HEALTH ACCESS UPDATE
Thursday, June 30, 2011
SENATE HEALTH COMMITTEE HOLDS EXTENSIVE HEARING ON RATE REGULATION PROPOSAL AB52 (FEUER), PASSES OTHER KEY HEALTH REFORM BILLS
* Consumers, labor, employers testify extensively about the merits of AB52 to empower state regulators to reject unjustified rate hikes; Health industry continues effort to stop momentum
* Committee moves other key legislation forward that will implement and improve upon the Affordable Care Act: AB714, AB792, AB922, and AB1083
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Yesterday, the Senate Health Committee, chaired by Senator Ed Hernandez (D-Los Angeles), considered many key bills to implement and improve upon the new federal health law.
The highlight was an over 3-hour discussion on a measure, AB52 (Feuer) to provide state regulators with the ability to reject unjustified rate increases. But the committee had previously decided not to hold a vote today, but rather schedule that until next week. ALERT: Health and consumer advocates are urging Californians to call members of the Senate Health Committee to urge them to support AB52 to help address rising health costs!
After that marathon session, several other health reform bills did come before the committee, and were voted out, moving forward in the legislative process.
Key Health Consumer Legislation Clears Senate Health Hurdle
Due to the extensive hearing on AB52, most other bills before the committee today enjoyed limited scrutiny and all were expeditiously moved forward. Among those were four important proposals, all sponsored or co-sponsored by Health Access California, that begin the work of implementing provisions of the federal health care law.
AB714 (Atkins) seeks to pre-enroll eligible Californians into coverage, either Medi-Cal or the Exchange. The bill potentially identifies and streamlines the enrollment process for over two million Californians prior to January 1, 2014, when the major (fully-federally funded) coverage expansion pieces of the Affordable Care Act (ACA) will go into effect. This allows California to immediately take advantage of the billions of federal dollars associated with covering more Californians, and to have a large and stable risk pool for the Exchange enrolled on Day One. This is a unique opportunity for the state to lead the nation in enjoying the benefits of the ACA as soon as they become available.
AB792 (Bonilla) would facilitate seamless transitions between public and private coverage programs and help to foster a culture of coverage. More than half of the uninsured are uninsured for less than a year, but unfortunately, individuals often incur medical costs while uncovered. AB792 would provide notice to individuals experiencing qualifying life events that may result in the loss of coverage and inform them of their eligibility for coverage in the Exchange or other programs.
AB922 (Monning) seeks to create a hub for consumer assistance and grievances so that consumers can easily find their own way through the tangled web of agencies, regulators and administrators that currently regulate and operate health insurance. The bill would make the Office of the Patient Advocate a go-to place for consumers should they have complaints, questions, or need other assistance.
AB1083 (Monning) is an important measure to implement the small group market provisions of the ACA, and adopts reforms that help small businesses get coverage for their workers. The bill would codify the requirements of the ACA in California law except where existing state law provides stronger protections for consumers.
The primary focus of the meeting though, was the hearing on AB52 (Feuer) which would give insurance regulators authority to give prior approval for proposed rate increases. Last year’s SB1163 gave regulators the authority to review rates and documents purporting to justify increases, but does not grant any authority for regulators to explicitly deny excessive, inadequate, discriminatory rates. Already, an insurer has gone ahead with a rate that the state regulator deemed as “unreasonable.” AB52 would allow California to catch up to the 34 other states and the District of Columbia when it comes to empowering regulators to protect consumers from unjustified rates.
Assemblymember Feuer and Insurance Commissioner Dave Jones opened the hearing by outlining how this bill will make a significant difference in the lives of California families, and addressing some of the misleading misinformation that the industry opposition continues to repeat. Chair Hernandez asked a range of questions, as did many other members of the Senate Health Committee.
The Committee heard testimony from 6 panels, the first three comprised of proponents and the other three made up of opponents.
The first panel consisted of consumer advocates, who spoke about the importance of protecting consumers from prohibitive and budget breaking premium increases, particularly in the context of the new world of health reform where individuals will all be mandated to purchase insurance. The panel included a constituent from Senator Hernandez’s district who testified that after a series of premium increases quadrupled his mother’s monthly insurance payments, she was faced with the choice of paying for her mortgage or her insurance. She chose to stay in her home and to join the ranks of the uninsured, hoping each day that her chronic conditions do not force her to seek care in the emergency room.
The second panel, consisting of labor and a few employer organizations, clearly demonstrated from their own experience that the Exchange’s large group purchasing power would not likely be adequate to protect consumers from prohibitively costly insurance premiums. One labor advocate spoke of the experience of one of her members, a mother of two teenaged sons who’s insurance premiums have increased so much that she could no longer afford to cover both of her children. She was forced to choose only one of her children to cover, and shortly after one son was dropped from the policy, he was involved in a serious car crash, leaving this working mother with enormous medical costs that she is not sure how she will afford.The third panel consisted of a broader constituency of supporters for the bill.
The three opposition panels consisted of providers, insurers, and other opponents. Their testimony tried to raise many questions to slow down the measures’ momentum. The providers invoked the fear factors that rate regulation would lower provider payments and cause providers to stop providing services despite a lack of evidence that this has happened in any of the other states where regulators have prior approval authority. It was noted that the CMA’s opposition is contrary to the position of the American Medical Association, which has supported rate regulation. Additionally, opponents claimed that rate regulation would undermine the Exchange, without any substantial evidence to contest Commissioner Jones and Assemblymember Feuer’s explanations of how rate regulation is a necessary and complimentary to the Exchange. Supporters invoked Oregon as a state with a pro-active rate regulator authority, and Massachusetts as a state with both an Exchange and a rate regulation process. In their testimony, opponents of AB52 continued to confuse the issue by calling any efforts to evaluate and adjust or reject rate increases “arbitrary” “rate setting”. (They did not address the arbitrary nature of their proposed rate increases that often times are exponentially higher than the rate of medical inflation.)
Finally, committee members, including GOP Senator Tony Stickland, asked the confusing argument offered by opponents that this bill does not merit support because it does not address the plethora of underlying costs that have created the crisis in our healthcare system. Yet neither the author, the sponsor, or any of the bill’s supporters have ever claimed that AB52 was a magic bullet for all that ails the health care system, simply that it’s merits lie in its ability to make better one important piece of the problem, that Californians simply can not afford arbitrary rate increases and are losing coverage and suffering negative health outcomes as a result.
At the end of the hearing, Committee Chair Hernandez said he remained unsure of his position but expressed interest in working with the author on amendments that would be necessary for his support. AB52 will be voted on in the Committee’s meeting next week.
More advocacy will be needed to move this measure forward. In the words of Assemblymember Feuer, this is an opportunity for legislators to do something positive for the people of California (considering the harmful context of the budget) and it should be evaluated based on the fact that it will make life better for Californian families and small businesses.