Governor Signs Health Bills

As featured in the CAHU president’s blog from Michael Lujan, Governor Brown signed the following bills into law:

  • Co-pay Drug Caps: AB 339 caps prescription drug costs. It was authored by Assemblyman Rich Gordon (D-Menlo Park), and is effective January 1, 2017. It applies caps to copays and coinsurance for a single 30-day prescription at $250 to $500, depending on the insurance plan type.  For high-deductible health plans, the caps will take effect only when the consumer reaches the deductible. It provides relief to people with chronic conditions, such as cancer, HIV/AIDS, hepatitis, and multiple sclerosis. These patients can reach their annual out-of-pocket limit, which can be as high as $6,600, with just one 30-day prescription.
  • Provider Directories: S.B. 137, authored by Sen. Ed Hernandez (D-West Covina), is effective July 1, 2016: It will require health plans to update their provider directories weekly. The updates will include office location, whether the provider is accepting new patients, and which languages, other than English, are spoken by the provider and staff.  It also requires the Department of Managed Health Care and the Department of Insurance to develop a standard template for these directories. It helps protect Californians from higher-than-expected bills from out-of-network doctors and other providers due to inaccurate or outdated directories.
  • Cost-sharing limits on family plans: AB 1305 limits cost-sharing on family plans. It was authored by Assemblyman Rob Bonta (D-Oakland) and is effective January 1, 2017:  It closes a loophole in some plans that requires individuals, who are part of a family health insurance policy, to meet the much larger family deductible before their insurance coverage kicks in. It requires family policies to include both an individual deductible and a per-individual out-of-pocket limit.

Lujan also reports that several agents and CAHU board members attended a recent Covered California board meeting to testify on behalf of agents enrolling in Medi-Cal. Funding for Medi-Cal enrollment ended this summer, yet the current agent agreement still requires agents to enroll people in Medi-Cal. CAHU says that the policy creates an undue burden on agents who want to help, but simply need help when they reach their capacity or have complex eligibility issues. “To make sure our position was heard, CAHU initiated a VoterVoice campaign that sent more than 600 emails to Peter Lee, CA HHS Secretary Diana Dooley, and members of the Covered California Board of Directors. Over the past months, CAHU met with leaders from Covered California, the Department of Healthcare Services and County Offices to discuss the agent’s role in enrolling consumers in Medi-Cal,” he added.

“CAHU’s legislative advocate Julianne Broyles, several CAHU board members, and I testified and shared real examples of the great work being done by agents and need for compensation. After much discussion, Peter Lee assured us that the current agent agreement language will provide the flexibility agents need to continue with partnerships and/or work with County offices and seek their help when needed. We will hold him to his word. To address the Medi-Cal service issues, CAHU offered to help the county offices better support agents when inquiring about application status or related work on behalf of clients. CAHU also helped develop an agent toolkit and will provide additional training for agents. And lastly, we will continue our work to identify ongoing funding for compensating agents for Medi-Cal enrollment, similar to the grant provided by The California Endowment,” Lujan added.

Premiums Drop for Lowest Cost Silver Plans

Premiums Drop for Lowest Cost Silver Plans


California is the first state to require health insurers to give advance notice to licensed health insurance agents before making major changes to their agent contracts. AB 1163 (Rodriguez D-Pomona) was sponsored by CAHU, the Independent Insurance Agents and Brokers of California, and NAIFA California. The law takes effect January 1. AB 1163 will require health insurers and HMOs to give appointed agents 45-days notice of certain changes. to their agency agreement.
CAHU President Michael Lujan said, “AB 1163 levels the playing field and provides for a fair and reasonable notice to licensed agents when their contract is materially changed. Most independent insurance agents are main street small business owners in nearly every community in California. This change is critical in light of the ACA compressed open enrollment period each year.”
Premiums Drop for Lowest Cost Silver Plans
The average 2016 premium increase for ACA Benchmark Silver Plans is 4,4% in 14 major cities across the United States. But California is beating the odds. Premiums for the lowest priced Silver plan actually dropped 5%, according to a survey by the Kaiser Family Foundation (KFF). Premiums for the second lowest price Silver plan rose a modest .2%.

Rating Area (Major City) Second Lowest Cost Silver Before Tax Credit Second Lowest Cost Silver After Tax Credit
2015 2016 % Change from 2015 2015 2016 % Change from 2015
15 (Los Angeles) $258 $245 -5% $208 $208 +0.2%

Reactions to Supreme Court Subsidy Ruling

The U.S. Supreme Court ruled that nationwide subsidies called for in the Affordable Care Act are legal. The following are reactions from stakeholders:

