BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Kevin de Le�n, Chair
SB 1182 (Leno) - Health care coverage: rate review.
Amended: April 10, 2014 Policy Vote: Health 7-1
Urgency: No Mandate: Yes
Hearing Date: May 23, 2014 Consultant: Brendan McCarthy
SUSPENSE FILE.
Bill Summary: SB 1182 would require health insurers and health
plans in the large group market to provide specified information
to the Department of Insurance or the Department of Managed
Health Care in order for those departments to review rate
increases over 5 percent from the prior year. The bill would
require health insurers and health plans to provide specified
information to certain large employers who purchase coverage for
their employees.
Fiscal Impact:
Likely costs in the tens of thousands to low hundreds of
thousands per year to develop regulations, review insurance
plan rate filings, respond to complaints, and take
enforcement actions by the Department of Insurance
(Insurance Fund).
One-time costs of about $715,000 in 2014-15 and $960,000 in
2015-16 and ongoing costs of about $685,000 per year
thereafter to develop regulations, review health plan rate
filings, respond to complaints, and take enforcement actions
by the Department of Managed Health Care (Managed Care
Fund).
Background: Under current law, the Department of Insurance
regulates health insurers and the Department of Managed Health
Care regulates health plans (collectively, these are referred to
as "carriers"). Current law requires carriers in the individual
and small group markets to provide information regarding rate
increases to their respective regulators annually. The
regulators use this information to conduct reviews of the
proposed rates. The regulators are authorized to make their
findings public, but they do not have the power to reject
proposed rate increases by carriers.
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In the large group market, current law requires carriers to
submit certain information on rate increases to their respective
regulators for "unreasonable" rate increases. The federal
government has not provided guidance on what constitutes
unreasonable rate increases in the large group market and
neither department has adopted regulations to implement this
provision of law.
Proposed Law: SB 1182 would require carriers in the large group
market to provide specified information to the Department of
Insurance or the Department of Managed Health Care in order for
those departments to review rate increases over 5 percent from
the prior year.
Specifically, the bill would:
Replace the term "unreasonable rate increase" in statute
with a rate increase of 5 percent over the prior year to
trigger rate review in the large group market;
Expands the information that carriers would be required to
provide to the regulators to facilitate rate review in the
large group market;
Require all carriers in the large group market to provide
specified information on costs and benefit categories to the
regulators.
The bill would require carriers to provide specified information
to certain large employers who purchase coverage for their
employees.
Specifically, the bill would:
Require a carrier to provide claims data to a requesting
purchaser (typically an employer or multiemployer trust)
with an enrollment of more than 1,000 covered lives;
Require the information above be provided at no cost by the
carrier;
Specify the method for providing information by a carrier
that does not have claims data (specifically, a fully
integrated health system such as Kaiser Permanente);
Put specified privacy protections in place to prevent the
identification of employees by health care usage or health
status based on the claims data.
Related Legislation: SB 746 (Leno, 2013) would have established
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new data reporting requirements on health plans in the large
group market and would have required Kaiser Permanente to
provide claims data (or the equivalent) to certain large
purchasers. That bill was vetoed by Governor Brown.
Staff Comments: 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.