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 14, 2014
Consultant: Brendan McCarthy
SUSPENSE FILE. AS AMENDED.
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 (as approved on August 14, 2014):
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 likely in the low millions to create a
website for comparing vision plans (special fund).
Ongoing administrative costs likely in the millions of
dollars per year for the Council to manage the new system,
review filings by 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
AB 1877 (Cooley)
Page 1
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
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
AB 1877 (Cooley)
Page 2
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.
Committee amendments: delete the requirement for an online
marketplace and instead require the Council to develop a web
site that will allow consumers to compare participating vision
plans, require implementation of the bill to commence upon
receipt of sufficient funding, and make other changes to the
duties of the Council.