BILL ANALYSIS                                                                                                                                                                                                    



                                                                    AB 1839


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          Date of Hearing:   April 5, 2016


                            ASSEMBLY COMMITTEE ON HEALTH


                                   Jim Wood, Chair


          AB 1839  
          (Patterson) - As Introduced February 9, 2016


          SUBJECT:  California Health Benefit Exchange:  enrollment  
          options.


          SUMMARY:  Makes changes to the California Health Benefit  
          Exchange's (the Exchange) enrollment system.  Specifically, this  
          bill:  


          1)Requires upgrades to the Exchange's enrollment system so that  
            an enrollee has the option to elect either of the following: 


             a)   Enroll in a plan with subsidized coverage for himself or  
               herself and enroll the eligible child or children in  
               Medi-Cal; or,


             b)   Enroll in a single plan for a family that preserves the  
               enrollee's subsidized coverage and purchase unsubsidized  
               coverage under the same plan for the child or children  
               under 19 years of age.


          1)Requires the upgrades to be operational no later than July 1,  
            2017, and provides that the chief information and technology  








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            officer or his or her designee to oversee the update process. 


          EXISTING LAW:  


          1)Establishes the federal Patient Protection and Affordable Care  
            Act (ACA), which enacts various health care coverage market  
            reforms.  


          2)Establishes the Exchange (also referred to as Covered  
            California) within state government, as an independent public  
            entity not affiliated with an agency or department, and  
            requires the Exchange to compare and make available through  
            selective contracting health insurance for individual and  
            small business purchasers as authorized under the ACA.   
            Specifies the powers and duties of the board governing the  
            Exchange, and requires the board to facilitate the purchase of  
            qualified health plans though the Exchange by qualified  
            individuals and small employers.  


          3)Requires the board to determine the criteria and process for  
            eligibility, enrollment, and disenrollment of enrollees and  
            potential enrollees in the Exchange and coordinate that  
            process with state and local government entities administering  
            other specified health care coverage programs, as specified.  


          4)Establishes the Medi-Cal program, which is administered by the  
            State Department of Health Care Services (DHCS), under which  
            qualified low-income persons receive health care benefits and,  
            in part, governed and funded by federal Medicaid program  
            provisions.  Authorizes DHCS to extend continuous Medi-Cal  
            eligibility to children 19 years of age and younger.

          FISCAL EFFECT:  This bill has not yet been analyzed by a fiscal  
          committee.  








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          COMMENTS:  


          1)PURPOSE OF THIS BILL.  According to the author, children are  
            being automatically enrolled into Medi-Cal if their parents  
            enroll for health insurance through the Exchange and their  
            parents are of certain income eligibility- up to 266% of the  
            federal poverty limit (FPL).  Although there is currently a  
            process to remove these children from Medi-Cal, the author  
            contends that this process is very bureaucratic and opens  
            families to higher financial liabilities.  The author points  
            out that some families would like the option of paying an  
            additional amount through the Exchange to keep their children  
            on the same commercial plan because it may better suit their  
            families' individual needs.  The author raises concerns  
            regarding access to care and finding providers accepting  
            Medi-Cal payments especially in rural communities throughout  
            the Central Valley.  The author cites rate reductions to  
            Medi-Cal providers and projected enrollment increases in  
            Medi-Cal as reasons why individuals may choose Covered  
            California.  The author states that while current law provides  
            an alternative to remove a child from the Medi-Cal system,  
            this process is slow and only allows for the purchase of a  
            separate plan for the child or children.  Consequentially, the  
            family is then on two separate plans.  The author contends  
            that the separate plans add another layer to the complexities  
            of navigating healthcare coverage and opens the parents to a  
            higher financial liability by having a family deductible and  
            out-of-pocket maximum on each plan instead of one.  Under  
            current law, families who do not want Medi-Cal coverage for  
            their children and are in the income bracket of 138% to 266%  
            FPL cannot sign up through Covered California on a single  
            policy.









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          2)BACKGROUND.  


             a)   FPL.  FPL is a measure of income level issued annually  
               by the Department of Health and Human Services to determine  
               eligibility for certain programs and benefits.  Medi-Cal is  
               available to all individuals who qualify on the basis of  
               income up to 138% of the FPL and all children (up to age  
               19) whose family's income is at or under 266% of the FPL.   
               Families who enroll in the Exchange with income below 266%  
               of the FPL must enroll their children in Medi-Cal or enroll  
               their children into a separate commercial plan.  


             b)   Covered California.  The Exchange does not change how  
               existing state health care coverage programs are  
               administered.  Medi-Cal continues to be administered by the  
               DHCS.  Federal law requires state exchanges to perform the  
               function of screening for and enrolling individuals in  
               Medi-Cal.  The Exchange coordinates with DHCS and  
               California counties to ensure that individuals are  
               seamlessly transitioned between coverage programs if their  
               eligibility changes. 



          Federal and state regulations provide that individuals who are  
          in the same household but would qualify for different levels of  
          cost-sharing reduction (CSR) if applying separately may,  
          collectively, only qualify for the CSR level that all members of  
          the household qualify for if they choose to enroll in the same  
          Covered California family health plan. Here, individuals who are  
          eligible for Medi-Cal are not eligible for advanced premium tax  
          credit (APTC) or CSR. Therefore, any parents who wish to enroll  
          their Medi-Cal-eligible children into their subsidized Covered  
          California health plan will lose their eligibility for CSR, if  
          applicable.









