BILL ANALYSIS �
SENATE INSURANCE COMMITTEE
Senator Ronald Calderon, Chair
SB 1438 Author:(Alquist) Hearing Date: April 25, 2012
As Amended:March 28, 2012
Fiscal: Yes
Urgency: No
SUMMARY: Would require the Insurance Commissioner to convene a
task force ("Task Force") to study the components necessary to
design a statewide long-term care insurance program and submit a
report the Commissioner, the Governor, and the Legislature by
July 1, 2013.
DIGEST
Existing law:
1. Provides for the regulation of long-term care insurance by
the Insurance Commissioner and prescribes various
requirements and conditions governing the delivery of
individual or group long-term care insurance in the state;
2. Establishes the California Partnership for Long-Term Care
Program to link private long-term care insurance and health
care service plan contracts that cover long-term care with
the In-Home Supportive Services program and Medi-Cal and to
provide Medi-Cal benefits to certain individuals who have
income and resources above the eligibility levels for receipt
of medical assistance, but who have purchased certified
private long-term care insurance policies and subsequently
exhausted the benefits of these private policies.
This bill
1. Would require the Insurance Commissioner to convene a task
force composed of specified stakeholders and representatives
of government agencies to examine the components necessary to
design a statewide long-term care insurance program, as
specified;
SB 1438 (Alquist), Page 2
2. Would require the task force to recommend options for
establishing this program and to comment on their respective
degrees of feasibility in a report submitted to the
commissioner, the Governor, and the Legislature by July 1,
2013.
COMMENTS
1. Purpose of the bill. According to the author, by forming a
task force to study how to design a long-term care insurance
program for the state, this bill would take the first step
to getting the estimated 80% or more of the California
population that currently does not own a long-term care
insurance policy, covered by some form of long-term care
insurance.
2. Background. The burgeoning need for long-term care services
for both the elderly and dependent adults and children
remains a pressing public policy concern. Demographic
trends push the need for greater services, but only a small
portion of the population purchase and retain long-term care
policies.
According to the author:
Only 115,000 Californians own long-term care
insurance policies through the state's Partnership
for Long-Term Care. With a population of about
12,000,000 people in California between the ages
of 40 and 65, these policies account for less than
1 percent of that population, ages 40 to 65.
Generous estimates suggest that another 10 to 20
percent of the population may hold wholly-private
long-term care insurance policies.
3. Community Living Assistance Services and Supports program
(CLASS Act). The federal Patient Protection and Affordable
Care Act established the Community Living Assistance
Services and Supports program (CLASS). The CLASS program
SB 1438 (Alquist), Page 3
was intended to be a national, voluntary insurance program
designed to provide assistance to qualified individuals to
obtain help with many basic daily living activities. On
October 14, 2011, the federal Department of Health and Human
Services transmitted the CLASS report and letter to Congress
stating that the Department CLASS implementation would not
be viable. (The report is available at
http://aspe.hhs.gov/daltcp/reports/2011/class/index.shtml .)
4. Long-term Care Task Force. SB 1438 would require the
Commissioner of the California Department of Insurance to
convene a task force to study how to best design a statewide
long-term care insurance program for Californians.
These policy experts and state officials will examine the
components necessary to design a long-term care insurance
program, including eligibility, enrollment, financing,
administration, and interaction with the state's Medicaid
program.
One year later, the task force would report to the Insurance
Commissioner, the Legislature, and the Governor on the
options for a statewide long-term care insurance programs.
Task Force Participants . This task force would be comprised
of expert long-term care insurance stakeholders, as well as
representatives from the following offices or agencies:
a. Insurance Commissioner. The Insurance Commissioner
oversees the California Department of Insurance (CDI).
The CDI enforces insurance-related laws and regulates
industry practices.
b. Department of Health Care Services (DHCS). The DHCS
houses the California Partnership for Long-Term Care
Program which links private long-term care insurance and
health care service plan contracts that cover long-term
care with the In-Home Supportive Services program and
Medi-Cal.
c. Employment Development Department (EDD). The EDD
administers the State Disability Insurance (SDI), a
SB 1438 (Alquist), Page 4
partial wage-replacement insurance plan for California
workers. The SDI programs are State-mandated, and funded
through employee payroll deductions. The author's office
has indicated in part that EDD may provide some guidance
on how to administer an employee payroll deduction
program.
d. Other relevant federal, state, and local government
agencies. SB 1438 does not specify what other state or
local agencies may be involved, nor does it provide any
criteria or specific appointment powers.
1. Summary of Arguments in Support
a. The author cites a recent poll by the UCLA Center
for Health Policy Research that surveyed 1,490 registered
voters, ages 40 and older, and found that two-thirds of
respondents could not afford more than three months of
nursing home care (at approximately $6,500 per month), if
they needed it. Sixty-four percent said the number one
priority of elected officials should be making long-term
care insurance more affordable.
b. The author argues that with long-term care insurance
policy premiums rising faster than the costs of health
care, most of the middle class is getting priced out of
the market. In support the author cites a recent study
by America's Health Insurance Plans that shows that the
average buyer of long-term care insurance in 1995 had a
median income of $30,000 per year and assets worth
$87,500, versus the average buyer in 2010 with a median
income of $87,500 per year and assets worth $375,000.
c. According to the Alzheimer's Association, because
long-term care represents such a serious financial
obstacle and, given aging projections, it is important
for the state to explore the possibility of establishing
a long-term care insurance program.
1. Summary of Arguments in Opposition
None received (as of April 22, 2012)
SB 1438 (Alquist), Page 5
SB 1438 (Alquist), Page 6
2. Questions
a. The Insurance Commissioner oversees the CDI which is
primarily a licensing and law enforcement agency. While
CDI regulates long-term care insurance contracts, it does
not operate any social assistance programs. Would the
Governor be a more appropriate choice to convene the task
force and appoint its members?
b. Should representatives from the private sector, such
as nonprofit agencies or insurance industry
representatives, be invited to participate?
1. Suggested Amendments
a. The author has agreed to amendments that will
require the Task Force to submit its report by January 1,
2014.
b. The Committee may wish to consider amendments that
clarify that the state officer with the power to convene
also has the power to appoint members of the task force
not otherwise explicitly designated in the bill (such as
representatives from DHCS or EDD).
POSITIONS
Support
Congress of California Seniors/Sponsor
Alzheimer's Association
California Commission on Aging
Oppose
None received (as of April 22, 2012)
Consultant: Hugh R. Slayden, (916) 651-4773
SB 1438 (Alquist), Page 7