BILL ANALYSIS Ó AB 1176 Page 1 Date of Hearing: May 8, 2013 ASSEMBLY COMMITTEE ON APPROPRIATIONS Mike Gatto, Chair AB 1176 (Bocanegra and Bonta) - As Amended: April 23, 2013 Policy Committee: HealthVote:12-6 Urgency: No State Mandated Local Program: No Reimbursable: No SUMMARY This bill establishes the Graduate Medical Education (GME) Council and GME Fund and assesses health plans and insurers five dollars ($5) annually per covered life to fund GME residency training programs. FISCAL EFFECT 1)Assessments on health plans and insurers based on more than 12 million covered lives would raise almost $61 million annually for the GME fund. 2)Costs to the Office of Statewide Planning and Development (OSHPD) Health Data and Planning Fund of $329,000 for FY 2013-14 and 2014-15 for start-up staffing and expenditures. 3)This bill has been keyed as a tax by Legislative Counsel, requiring a 2/3 vote. COMMENTS 1)Rationale . The California Medical Association and California Academy of Family Physicians support this bill because there are not enough primary care providers practicing in California to treat those who will be newly insured under the Affordable Care Act. California has about 12% of the nation's population, but only 8.5% of its medical residents and fellows. Other states, such as New York, Michigan, and Maryland, have ensured physicians who want to train in their states have that opportunity, and costs are spread out equally among those who will benefit. The vast majority of physicians who train in a region will remain in that region. AB 1176 Page 2 2)GME Background . GME is a training program for medical school graduates that serve as residents in more than 1,000 of the nation's hospitals. Each year the federal government contributes about $9.5 billion in Medicare funds, and approximately $2 billion in Medicaid to help pay for GME. The federal government also funds GME in children's hospitals through a program called Teach Health Centers GME, which trains residents in community-based ambulatory settings; and through contributions from other agencies, including the Department of Defense, the Department of Veterans Affairs, the Health Resources and Service Administration, and the National Institutes of Health. More than 40 states paid about $3.78 billion through their Medicaid programs to support GME in 2009. Since then, many states have reduced their support for advanced medical training. Private insurers support GME to some degree through payments they negotiate with teaching hospitals. 3)GME and the Affordable Care Act (ACA). The ACA increases the number of GME training positions by redistributing currently unused slots, with priorities given to primary care and general surgery and to states with the lowest resident physician-to-population ratios (effective July 1, 2011); increases flexibility in laws and regulations that govern GME funding to promote training in outpatient settings (effective July 1, 2010); and, ensures the availability of residency programs in rural and underserved areas. 4)Health plan opposition . Health plans and insurers argue this bill translates into a large premium increase for insured Californians. Adding another tax would only further the unaffordability of health care and could potentially price out many Californians who are attempting to gain coverage for the first time. 5)Related legislation . AB 565 (Salas) revises program criteria of the Steven Thompson Loan Repayment Program (STLRP) and revises the definition of practice setting for purposes of the STLRP to include a private practice that provides primary care located in a medically underserved area and has a minimum of 30% uninsured, Medi-Cal, or other publicly funded program that serve patients under 250% of the federal poverty level. AB 565 is pending in this committee. AB 1176 Page 3 AB 860 (Perea and Bocanegra) appropriates $600,000 from the Managed Care Administrative Fines and Penalties Fund (Managed Care Fund) to the Steven M. Thompson Medical School Scholarship Program (STMSS Program) Account within HPEF. AB 860 is pending on this committee's Suspense File. SB 20 (Ed Hernandez), pending on the Senate Appropriations Committee's Suspense File, requires, beginning on the date that the Major Risk Medical Insurance Program (MRMIP) becomes inoperative, all the funds in the Managed Care Fund to be transferred each year for purposes of the STLRP. Analysis Prepared by : Debra Roth / APPR. / (916) 319-2081