BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Kevin de Le�n, Chair
SB 1053 (Mitchell) - Health care coverage: contraceptives.
Amended: April 22, 2014 Policy Vote: Health 6-1
Urgency: No Mandate: Yes
Hearing Date: May 12, 2014 Consultant: Brendan McCarthy
This bill meets the criteria for referral to the Suspense File.
Bill Summary: SB 1053 would mandate that health plans and health
insurers provide coverage for all Food and Drug Administration
approved contraceptives.
Fiscal Impact:
Potential one-time costs up to $150,000 to adopt
regulations and potential ongoing costs in tens of thousands
to enforce the bill's provisions by the Department of
Insurance (Insurance Fund).
One-time costs of $125,000 to review plan filings and minor
ongoing costs to enforce the bill's provisions by the
Department of Managed Health Care (Managed Care Fund).
No anticipated costs to the Medi-Cal Program. Under current
law, Medi-Cal managed care plans are not designated as group
plans and therefore are not subject to the benefit mandate
in this bill.
Increased health care premium costs of about $1.5 million
per year to CalPERS for state employees and their
dependents, according to the California Health Benefit
Review Program. These costs would be split between the
General Fund (55 percent) and various special funds (45
percent).
Annual costs of about $5 million per year to subsidize
coverage for additional benefits for enrollees in Covered
California health plans. Based on the estimated per member
per month cost of the new benefit mandate by the California
Health Benefits Review Program and current enrollment by
consumers who are eligible for subsides, the state would
likely pay about $5 million per year in subsidy costs. Over
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time, as enrollment in Covered California grows, such costs
would increase proportionately with enrollment growth.
Total statewide savings projected to be about $150 million
per year in avoided health care costs. The California Health
Benefits Review Program estimates that increased access to
contraception under the bill will increase utilization by
enrollees and thus reduce unwanted pregnancies in the state.
This will reduce health care costs for abortions and labor
and delivery. A small portion of those savings would accrue
to CalPERS, offsetting some or all of the increased costs to
CalPERS. It is important to note that any cost savings
associated with subsidized coverage through Covered
California would likely reduce the long-term cost of
coverage, but would not reduce the state's obligation to pay
for the mandated benefit.
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 health
insurers and health plans are referred to as "carriers").
Current state law requires carriers to provide coverage for a
"variety of contraceptive methods". Current federal law requires
non-grandfathered plans to provide coverage to women for all
Food and Drug Administration approved contraceptive methods.
Under the federal Affordable Care Act, all non-grandfathered
health plans (which in California includes health insurance
policies and health plans) offered after January 1, 2014 must
meet specified essential health benefits. In implementing the
Affordable Care Act, the state has designated the Kaiser
Permanente Small Group Plan as the essential health benefit
benchmark plan. This means that all non-grandfathered plans must
provide the same benefits package that is included in the
benchmark plan, including any specific coverage mandates in law
that applied to the benchmark plan on January 1, 2012.
Under the Affordable Care Act, the federal government will
provide subsidies for coverage purchased through health benefit
exchanges, based on the applicant's income level. Federal law
and guidance provide that the subsidies will include the costs
of any state-imposed benefit mandates that are covered under the
essential health benefits benchmark plan. Should a state adopt
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any new benefit mandate after January 1, 2012 federal subsidies
would not be available to pay for the cost of that benefit. In
other words, whenever the state mandates a new benefit on
carriers in the California health Benefit Exchange, the state
will have to pay the cost to subsidize that additional benefit.
Proposed Law: SB 1053 would mandate that health plans and health
insurers in the group or individual market to provide coverage
for all Food and Drug Administration approved contraceptives.
Specific provisions of the bill would:
Limit the contraception mandate in existing law to plans
and policies issued through December 31, 2014;
Require all plans and policies sold in the group or
individual markets to provide coverage for all Food and Drug
Administration approved contraceptive drugs, devices, and
products (including over the counter products), voluntary
sterilization, patient education and counselling, and follow
up services;
Prohibit non-grandfathered plans from imposing any
cost-sharing on the enrollee;
Extend coverage to the enrollee's spouse and dependents.
Staff Comments: SB 1053 expands the benefit mandate for
contraception in two ways. Both state and federal law are more
general in their requirements for contraceptive coverage than
this bill. Federal law only applies to benefits provided to
women and requires coverage of all contraceptive methods, rather
than all approved contraceptives. This would likely be
interpreted to mean that federal law mandates carriers to
provide women with coverage for one or more contraceptives
within each of the categories of contraception (e.g. barrier
methods, hormonal contraceptives). State law includes a more
general requirement to cover a "variety of contraceptive
methods" and does not specifically mandate coverage for male
contraception. (However, the state's essential health benefit
benchmark plan does provide coverage for male vasectomies, with
patient cost-sharing, so that benefit is now in effect mandated
by state law.)
According to the California Health Benefit Review Program, the
most significant coverage change under the bill will be the
expansion of coverage to include male condoms. There will also
be increased coverage due to the elimination of cost-sharing for
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male vasectomies and the expansion of coverage to explicitly
require all approved female contraceptives to be covered.
Because the bill would impose a benefit mandate that exceeds the
state's essential health benefits, the state will most likely be
required to pay for the marginal cost to provide the new benefit
to those consumers who are purchasing subsidized coverage
through Covered California.
The California Health Benefits Review Program estimates overall
the bill will result in a statewide net increase in expenditures
for contraceptives of about $31 million per year - which
reflects an increase of about $81 million per year in additional
premiums being paid by employers and enrollees and a decrease of
about $47 million per year in enrollee out-of-pocket
expenditures. On the other hand, annual savings due to reduced
health care costs associated with pregnancy, abortion, and labor
and delivery are estimated to be about $150 million per year.
The only costs that may be incurred by a local government under
this bill relate to crimes and infractions. Under the California
Constitution, such costs are not reimbursable by the state.