BILL ANALYSIS �
SB 961
Page 1
SENATE THIRD READING
SB 961 (Ed Hernandez)
As Amended August 20, 2012
Majority vote
SENATE VOTE :23-13
HEALTH 12-4 APPROPRIATIONS 12-5
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|Ayes:|Monning, Atkins, Bonilla, |Ayes:|Gatto, Blumenfield, |
| |Eng, Gordon, Hayashi, | |Bradford, |
| |Roger Hern�ndez, Bonnie | | Charles Calderon, |
| |Lowenthal, Mitchell, Pan, | |Campos, Davis, Fuentes, |
| |Silva, Williams | |Hall, Hill, Cedillo, |
| | | |Mitchell, Solorio |
|-----+--------------------------+-----+--------------------------|
|Nays:|Logue, Garrick, Mansoor, |Nays:|Harkey, Donnelly, |
| |Nestande | |Nielsen, Norby, Wagner |
| | | | |
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SUMMARY : Reforms California's health insurance market for
individual purchasers and implements provisions of the Patient
Protection and Affordable Care Act (ACA) prohibiting preexisting
condition exclusions, requiring guaranteed issuance of products,
establishing statewide open and special enrollment periods, and
limiting premium rating factors to age, geography, and family
size. Specifically, this bill :
1)Prohibits health plans and disability insurers in the
individual market, except grandfathered plans, from imposing
preexisting condition requirements after January 1, 2014.
2)Requires guaranteed issuance of health plan contracts and
health insurance policies in the individual market.
3)Requires a plan or insurer to provide an initial open
enrollment period from October 1, 2013, to March 31, 2014,
inclusive, and annual enrollment periods for plan years on or
after January 1, 2015, from October 15 to December 7,
inclusive of the preceding calendar year.
4)Requires a plan or insurer to allow an individual to enroll in
or change individual health benefit plans, as a result of
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specified triggering events including when he or she was
receiving services from a contracting provider under another
health benefit plan for a condition which requires continuity
of coverage, under existing law.
5)Prohibits, on or after January 1, 2014, a health plan or
health insurer from conditioning the issuance or offering of
an individual health benefit plan on any of the following
factors:
a) Health status;
b) Medical condition, including physical and mental
illness;
c) Claims experience;
d) Receipt of health care;
e) Medical history;
f) Genetic information;
g) Evidence of insurability, including conditions arising
out of acts of domestic violence;
h) Disability; or,
i) Any other health status-related factor as determined by
federal regulations, rules, or guidance issued pursuant to
the ACA.
6)Requires all individual health benefit plans to conform to
specified requirements in existing law, and to be renewable at
the option of the enrollee except as permitted to be canceled,
rescinded, or not renewed, as specified. Requires any plan
that ceases to offer for sale new individual health benefit
plans, as specified, to continue to be governed by existing
law, as specified.
7)Requires a health plan to use only the following
characteristics of an individual, and any dependent thereof,
for purposes of establishing the rate of the individual health
benefit plan covering the individual and eligible dependents,
along with the health benefit plan selected by the individual:
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a) Age, as described in regulations adopted by the
Department of Managed Health Care (DMHC) and the California
Department of Insurance (CDI) that do not prevent the
application of the ACA. Requires the rates to be
determined based on the individual's birthday;
b) Thirteen geographic rating regions; and,
c) Whether covering an individual or family.
8)Establishes a rating period from January 1, to December 31,
inclusive.
9)Requires grandfathered plans to disclose to enrollees that new
coverage options including potential subsidies will be
available in 2014 and to direct enrollees where they can seek
more information.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, one-time special fund costs over the next three years
to CDI and DMHC exceeding $500,000 (Managed Care Fund and
Insurance Fund) to modify regulations, to ensure plan licensure
documentation and practices reflect compliance with this bill's
provisions, and to handle consumer inquiries. Unknown,
potentially significant annual state costs to CDI and DMHC to
enforce the provisions of this bill depending upon insurer
compliance with the new provisions and the volume of consumer
complaints.
COMMENTS : According to the author, this bill is necessary to
implement provisions of the ACA and reform California's
individual insurance market. While California has a history of
strong consumer protections in the group market, these
protections have largely been absent in the individual market.
The ACA creates new market rules that limit which factors plans
can use to determine premium rates, eliminate the use of
preexisting condition exclusions and require plans to issue and
renew policies for anyone willing to purchase. The market rules
established in this bill will affect plans operating in the
Exchange and in the outside market in order to be consistent and
ensure an equitable mix of health risk. This bill reforms
California's individual health insurance market to include ACA
requirements and improve access and affordability to health
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insurance for Californians.
Health Access California (HAC) writes in support that this bill
requires guaranteed issue of coverage, ending the practice of
denying Californians coverage based on pre-existing conditions,
prohibits basing premiums on health status, and ends lock-in so
that individuals will be able to change carriers and products.
HAC raises concern about the limitations on guaranteed issue
related to the open enrollment period but reluctantly accepts
these limits given the federal rule on exchanges which imposes
the same rule on California's Exchange. HAC also raises
concerns about not applying the bill's provisions to
grandfathered plans because it will allow the continuation of
substandard plans with increasing premiums. HAC supports the
provisions that limits rate increases to once annually.
Consumers should be able to budget and plan. The Greenlining
Institute believes this bill will establish parity in California
with federal regulations. According to the Greenlining
Institute these measures are of critical importance to
communities of color, who experience health disparities
resulting from factors such as environmental hazards, poverty,
and various forms of discrimination. The California Primary
Care Association indicates that this bill provides numerous
consumer protections. The California Pan-Ethnic Health Network
contends that this bill will ensure that Californians regardless
of health status will be able to get the coverage they need.
The California Chiropractic Association (CCA) strongly believes
that having access to cost-effective health care coverage is
essential in creating and maintaining long-term health and
wellness. CCA is pleased that this bill, in compliance with the
ACA, will prohibit discriminatory premium and denial policies
related to health status and pre-existing conditions. The
California Association of Health Plans (CAHP) believes this bill
is missing key components, such as tying some individual market
and underwriting changes of the ACA to an individual coverage
requirement that was designed to help mitigate the cost impacts
of adverse selection. CAHP believes the ACA changes can only
work when its central provisions are working in harmony. Such
provisions are the guaranteed issuance of coverage regardless of
preexisting conditions, a community rating structure that limits
premium variance, and an individual mandate that requires broad
participation in the insurance market. According to CAHP,
states that have instituted guaranteed issue and community
rating without a mandate have experienced incredible market
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disruption. CAHP would also require charging higher premium
rates based on tobacco use because they cause $96 billion in
health care expenditures per year in the United States. CAHP
also believes many laws will be obsolete under the ACA and
should be repealed.
Analysis Prepared by : Teri Boughton / HEALTH / (916) 319-2097
FN: 0005013