BILL ANALYSIS �
AB 1578
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Date of Hearing: August 30, 2014
ASSEMBLY COMMITTEE ON HEALTH
Richard Pan, Chair
AB 1578 (Pan) - As Amended: August 19, 2014
SUBJECT : Health: The California Health Benefit Review Program.
SUMMARY : Extends the sunset for the California Health Benefit
Review Program (CHBRP) and sunset date for the fee paid by
health plans and insurers by an additional fiscal year to
include 2015-2016. Expands the subject of legislation that
CHBRP may assess to include health insurance benefit design,
cost sharing, premiums and other health insurance topics.
Specifically, this bill :
Requests CHBRP, in addition to analyzing the public health
impacts, medical effectiveness, and financial impacts of
legislation proposing to mandate or repeal a benefit or service,
to also analyze the impact on essential health benefits (EHBs)
and the California Health Benefit Exchange, known as Covered
California.
Requests CHBRP to assess legislation that impacts health
insurance benefit design, cost sharing, premiums, and other
health insurance topics.
Requests analyses be provided to the appropriate policy and
fiscal committees of the Legislature not later than 60 days, or
in a manner and pursuant to a timeline agreed to by the
Legislature and CHBRP.
Extends the annual fee assessed on health plans and insurers to
fiscal year 2015-16.
Extends CHBRP, from June 30, 2015, to June 30, 2016.
EXISTING LAW , until June 30, 2015, requests the University of
California (UC) to establish CHBRP to assess and prepare a
written analysis on the medical, economic and public health
impact of legislation proposing a mandated health benefit or
service required to be offered or provided by health plans and
health insurers.
FISCAL EFFECT : As this bill extends statutes governing CHBRP
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for one additional fiscal year, the UC Office of the President
will continue to incur costs of $2 million annually in the
2015-16 fiscal year to support CHBRP activities (Health Care
Benefits Fund).
COMMENTS : According to the author, under existing law, until
June 30, 2015, the Assembly and Senate Health Committees, make
requests of UC to assess and prepare a written analysis on the
medical, economic, and public health impact of legislation
proposing a mandated health benefit or service required to be
offered or provided by health plans and health insurers. The
author argues that in order for this program to continue the
sunset date needs to be extended. The author also notes that
existing law is unnecessarily restrictive as to what CHBRP will
study and the codified timetable for completing any work is
inflexible and outdated. The author states that existing law
does not reflect the changes made in health insurance since the
enactment and implementation of health care reform.
This bill reforms the CHBRP program to reflect the new health
care environment since the implementation of federal health care
reform. The bill expands the scope of the program by requiring
the mandate studies to examine the impact on essential health
benefits and authorizes CHBRP to undertake research on
additional important health insurance topics such as benefit
design, cost sharing and premiums. This bill also extends for
an additional year the sunset date on the overall CHBRP program
and the requirement that health plans and health insurers be
assessed a fee to support CHBRP. The extensions will be through
the 2015-16 fiscal year. The bill also requires a report to the
Legislature and the Governor by January 1, 2016. The studies
conducted by CHBRP supply important information as the
Legislature and Governor consider the impacts of different
health policy issues related to health insurance.
AB 1996 (Thomson), Chapter 795, Statutes of 2002, requests UC to
assess legislation proposing a mandated benefit or service
(referred to as "mandate bills") and prepare a written analysis
with relevant data on the medical, economic, and public health
impacts of proposed health plan and health insurance benefit
mandate legislation. Since 2004, CHBRP has analyzed 103 mandate
bills, 45 of which were passed by the Legislature and enrolled
to the Governor. Thirty-three of those bills analyzed were
vetoed, and 11 were signed into law. In the past two years,
during CHBRP's analysis of what were thought to be mandate
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bills, it determined that a number of those referred were not,
in fact, new mandates. Additionally, a number of the bills that
became law were amended enough by the time they were sent to the
Governor to no longer be considered a new mandated benefit or
service.
On March 23, 2010, President Obama signed the Affordable Care
Act (ACA, Public Law 111-148), as amended by the Health Care and
Education Reconciliation Act of 2010 (Public Law 111-152), into
law. Among many other provisions, the ACA requires Medicaid
benchmark and benchmark-equivalent plans, plans sold through the
Exchange, and health plans and health insurers providing
coverage to individuals and small employers to ensure coverage
of EHBs, as defined by the federal Department of Health and
Human Services (HHS). HHS is required to ensure that the scope
of EHBs is equal to the scope of benefits provided under a
typical employer plan, as determined by the Secretary. Under
federal law, EHBs must include 10 general categories and the
items and services covered within the following categories:
1)Ambulatory patient services;
2)Emergency services;
3)Hospitalization;
4) Maternity and newborn care;
5)Mental health and substance use disorder services, including
behavioral health treatment;
6)Prescription drugs;
7)Rehabilitative and habilitative services and devices;
8)Laboratory services;
9)Preventive and wellness services and chronic disease
management; and,
10)Pediatric services, including oral and vision care.
On December 16, 2011, the HHS Center for Consumer Information
and Insurance Oversight released a bulletin proposing that EHBs
be defined using a benchmark approach. SB 951 (Ed Hernandez),
Chapter 866, Statutes of 2012 and AB 1453 (Monning), Chapter
854, Statutes of 2012 designated the Kaiser Small Group HMO as
California's benchmark plan to serve as the EHB standard. The
state has to defray the costs of federal subsidies to cover any
mandate enacted that is beyond what is contained in EHBs
pursuant to SB 951 and AB 1453.
