BILL ANALYSIS �
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|SENATE RULES COMMITTEE | SB 961|
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UNFINISHED BUSINESS
Bill No: SB 961
Author: Hernandez (D), et al.
Amended: 8/24/12
Vote: 21
SENATE HEALTH COMMITTEE : 6-2, 4/18/12
AYES: Hernandez, Alquist, De Le�n, DeSaulnier, Rubio, Wolk
NOES: Harman, Anderson
NO VOTE RECORDED: Blakeslee
SENATE APPROPRIATIONS COMMITTEE : 5-2, 5/24/12
AYES: Kehoe, Alquist, Lieu, Price, Steinberg
NOES: Walters, Dutton
SENATE FLOOR : 23-13, 5/30/12
AYES: Alquist, Calderon, Corbett, Correa, De Le�n,
DeSaulnier, Evans, Hancock, Hernandez, Kehoe, Leno, Lieu,
Liu, Lowenthal, Negrete McLeod, Padilla, Pavley, Price,
Rubio, Simitian, Steinberg, Vargas, Yee
NOES: Anderson, Berryhill, Blakeslee, Cannella, Dutton,
Emmerson, Fuller, Gaines, Harman, Huff, La Malfa,
Walters, Wyland
NO VOTE RECORDED: Runner, Strickland, Wolk, Wright
ASSEMBLY FLOOR : Not available
SUBJECT : Individual health care coverage
SOURCE : Author
CONTINUED
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DIGEST : This bill 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.
Assembly Amendments establish geographic rating regions, to
prohibit a health care service plan from acquiring or
requesting information related to a health status factor,
and require if the federal ACA provisions on guarantee
issue and rating factors are repealed in the ACA, these
sections in state law would also be repealed.
ANALYSIS :
Existing federal law:
1. Establishes the ACA, which imposes various requirements,
some of which take effect on January 1, 2014, on states,
carriers, employers, and individuals regarding health
care coverage.
2. Requires each health insurance issuer that offers
coverage in the individual or group market to accept
every employer and individual that applies for that
coverage and to renew that coverage at the option of the
plan sponsor or the individual.
3. Prohibits a group health plan and a health insurance
issuer offering group or individual health insurance
coverage from imposing any preexisting condition
exclusion with respect to that plan or coverage.
4. Allows the premium rate charged by a health insurance
issuer offering small group or individual coverage to
vary only as specified, and prohibits discrimination
against individuals based on health status.
5. Defines "grandfathered plan" as any group or individual
health insurance product that was in effect on March 23,
2010.
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Existing state law:
1. Provides for regulation of health insurers by the
Department of Insurance (CDI) under the Insurance Code
and provides for the regulation of health plans by the
Department of Managed Health Care (DMHC) pursuant to the
Knox-Keene Health Care Service Plan Act of 1975.
2. Requires health plans to fairly and affirmatively offer,
market, and sell health coverage to small employers.
This is known as "guaranteed issue."
3. Defines a preexisting condition provision as a contract
provision that excludes coverage for charges or expenses
incurred during a specified period following the
employee's effective date of coverage, as a condition
for which medical advice, diagnosis, care, or treatment
was recommended or received during a specified period
immediately preceding the effective date of coverage.
4. Prohibits a plan contract for group coverage from
imposing any preexisting condition provision upon any
child under 19 years of age.
5. Prohibits a plan contract for individual coverage that
is not a grandfathered health plan within the meaning of
the ACA from imposing any preexisting condition
provision upon any children under 19 years of age.
6. Prohibits, with respect to the individual market child
coverage, except to the extent permitted by federal law,
carriers from conditioning the issuance or offering of
individual coverage 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; and
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I. Any other health status-related factor as
determined by the regulators.
7. Defines a "rating period" as the period for which
premium rates established by a plan are in effect, and
requires them to be in effect no less than six months.
8. Establishes the following risk categories for rating
purposes in the small group market: age, geographic
region, and family composition, plus the health benefit
plan selected by the small employer. Specifies age
categories, family size categories, and nine geographic
regions, as determined by the carriers.
