BILL ANALYSIS �
SB 757
Page 1
Date of Hearing: August 17, 2011
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
SB 757 (Lieu) - As Amended: August 15, 2011
Policy Committee: JudiciaryVote:6-3
Health Vote: 13-5
Urgency: No State Mandated Local Program:
Yes Reimbursable: No
SUMMARY
This bill requires that out-of-state health insurance or health
plan issuers (carriers) comply with requirements to provide
coverage to domestic partners. These requirements currently
only apply to in-state carriers. Specifically, this bill:
1)Subjects, notwithstanding any other provision of law, every
group health care service plan contract or health insurance
policy marketed, issued, or delivered to a California
resident, to the requirements to provide the same coverage to
domestic partners that is provided to spouses, regardless of
the situs of the contract or the subscriber.
2)States that group policies and plan contracts may not
discriminate in coverage between spouses or domestic partners
based on whether they are same-sex or opposite-sex.
FISCAL EFFECT
1)Potential minor, absorbable costs to the Department of Managed
Health Care (DMHC) and California Department Insurance (CDI)
related to ensuring carrier compliance with the provisions of
this bill that states that policies and plan contracts may not
discriminate on the basis of the sex of spouses or domestic
partners.
2)As it is unclear how the provisions of this bill that apply to
out-of-state carriers can be enforced by state regulators,
there is no anticipated direct state fiscal impact for
enforcement.
SB 757
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COMMENTS
1)Rationale . The author states that although California has
strong laws prohibiting discrimination in the issuance of
insurance policies in the state, including a requirement that
all California licensed and regulated insurers and health
plans provide equal coverage to domestic partners, some
out-of-state insurance companies are attempting to evade the
California law that prohibits the sale or issuance of
discriminatory insurance policies. The author states that
multi-state companies that do business in California often
contract with out-of-state insurance companies to provide
coverage for their employees, and that because some of these
out-of-state insurance companies believe there is a loophole
in the law, they are discriminating against employees who live
in California and who are in a domestic partnership by
refusing to provide equal coverage to domestic partners. This
bill intends to provide a legal basis for individuals seeking
to ensure equal coverage for same-sex spouses or domestic
partners.
2)Background . Some California residents are employed by an
employer whose headquarters is located in another state.
These out-of-state employers may contract with one insurance
company for all of their employees, regardless of the
employee's state of residence. If an insurance company is not
licensed by a California regulator, either DMHC or CDI, they
do not have to comply with antidiscrimination requirements in
state law, regardless of whether they are providing coverage
to a California resident. The sponsors suggest that this bill
would be applicable to a small number of people, perhaps
numbering in the low thousands, who work for out-of-state
companies and may seek coverage for same-sex spouses or
domestic partners.
3)Jurisdiction and Enforcement . There are currently 12 states
that exercise extraterritorial jurisdiction over health
insurance policies for their residents. In these states,
health insurers are required to provide benefits consistent
with the state law in which an employee resides. This bill
would make California one of these extraterritorial states.
However, it is unclear how this bill would be enforced, as
state regulators do not have authority over out-of-state
carriers.
SB 757
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4)Related Legislation .
a) AB 205 (Goldberg) Chapter 421, Statutes of 2003 provided
that registered domestic partners should have the same
rights, protections, and benefits as are granted to
spouses.
b) AB 2208 (Kehoe) Chapter 488, Statutes of 2004
established the California Insurance Equality Act which
required all insurance plans to provide equal coverage to
registered domestic partners as to spouses.
Analysis Prepared by : Lisa Murawski / APPR. / (916) 319-2081