BILL ANALYSIS �
SENATE JUDICIARY COMMITTEE
Senator Hannah-Beth Jackson, Chair
2013-2014 Regular Session
SB 974 (Anderson)
As Amended April 21, 2014
Hearing Date: April 29, 2014
Fiscal: Yes
Urgency: Yes
NR
SUBJECT
California Health Benefit Exchange: Confidentiality of Personal
Information
DESCRIPTION
Existing law establishes the Health Benefit Exchange (Exchange)
in California as a state-based marketplace where individuals and
small businesses can purchase qualified health plans. This
urgency bill would allow an applicant to indicate in his or her
application for a qualified health plan whether he or she would
like assistance in completing the application from an
Exchange-certified insurance agent or certified counselor. This
bill would also prohibit the Exchange from disclosing
information if the applicant indicates that he or she does not
want assistance from an Exchange-certified insurance agent or
enrollment counselor.
BACKGROUND
The Patient Protection and Affordable Care Act (ACA) is a United
States federal statute signed into law by President Obama in
2010. California was the first state to create a health benefit
exchange (Exchange) pursuant to the passage of the ACA and was
charged with creating a new insurance marketplace in which
individuals and small businesses would be able to purchase
competitively priced health plans beginning in October 2013,
with a March 31, 2014 deadline for open enrollment. Those
without insurance may buy a plan at the state's new health
insurance marketplace, called Covered California, or
alternatively be covered by an expansion of Medi-Cal.
(more)
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By the end of February more than 800,000 Californians had
enrolled in a qualified health insurance plan. However, in
December of last year, Covered California shared the contact
information of more than 60,000 individuals with private
insurance agents who had contracted with Covered California.
These individuals had started the process of applying for health
insurance and, for whatever reason, did not complete the
application. Covered California then shared the contact
information of these applicants with insurance agents, who
contacted the individuals about securing alternative health
insurance and/or completing their application. Representatives
of Covered California argued that sharing this information was
legal and would help potential customers sign up for insurance
by the deadline in order for coverage to start by January 1,
2014.
Legal or not, many individuals, including some insurance agents
given the applicants' contact information, expressed outrage
that applicants' personal contact information was shared without
knowledge or consent.
"I'm shocked and dumbfounded," said Sam Smith, and Encino
insurance broker and president of the California Association
of Health underwriters, an industry group. Smith said he was
under the impression from the Exchange that these consumers
had requested assistance. He received the names of two
consumers ? but has not yet contacted them. "These people
would have a legitimate complaint," Smith said. (Chad Terhune,
Los Angeles Times Covered California gave consumers' contact
info to agents, December 3, 2013.)
This bill seeks to address the privacy concerns that have arisen
as a result of Covered California's sharing of private contact
information and would require Covered California to allow an
applicant to indicate on his or her application whether he or
she would like assistance with completing the application, and
prohibit the Exchange from disclosing information to a certified
insurance agent or counselor if the applicant indicates that he
or she does not want assistance. This bill is an urgency
statute and would take immediate effect.
CHANGES TO EXISTING LAW
Existing federal law , the Patient Protection and Affordable Care
Act (ACA), required each state, by January 1, 2014, to establish
an American Health Benefit Exchange to make qualified health
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plans available to individuals and qualified employers. (Public
Law 111-148.)
Existing law establishes the Health Benefit Exchange (Covered
California) in state government as a state-based marketplace
where individuals and small businesses can purchase qualified
health plans. (Gov. Code Sec. 100500 et seq.)
Existing law prohibits every state office, officer, department,
division, bureau, board, commission or other state agency from
disclosing personal information unless the information is
disclosed in a specified way, including:
to the individual to whom the information pertains;
with the prior voluntary written consent, as specified; or
to those officers, employees, attorneys, agents, or volunteers
of the agency that has custody of the information, if the
disclosure is relevant and necessary in the ordinary course of
the performance of their official duties and is related to the
purpose for which the information was acquired. (Civ. Code
Sec. 1798 et seq.)
Existing law defines "personal information" as any information
that is maintained by an agency that identifies or describes an
individual, including, but not limited to, his or her name,
social security number, physical description, home address, home
telephone number, education, financial matters, and medical or
employment history. (Civ. Code Sec. 1798.3.)
Existing law provides that any person who willfully requests or
obtains any record containing personal information from an
agency under false pretenses is guilty of a misdemeanor and
subject to a fine of not more than $5,000, imprisonment not to
exceed one year, or both. Existing law also provides that any
person who unlawfully discloses information is subject to civil
action for invasion of privacy, in addition to any special or
general damages awarded, and attorney fees and/or other
litigation costs reasonably incurred in the suit. (Civ. Code
Secs. 1798.56, 1798.53.)
Existing federal law , the Health Insurance Portability and
Accountability Act (HIPAA), specifies privacy protections for
patients' protected health information and generally provides
that a covered entity, as defined (health plan, health care
provider, and health care clearing house), may not use or
disclose protected health information except as specified or as
authorized by the patient in writing. (45 C.F.R. Sec. 164.500
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et seq.)
Existing law prohibits, under the State Confidentiality of
Medical Information Act (CMIA), providers of health care, health
care service plans, or contractors, as defined, from sharing
medical information without the patient's written authorization,
subject to certain exceptions. (Civ. Code Sec. 56 et seq.)