9. Prohibits a plan in the small group market from,
directly or indirectly, entering into any contract,
agreement, or arrangement with a solicitor that provides
for or results in the compensation paid to a solicitor
for the sale of a health plan contract to be varied
because of the health status, claims experience,
industry, occupation, or geographic location of the
small employer.
10.Prohibits a policy or contract that covers two or more
employees from establishing rules for eligibility,
including continued eligibility, of an individual, or
dependent of an individual, to enroll under the terms of
the plan based on any of the following health
status-related factors:
A. Health status;
B. Medical condition, including physical and mental
illnesses;
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; and
H. Disability.
11.Establishes and specifies the duties and authority of
the California Health Benefit Exchange (Exchange) within
state government in a manner that is consistent with the
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ACA. Requires, as a condition of participation in the
Exchange, carriers that sell any products outside the
Exchange to fairly and affirmatively offer, market, and
sell all products made available in the Exchange to
individuals and small employers purchasing coverage
outside of the Exchange.
This bill:
1. Prohibits health insurers in the individual market,
except grandfathered plans, from imposing preexisting
condition requirements after January 1, 2014.
2. Requires guaranteed issuance of health insurance
policies in the individual market. Makes this provision
inoperative if the ACA requirement on guaranteed
issuance is repealed.
3. Requires a health 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 health insurer to allow an individual to
enroll in or change individual health benefit plans, as
a result of 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
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;
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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 health insurer 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 insurer 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:
A. Age, as established by the United States Secretary
of Health and Human Services and shall not vary by
more than three to one for adults;
B. 19 geographic rating regions; and,
C. Whether covering an individual or family, and
required by the ACA.
8. Makes #7 above inoperative if the ACA requirement on
rating factors is repealed.
9. Establishes a health insurer rating period of January
1, to December 31, inclusive.
10.Requires grandfathered plans to disclose to insureds
that new coverage options including potential subsidies
will be available and to direct insureds to seek more
information, as specified.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
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Local: Yes
According to the Assembly Appropriations Committee,
one-time special fund costs over the next three years to
CDI and the 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. This
bill has been amended to exclude Health and Safety Code
sections enforced by the DMHC.
SUPPORT : (Verified 5/25/12)
AFSCME, AFL-CIO
California Chiropractic Association
California Commission on Aging
California Pan-Ethnic Health Network
California Primary Care Association
Consumers Union
Health Access California
National Association of Social Workers
The Greenlining Institute
United Nurses Associations of California/Union of Health
Care Professionals
OPPOSITION : (Verified 5/25/12)
Blue Shield of California
California Association of Health Plans
ARGUMENTS IN SUPPORT : The California Commission on Aging
writes in support of this bill that by requiring health
plans to offer guaranteed coverage, portability, and
prohibiting discriminatory premiums based on health status,
this bill helps assure that all Californians can access the
health care they need. The National Association of Social
Workers writes this bill provides a smooth transition to
meeting federal health care law requirements. The
California Chiropractic Association writes in support that
having access to cost-effective health care coverage is
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essential in creating and maintaining long-term health and
wellness. The California Primary Care Association writes
that California's leading role in implementing the
provisions of the ACA is essential to its success. The ACA
provides for numerous consumer protections and it is
important that these are codified into state statute. This
bill ensures that state statute reflects the protections
provided for in the ACA.
ARGUMENTS IN OPPOSITION : The California Association of
Health Plans (CAHP) writes that this bill places some of
the individual market and underwriting changes of the ACA
into state law without tying those changes to an individual
coverage requirement. CAHP argues that the individual
coverage requirement was designed to help mitigate the cost
impacts of adverse selection. CAHP and Blue Shield of
California are also opposed to this bill not including
tobacco use in rate development as allowed under the ACA.
Blue Shield writes in opposition to this bill stating that
if guaranteed
issue and community rating are placed into state law, they
must be tied to an effective and enforceable individual
coverage requirement.
CTW:k 8/28/12 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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