The Senate Health Committee met Wednesday afternoon and considered a bill that would begin the process of risk adjustment in the Exchange. Even though the Affordable Care Act puts a lot of safeguards in place, including requiring all insurers to cover people regardless of health status, it may still be possible for some insurers to find some way to reduce the number of sick people they cover, and thereby reducing their costs and increasing their profits. The process of risk adjustment would create a mechanism by which insurers that have cherry-picked more desirable policy holders, or bear less than their share of risk, would transfer money to those bearing a heavier burden. AB728 (Hernandez) would begin to set up risk adjustment in the state, including beginning data collection, in preparation for 2014 when the Exchange begins operations. AB728 passed out of Health Committee and moves forward to Appropriations.
The Committee also considered SB616 (DeSaulnier), a bill that would require the state to apply for grants available under the Affordable Care Act that would provide wellness incentives under Medi-Cal. Many health advocates are often wary of wellness incentives because if implemented incorrectly, they may work to advantage the healthy people at the expense of the unhealthy, reinforcing and deepening existing health disparities. For example, giving discounts on insurance premiums to people who belong to a gym is in effect requiring individuals who do not have access to a gym due to how much money they make, where they live, or whether they have a disability or illness, to pay more for health insurance. This also allows for “backdoor underwriting,” allowing insurers to further identify and segment the healthy from the rest of us for discriminatory purposes. However, when implemented with equality in mind, wellness incentives can encourage people to get healthier. Advocates tenuously expressed support for the measure with these caveats. Health Access and our colleagues at the California Pan Ethnic Health Network have adopted a “Support if Amended” position while our colleagues at the
The Committee also passed SB442 (Calderon) which would require hospitals to renew and strengthen their commitment to using trained culturally and linguistically competent interpreters in providing care to limited English proficient or deaf patients upon request. The bill encourages discussion of cultural or religious traditions that might influence medical treatment or care, and also allows for the use of Video Medical Intrepretation where in person interpreters are not available.
Meanwhile, on the Assembly Side, the Assembly Insurance Committee also heard AB736 (Calderon) related to insurance brokers, which could potentially have an impact on the sale of health insurance. The bill would amend the insurance code for the benefit of health insurance brokers and agents and to the detriment of consumers. It would allow agents and brokers to charge fees for their services directly to individual consumers and businesses in order to bypass the federal law that establishes a “Medical Loss Ratio” which protects consumers by requiring that a percentage of premium dollars actually go toward care. The bill undercuts the Exchange by making it more profitable for brokers and agents to sell products outside of the Exchange, therefore providing incentive for them to steer consumers away from the Exchange, where they are protected under a number of new consumer protection laws. AB736 also reduces transparency in health care costs. The bill passed out of committee with 11 votes and we will continue to watch it moving forward.