• Senate committee fails to place oversight over high-deductible plans
  • Children’s coverage still at issue in budget talks
  • Other updates on: coverage for those with “pre-exisitng conditions”, clinical trials, Part D

It’s been a busy and disappointing week for health advocates in the Legislature as the fiscal year draws near – with still no resolution on the budget – and lawmakers’ summer break looming. Many bills on health coverage, Medicare Part D, prescription drugs, and other matters passed. However, two significant consumer-oriented bills: one on out-of-pocket costs, another on disclosure of clinical trials for prescription drugs, failed in committee.


Senators in the Banking, Finance and Insurance committee today failed to pass AB977, which would have limited annual out-of-pocket expenses and created a stricter approval process for new health coverage plans.

The bill received only two votes, from Sens. Gloria Romero and Dean Florez. The remaining members of the caucus abstained, including Chairwoman Jackie Speier, Sens. Alan Lowenthal, Mike Machado, Kevin Murray, Gloria Romero and Jack Scott. Republicans Senators voted no.

The bill was heavily opposed by the HMOs and insurance industry. Lawmakers seriously considered the insurance industry’s warnings. The top argument circulated by insurers was that tighter scrutiny of new health coverage products would “limit consumer choice’’ and leave more people uninsured because coverage would be unaffordable.

From a consumer advocate’s perspective, though, without AB977 consumers are condemned to a “choice’’ of bad products.

Consumer advocates argued that high-deductible plans hardly undergo any public scrutiny, as do other policies that impose significant out-of-pocket costs on consumers. While the premiums on these plans may be less expensive than comprehensive coverage, they are expensive to use – requiring high deductibles, with co pays and co-insurance. For practical purposes, it’s not really insurance if enrollees are afraid to use their health plan because of the costs, if the patient doesn’t get the care they need, if the family is still at risk of bankruptcy.

Sen. Kevin Murray stated that “I don’t know that I have a problem with the ability of someone to offer that [high-deductible] product.” Sen. Jack Scott said he didn’t like the idea of ceding any regulatory control or authority to the Department of Managed Health Care, which he argued was notoriously slow at enacting laws. Such inaction amounts to no improvement.

Committee chairwoman Jackie Speier suggested that more information was needed, and suggested that Assemblyman Pedro Nava convert his legislation to a “study’’ of all the plans Department of Insurance and Department of Managed Health Care has approved, including the amounts of co-pays, deductibles and other out-of-pocket costs. Such information is hard to obtain. Incidentally, Health Access sponsored such a bill in 2004 – AB2289 by Assemblywoman Wilma Chan. That bill was vetoed by Gov. Arnold Schwarzenegger.

As more and more Californians become underinsured, finding themselves with more out-of-pocket costs shifted to them by employers and insurers, this will continue to be an issue.


The Senate Insurance Committee cautiously agreed today to pass AB1971 (Chan), which would extend the Managed Risk Medical Insurance Program (MRMIP), which covers patients with “pre-existing conditions’’ unable to get coverage elsewhere. Saying that much more work needed to be done, Sen. Jackie Speier urged that a conference committee to continue work on the bill.

The Graduate Insurance Program pilot allows Californians with “pre-existing conditions’’ who have been insured by the state to move off the state MRMIP program to a private insurer. The program currently enrolls about 12,000 patients.

But one of big problems is that many more Californians–possibly ten times or more–need such coverage. Additionally, the coverage is capped at $75,000 a year.

Blue Cross has also opined that it insures a disproportionate number of the difficult-to-insure in this program, losing $13 million a year. (While Blue Cross is correct that it has largest share of this market, it should be noted that former CEO Leonard Shaeffer reportedly received $330 million from the Wellpoint-Anthem merger – enough to cover this loss for 25 years.) In some other states, insurers pay a tax that helps to subsidize the high-risk patients that live in the state.

Insurers uniformly opposed AB1971, which would extend the program, and require those insurers that do not offer plans without regard to pre-existing conditions–known as “guaranteed issue”–to pay a fee to support this program. All insurers were opposed to the bill, but they did not agree on one alternative.

They agreed that this program needs to be fixed, and many admitted they needed to pay some assessment. Questions remain include: How much is the insurer assessment? How is it determined? What segments of the market will the assessment be levied on — just individual insurance? Or large and small group markets as well?
While the Senate Insurance committee passed AB1971 Wednesday, the bill will likely return for conference committee hearings in August to answer these questions.


