BILL NUMBER: SB 51 AMENDED
BILL TEXT
AMENDED IN SENATE MAY 23, 2007
AMENDED IN SENATE MARCH 27, 2007
INTRODUCED BY Senator Ducheny
( Coauthor: Senator Kehoe
)
(Coauthors: Assembly Members Dymally
Beall, Dymally, and Salas)
JANUARY 8, 2007
An act to add Part 6.44 (commencing with Section 12699.70) to
Division 2 of the Insurance Code, relating to health care coverage.
LEGISLATIVE COUNSEL'S DIGEST
SB 51, as amended, Ducheny. San Diego Health Care Connection
Demonstration Project.
Existing law, the County Health Initiative Matching Fund,
establishes a program administered by the Managed Risk Medical
Insurance Board and the State Department of Health Care Services.
Under existing law, a local entity may apply to the board to obtain
funding from the County Health Initiative Matching Fund for health
care coverage for persons meeting specified criteria.
This bill would establish the San Diego Health Care Connection
Demonstration Project. The bill would require the board to contract
with San Diegans for Healthcare Coverage, Inc., a private nonprofit
corporation, to provide local project operations to assist employers
in San Diego County with providing health care benefits to employees
with full-time employment, as defined. The bill would specify various
components of the project, including, but not limited to,
establishing a premium assistance program and criteria for
participation in the project by employers and employees and an
essential benefits package consisting of basic health care benefits
and dental coverage to be offered by participating health care
service plans. The bill would require the department to secure any
state plan amendments and federal waivers required for the project
and to submit the waivers or amendments by June 30, 2008.The bill
would also require the department to pursue government and
private funding for specified project activities and to
establish data collection and reporting procedures. The bill would
require the board to submit an annual report to the Legislature on
the progress and outcomes of the project. The bill
would require the board to submit a report, on or before January 1,
2011, to the Legislature regarding the feasability of expanding the
project to persons with part-time employment, as defined.
The bill would declare that due to the unique circumstances
pertaining to San Diego County that it is intended to remedy, a
general statute within the meaning of specified provisions of the
California Constitution cannot be made applicable and a special
statute is necessary.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. This act shall be known and may be cited as the San
Diego Health Care Connection Demonstration Project.
SEC. 2. (a) The Legislature finds and declares all of the
following:
(1) Approximately 25 percent of adults in California were without
health care coverage at some time during the year 2003, and it is
estimated that more than 75 percent of that population was employed
or part of a family with an employed member.
(2) Fewer employers are able to offer health care coverage to
their employees, and fewer low- to modest-wage employees are able to
pay for their share of coverage when it is offered. As a result, the
percentage of Californians covered by employer-sponsored health care
coverage is declining, and the percentage of those without health
care coverage is increasing.
(3) Research studies report that employees of small businesses and
those in low-wage jobs are less likely to be enrolled in
employer-sponsored health care coverage and are significantly more
likely to be without health care coverage. Research also shows that
low-income individuals with private health care coverage with
traditional deductibles and copayment amounts have the same health
outcomes as those without health care coverage because they are
reluctant to obtain care because of the out-of-pocket expenses under
their health plan or policy.
(4) Research studies report that those without health care
coverage are significantly more likely to be admitted to a hospital
for an avoidable hospital condition and are in poorer health upon
admission than those with health care coverage. Many of those without
health care coverage ultimately become eligible for that coverage
through government programs due to their medical condition, sometimes
resulting in poorer outcomes and higher costs to the public.
(5) There are currently "three-share" programs, including state
reinsurance of private coverage, in place or being implemented
through federal waiver in other states to address the issues of
growing uninsured, decreasing affordability of health care coverage,
and declining employer-sponsored health care coverage.
(6) In San Diego County, a unique and diverse collaboration of
consumer, business, labor, health care provider, health plan, and
local government representatives have worked to reach consensus and
identify tradeoffs necessary to expand health care benefits to
employed persons who are without health care coverage and to reduce
the number of residents in the region without that coverage. One
critical strategy that has been identified is a partnership with the
business community to focus on the uninsured through the workplace.
(b) It is the intent of the Legislature to establish the San Diego
Health Care Connection Demonstration Project that will include a
premium assistance program to allow employed persons without health
care coverage and employers to enroll in a basic benefits plan at
actuarially established commercial premiums appropriate to the
benefit package. It will also include a resource center and programs
to provide education, outreach, eligibility services, and enrollment
in the premium assistance program as well as eligibility screening
and referral for other private and public health care benefits
programs. The San Diego Health Care Connection Demonstration Project
is also intended to test key elements of health reform models, to
estimate potential savings to the state resulting from its operation,
and to test interest and participation by employers and uninsured
employees.
