HIGH DEDUCTIBLE PLAN PROTECTIONS HEADS TO ASSEMBLY FLOOR

  • AB2281, to cap annual out-of-pocket costs, passes Assembly Appropriations
  • Medicare Part D Update: Emergency Extension signed; AB2667 passes Assembly

The debate over high deductible health plans is heating up, as key legislation hotly opposed by the insurance industry is heading toward the Assembly floor.

This week has also been a big week for Medicare Part D, as well as for efforts to reform the program and fill in some of the gaps it leaves.

HIGH DEDUCTIBLE HEALTH PLANS HEADS TO FULL ASSEMBLY

Annual out of pocket costs for high-deductible health plans would be capped at $5,000 for individuals, and deductibles would not apply for covered preventive care under AB2281 by Assemblywoman Wilma Chan, which passed out of the Assembly Appropriations Committee Wednesday on a party line vote, with Democrats voting for it.

While the bill would allow Californians to couple a high deductible health plan with a tax-sheltering Health Savings Account., AB2281 would ensure that consumers weren’t annually on the hook for thousands more than their deductible. “These products are here and they’re going to be around for some time to come,’’ Chan said. “This bill sets outer limits. Without this bill, the Department of Insurance has no way to regulate these plans at all.”

Chan took three amendments that focused the bill, including one that conformed the caps on out of pocket costs to federal IRS guidelines, and also indexes the cap to annual inflation rates.

Several organizations spoke in support of Chan’s measure, including: Health Access, California School Employees Association, SEIU, Older Women’s League, California Labor Federation, Western Center on Law and Poverty, Foundation for Taxpayer and Consumer Rights, the Office of Insurance Commissioner John Garamendi, AFSCME and United Nurses Association of California.

The insurance industry lined up a parade of opposition. Anne Eowan, speaking for the Association of California Life and Health Insurance opposed to AB2281 because they claimed it would make premiums more expensive. “Folks who are buying these found a price point they can afford,’’ said Eowan. “With preventive care, they might not be able to afford it.’’ As part of their lobbying, Blue Cross’ Armand Feliciano produced for Chan, the bill’s author, and Assemblywoman Judy Chu, the chairwoman of Appropriations, how many of their constituents with Blue Cross plans would be affected by AB2281.

Advocates for the bill argued that affordability of premiums is a secondary concern if the product doesn’t not provide coverage or value, and still leaves the patient at risk for financial ruin. Even if consumers can pay the monthly bill to the insurance company, they may not be able to pay the bill for the doctor’s office, or the prescription drugs, or the hospital bill.

The bill now heads directly for the Assembly floor, where the bill needs 41 votes to pass, and could be heard as early as next week.

ACTION NEEDED: The insurance industry has reportedly made AB2281 (Chan) their top priority bill to kill this year. With that kind of lobbying fervor and financial backing opposed, health advocates are organizing to contact legislators about their support. CALLS AND FAXES TO LEGISLATORS ARE NEEDED.

The mailing address for lawmakers is:

State Capitol
Sacramento , CA 95814

For a sample letter of support for AB2281, please email or call Hanh Kim Quach, Health Care Policy Coordinator at Health Access: hquach@health-access.org or 916.497.0923 x 206.

DECISION WEEK ON MEDICARE PART D

It was a big week for the Medicare Part D prescription drug benefit.

SIGN-UP DEADLINE: Monday was the deadline for seniors and people with disabilities to sign up and select a plan under Medicare Part D for the year. That means those who have not yet enrolled would now face a penalty of 1 percent each month to their premiums. On top of that, consumers who did not sign up by Monday cannot do so until November, with coverage beginning in Janury 2007. When enrolled, they will face a 7% additional penalty for life.

PROPOSAL TO PREVENT PENALTY: To remedy this, a bipartisan group of U.S. Senators Charles Grassley (R-IA), Max Baucus (D-MT), Bill Nelson (D-FL), and Mike DeWine (R-OH) indicated that they will work together to waive the Medicare Part D late enrollment penalty. President George W. Bush had previously rejected calls to delay the deadline, and hence the penalty.

EMERGENCY COVERAGE EXTENDED: In California , Gov. Arnold Schwarzenegger on Tuesday signed AB813 (Perata/Nunez), which would extend until January 2007 the emergency drug coverage for seniors and people with disabilities when they have problems with their Medicare Part D plan. Earlier this year, the state authorized emergency coverage for this population, when many found that drug plans had no record of their enrollment or Medicare lost their information, among other problems. The extension allows this “coverage of last resort” to continue through the beginning of next year, when confusion and complicaties are expected as the private prescription drug plans either change formularies or leave the program altogether.

ASSEMBLY PASSES BACA BILL: Also this week, the full Assembly passed AB2667 (Baca) by a wide margin. The bill, by Assemblyman Joe Baca, which would allow the state to use its full regulatory authority to provide additional oversight to prescription drug plans with a history of bad behavior in other states.

COVERING CO-PAYS: An issue that will be decided in the next week is whether California will cover the newly-imposed costs on the one million “dual-eligible” seniors and people with disabilities made worse off by Medicare Part D.

Senior, health and low-income advocates are urging the Budget Subcommittees that oversee the health budget, to allocate the $76 million price tag to provide assistance to all seniors and people with disabilities who previously had Medi-Cal coverage for their drugs, but now must use part of their $825 a month income to stay alive. These dual eligibles use an average of 10 medications a month.

Please call and write to:

Assemblyman Hector De La Torre
Chair, Assembly Budget Subcommittee #1
State Capitol
Sacramento, CA 95814 .
The phone number is 916.319.2050; fax: 916.319.2150.

The Honorable Denise Moreno Ducheny, Chair
Chair, Senate Budget & Fiscal Review Subcommittee #3
Health and Human Services
State Capitol
Sacramento , CA 95814
The phone number is 916.651.4040; fax: 916.327.3522

For a sample letter on copay coverage for dual eligibles, please contact Elizabeth Abbott, Project Director at Health Access at eabbott@health-access.org.

For questions about state health policy issues, please call Hanh Kim Quach, Policy Coordinator, 916.497.0923 x 206 or hquach@health-access.org.

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