BILL ANALYSIS �
AB 1917
Page 1
ASSEMBLY THIRD READING
AB 1917 (Gordon)
As Amended May 23, 2014
Majority vote
HEALTH 13-5 APPROPRIATIONS 12-5
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|Ayes:|Pan, Ammiano, Chau, |Ayes:|Gatto, Bocanegra, |
| |Bonilla, Bonta, Chesbro, | |Bradford, |
| |Gomez, Gonzalez, | |Ian Calderon, Campos, |
| |Roger Hern�ndez, | |Eggman, Gomez, Holden, |
| |Lowenthal, Nazarian, | |Pan, Quirk, |
| |Ridley-Thomas, Wieckowski | |Ridley-Thomas, Weber |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Maienschein, Ch�vez, |Nays:|Bigelow, Donnelly, Jones, |
| |Nestande, Patterson, | |Linder, Wagner |
| |Wagner | | |
| | | | |
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SUMMARY : For health plans and insurance policies which cover
essential health benefits (EHBs), limits enrollee cost sharing,
such as copayments and coinsurance, for outpatient prescription
drugs. Specifically, this bill :
1)Limits cost sharing for a 30-day supply of a prescription drug
that does not have a time-limited course of treatment, or that
has a time-limited course of treatment of more than three
months, to no more than one-twelfth of the annual
out-of-pocket limit.
2)Limits cost sharing for a prescription drug that has a
time-limited course of treatment of three months or less to
one-half of the annual out-of-pocket limit, for the
time-limited course of treatment.
3)For a high deductible health plan, requires the cost sharing
limit be applied once an enrollee's deductible for the plan
year is satisfied.
EXISTING LAW requires non-grandfathered individual and group
coverage covering EHBs to limit annual out-of-pocket expenses
for 2014 for covered EHBs (except for pediatric oral care) to
AB 1917
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$6,350 for an individual and $12,700 for family coverage. In
2015 and subsequent years, requires out-of-pocket limits to be
adjusted annually based on the average increase in health
insurance premiums, pursuant to the federal Patient Protection
and Affordable Care Act (ACA) and implementing federal rules.
FISCAL EFFECT : According to the Assembly Appropriations
Committee:
1)One-time costs to the California Department of Insurance for
oversight and review of $50,000 and ongoing potential
enforcement costs of $70,000 annually (Insurance Fund).
2)One-time costs to the Department of Managed Health Care for
review and regulations of $80,000, and potential ongoing
enforcement costs averaging $25,000 per year (Managed Care
Fund).
3)Unknown employer-funded premium costs in the private insurance
market and premium expenditures by employees and individuals
purchasing insurance, potentially in the millions to tens of
millions of dollars. Some of these increased costs will be
offset by reduced out-of-pocket expenditures.
4)To the extent this bill improves adherence to costly
medication, payers may experience some level of reduced
utilization and cost for other health care services. Poor
adherence to prescription drugs is associated with increased
hospitalizations and emergency department visits. The extent
of potential savings associated with improved adherence
attributable to this bill, however, is unknown.
COMMENTS : Health Access California, sponsor of this bill,
argues that the emergence of very high cost specialty drugs
which are increasingly offered on an outpatient basis, such as
chemotherapy, has led health plans and insurers to impose high
copayments and coinsurance on the necessary medications.
Californians with human immunodeficiency virus or acquired
immune deficiency syndrome, hepatitis, cancer, multiple
sclerosis, or other serious conditions often drug coinsurance of
10% to 20% of the drug costs. Under these conditions, patients
must exhaust their entire annual out-of-pocket limit in the
first month. According to Health Access, asking someone to
spend $6,000 for a single prescription upfront is unrealistic.
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This is particularly true for those who make less than $45,000,
the median income in California. Spreading these costs out over
the course of a year is reasonable and allows Californians to
budget and plan for the cost of their care, and will prevent
financial hardship and bankruptcy, the intent of the ACA and the
out-of-pocket limit provision.
Health plans and insurers oppose this bill arguing it will
increase health insurance premiums, arbitrarily require changes
in the Covered California standard benefit designs and do
nothing to control the dramatic rise in prescription drug costs.
The California Association of Health Plans points out that
prescription drugs represent a significant 16% of the health
care premium dollar and the underlying cost of drugs deserves
immediate attention, but argues that this bill does nothing to
address that underlying issue. The Pharmaceutical Care
Management Association argues that this bill will give branded
drug manufacturer's a free ride on endless price increases. The
Association of California Life and Health Insurance Companies
(ACLHIC) argues that under the ACA actuarial value standards
lowering cost sharing for one benefit will necessarily increase
cost sharing for other services. ACLHIC believes that this bill
will only shift the burden and socialize the costs of expensive
drugs to all rate payers.
Analysis Prepared by : Ben Russell / HEALTH / (916) 319-2097
FN: 0003744