SEC. 3. Part 6.44 (commencing with Section 12699.70) is added to
Division 2 of the Insurance Code, to read:
PART 6.44. San Diego Health Care Connection Demonstration
Project
12699.70. The San Diego Health Care Connection Demonstration
Project is hereby established.
12699.71. The following definitions apply for purposes of this
part:
(a) "Board" means the Managed Risk Medical Insurance Board.
(b) "Department" means the State Department of Health Care
Services.
(c) "Full-time employment" means employment with a single employer
of an average of 20 or more hours each week.
(d) "Part-time employment" means employment of less than an
average of 20 hours each week with a single employer.
(e) "Project" means the San Diego Health Care Connection
Demonstration Project.
(f) "SDHCC" means San Diegans for Healthcare Coverage, Inc., a
private nonprofit corporation.
(g) "Providing employer" means an employer that at the time of
application is providing health care coverage to employees or has
provided health care coverage within the six months prior to
application for enrollment in the project.
(h) "Nonproviding employer" means an employer that does not at the
time of application provide health care coverage to employees and
has not provided health care coverage within the six months prior to
application for enrollment in the project.
12699.72. (a) The board shall contract with SDHCC to provide
local project operations.
(b) The Legislature finds that the provision of local project
operations is a new state function pursuant to Section 19130 of the
Government Code.
(c) The contract awarded pursuant to this section is exempt from
the competitive bidding requirements of the Public Contract Code.
(d) Notwithstanding any other provision of law, a member of the
SDHCC board of directors shall not be deemed to be interested in a
contract entered into by the state and the SDHCC if all of the
following conditions are satisfied:
(1) The member was appointed to represent the interests of
physicians, health care practitioners, hospitals, pharmacies, health
plans, advocates, or other health care organizations.
(2) The contract authorizes the member or the organization the
member represents to provide services under the project.
(3) The contract contains substantially the same terms and
conditions as contracts entered into with other individuals or
organizations the member was appointed to represent.
(4) The member does not influence or attempt to influence the
SDHCC or another member of the SDHCC board to recommend that the
state or SDHCC enter into the contract in which the member is
interested.
(5) The member discloses the interest to the SDHCC board and
abstains from voting on any recommendation on the contract.
(6) The SDHCC notes the member's disclosure and abstention in its
official records.
12699.73. (a) The project shall assist employers doing business
in San Diego County with providing health care benefits to their
employees with full-time employment.
(b) The project shall consist of the following components:
(1) Establishment of a premium assistance program. The program
shall include eligibility criteria such as employment status, average
number of hours worked each week, and family income categories of 0
to 100, inclusive, percent of the federal poverty level, 101 to 199,
inclusive, percent of the federal poverty level, and 200 to 299,
inclusive, percent of the federal poverty level and establishment of
the employee share of the monthly premium cost at a fixed monthly
amount equal to approximately 1 to 2 percent of the employee's
monthly gross gross monthly family
income for health care benefits for employees with a family income of
101 to 299, inclusive, percent of the federal poverty level. The
health care benefit premium for eligible employees under the program
shall be funded by employees, employers, and state and federal funds.
(2) Establishment of a basic essential benefits package to be
offered by participating health care service plans to participants in
the premium assistance program to include the following:
(A) Basic health care benefits, including medically necessary
inpatient and outpatient diagnostic and treatment services, primary
and specialty physician services, a three-tier prescription drug
program, rehabilitation services, skilled nursing facility care for
up to 30 days per year, mental health up to 20 visits and 20
inpatient days per year for nonserious mental illness and without
limit for serious mental illness, chemical dependency services
including inpatient services as medically appropriate to remove toxic
substances from the system and up to 20 outpatient visits per year,
and vision services to include routine eye examinations and lenses
every two years. For the premium assistance program, the employee may
select the basic health benefits plan or may select a health care
benefit option of equal or greater benefits and higher cost, with the
difference in cost to be paid by the employee.
(B) Dental coverage, including a dental benefit plan to be
provided by dental health plans that includes preventive, diagnostic,
and basic dental services including minor prosthetic services and
repairs. For the premium assistance program, the employee may select
the basic dental coverage, or a preferred provider organization (PPO)
basic dental coverage of equivalent cost to the basic dental
coverage, or may select dental coverage of equal or greater benefits
and higher cost with the difference in cost to be paid by the
employee.
(C) The amount of copayments under the basic essential benefits
package shall be based upon family income categories. The amount of
annual copayments for health care benefits and dental
coverage for an employee with a gross family income less
than 300 percent of the federal poverty level shall not exceed
7 percent of the employee's gross annual family income.