Through SB 900 (Alquist) Chapter 659, Statutes of 2010, and AB
1602 (P�rez), Chapter 655, Statutes of 2010, California was the
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first state in the nation to establish a Health Benefit Exchange
(known as Covered California). Adopting its Board of Directors
in October 2011, Covered California's vision is to improve the
health of all Californians by assuring their access to
affordable, high quality care. According to Covered California,
it is an easy-to-use marketplace where individuals can get
financial assistance to make coverage more affordable and where
people can compare and choose health coverage. As of March 31,
2014, approximately 3.2 million Californians have enrolled in
coverage since October 1, 2013, including 1.9 million in
Medi-Cal.
Since CHBRP's inception, the number of bills mandating benefits
and services has fluctuated, and in the last year has decreased
significantly. When AB 1996 was being considered by the
Legislature, the author stated that during the 2001-02
legislative session, more than 14 mandate bills were introduced.
The author believed that UC would facilitate the provision of
quality, cost-effective health services by providing current,
accurate data and information to the Governor and the
Legislature for the purpose of determining health-related
programs and policies in connection with proposed legislation.
In 2003, the first year that the UC received requests for
analysis of mandate bills, only four were introduced and
analyzed. The following year, there were 13 mandate bills
analyzed. Between 2005 and 2014, the number of mandate bills
introduced has varied, with the largest number (15 mandate
bills) in 2011. With the passage of the ACA, and the
establishment of EHBs, policymakers have worked to ensure the
successful implementation of the ACA and Covered California, and
have endeavored to discourage any additional legislation to
alter state mandated benefits until the implications of EHBs
were known.
In the 10 years since CHBRP has been analyzing mandate bills,
various stakeholders and interest groups have developed
legislative proposals other than mandates to have a similar
effect on coverage requirements. These have included:
1)SB 639 (Ed Hernandez), Chapter 316, Statutes of 2013 places in
California law provisions of the ACA relating to out-of-pocket
limits on health plan enrollee and insured cost-sharing,
health plan and insurer actuarial value coverage levels and
catastrophic coverage requirements, and requirements on health
insurers with regard to coverage for out-of-network emergency
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services. Applies health plan enrollee and insured
out-of-pocket limits to specialized products that offer EHBs.
2)AB 1800 (Ma), of 2012, would have implemented provisions of
the ACA related to prohibitions on health plans and health
insurers from imposing out-of-pocket maximum caps which exceed
specified levels. AB 1800 was held in the Senate
Appropriations Committee.
3)AB 310 (Ma), of 2011, would have prohibited health plan
contracts and health insurance policies that cover outpatient
prescription drugs from requiring coinsurance, as defined, as
a basis for cost sharing for outpatient prescription drug
benefits and imposes specified limitations on copayments, as
defined, and out-of-pocket expenses for outpatient
prescription drugs. AB 310 was held in Assembly
Appropriations Committee.
AB 1996 and subsequent legislation that extended CHBRP included
a request that analyses be provided to the legislature within 60
days. CHBRP developed a model that has resulted in analyses not
being completed prior to that 60-day deadline. According to
CHBRP's 2013 report to the Legislature, it uses a 60-day
timeline that details which activities occur on what day. The
60-day clock is initiated by CHBRP upon receipt of a request
from the Senate or Assembly Health Committee. According to
CHBRP, it must have sufficient capacity to do multiple (e.g.,
eight or more) analyses on simultaneous 60-day timelines. CHBRP
faculty, actuaries, librarians, reviewers, and staff must
produce and review multiple drafts on multiple bills in what
they consider a very compressed timeframe, given their model.
This timeline has led to challenges for policy committee staff,
because Assembly and Senate Health Committee staff requires the
CHBRP analysis prior to completing their analysis. Often times
mandate bills are introduced close to the bill introduction
deadline, which is also about 60 days before deadline for policy
committees to hear bills, and there is a tight window between
the time the CHBRP analysis is received and the Committee
analysis must be completed. This arrangement gives the Health
Committees little time to incorporate its findings in a
meaningful way into the Committee analysis.
AB 1996 requests UC to, within 60 days of receiving a request by
the Legislature, analyze legislation proposing to mandate or
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repeal a health plan or health insurance benefit or service for
public health, medical, and financial impacts.
SB 1704 (Kuehl), Chapter 684, Statutes of 2006, extended the
sunset date of the UC program to January 1, 2011 and adds
legislation proposing to repeal a mandated benefit or service to
the types of legislation that the Legislature requests that UC
assess.
AB 1540 (Committee on Health), Chapter 298, Statutes of 2009,
extends the sunset date of the UC program to June 30, 2015.
SB 18 (Ed Hernandez) would have requested CHBRP to assess, in
addition to the health, medical, and financial impacts, the
impact that health coverage mandates will have on EHBs, as
specified, and Covered California. SB 18 was subsequently
amended to a different subject matter.
REGISTERED SUPPORT / OPPOSITION :
Support
America's Health Insurance Plans
California Association of Health Plans
Opposition
None on file.
Analysis Prepared by : Roger Dunstan / HEALTH / (916) 319-2097