BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Kevin de Le�n, Chair
AB 1877 (Cooley) - California Vision Care Access Council.
Amended: July 1, 2014 Policy Vote: Health 8-0
Urgency: Yes Mandate: No
Hearing Date: August 4, 2014
Consultant: Brendan McCarthy
This bill meets the criteria for referral to the Suspense File.
Bill Summary: AB 1877 would create the California Vision Care
Access Council and require the Council to develop an online
marketplace for the purchase of vision plans, similar to the
system created by Covered California for the purchase of health
care coverage.
Fiscal Impact:
One-time administrative costs in the hundreds of thousands
to low millions for administrative tasks such as developing
policies regarding the new marketplace, adopting
regulations, conducting stakeholder outreach, and overseeing
the management of funds donated to the new Vision Care
Access Council for development of the marketplace (special
fund).
One-time costs up to $10 million to create a market place
for vision plans (special fund). The bill requires the new
Vision Care Access Council to create a marketplace for the
purchase of vision coverage. Presumably, such a marketplace
would allow consumers to compare vision plans, securely
purchase coverage, and then interface with the information
technology system of the insurance company that offers the
vision plan purchased by the consumer. Based on the
experience in creating the Covered California online health
care marketplace (admittedly a much more complicated system
than the one envisioned in this bill), the costs to develop
such information technology systems are likely to be in the
millions.
Ongoing administrative costs likely in the millions of
dollars per year for the Council to manage the new
marketplace, provide customer support, review filings by
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participating vision plans, and oversee financial
transactions conducted through the new marketplace (special
fund).
One-time costs of about $160,000 over two years and ongoing
costs of about $100,000 for enforcement and consumer
assistance by the Department of Insurance (Insurance Fund).
Background: Under the federal Affordable Care Act, states are
required to establish American Health Benefit Exchanges. If a
state does not create an Exchange, the federal government will
do so. Within the Exchanges, individuals are able to purchase
health care coverage with standardized benefit packages and
actuarial values. In addition, individuals with incomes between
100 percent and 400 percent of the federal poverty level will be
eligible for subsidies for coverage purchased in the Exchanges.
California has established its own California Health Benefit
Exchange (referred to as "Covered California"). In order to
establish eligibility for subsidies and sell coverage, Covered
California operates call centers, contracts with counties, and
utilizes certified insurance agents and certified enrollment
counsellors to help consumers navigate the eligibility and
enrollment process.
Under guidance from the federal government, the state-run
Exchanges are only allowed to offer for sale qualifying health
plans that meet the essential health benefits requirements.
State exchanges are not allowed to offer ancillary policies,
such vision coverage. The federal guidance does allow states to
create parallel organizations to offer ancillary coverage and
those parallel organizations can share resources with an
exchange, provided that the costs for any resources used to
support the sale of ancillary coverage are not paid for with
federal funds or fees paid by participating health plans.
Proposed Law: AB 1877 would create the California Vision Care
Access Council and require the Council to develop an online
marketplace for the purchase of vision plans, similar to the
system created by Covered California for the purchase of health
care coverage.
Specific provisions of the bill would:
Create a new California Vision Access Council, to be
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governed by the existing governing board of Covered
California;
Require the Council to create a marketplace for the
purchase of vision plans by individuals and employers;
Require the Council to determine the minimum requirements
for participation in the marketplace by vision plans;
Require the Council to operate a toll-free telephone line
to assist consumers;
Require the Council to assess a fee on participating vision
plans to cover the costs of operating the marketplace;
Require participating vision plans to provide specified
information, including information on premium increases and
cost sharing, to the Council;
Create a new special fund to support the activities of the
Council and continuously appropriate monies in the new
special fund for support of the Council;
Prohibit the use of State General Fund, federal funds
received by Covered California, or fees assessed on
qualifying health plans by Covered California from being
used to support the Council;
Make most, but not all, provisions of the bill contingent
on the Council determining that at least $250,000 has been
deposited in the new special fund.
The bill contains an urgency clause.
Staff Comments: The creation of the Covered California
marketplace and information technology infrastructure was a very
significant undertaking, taking several years and hundreds of
millions of dollars. The Covered California information
technology system is significantly more complicated than the
marketplace envisioned in this bill. Nevertheless, creation of a
functioning marketplace that would allow consumers to comparison
shop between plans and purchase coverage will require
significant resources. While the bill would make creation of the
marketplace contingent on the receipt of at least $250,000
(presumably from vision plans seeking to participate) that level
of funding will not be sufficient to cover the substantial
startup costs that will be necessary to develop the required
marketplace.
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