BILL ANALYSIS                                                                                                                                                                                                    

                                                                  AB 1176
                                                                  Page  1

          Date of Hearing:   May 8, 2013

                                  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


          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.


           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
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           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  

           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
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            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