BILL ANALYSIS Ó
AB 2088
Page 1
GOVERNOR'S VETO
AB 2088 (Roger Hérnandez)
As Amended August 21, 2014
2/3 vote
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|ASSEMBLY: |50-25|(May 28, 2014) |SENATE: |22-12|(August 27, |
| | | | | |2014) |
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|ASSEMBLY: |54-25|(August 28, | | | |
| | |2014) | | | |
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Original Committee Reference: HEALTH
SUMMARY : Requires health plans and insurers that sell products
in the large group market that provide a minimum value of less
than 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.
The Senate amendments clarify this bill does not apply to
specialized health plans and insurers and remove language that
required the certification to include average annual premium
rates, or ranges of premium rates, charged for the group plans
or policies, as specified.
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
AB 2088
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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
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 Senate Appropriations
Committee:
1)Minor costs to the Department of Insurance to enforce
compliance (Insurance Fund).
2)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).
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.
According to the author, 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,
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this bill closes an important gap that could lead employers to
offer inadequate coverage for workers. Health Access
acknowledges that California law cannot regulate the health
benefits provided by employers to 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.
There is no opposition on file.
GOVERNOR'S VETO MESSAGE :
"This bill seeks to prevent substandard health care coverage
from being sold in the employer market by setting a minimum
threshold for value.
"While well-intentioned, to the extent this bill would outlaw
any 'grandfathered plans' - those products that have been
continuously sold to an employer prior to the passage of the
Affordable Care Act - it may violate federal law."
Analysis Prepared by : Ben Russell / HEALTH / (916) 319-2097
FN: 0005713