BILL ANALYSIS Ó
AB 1526
Page 1
ASSEMBLY THIRD READING
AB 1526 (Monning)
As Amended May 25, 2012
Majority vote
HEALTH 18-0 APPROPRIATIONS 16-1
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|Ayes:|Monning, Logue, Ammiano, |Ayes:|Fuentes, Harkey, |
| |Atkins, Bonilla, Eng, | |Blumenfield, Bradford, |
| |Gordon, Hayashi, Roger | |Charles Calderon, Campos, |
| |Hernández, Torres, | |Davis, Gatto, Ammiano, |
| |Mansoor, Mitchell, | |Hill, Lara, Mitchell, |
| |Nestande, Pan, | |Nielsen, Norby, Solorio, |
| |V. Manuel Pérez, Silva, | |Wagner |
| |Smyth, Williams |Nays:| |
| | | |Donnelly |
| | | | |
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SUMMARY : Eliminates limits on benefits and revises eligibility
documentation in the Major Risk Medical Insurance Program
(MRMIP) which is administered by the Managed Risk Medical
Insurance Board (MRMIB). Specifically, this bill :
1)Adds documentation, satisfactory to MRMIB from a specified
licensed health care professional, which verifies an
applicant's pre-existing medical condition to those
circumstances that fulfill the eligibility requirement that an
applicant demonstrate an inability to obtain private health
insurance.
2)Authorizes MRMIB to remove annual or lifetime benefit limits
on coverage provided through MRMIP and requires any associated
costs from the calculation of the subscriber's contribution to
be excluded from the premium.
3)Authorizes MRMIB to implement these provisions by means of
emergency regulations.
4)Creates the Major Risk Medical Insurance Reconciliation Fund
and requires all remittances received on or after January 1,
2013, from participating health plans to be deposited in the
fund and to be available for appropriation by the Legislature,
but prohibits the fund from being used to pay for increase
AB 1526
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program costs resulting from the elimination of the annual or
lifetime benefit limits.
FISCAL EFFECT : According to the Assembly Appropriations
Committee:
1)Although this bill expands benefits and streamlines
eligibility, the overall state budget impact of this bill is
likely to be minimal. MRMIP is not an entitlement program and
is required to adjust program expenditures to stay within
appropriated amounts. MRMIB has historically met this
statutory obligation by limiting benefits and using a waiting
list. By federal law, MRMIP is subject to a
maintenance-of-effort requirement of $31.8 million.
2)Based on an enrollment target of 6,600, this bill would lead
to increased cost pressure on MRMIP in the range of $15
million in calendar year 2013. Actual costs will depend on
actual enrollment and the number of individuals who exceed the
limit.
3)The simplified documentation rule to establish eligibility may
also increase cost pressure on MRMIP (a person will no longer
need to prove rejection from health care coverage if a
preexisting condition is documented). This increased cost
pressure is not likely to exceed $1 million in calendar year
2013.
4)This bill requires reconciliation payments owed to MRMIB based
on past-year claims to be deposited in a newly created Major
Risk Medical Insurance Reconciliation Fund. This will require
MRMIB to rely on appropriated funds, as well as carry-over
funds remaining in the Major Risk Medical Insurance Fund, in
order to fund the increased costs associated with this bill.
MRMIB will need to manage enrollment as required by current
law based on the funding available for the program.
5)The impact of this bill on state costs in 2014 and beyond is
likely negligible.
COMMENTS : The federal Affordable Care Act (ACA) prohibits
insurers from discriminating against an individual based on a
pre-existing condition as of 2014. In the meantime, federal
funding has been provided to establish the federal Pre-Existing
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Condition Insurance Program (PCIP) for individuals with
pre-existing conditions, who have not had coverage for the prior
six months and who meet certain citizen or residency
requirements. California established the PCIP in October 2010,
administered by MRMIB. Since 1991, MRMIB has also operated a
California high-risk pool known as MRMIP to provide the
medically uninsurable with health coverage. Premiums paid by
individuals receiving coverage are supplemented with state
tobacco tax revenues to fund coverage through the program.
MRMIP currently has approximately 6,300 individuals receiving
coverage in the program.
Certain aspects of the PCIP make it more attractive to an
applicant than the MRMIP. For instance, MRMIP has an annual
maximum benefit of $75,000 and a lifetime benefit maximum of
$750,000 whereas there is no cap in the PCIP. However, for
states to be eligible to run a PCIP, the state must agree to not
reduce the annual amount the state expended for the operation of
its high-risk pool. Furthermore, for an individual to be
eligible for the PCIP, the person must have been without health
coverage for six months. For those not eligible for PCIP or
other coverage, MRMIP is the only available option. This bill
attempts to more closely align the two programs as much as
possible within the existing resources and thereby improve the
appeal of MRMIP. Because of the disparities, according to the
author, there has been a slight decline in enrollment. The
author argues that reducing out-of-pocket costs to a subscriber
by eliminating the annual and lifetime limits is a small step
that can be accomplished without any cost to the General Fund.
The author points out that although there is nothing in law to
prevent the MRMIB from eliminating this cap, existing law
requires premiums to be set at a minimum of 125% of the standard
rate in the private market for a similar level of benefits. As
a result, without this bill, if the MRMIB were to eliminate the
benefit cap, the premiums would have to be even greater. This
bill also adopts eligibility simplification for MRMIB that was
adopted by the federal Department of Health and Human Services
(HHS) for the PCIP in July of 2011. HHS proposed allowing
persons applying for coverage to simply provide a letter from a
doctor, physician assistant, or nurse practitioner dated within
the past 12 months stating that they have or, at any time in the
past, had a medical condition, disability, or illness.
AB 1526
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Analysis Prepared by : Marjorie Swartz / HEALTH / (916)
319-2097
FN: 0003944