Existing law subjects any person who knowingly and willfully
uses or discloses information in violation of the ACA to a civil
penalty of not more than $25,000, in addition to any other
penalties that may be prescribed by law. (42 U.S.C. Sec. 18081.)
This bill would require the Exchange to allow an applicant to
indicate in his or her health insurance application for a
qualified health plan whether he or she would like assistance
completing the application from an Exchange certified agent or
certified enrollment counselor.
This bill would prohibit the Exchange from disclosing
information to a certified insurance agent or certified
enrollment counselor if the applicant indicates that he or she
does not want assistance from an Exchange-certified insurance
agent or certified enrollment counselor.
COMMENT
1.Stated need for the bill
According to the author:
The ACA has directed states to provide marketplaces, or
exchanges, for consumers seeking health insurance. Covered
California, the health benefit exchange in our state, has
provided this platform for individuals shopping for a plan.
Unfortunately, due to a security loophole in the law, shoppers
on the website have suffered a disclosure of their data to
outside companies without having given their permission. This
bill is a bipartisan effort to close that loophole, so that
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consumers may shop free from fear of losing their privacy to
unknown, outside entities.
2.Would give consumers control over the sharing of personal
information
This bill would require the board governing the Exchange to
allow an applicant to indicate whether or not he or she would
like assistance with completing his or her health insurance
application from an Exchange certified insurance agent or
certified enrollment counselor. Further, this bill would
prohibit the Exchange from disclosing information if the
applicant indicates that he or she does not want assistance.
The California Pan-Ethnic Health Network (CPEHN) opposed an
earlier version of this bill which would have prohibited the
sharing of an applicant's personal information without explicit
permission from the individual. CPEHN argued that the term
"explicit permission" was overbroad and may prevent the sharing
of marketing leads with enrollee grantees. CPEHN writes:
Covered California is contracting with various entities,
including non-profit community-based organizations, in an
attempt to reach vulnerable communities including low-income
communities of color, immigrants and
Limited-English-Proficient (LEP)?it is vital that such trusted
committee-based organizations have the ability to follow-up on
the leads that have been generated and provide appropriate
assistance and referrals so that those who are eligible
successfully complete the complex enrollment process.
Arguably, this bill represents a narrowly tailored approach to a
specific problem, and allows for individuals needing assistance
in the enrollment process to indicate as much on their
applications. Individuals who do not wish to be contacted may
indicate that preference as well, ensuring their contact
information remains private. In addition, the author offers the
following technical and clarifying amendments which will ensure
that the scope of this bill remains related to the sharing of
personal, contact information for enrollment purposes. With the
most recent set of amendments, CPEHN has removed their
opposition.
Suggested amendments:
Page 3, line 19 after "disclose" insert "personal
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information pursuant to Civil Code Sec. 1798.3"
Page 3, line 19, strike "information"
Page 3, line 21, after "that" insert "he"
1.Non-prescriptive drafting allows Covered California to choose
method most effective for obtaining consumer consent
This bill would require Covered California to allow applicants
to indicate whether or not they would like to receive assistance
in completing health insurance applications, but would not
prescribe the method by which Covered California must comply.
This approach arguably balances privacy concerns with Covered
California's obligation to conduct outreach and provide
assistance to those seeking health insurance. Further, it
ensures that Covered California will have the flexibility to
implement the requirements of this bill in a way that works
within the existing parameters and obligations imposed on the
Exchange.
2.The author should consider amending the bill to allow the
Exchange adequate time to update Covered California
This bill is an urgency measure and will therefore go into
effect immediately upon the signature of the governor.
Effectively, upon enactment, the Exchange will not be able to
enroll new members until an option to indicate whether or not
applicants would like to receive assistance in enrolling for
health insurance under Covered California is present. As it
does not appear to be the intent of the author to bar
enrollment, the author should continue working with Covered
California and the Committee to ensure that there are no
workability issues.
Support : None Known
Opposition : None Known
HISTORY
Source : Author
Related Pending Legislation :
AB 1829 (Conway) would prohibit Covered California from hiring
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or contracting with a person who has been convicted of certain
crimes if the person's duties would involve facilitating
enrollment in qualified health plans or would give the person
access to the financial or medical information of enrollees or
potential enrollees of the Exchange. This bill failed passage
in the Assembly Health Committee.
AB 1830 (Conway) would authorize Covered California to use or
disclose personally identifiable information only to the extent
necessary to carry out specified functions authorized under the
Affordable Care Act, and create civil penalties for the knowing
and willful violation of the bill's provisions. This bill failed
passage in the Assembly Health Committee.
AB 1560 (Gorell) would prohibit Covered California from
disclosing an individual's personal information without first
obtaining written consent, and would require Covered California
to immediately notify the public of any breach of the security
of personal information, as specified. This bill is an urgency
measure and is currently in the Assembly Health Committee.
Prior Legislation :
SB 900 (Alquist, Chapter 659, Statutes of 2010) pursuant to the
federal Patient Protection and Affordable Care Act established
the California Health Benefit Exchange (the Exchange) within
state government.
AB 1602 (Perez, Chapter 655, Statutes of 2010) enacted the
California Patient Protection and Affordable Care Act which,
contingent on SB 900, created the California Health Benefit
Exchange.
Prior Vote : Senate Health Committee (Ayes 8, Noes 0)
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