The Assembly Health Committee yesterday killed SB163 (Scott), which would require drug companies to make results of their clinical trials publicly available.
Assemblymembers Juan Vargas of San Diego and Leland Yee of San Francisco did not vote for the measure, which would have forced Merck to disclose the dangers of its drug Vioxx, which has since been pulled off the market.


Despite some setbacks, other key bills passes important policy committees, although some of these bill are double-referred, and will be considered in other policy committees in the next week or so. Those bills heard and passed today included:

  • AB1840 (Horton): Requires the state to disclose names of employers who, rather than providing health coverage, have many of their workers and their families on Medi-Cal and Healthy Families. Despite opposition from the Restaurant Association and the Agua Caliente tribe, labor and consumer groups were able to pass this measure in Senate Insurance.
  • AB2877 (Frommer): Establishes a website listing sources that are safe for purchasing more affordable drugs from other countries. Despite opposition from the drug companies, this measure passed Senate Health.
  • AB2377(Chan): Assists counties in extending coverage to children. Passed Senate Insurance.
  • AB1948 (Montanez): Simplifies the application for Medi-Cal and Healthy Families using the CHDP Gateway and electronic applications. Passed Senate Health.
  • AB2889 (Frommer): Prohibits health plans from discriminating against people who have been insured, but who have chronic or serious illnesses. Passed Senate Insurance.
  • AB2667 (Baca): Allows the state to monitor prescription drug coverage plans in the same way it monitors health plans and weed out bad apples. Passed Senate Insurance.
  • AB2170 (Chan): Creates a consumer report card on Medicare Part D prescription drug plans. Passed Senate Insurance.


Hopes of a smooth budget passage this year were abruptly dashed when Republicans raised issue with $24 million – about .02 percent of the entire state spending plan.

The piece that most ignited Republican anger was a lean $1.8 million – added in by Assembly Democrats – that would start the process of expanding the Healthy Families program to children in families earning less than 300 percent federal poverty level beginning 2008.

On Monday, at the Sacramento Press Club lunch, Senate President Pro Tem Don Perata announced that Senate Democrats would concede the $1.8 million in the budget to expand Healthy Families. He promised to have the issue dealt with in legislation, and noted that a statewide child coverage expansion will be considered this fall on the ballot, as one part of a pending tobacco tax initiative. That initiative was officially qualified yesterday, which would raise the tobacco tax by $2.60 and use the money, among other things, to fund a statewide expansion of health coverage to all children.

Howeber, upon further inspection, Republicans also decided they didn’t like the $22 million originally proposed by the governor. In his May Revise, Gov. Arnold Schwarzenegger augmented spending by County Health Initiatives, which provide health care to children who otherwise wouldn’t qualify for Medi-Cal or Healthy Families. These children are in families earning up to 300 percent of poverty ($60,000 for a family of four) and may or may not be citizens.

Schwarzenegger has already said – on several occasions – he believes *all* children need health coverage, whether they are legal or illegal. This directly contradicts the position of Legislative Republicans.

As of this writing, a range of advocates representing children, people of faith, business, and others are continuing to urge legislators, Democrats and especially Republicans, to support this “bridge” funding for these county efforts.


Next week also promises to be a busy week in the Legislature. While not a comprehensive list, bills to be heard include:


  • SB1591: Would set rules on the profit and overhead for health insurers.
  • SB452: Requires Medi-Cal to report to Governor on whether Medi-Cal prescription drug prices are higher than prices for federal programs.
  • SB1622: Gives employers a notice to be passed along to employees, advising them of the availability of Healthy Families and Medi-Cal.
  • SB1405: Creates a Task Force on Reimbursement for Language Services to recommend actions for achieving linguistic access to care
  • SB1702: Establishes a discount prescription drug program.
  • SB1804: Requires health insurers to disclose the number of physicians accepting new patients on a county-by-county basis


  • AB2607: Provides consumer protections if seniors and people with disabilities in Medi-Cal are placed into managed care.
  • AB2911: Establishes a discount prescription drug program.
  • AB71: Establishes a clearinghouse for information about the safety and effectiveness of prescription drugs that are advertised on television
  • AB774: Provides consumer protections against abusive hospital billing and collections practices, including those that charge uninsured patients multiple times what insurers pay for the same service.

For information on any of these bills or topics, please contact Hanh Kim Quach, policy coordinator, at or (916)497-0923 x 206.

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