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               The California Eligibility, Enrollment and Retention System  
               (CalHEERS) is the computer system behind the Exchange and  
               is sponsored by Covered California and DHCS.  CalHEERS is a  
               computer program that allows prospective consumers to enter  
               their personal and income data and receive information  
               about plans they are eligible for and what they cost.   
               CalHEERS also determines preliminary eligibility for APTC,  
               Modified Adjusted Gross Income (MAGI) Medi-Cal, and  
               Non-MAGI Medi-Cal.  Covered California indicates initial  
               estimates of this bill's implementation would cost  
               approximately $1.8 million.  Covered California also notes  
               that this change request could take well over a year to  
               correctly implement.  

               In its February 2016 report, the California State Auditor  
               noted that CalHEERS, while functional, its rapid design,  
               development, and implementation have resulted in some risk  
               to system maintainability.  It noted that without continued  
               oversight, identification or resolution of system issues,  
               there may be long-term cost and schedule implications for  
               the ongoing maintenance of CalHEERS.  





          3)SUPPORT.  Lumen Insurance Solutions, Inc. states that this  
            bill would cost California nothing, give families a choice,  
            not increase the family's total out-of-pocket maximum, relieve  
            stress on the Medi-Cal system, and is simple to do.  


          4)OPPOSE UNLESS AMENDED.  Health Access California (Health  
            Access) contends that the difference in costs for families who  
            opt for unsubsidized coverage is so extreme that this bill  
            should be amended to identify the cost differences for  
            families.  Furthermore, Health Access states that this bill  
            should be further amended to direct families to the Department  








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            of Managed Health Care's call center and to the Medi-Cal  
            managed care ombudsman to complain about Medi-Cal's lack of  
            access to care.  Finally, Health Access requests that this  
            bill amended to require insurance agents to provide the same  
            degree of assistance to a family with members on Medi-Cal as  
            they provide to a family with private, commercial coverage.  


          5)OPPOSITION.  The Western Center on Law and Poverty (WCLP)  
            contends that the CalHEERS system already provides a choice  
            for families since it allows purchasers to select the  
            financial assistance path that would determine eligibility for  
            Medi-Cal or tax credits.  This bill would mandate changes to  
            CalHEERS ahead of other problems like income determinations,  
            immigration status information, eligibility determinations for  
            former foster youth, and many other requests.  Additionally,  
            WCLP states that advising families of eligibility for  
            unsubsidized coverage could also jeopardize the parents'  
            eligibility for Cost Sharing Reductions (CSRs) and would not  
            provide families with complete information about the major  
            cost implications of choosing unsubsidized coverage over  
            Medi-Cal.  Specifically, WCLP cites Covered California  
            Regulations that cause parents to lose their eligibility for  
            CSRs like the enhanced silver plan, which has lower  
            cost-sharing.  Finally, WCLP identifies the potential  
            financial options faced by children enrolled in unsubsidized  
            coverage, describing Medi-Cal monthly premiums and  
            unsubsidized platinum plan premiums and bronze plan cost  
            sharing.  


          6)RELATED LEGISLATION.


             a)   AB 2077 (Burke and Bonilla) establishes procedures to  
               ensure eligible recipients of insurance affordability  
               programs move between the Medi-Cal program and other  
               insurance affordability programs without any breaks in  
               coverage.  AB 2077 would require an individual's case to be  








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               run through CalHEERS.  AB 2077 is currently pending in the  
               Assembly Health Committee.


             b)   SB 10 (Lara) requires the Secretary of California Health  
               and Human Services to apply to the United States Department  
               of Health and Human Services for a waiver to allow  
               individuals who are not eligible to obtain health coverage  
               because of their immigration status to obtain coverage from  
               the Exchange.


          7)PREVIOUS LEGISLATION.  SB 75 (Committee on Budget and Fiscal  
            Review), Chapter 18, Statutes of 2015, the Omnibus Health  
            Trailer Bill for 2015-16, contains changes related to the  
            Budget Act of 2015 and includes provisions expanding  
            full-scope Medi-Cal coverage to children, regardless of  
            immigration status, who currently would be eligible for  
            Medi-Cal if not for immigration status.  Requires children  
            eligible in this category to enroll in Medi-Cal managed care.   
            Requires DHCS to seek federal financial participation (FFP),  
            but requires coverage to be provided regardless of FFP.   
            Requires DHCS to provide a semiannual status report to the  
            Legislature until regulations have been adopted.


          8)POLICY COMMENTS.  This bill would require changes to the  
            CalHEERS system to enable families the option to enroll in a  
            single plan by July 1, 2017.  First, this bill will have cost  
            implications and may also require CalHEERS to implement  
            changes in advance of other priorities.  Based upon the  
            California State Auditor report, this bill has a potential to  
            exacerbate CalHEERS maintenance issues.  Second, it also  
            appears as if there may be some unintended consequences on  
            adult coverage with respect to enrollment in the subsidized on  
            Exchange plan if children (who are also eligible for Medi-Cal)  
            are allowed the option to enroll in the parent's subsidized  
            commercial plan.  









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          REGISTERED SUPPORT / OPPOSITION:




          Support


          California Association of Health Underwriters


          Lumen Insurance Solutions, Inc.




          Opposition


          Western Center for Law and Poverty 




          Analysis Prepared by:Kristene Mapile / HEALTH / (916) 319-2097