BILL ANALYSIS Ó
AB 2088
Page 1
ASSEMBLY THIRD READING
AB 2088 (Roger Hernández)
As Amended April 21, 2014
Majority vote
HEALTH 13-6 APPROPRIATIONS 12-5
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|Ayes:|Pan, Ammiano, Holden, |Ayes:|Gatto, Bocanegra, |
| |Bonilla, Bonta, Chesbro, | |Bradford, |
| |Gomez, Gonzalez, Roger | |Ian Calderon, Campos, |
| |Hernández, Nazarian, | |Eggman, Gomez, Holden, |
| |Ridley-Thomas, | |Pan, Quirk, |
| |Wieckowski, Eggman | |Ridley-Thomas, Weber |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Maienschein, Chávez, |Nays:|Bigelow, Donnelly, Jones, |
| |Mansoor, Nestande, | |Linder, Wagner |
| |Patterson, Wagner | | |
| | | | |
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SUMMARY : Requires health plans and insurers that sell products
in the large group market that do not provide a minimum value of
at least 60%, as defined under federal law, to require that
individuals to be covered by the product have comprehensive
health coverage. Requires plans that offer products with a
minimum value of less than 60% to file a certification with
state regulators and to disclose to potential purchasers that
the product is a supplement to health insurance and is not a
substitute for essential health benefits or minimum essential
coverage as defined in federal law.
EXISTING LAW :
1) Requires health plans and insurers issuing health
benefit plans in the individual and small group markets to
comply with specific rules in the offering, sale and scope
of that coverage, including that the coverage must, at a
minimum, cover 10 essential health benefits (EHBs) as
outlined in federal and state law.
2) Excludes from this requirement certain insurance
policies, if the insurer certifies that the policy is being
offered as supplemental health insurance, and not as a
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substitute for the minimum EHBs, and the insurer requires
that the persons who will be covered have other health
coverage that is not designed to serve as a supplement.
FISCAL EFFECT : According to the Assembly Appropriations
Committee:
1)Likely minor one-time and ongoing costs to the California
Department of Insurance to ensure compliance.
2)Costs to the Department of Managed Health Care as follows
(Managed Care Fund):
a) One-time cost for workload related to issuance of
regulations estimated at $60,000.
b) Plan licensing and enforcement workload estimated at
$135,000 for the first year of implementation, $65,000
ongoing.
COMMENTS : According to the author, this bill is needed to close
a gap in existing state law for large group health coverage
which allows insurers to sell minimum value products to large
employers without clear disclosure that the policies do not
constitute minimum essential coverage for purposes of the
employer requirement or the individual mandate under the federal
Patient Protection and Affordable Care Act. The author states
that this bill closes the gap by applying the same disclosures
and requirement that there be underlying comprehensive coverage
as now apply in state law for the individual and small group
market to large group coverage and extending those protections
to any large group coverage that is less than minimum value.
This bill ensures that policies with less than 60% minimum value
will only be sold as supplemental to coverage sufficient to
comply with the individual mandate in federal law.
According to Health Access California, sponsor of this bill,
this bill closes an important gap that could lead employers to
offer inadequate coverage for workers. However, the employer
penalty would be $3,000 for each employee who enrolls in Covered
California and receives premium assistance while the employer
penalty for failing to offer any coverage is $2,000 for every
full time employee. Health Access acknowledges that California
law cannot regulate the health benefits provided by employers to
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employees, but California can regulate what insurers sell to
large employers. Supporters, primarily labor organizations,
argue that most large employers do the right thing and buy
comprehensive coverage for their workers, but given the federal
employer contribution and potential penalties some employers and
insurers may be tempted to pass off limited benefit coverage as
meeting the individual mandate.
The Association of California Life and Health Insurance
Companies (ACLHIC), in opposition, argues that this bill puts
insurers in the role of policing employers to ensure they are
providing comprehensive coverage. ACLHIC suggests that these
requirements could threaten the continued availability of
important specialty products to employees. Finally, ACLHIC
states that there is no evidence to show that insurers are
inappropriately offering or marketing minimum value plans as a
substitute for minimum essential coverage.
Analysis Prepared by : Ben Russell / HEALTH / (916) 319-2097
FN: 0003749