BILL ANALYSIS Ó
Senate Appropriations Committee Fiscal Summary
Senator Kevin de León, Chair
AB 2088 (R. Hernandez) - Health insurance: minimum value: large
group market policies.
Amended: July 1, 2014 Policy Vote: Health 6-2
Urgency: No Mandate: Yes
Hearing Date: August 14, 2014
Consultant: Brendan McCarthy
SUSPENSE FILE. AS AMENDED.
Bill Summary: AB 2088 would require a health insurer or health
plan that sells a product in the large group market that does
not provide minimum essential coverage to ensure that enrollees
have other coverage that meets minimum essential coverage
requirements.
Fiscal Impact (as approved on August 14, 2014):
Minor costs to the Department of Insurance to enforce
compliance (Insurance Fund).
One-time costs of $170,000 in 2014-15 and $95,000 in
2015-16 for development of regulations and review of health
plan filings and ongoing costs of $67,000 per year
thereafter for enforcement by the Department of Managed
Health Care (Managed Care Fund).
Background: Under current law, health insurers are regulated by
the Department of Insurance and health plans are regulated by
the Department of Managed Health Care (collectively referred to
as "carriers").
The federal Affordable Care Act, and implementing legislation
enacted in California, makes a variety of changes to the
individual and group health insurance market. Changes to the
market include a requirement for "guaranteed issue" of coverage
if premiums are paid, a prohibition on denials of coverage for
preexisting conditions, and many other regulatory requirements.
Under the Affordable Care Act, employers with more than 50
employees are required to provide health care coverage that
meets minimum essential coverage, which is comprehensive health
AB 2088 (R. Hernandez)
Page 1
care coverage that covers at least 60 percent of the total cost
of health care services covered by the plan.
The Affordable Care Act, and implementing legislation in
California, made a number of changes to the health care
marketplace, with the overall impact of requiring qualifying
health plans to offer comprehensive benefits with high levels of
actuarial value. However, current law does not prohibit the sale
of health plans or insurance policies that do not meet these
requirements. For example, specialty coverage (dental plans,
vision plans) or limited benefit insurance plans.
Proposed Law: AB 2088 would require a health insurer or health
plan that sells a product in the large group market that does
not provide minimum essential coverage to ensure that enrollees
have other coverage that meets minimum essential coverage
requirements.
Related Legislation: AB 1972 (Gomez) would require the
Department of Finance to prepare an annual report that
identifies each employer in the state that employs 50 or more
employees who receive benefits from specified public assistance
programs. That bill is pending in this committee.
Staff Comments: The intent of this bill is to ensure that large
employers do not offer their employees coverage that does not
meet minimum essential coverage. Rather than place this
requirement on the employer, however, this bill requires the
health plan or insurer to ensure that its enrollees are offered
coverage by the employer that meets minimum essential coverage
requirements.
The only costs that may be incurred by a local agency under the
bill relate to crimes and infractions. Under the California
Constitution, such costs are not reimbursable by the state.
Author's amendments: make minor changes to the disclosure
requirements in the bill.