5 percent of the federal poverty level threshold for
the enrollee's applicable income category for one person. If more
than one family member is enrolled in the premium assistance program,
the total annual family copayments shall not exceed 7 percent of the
federal poverty level threshold for the enrollees' applicable income
category for the number of family members covered.
(3) Establishment of criteria for participation by employers and
employees in the project, including, but not limited to, the
following:
(A) Criteria for nonproviding employers, requiring them to
contribute 30 percent of the premium expense in the first and second
years of participation in the project, 40 percent of the premium
expense in the third year of participation in the project, 50 percent
of the premium expense in the fourth year of participation in the
project, and 60 percent of the premium expense in the fifth year of
participation in the project.
(i) SDHCC may reduce the percentage of employer share of the
premium expense for the fifth year of participation to no less than
50 percent if project retention falls below 80 percent of
participating employers upon transition from the fourth to the fifth
year of participation.
(ii) An employer that terminates participation in the project, and
later wishes to reenroll, must reenroll at the premium contribution
level appropriate to the year of enrollment as measured from the
first month of first enrollment as if enrollment had not been
terminated or lapsed.
(iii) A participating employer may elect to contribute to the
health care benefits of an employee's spouse or domestic partner who
is without health care coverage and, if eligible, the spouse or
domestic partner shall be enrolled through the premium assistance
program.
(B) Criteria for providing employers, requiring them to enroll
through a participating project health care service plan and
contribute to premiums at their current or previous contribution
levels including, as applicable, both employees and dependents. This
contribution amount shall be not less than 60 percent of the premium
expense.
(C) Criteria for all participating employers to do all of the
following:
(i) Enroll a minimum of 70 percent of all eligible employees in
group health care benefits through a participating health care
service plan and notify SDHCC and participating health care service
plans of eligible enrollees no later than 60 days from the effective
date of eligibility. For purposes of this subparagraph, eligible
employees are those not covered by other creditable private or public
health care coverage.
(ii) Establish a waiting period for enrollment of not less than 30
days, and not more than 90 days, from the first of the month
following hire or eligibility for health care benefits.
(iii) Utilize SDHCC administrative procedures and systems for
enrollment and disenrollment, and agree to and participate in project
evaluation. If funding for the employer share of an uninsured
dependent spouse or domestic partner is available from the employer
or through other sources, the dependent spouse or domestic partner
may be enrolled in the premium assistance program.
(D) Criteria for employees to participate in the premium
assistance program if they meet family income criteria, are not
currently enrolled in Medi-Cal or another public program with a share
of cost less than 2 percent of gross monthly income, and do not have
or have not had other health care coverage for a period of six
months prior to enrollment. This project shall provide counseling to
an employee who is currently enrolled in, or appears eligible for,
the Medi-Cal program and who otherwise meets the conditions for
participation in the project to assist the employee in understanding
all of the coverage options, including the cost and benefit tradeoffs
associated with enrolling in a participating project plan rather
than in the Medi-Cal program. The project shall provide this
counseling prior to enrolling the employee in the project. The
project shall establish exceptions to prior health care coverage
restrictions if the reasons were outside of the employee's control,
including, but not limited to, loss of employment or loss of
eligibility for public program coverage. Participating employees who
become eligible for Medi-Cal or Medicare due to a chronic medical
condition during the course of project participation shall be
required to complete an eligibility application and the eligibility
process and, if certified eligible with a share of cost less than 2
percent of gross monthly income, shall be disenrolled from the
project. For the purposes of this subparagraph, SDHCC and
participating health care service plans shall be exempt from Section
1373 of the Health and Safety Code prohibiting plan contracts from
providing an exemption because of an applicant's entitlement to
Medi-Cal benefits.
(4) Establishment of participation criteria and administrative
procedures for health care service plans and dental health plans,
including approval as a health care service plan licensed by the
Department of Managed Health Care or a health insurer with a
certificate of authority issued by the Department of Insurance to
provide commercial group health care benefits or dental coverage for
both small and large employers in San Diego County, agreeing to offer
the basic essential benefits package established by the project for
employees under 300 percent of the federal poverty level, offering
their portfolio of group benefit plans for employees at or over 300
percent of the federal poverty level, and allowing the employer to
select up to two benefit plans for employees at or over 300 percent
of the federal poverty level, complying with project enrollment
processes and systems, establishing reinsurance and administrative
procedures and evaluation processes, applying small group rules and
protections to the project, and agreeing to automatic annual rate
adjustments over the life of the program subject to adjustments for
demonstrated participating employee expenses exceeding annual rate
adjustments by a specified level. For the purposes of project
evaluation, participating health care service plans shall provide
summary and enrollee level data to the project.
