2011-12 2012-13
2013-14 Fund
DMHC enforcement unknown, potentially minor
to significant Special*
* Managed Care Fund
SUPPORT : (Verified 5/17/11)
Equality California (source)
California Association of Marriage and Family Therapists
California Communities United Institute
ARGUMENTS IN SUPPORT : Equality California, the sponsor
of this bill, asserts that employees of out-of-state
companies who live in California and are in a domestic
partnership are often the victims of discrimination because
their employer contracts with an out-of-state insurer that
does not provide equal benefits to domestic partners.
Because of this practice, domestic partners and employers
are often forced to switch insurers to purchase coverage
that treats spouses and domestic partners equally.
Equality California believes that this bill ensures that
such out-of-state insurers must abide by the same
nondiscrimination laws that California insurers already do.
Writing in support, the California Association of Marriage
and Family Therapists (CAMFT) argues that the 2004
California Insurance Equality Act was intended to provide a
necessary and consistent standard of nondiscrimination in
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insurance by ensuring that insurance companies treat
domestic partners in the same manner as spouses in the
purchase of insurance. CAMFT believes this bill ensures
that out-of-state plans and insurers also adhere to the
nondiscrimination laws of California, thereby assuring
legislative intent behind the California Insurance Equality
Act.
CTW:kc 5/17/11 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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