  • Patrick Burns, president of the California Association of Health Underwriters: The Supreme Court got it right. California has a state-based exchange (Covered California), so nothing will really change here, but the clarification was very important to residents in the 34 states that utilize the federally facilitated health insurance marketplace in some form…Our hope is that state and federal policymakers will now turn their attention on efforts to truly reduce the cost of providing health care, something that the ACA has not fully addressed. Lawmakers and regulators need to look at and improve the portions of our health care system that work well and keep a variety of health insurance product options available to all. The employer-based system has reliably and effectively delivered quality health coverage to generations of Americans. And we as a nation need to work to preserve it.
  • Covered California Executive Director Peter V. Lee: Although Covered California enrollees were not at risk of losing their subsidies as a result of the Supreme Court decision, a ruling invalidating subsidies offered through the federal health exchange could have resulted in changes to the federal law, which could have affected California…The subsidies have helped millions of Americans, including individuals I have met whose lives were saved as a result of the care they received. With the support of federal subsidies, the majority of consumers enrolled with Covered California pay less than $150 per month for their premiums, with many tens of thousands of consumers paying less than $10 per month for coverage.
  • California HealthCare Foundation president and CEO Dr. Sandra Hernández: We hope that this ruling will hasten the conclusion of the seemingly endless political debate about the law. After the ACA was enacted in 2010, California government and industry leaders had the foresight to swiftly establish Covered California. That was a wise decision not only because the exchange now has 1.3 million enrollees, but also because the state exchange insulated Californians from the financial and health risks posed by this legal challenge.
  • The American Academy of Actuaries Academy Senior Health Fellow Cori Uccello: The…ruling upholding…preserved an integral component of the Affordable Care Act and averted significant disruptions to the individual health insurance market. In the loss-of-subsidy scenario, adverse selection would have been a serious concern, as relatively higher-cost individuals would have retained coverage, increasing average costs and premiums. While the legal challenge to subsidies has been decided, the Academy urges policymakers to assess any proposals that may be offered to modify or replace the ACA against these important market reform principles.

Bill Would Limit Deductibles

California Ass. of Health Underwriters (CAHU) is alerting agents and brokers to state Senate Bill 639, which would limit deductibles for non-grandfathered and individual plans. CAHU says there is no federal mandate to set deductible limits in state law. As the Exchange moves forward in 2014 and beyond, these deductibles may need to be updated to ensure the deductible limits are actuarially sound. Not setting these in statute will permit easy updating as federal guidelines change and to meet actuarial standards. The bill also proposes to limit or standardize all outside exchange plans to those that only mirror what is offered in California’s two government-run exchanges. CAHU says that would eliminate choice and competition.

Bill Would Limit Financial Incentives in Wellness Plans

WellnessCalifornia Health Underwriters is alerting members toSenate Bill 189 (Monning).It would ban all wellness programs until 2020 unless they meet a number of restrictive conditions. A health plan could not offer an incentive or reward under a group health care service plan contract or group health insurance policy unless it met these requirements:

Incentives can only include rewards for participation that are not linked to premiums, deductibles, copayments, or coinsurance.

A program must have a reasonable chance of improving the health of, or preventing disease. It cannot be overly burdensome, cannot be a subterfuge for discriminating based on a health status factor, cannot lead to cost shifting, and cannot use a highly suspect method to promote health or prevent disease.
Participation must be voluntary.
An individual cannot be offered an incentive or reward for participating the program based on satisfying a standard that is related to a health status factor. The following would be acceptable:
  • A program that reimburses all or part of the cost for memberships in a fitness center.
  • A diagnostic testing program that provides a reward for participation, but does not base any part of the reward on outcomes.
  • A program rewards people for attending a health education seminar as long as participation is not related to a particular health condition or any other health status factor.
Participation in the program must be offered to all similarly situated individuals.
People with disabilities must be offered reasonable accommodations to participate.
There must be a reasonably available and equivalent alternative for those who are unable to participate due to occupational requirements, a medical condition, or other hardship.
All materials related to the program must disclose the availability of these accommodations.
The program must assesses the cultural competency needs of the health plan’s population.
The program must provide language assistance for those who speak limited English.
The program cannot not result in any decrease in benefits coverage.
The program cannot not result in an increase in premium for the product as demonstrated through rate review consistent with Article 6.2 (commencing with Section 1385.01).
The incentive or reward cannot not exceed the amounts determined to be unreasonable by regulation by the director in consultation with the Insurance Commissioner
The incentive or reward can not exceed the percentage of the cost of coverage under the plan contract identified in Section 2705(j)(3)(A) of the federal Public Health Service Act (42 U.S.C. Sec. 300gg-4) or regulations adopted thereunder.

The state notes that PPACA prohibits a carrier from requiring a person to pay a greater premium or contribution based on a health status-related factor. Senator Bill Monning said, “There is growing concern among consumer advocates that wellness programs could become a subterfuge for discrimination against those with pre-existing conditions…Wellness incentives should be about making people healthier, not pricing insurance premiums based on pre-existing conditions…” The intent of SB 189 is supported by AARP, American Cancer Society Action Network, American Heart Association, California Black Health Network, California Pan-Ethnic Health Network, Consumers Union, Health Access, Greenlining Institute, and Prevention Institute.

According to a CAHU statement, “As health care coverage specialists, you know the value of wellness programs and positive impact they have on the lives and affordability. CAHU is asking you to join with other licensed insurance agents and their clients in letting your state Senator know you oppose SB 189.” Click here to oppose SB 189.

New Exchange Website Helps Agents Stay Compliant

CoveredCaliforniaThe California Health Benefit Exchange website,www.CoveredCA.com, is now live. California Health Underwriters (CAHU) is urging agents to visit the site and review all the marketing materials to avoid violating AB 1761 rules. AB 1761, which took effect January 1, prohibits any individual or website from attempting to hold their selves, plans or websites out as officially authorized as “Covered California” certified or approved.

CAHU says that word has come down that the Exchange plans a hard crackdown on violators of AB 1761 provisions. AB 1761 was supported by all three-agent organizations as well as other consumer health advocates.

The Covered California website has been designed for ease of use by all stakeholders, including licensed agents and employers. In fact, the new website contains individual and small employer content on the Small Employer Health Options Program (SHOP) section. A newsletter about SHOP Exchange happenings is expected to launch sometime in the first quarter of 2013. The site, which is available in English and Spanish, also offers a variety of fact sheets in 11 additional languages. It provides basic information about the Exchange and a calculator to give Californians an estimate of how much help they can get to reduce their premium costs.

Last Updated 10/20/2021

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