(A) The project shall develop, negotiate, and execute contracts
and operating policies and procedures with health care service plans
that meet participation criteria to ensure access within San Diego
County.
(B) Contracts and operating procedures shall include adverse
selection enrollment protections including quarterly retroactive
premium payment adjustments based upon the actual age group of
enrollees compared to the age groups utilized to establish average
project premium levels. Those adjustments shall be calculated 60 days
after the quarter and payment adjustments made within 30 days of
adjustment calculations.
(C) Small business insurance rules and protections shall apply to
the program, including guaranteed issue and renewability subject to
annual rate adjustments.
(D) Qualifying events for special enrollment shall include
official SDHCC notification to uninsured employees working for an
employer offering health care coverage through a participating health
plan. Those employees shall have 30 days from the date of
notification to apply for the project.
(5) Establishment of administrative and financial policies and
procedures to include, but not be limited to, the following:
(A) Information resources for the project and for other private
and public health care coverage.
(B) An outreach program to provide employers and employees with
education and eligibility screening and enrollment for the project
and for other private and public health care coverage programs.
(C) Linkages and partnerships with local government agencies,
business associations, economic development councils, workforce
partnerships, brokers, professional associations, and community-based
organizations to identify, accept referrals from and refer to, and
coordinate with existing resources. The project shall facilitate
enrollment of eligible children in public programs, including
enrollment of eligible children in the Healthy Families Program, with
subscriber premium payments through payroll deduction to maximize
continuity of health care benefits.
(D) Health plan contracts, broker policies and procedures, premium
collection and premium distribution policies, reinsurance program
policies and procedures, and other procedures and processes necessary
to implement the project.
(E) Accounting and financial reporting policies and other
procedures and processes necessary for the financial management of
the project.
(F) Operating policies, procedures, and processes necessary to
operate the project, including contracts with third-party
administrators as necessary for premium collection and distribution
and reinsurance administration.
(G) Data collection and reporting procedures to identify, report
on, and evaluate project activities, impacts, and estimated offsets
to state public program expenditures.
12699.74. The department, working in coordination with the board
and SDHCC, shall perform the following functions for the project:
(a) Develop, pursue, and secure any federal waivers and state plan
amendments necessary to implement the project. Submission of the
federal waiver or state plan amendments, or both shall be completed
on or before June 30, 2008.
(b) To the extent available, pursue government and private funding
for planning, startup, evaluation, and other project activities.
(b)
(c) Establish data collection and reporting procedures
to identify and report on project activities, impacts, and estimated
offsets to state public program expenditures.
12699.75. The board, in conjunction with SDHCC, shall evaluate
the feasibility of including employees with part-time employment in
the project. The board shall submit a report of its findings and
recommendations to the Legislature on or before January 1, 2011.
12699.76. (a) The project shall establish,
monitor, and continuously evaluate critical success indicators and
outcomes for its programs and operations, including the number of
employers and employees participating in it, their benefit plans, and
services provided to them, including those employees and dependents
identified as eligible for public program coverage at the time of
enrollment. On The board and the SDHCC, in
conjunction with a contracted academic institution or health policy
organization, shall prepare an evaluation plan prior to
initiating enrollment in the project. The contracted academic
institution or health policy organization shall have the skills and
expertise necessary to evaluate the project and perform the duties
described in this section.
(b) On or before January 1, 2009,
and annually thereafter, the board shall submit a report to the
Legislature on the progress and outcomes of the project, including
the number of employees participating in it and other health care
coverage programs and the estimated offsets to other state
program expenditures resulting from the project.
programs. Beginning with the third year after enrollment, the report
shall include the estimated improved health outcomes,
financial savings to other government program expenditures, and
reductions in uncompensated care resulting from the project. The
academic institution or health policy organization described in
subdivision (a) shall compile the information required for the board'
s report.
12699.77. Any funding for this project shall supplement and not
supplant appropriations for existing health programs administered by
the state and county and funded by federal, state or county dollars
or any combination of federal, state and county dollars.
SEC. 4. The Legislature finds and declares that due to the unique
circumstances applicable within the County of San Diego with respect
to its significant population of low-income residents without health
care coverage, the existence of San Diegans for Healthcare Coverage,
Inc., and the collaborative agreement among diverse constituency
groups within the county to pursue the San Diego Health Care
Connection Demonstration Project, a statute of general applicability
cannot be made applicable within the meaning of subdivision (b) of
Section 16 of Article IV of the California Constitution.