SB 900/ Alquist
California Health Benefits Exchange (CHBE)
Update: Passed Senate, in Assembly, waiting be to be assigned to Committee, June 3, 2010

Summary:

Establishes the California Health Benefits Exchange in the California Health and Human Services Agency. The Exchange will be governed by a board with 4-yr terms, appointed by the Governor and the Legislature, that negotiate and enter into contracts with health plans. The Exchange will offer each region of the state a choice of health plans; Including a choice between 5 levels of coverage contained in federal law: platinum, gold, silver, bronze, catastrophic level benefit plan

Analysis/Studies:

  • Federal government would award grants to states beginning in 2011, self-sustained by 2015
  • If state chooses not to establish the Exchange, the Federal government would run its own through a non-profit
  • Assists small employers in facilitating the enrollment of their employees in qualified health plans offered in small group market in the state
  • Awards grants to “navigators” to conduct public education and facilitate in qualified health plans
  • Enrolls any “qualified individual” who seeks enrollment, excluding those incarcerated and undocumented immigrants. The individual’s household income must be between 100-400 percent of the federal poverty level
  • Grants refundable tax credit for % of cost of premiums for coverage under a qualified health plan
  • Requires reduction in maximum limits for out-of-pocket expenses for those enrolled in qualified health plans with incomes between 100 and 400% of FPL
  • Enrolls “qualified employers” defined as a small employer, establishes a tax credit up to 50% of their employee heath care coverage expenses beginning in 2010
  • Exchange is the only place where tax credits are available to individuals
  • Beginning 2014 tax credits for small employers are only available through the Exchange; Small employers can claim credit only for two consecutive taxable years
  • UC Berkeley estimate 8.4 Million Californians will be eligible for the Exchange; 2.9 million (35%) eligible with a subsidy (84% individuals, 16% employees of small employers), costing $12 mil to $220 mil per yr.
  • The bill is silent on forming more than one Exchange in the state and authorizing a regional exchange
  • The bill is silent on including large employers in the Exchange after 2017
  • Related bills: AB 1602, SB 890
  • Supporters: CALPIRG, Congress of California Seniors, Consumer Union, Health Access California
  • Oppose: Anthem Blue Cross

Detailed Summary:

California Benefits Exchange

  • Would be created within the California Health and Human Services Agency
  • Provides a choice in each region of the state between 5 levels of coverage
  • Governed by a board with 4-yr terms that would purchase insurance on behalf of those up to 400% FPL
    • Unspecified number of members appointed by the Governor and the Legislature in an unspecified manner

 

Sec 1

Start-Up costs
  • Provides for a toll-free telephone hotline
  • Staff and IT investments- could phase-in staff
  • Certifies qualified health plans
  • Requires maintenance of an Internet Website that provides standardized comparative information on qualified health plans
  • Assigns rating to each qualified health plan in accordance with the criteria
  • Utilizes a standard format for presenting health benefits plan options
  • Informs individuals of eligibility requirements for the Medi-Cal, Healthy Families, etc
  • Provides an electronic calculator to calculate actual cost of coverage after application of any premium tax credit
  • Grants certification of exemption from responsibility or penalty to have health insurance to individuals
  • Provide a choice of health plans in each region of the state between 5 levels of coverage

 

Functions
  • Enters into contracts with carriers
  • Enrolls individuals in state and local public programs if they’re found eligible (i.e. Medi-Cal, Healthy Families, County-administered Healthy Kids Program)
  • Governance structure/functions would be similar to CalPERS and MRMIB

 

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SB 890/ Alquist
Health Care Coverage

Update: Passed Senate, in Assembly, waiting be to be assigned to Committee, June 3, 2010

Summary:

SB 890 requires insurers to offer standard benefit designs to individuals in accordance with federal requirements. Selling and offering of any benefit plan designs other than the standard benefit plan designs would be prohibited after July 2011.  Policyholders may choose to transfer to a new benefit plan designs of equal or lesser value on their policy’s annual renewal date. The standard benefit plans are required to provide medically necessary health care coverage and may not impose annual or lifetime limits on basic health care services (excluding Medi-care supplements, CHAMPUS supplements, and TRICARE supplements).

The bill also creates an Individual Insurance Market Reform Commission, made up of 9 voting and 3 non-voting member to review and suggest changes to standard benefit plan designs. In addition, the bill places limits on annual premium rate increases and requires at least 30-day notice for changes in premium rate or coverage with a written explanation.

Detailed Summary:

Standard Benefit Plan Designs
  • Requires insurers to make standard benefit plan designs available to individuals. These designs need to be offered in five different coverage choice categories with one standard benefit plan design in each category.
  • Requires discontinuation of offering and selling of any benefit plan designs other than the standard benefit plan designs on and after July 1, 2011
  • Allows policy holder to transfer to a new benefit plan design of equal or lesser value on the annual renewal date on a guarantee issue basis
  • Requires policies issued on or after Jan 2011, to provide coverage for medically necessary basic health care services; prohibiting them from imposing annual or lifetime limits on basic health care services
    • Excludes Medicare supplements, CHAMPUS supplements, TRICARE supplements, accident-only insurance policies
  • Imposes a state-mandated local program; no reimbursement is required by this act for a specified reason

 

Section 12(Ch 9.6/ part 2, division 2 of Insurance Code)

