Three down, many more to go…

HEALTH ACCESS UPDATE
Tuesday, August 24, 2010

KEY HEALTH CONSUMER PROTECTIONS HEAD TO FINAL FLOOR VOTES THIS WEEK

* Bills Pass Monday to Prevent Rate Hikes More Than Once a Year; Allow Young Adults up to Age 26 Onto Parental Health Plans; and Facilitate Local Public Health Insurance Options

* Multiple Pending Bills Would Implement & Improve Federal Health Reform in California
* Key Bills Would Set Up New Exchange to Negotiate with Insurers for Best Price & Value
* One Bill Would Establish Minimum Benefit Standards, Allow Better Comparison Shopping
* Bills for Rate Review & Transparency and Rate Regulation & Approval Hotly Contested
* Also At Stake: Affordable Access for Children with Pre-Existing Conditions
* Votes This Week, While Anthem Blue Cross and Other Insurers Oppose

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This week, the California Legislature is voting on key bills to implement federal health reform and enact important consumer protections.

Just yesterday, Monday, state legislators had crucial floor votes on three health care measures:
* SB1088(Price) passed the Assembly, which would implement federal health reform on the issue of allowing young adults to stay on their parent’s coverage up to age 26.
* AB2042(Feuer), sponsored by Health Access, passed the Senate with 21 votes, would provide predictability to the insurance market by limiting changes in premiums, cost-sharing and benefits more than once a year.
* SB56(Alquist) also passed the Assembly, and would facilitate new public health insurance options for consumers by encouraging joint ventures between county-run Medicaid managed care plans (think San Francisco Health Plan, Alameda Alliance for Health, LA Care, etc), so they have broader geographical networks and be viable in the non-Medi-Cal marketplace.

These bills need to go back to their respective houses for concurrence votes before being sent to the Governor.

MAJOR BILLS COMING UP TODAY AND LATER THIS WEEK: Other key consumer protection bills are up today and later this week, bills to implement health reform and provide greater oversight over the health insurance industry. Anthem Blue Cross of California, the largest private insurer in the state, and other insurance companies are actively opposing these measures.

These bills go to the heart of health reform: they create the exchange that will allow individual Californians to pool together to bargain for the best price and value for coverage; they require insurers to disclose their rate filings and justify their rates, and to submit those rates for approval by state regulators; they set standards for coverage, and better classify health plans so consumers can make apples-to-apples comparisons; and they limit the premium charges for children with pre-existing conditions, to ensure meaningful access to coverage for them.

To counter the opposition from Anthem Blue Cross and other insurers, health care and consumer advocates are actively supporting these measures, which are expected to come up for final floor votes in the next few days in the California legislature. A run-down of the key bills is below.

* CREATING A NEW CONSUMER-FRIENDLY EXCHANGE WITH BARGAINING POWER: AB 1602 (Perez) and SB 900 (Alquist/Steinberg) are companion bills, up in the Senate today or tomorrow, that will establish a new health insurance Exchange as required by the federal health reform law.

In 2014, the new Exchange will be the new one-stop shop for getting health coverage for individuals and small businesses, both providing easy-to-compare choices, access to federally-funded subsidies to make coverage affordable, and the bulk purchasing power (similar to large employers or CALPERS) of millions of Californians to bargain for the best price and value.

Right now, individual consumers are at the mercy of the big insurers, without any purchasing power, in a complex and confusing marketplace. A new insurance exchange, can dramatically improve the way Californians buy coverage as individuals and small businesses.

With an estimate 4 million or more Californians who will be eligible to participate in the exchange starting 2014, it is critical that we begin creating an exchange that will be prepared to serve consumers and draw down federal subsidies on day one.

* TRANSITIONING TO A MORE TRANSPARENT AND COMPARATIVE MARKET: SB 890 (Alquist) would reform the individual insurance market, by setting basic benefit levels and categorizing health plans to allow consumers to compare plans based on the actuarial value, so that they can have some idea of how much of their medical costs they may need to pay out of pocket.

Countless Californians who thought they were covered by insurance, have ended up incurring medical debt or worse, losing their savings or their homes are a result of health care costs. This bill categorizes insurance products based on actuarial value, allowing consumers to compare the degree of risk they take on with various plan options and give consumers much needed information about how much they may end up spending out of pocket.

This bill also eliminates caps on coverage that cause individuals with serious illnesses to incur medical debt.

* REGULATING AND APPROVING HEALTH INSURANCE RATES: AB 2578 (Jones) would require approval by the Department of Managed Health Care or the Department of Insurance of an increase in the amount of premium, co-payment, coinsurance, deductible, or other charges under a health plan.

We’ve seen the huge increases of up to 39% by Anthem Blue Cross of California, and even more by other insurers and in the market for small businesses. Even with the very limited authority of the Department of Insurance, they were able to find significant errors.

We especially need rate regulatory oversight in the interim between now and 2014, to prevent insurers from jacking up rates when health reform is fully in force.

President Obama endorsed an amendment by Senator Feinstein to provide for rate review, but there were procedural barriers to getting it included. But we can do it at the state level with this bill. This bill can take advantage of the new federal funding available for review of rates.

* MAKING RATES TRANSPARENT AND ACTURIALLY SOUND: SB 1163 (Leno) would require insurers to provide information about premium increases and insurer rate filings to be reviewed by the state and released to the public. The bill would also require insurers to notify consumers in writing of rate increases, these notifications must include clear justifications and rate increase notifications must be sent at least 60 days prior to the change taking effect.

The rate increases, such as the up to 39% increases by Anthem Blue Cross of California that ultimately had to be withdrawn because it was determined that they were based upon mathematical errors.

This bill will require insurers to disclose their methodology for determining rates and to show their actuarial soundness. This bill allows California to take advantage of the new federal funding available for review of rates.

* LIMITING SURCHARGES FOR CHILDREN WITH PRE-EXISTING CONDITIONS: AB 2244 (Feuer) implements the federal prohibition on denying coverage to children with pre-existing conditions, and limits the amount that insurers can charge to cover those children.

Starting this year, federal reform prohibits insurers from denying coverage to children with pre-existing conditions. California can make this reform real, by also limiting how much insurers can charge children with pre-existing conditions. The bill would limit different premiums in an open enrollment period. Federal law will prohibit such premium differences in 2014, but this bill provides a smoother glide path for the CA market’s transition.

The bill provides some affordability and meaningful access to children with pre-existing conditions, and would save tens of millions in the state budget, giving families the opportunity to buy private insurance rather than having them fall onto public health coverage programs like Medi-Cal, Healthy Families, and CCS (California Children’s Services for children with disabilities).

A number of additional consumer protection and health reform bills are also up for vote in the next week. A list of these bills are on the front page of the Health Access California website, at www.health-access.org. If these bills pass the final floor votes before Tuesday, they will head to the Governor’s desk in hopes of signature. If the bills are passed, the Governor has the month of September to either sign or veto the measures.

For more information about these bills, contact the author of this report, Linda Leu, Policy Analyst, Health Access California, at lleu@health-access.org

Health Access California promotes quality, affordable health care for all Californians.
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