Insurance Regulations, Redux…

HEALTH ACCESS UPDATE
Wednesday, April 29th, 2009

INSURANCE OVERSIGHT LEGISLATION IN ASSEMBLY HEALTH COMMITEE
* AB786(Jones) Passes to Set Standards for Individual Insurance & Limit “Junk” Plans
* Other Bills Pass On Rescissions, Mental Health Parity, Medical Loss Ratio, Etc.
* Committee Rejects Bill on Rate Regulation for Health Coverage

More Updates on the Health Access WeBlog: Coverage That Counts; Call Her Secretary Sebelius; Opinions on Prop 1A; Blue Cross Calling on Health Reform; Prescription Drug Legislation; Update on Budget Hearings; Reforming the “High Risk” Pool

A number of measures to place new oversight over the health insurance industry cleared a critical first hurdle Tuesday, as the Assembly Health Committee, chaired by Assemblyman Dave Jones, wrapped up its policy scrutiny role by the April 30 deadline. The bills now advance to the Assembly Appropriations Committee, where their fiscal impacts will be examined.

The consumer protections regarding health insurance that were considered, all supported by Health Access California, included:

* INSURANCE STANDARDS: A.B. 786 (Jones) would provide new information and standards on health plans for individual consumers buying health coverage. The bill is designed to make it easier for consumers to make informed choices while shopping on the “individual” market (as opposed the group-policy market). Authored by Committee Chair Dave Jones (D), the measure would encourage “apples-to-apples” price comparisons and the development of clear categories of services and benefits, so people better understood what they are buying with their premiums. It also seeks to limit the sales of “junk” insurance, or policies that offer only very limited benefits–often to the surprise of the consumer.

One testifier, Ehren Thompson, then a personal trainer at 24-hour fitness, reported buying coverage as an individual from MEGA that ultimately did not cover his surgery. A doctor diagnosed him with a inguinal hernia and admitted him to a hospital for surgery immediately, but after overnight preparation, he was released from the hospital with a $2,000 bill but without surgery because it wasn’t covered. For four months in pain, he negotiated with the insurer and scheduled outpatient surgery. Ultimately, MEGA’s hospital coverage was limited to $1,000, leaving Thompson in debt for over $12,000, for which he is in collections.

AB 786 is sponsored by Health Access California, with support coming from Consumers Union, Western Center on Law and Poverty, AARP, AFSCME, California Immigrant Policy Center, California Medical Association, Congress of California Seniors, and SEIU. Opposition came from various health insurers and the Chamber of Commerce. The measure drew ideological opposition from Republicans on the committee, with Assemblywoman Audra Strickland (R) proclaiming, “frankly, one man’s junk insurance is another man’s coverage.” Assemblyman Anthony Adams (R) insisting the bill insults the intelligence of consumers, that they can’t figure out the insurance market by themselves. Jones replied that he and the Republicans had “fundamental differences” in that he sees some products as “false choices”–and his colleagues on the other side of the aisle don’t recognize that as an issue. There are some products that have people paying premiums but without getting any significant value. The measure passed with all Democrats on the committee in support and Republicans against.

* RESCISSIONS: A.B. 2 (De La Torre) provides for an independent review of any rescissions of individual health care coverage. Author Hector De La Torre cited statistics showing that “every major insurer” had illegally rescinded hundreds of individual policies of consumers who had faithfully paid their health premiums. His bill would protect consumers against this practice, where paying patients are accused of having incorrectly disclosed their medical history. A spokesman for the California Medical Association, told committee members that “health plans exist to provide coverage to patients, not to yank coverage away.” Consumer groups were in support, insurers were in opposition, with a representative from Blue Shield spoke against the measure, saying he feared the bill would unfairly favor attorneys who were filing legal actions against insurers. A version of this measure was vetoed by Governor Schwarzenegger last year, but the author specified some changes that could lead to a different result this year. The measure passed with Democrats in support.

* MENTAL HEALTH COVERAGE: A.B. 244 (Beall) would require health care policies to cover expanded mental health services. Currently, plans are required to cover serious mental illness but not the less-severe conditions that could lead up to serious disorders if left untreated. Assemblyman Jim Beall Jr. (D) pointed out that the Obama Administration has already announced its intent to expand mental health services, and said that California has some catching up to do. The measure passed with Democrats in support.

* DISCLOSING ADMINISTRATION & PROFIT: A.B. 812 (De La Torre) would require insurers to disclose medical-loss ratios, information already provided to two state regulatory departments, albeit in different forms. De La Torre (D) said the measure would add transparency, create a better comparable standar, and provide consumers and regulators critical information about the percentage of premiums being used for medical coverage versus the percentage devoted for the profit of parent companies and shareholders. The measure passed with Democrats in support.

* RATE REGULATION: A.B. 1218 (Jones) on the other hand, fell victim to opposition and failed to pass out of committee. It would have required health care insurers to seek approval for new rate hikes. Jones and his supporters of consumer groups and labor unions argued that, if health care insurance followed the model of auto insurance in California, which is regulated under Proposition 103, insurers would benefit from healthy profits and consumers would benefit from lower overall rates. Assemblyman Adams (R) called the measure “old school liberalism.” The measure stalled with eight Democrats in support, but the rest either opposed or not voting, including all Republicans and Democratic Assemblymembers Block, Hall, Hayashi, Hernandez, and Salas.

Other bills relating to insurers included efforts A.B. 591(De La Torre) to require insurers to provide a list of plan contracts/policies offered or issued in California so consumers can better information about their plan; and A.B. 598 (De La Torre) to help create streamlined billing codes for health services. Both measures got bipartisan support.

Another bill of interest to consumers was A.B. 542 (Feuer), which seeks to withhold public insurance payments to hospitals for so-called “never” events–or adverse medical conditions or errors that “never should have happened.” Health Access California spoke in support of the bill, citing severe, life-threatening bedsores as an example of poor hospital care that does not deserve reimbursement.

Finally, serving as a placeholder for a broader discussion on health reform was A.B. 1314 (Jones), which won approval from the committee. It provides a vehicle for comprehensive health reform by requiring the California Health and Human Services Agency to engage with stakeholders to develop a plan to enact broad-based reforms to the state’s health care system and to present the plan to the Legislature no later than April, 1, 2010. The development of a plan would move forward both with, or without, federal action. Health Access California expressed its encouragement for the discussion and is in support of the bill, which advanced without much committee discussion Tuesday.

All bills needed to pass policy committees by April 30. The next hurdle for the bills will be Assembly Appropriations Committee, which must pass bill by the end of May. Health Access will continue to provide updates on actions taken in the Legislature. For a broader list of interest to health advocates and Health Access California , check out the bill list on our website.

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

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