 

 

Section 6(10112.56 Insurance Code)

Individual Reform Commission

  • Creates Individual Insurance Market Reform Commission, consistent of 9 voting members appointed by the Legislature and the Governor, and 3 nonvoting members
  • Requires the Commission to review and suggest changes to standard benefit plan designs and requires Dpt of Managed Health Care and the Dpt of Insurance to jointly adopt regulations based on these suggestions
  • Develops an enrollment questionnaire for all health plans and health insurers that offer/sell individual coverage, establishing a methodology for categorizing individuals into 3 risk categories: Higher risk, Standard risk, Preferred risk and to set rates consistent with methodology
    • Rates between the highest risk category and the lowest risk category cannot vary by more than a 2 to 1 ration within each standard benefit plan design within each category
    • Annual premium rate increase for a plan cannot vary by more than 10% above or below the weighted average premium rate increase across all plan designs (excluding change in premium rate due to age)
    • The highest standard premium rate for a standard benefit plan design cannot exceed the lowest standard premium rate for a design in the market by more than 50% (at the same age, geographic area, family size, contract type, network, effective date)

 

Section 2. (art 4.1/ ch 2.2 division 2 health and safety code)

Coverage Charges and Fees
  • Places limits on the annualized premium rate increase for a contract and the variation between the highest standard premium rate and lowest standard premium rate
    • Does not apply to a specialized health care service plan in contract in the Medi-Cal Program or Healthy Families Program
  • Requires at least 30-day notice for changes in premium rate or coverage with a written explanation
    • Excludes Medi-Cal, Healthy Families Program
  • Requires full service health care service plans and health insurers to expand no less than a certain % of aggregate fees, premiums, other periodic payments they receive on health care benefits:
    • 85% for large group coverage
    • 85% for individual and small group coverage
  • Requires plans and insurers to provide for rebates to enrollees and insured’s if they fail to meet that %
      • Does not apply to Medicare supplement plans nor to coverage offered by specialized health care service plans (i.e. ambulance, dental, vision, behavioral health, chiropractic, naturopathic)
  • Authorizes plans and insurers to average their total costs across all plan contracts or insurance policies across California

 

Section 4 (1367.001 Health & Safety Code)

Section 5(1389.25 H&S) and Section 8(10113.9Insurance Code)

Section 3 (1378.1 H&S) and Section 7 (10112.7 Insurance Code)

IT
  • Requires disclosure forms to be made available online and to include information on plan contracts or policies and insurer’s rights
    • I.e. : A description of any limitations on the patient’s choice of primary care physician, specialty care physician, or nonphysician health care practitioner, based on service area and limitations on the patient’s choice of acute care hospital care, subacute or transitional inpatient care, or skilled nursing facility.
  • Requires the uniform health plan benefits and coverage matrix to be also provided on the insurer’s website

Section 1 (1363 of Health & Safety Code) and Section 9& 10 (10603-4 Insurance Code)

Section 11(10604.2 Insurance Code)

Appendix:

  • “Benefit plan design” means a specific individual health care coverage product issued by a health care service plan.
  • “Commission” means the Individual Insurance Market Reform Commission established pursuant to Section 1366.14.
    • The governor appoints 5 members:
      • One with experience health care coverage pricing, one representative of a health insurer, one representative of a health care service plan insurer, one health care advocate as consumer representative, one representative of ––
    • The Senate Committee on Rules appoints 2 members:
      • One representative of health care providers and one representative of consumers
    • The Speaker of the Assembly appoints 2 members: One representative of consumers and one representative of ––
    • Secretary of California Health and Human Services or his/her designee & the Insurance Commissioner or his/her designee serve as nonvoting members
  • “Coverage choice category” refers to the levels of coverage identified in subdivision (c) of Section 1366.13.
    • 1366.13. (a) A health care service plan offering individual plan contracts shall fairly and affirmatively offer and market all of the standard benefit plan designs provided for in this section and any additional standard benefit plan designs authorized through regulations adopted pursuant to subdivision (c) of Section 1366.14 to all individual purchasers.(b) Except as provided in subdivision (a) of Section 1366.15, no benefit plan designs other than the standard benefit plan designs described in this article shall be offered for sale to individuals in this state. (c) Standard benefit plan designs shall be offered in platinum, gold, silver, bronze, and catastrophic coverage choice categories

Research shows:

  • Would newly mandate coverage for: (1) preventive benefits for adults (physical exams, immunizations, health education, vision screenings, and hearing screenings), (2) preventive benefits for children (physical exams, immunizations, health education, well baby exams, vision screenings, and hearing screenings), (3) maternity coverage, (4) physical, occupational, and speech therapy, (5) home health care, and (6) hospice services.
  • Most of the cost is driven by coverage for maternity services (increase of $49 million)
  • CalPERS HMO, Medi-Cal managed care, Healthy Families are not directly affected by the mandate
  • Total premiums expenditures for private employers purchasing group would increase by .01%
  • Total premiums for enrollees in group market would increase by 2.14%
  • Individual out of pocket expenditures for covered benefits would increase by 0.54%

Support:  Alliance of Californians for Community, Empowerment California Children's Hospital Association, California Medical Association, Congress of California Seniors, Consumers Union, Health Access California, Kaiser Permanente Medical Care Program
Oppose:  None received.

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