BILL ANALYSIS �
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THIRD READING
Bill No: SB 974
Author: Anderson (R), et al.
Amended: 5/6/14
Vote: 27 - Urgency
SENATE HEALTH COMMITTEE : 8-0, 4/9/14
AYES: Hernandez, Anderson, Beall, DeSaulnier, Evans, Monning,
Nielsen, Wolk
NO VOTE RECORDED: De Le�n
SENATE JUDICIARY COMMITTEE : 7-0, 4/29/14
AYES: Jackson, Anderson, Corbett, Lara, Leno, Monning, Vidak
SENATE APPROPRIATIONS COMMITTEE : 7-0, 5/23/14
AYES: De Le�n, Walters, Gaines, Hill, Lara, Padilla, Steinberg
SUBJECT : California Health Benefit Exchange
SOURCE : Author
DIGEST : This bill requires the Covered California Board to
allow a Covered California applicant to indicate in his/her
application for a qualified health plan whether he/she would
like assistance in completing the application from a certified
insurance agent or certified counselor. This bill also
prohibits Covered California from disclosing personal
information, as defined, if the applicant indicates that he/she
does not want assistance from a certified insurance agent or
enrollment counselor.
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ANALYSIS :
Existing federal law:
1.Required, under the Patient Protection and Affordable Care Act
(ACA), each state, by January 1, 2014, to establish an
American Health Benefit Exchange to make qualified health
plans available to individuals and qualified employers.
2.Specifies, the Health Insurance Portability and Accountability
Act (HIPAA), 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.
Existing state law:
1.Establishes Covered California in state government as a
state-based marketplace where individuals and small businesses
can purchase qualified health plans.
2.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.
1.Defines "personal information" as any information that is
maintained by an agency that identifies or describes an
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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.
2.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. 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.
3.Prohibits, under the Confidentiality of Medical Information
Act, 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.
4.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.
This bill:
1.Requires Covered California to allow an applicant to indicate
in his/her health insurance application for a qualified health
plan whether he/she would like assistance completing the
application from Covered California certified agent or
certified enrollment counselor.
2.Prohibits Covered California from disclosing personal
information, as defined, to a certified insurance agent or
certified enrollment counselor if the applicant indicates that
he/she does not want assistance from a Covered California
certified insurance agent or certified enrollment counselor.
3.States the bill becomes operative October 1, 2014.
Background
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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 (Covered California) 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.
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.)
Covered California Privacy Practices . Covered California Notice
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of Privacy Practices, Use and Disclosure explain that Covered
California may use and disclose a consumer's personal
information with contractors to help with enrollment and contact
the consumer when necessary. Additionally, all contractors who
Covered California shares information with for these purposes
undergo a fingerprint and background check, receive specialized
training on keeping information confidential, and require signed
confidentiality agreements that requires contractors to follow
the safeguards applicable to Covered California, and prohibit
the use for any purposes outside the scope of the contract.
According to Covered California, both the paper and online
application include disclosures about Covered California's
privacy policy, and require the consumer to agree that they are
aware of those privacy policies and practices. This is required
under the Information Practices Act of 1977 (IPA) and the ACA.
On the paper application, the privacy policy is described
immediately above the "rights and responsibilities" section of
the application, and is referenced in the declaration and
signature which are submitted under penalty of perjury.
Specifically, the paper application states, "We will share your
information with other state, federal and local agencies,
contractors, health plans, and programs only to enroll you in a
plan or program or to administer programs, and with other state
and federal agencies as required by law." For the web-based
application, in order to initially set up an online application
a user must actively consent by clicking a box to agree to the
Terms of Conditions. The Terms and Conditions direct users to
information on the privacy policy that applies to personal
information collected on the site. It discloses that Covered
California maintains administrative, physical, technical,
electronic and procedural safeguards to protect the
confidentiality and security of the personal information. It
allows links to additional information about how data is
collected online and used, and how to request restrictions on
the use and disclosure of information, among other information.
Center for Democracy and Technology (CDT) paper . A March 28,
2012 paper "Privacy and Security Protections for Personal
Information in California's Health Benefit Exchange," written by
Kate Black at the CDT calls on state policymakers to develop a
comprehensive framework of privacy and security policies to
build and maintain public trust in Covered California. The
paper reviews California and federal data privacy laws,
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including the IPA, HIPAA and others and indicates that Health
and Human Services explanatory rule states that HIPAA is "not
broad enough to adequately protect the various types of
personally identifying information that will be created,
collected, used or disclosed by Exchanges and individuals or
entities who have access to information created, collected, and
used by Exchanges." The paper also indicates that the IPA sets
potentially stricter standards for sharing of information
between or among agencies versus sharing information within a
single agency. A December 17, 2013 article written by
Christopher Rasmussen and published on CDT.org asserts that
Covered California incorrectly sees itself as a HIPAA-covered
entity and suggests that Covered California's privacy policy
goes beyond the ACA's privacy protections.
Prior Legislation
SB 900 (Alquist, Chapter 659, Statutes of 2010) pursuant to ACA
established Covered California 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 Covered California.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee:
One-time costs of about $350,000 to modify information
technology systems by Covered California to allow applicants
to indicate whether they would like assistance (federal funds
or special fund).
Potential minor costs to revise paper applications for health
care coverage by the Department of Health Care Services (DHCS)
(General Fund and federal funds). The state uses a single
paper application for the Medi-Cal program and coverage
through Covered California. In order to comply with the
requirements of this bill, the DHCS would likely need to
update the paper application to opt out of future contacts.
The costs to do so are not expected to be significant since
the DHCS regularly revises those forms.
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SUPPORT : (Verified 5/23/14)
California Association of Health Underwriters
California Chiropractic Association
Independent Insurance Agents and Brokers of California
Lieutenant Governor Gavin Newsom
National Association of Insurance and Financial Advisors of
California
ARGUMENTS IN SUPPORT : The California Association of Health
Underwriters, the National Association of Insurance and
Financial Advisors of California and the Independent Insurance
Agents and Brokers of California support this bill stating it is
as a simple, tailored approach that permits individuals needing
assistance in the Covered California enrollment process to
affirmatively indicate they need additional help with their
applications.
JL:k 5/23/14 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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