Existing federal law, the federal Patient Protection and Affordable Care Act (PPACA), enacts various health care coverage market reforms that took effect January 1, 2014. Among other things, PPACA required each state to establish an American Health Benefit Exchange to facilitate the purchase of qualified health plans by qualified individuals and qualified small employers. Existing state law establishes the California Health Benefit Exchange, also known as Covered California, within state government. Existing law specifies the powers and duties of the board to implement Covered California. Existing law generally authorizes the board to adopt any necessary rules and regulations as emergency regulations until January 1, 2017, and to adopt regulations to implement the eligibility, enrollment, and appeals processes for the individual and small business exchanges, changes to the small business exchange, and other specified provisions as emergency regulations, until January 1, 2019. Existing law authorizes the Office of Administrative Law, until January 1, 2020, to approve more than 2 readoptions of the emergency regulations adopted by the board.

This bill instead would authorize the board to adopt necessary rules and regulations by emergency regulations until January 1, 2022, with the exception of regulations implementing specified existing provisions relating to criminal background history checks for persons with access to confidential, personal, or financial information. The bill would extend the authority of the Office of Administrative Law to approve more than 2 readoptions of emergency regulations until January 1, 2027. The bill would require the board to discuss a proposed rule or regulation at a properly noticed meeting prior to the adoption of the rule or regulation, as specified. The time extensions provided for in the bill also would apply to any regulation adopted prior to January 1, 2019, as specified.

Existing law authorizes the board to standardize products offered through the California Health Benefit Exchange. Existing law requires any products standardized by the board to be discussed by the board during at least one properly noticed board meeting prior to the board meeting at which the board adopts the standardized products to be offered through the Exchange.

This bill would require the board to discuss a proposed rule or regulation standardizing those products at a properly noticed meeting prior to the adoption of the rule or regulation, as specified.

Existing federal law, the federal Patient Protection and Affordable Care Act (PPACA), enacts various health care coverage market reforms that took effect January 1, 2014. Among other things, PPACA required each state to establish an American Health Benefit Exchange to facilitate the purchase of qualified health plans by qualified individuals and qualified small employers. Existing state law establishes the California Health Benefit Exchange, also known as Covered California, within state government. Existing law specifies the powers and duties of the board to implement Covered California. Existing law generally authorizes the board to adopt any necessary rules and regulations as emergency regulations until January 1, 2017, and to adopt regulations to implement the eligibility, enrollment, and appeals processes for the individual and small business exchanges, changes to the small business exchange, and other specified provisions as emergency regulations, until January 1, 2019. Existing law authorizes the Office of Administrative Law, until January 1, 2020, to approve more than 2 readoptions of the emergency regulations adopted by the board.

This bill instead would authorize the board to adopt necessary rules and regulations by emergency regulations until January 1, 2022, with the exception of regulations implementing specified existing provisions relating to criminal background history checks for persons with access to confidential, personal, or financial information. The bill would extend the authority of the Office of Administrative Law to approve more than 2 readoptions of emergency regulations until January 1, 2027. The bill would require the board to discuss a proposed rule or regulation at a properly noticed meeting prior to the adoption of the rule or regulation, as specified. The time extensions provided for in the bill also would apply to any regulation adopted prior to January 1, 2019, as specified.

Existing law authorizes the board to standardize products offered through the California Health Benefit Exchange. Existing law requires any products standardized by the board to be discussed by the board during at least one properly noticed board meeting prior to the board meeting at which the board adopts the standardized products to be offered through the Exchange.

This bill would require the board to discuss a proposed rule or regulation standardizing those products at a properly noticed meeting prior to the adoption of the rule or regulation, as specified.

Existing federal law, the federal Patient Protection and Affordable Care Act (PPACA), enacts various health care coverage market reforms that took effect January 1, 2014. Among other things, PPACA required each state to establish an American Health Benefit Exchange to facilitate the purchase of qualified health plans by qualified individuals and qualified small employers. Existing state law establishes the California Health Benefit Exchange, also known as Covered California, within state government. Existing law specifies the powers and duties of the board to implement Covered California. Existing law generally authorizes the board to adopt any necessary rules and regulations as emergency regulations until January 1, 2017, and to adopt regulations to implement the eligibility, enrollment, and appeals processes for the individual and small business exchanges, changes to the small business exchange, and other specified provisions as emergency regulations, until January 1, 2019. Existing law authorizes the Office of Administrative Law, until January 1, 2020, to approve more than 2 readoptions of the emergency regulations adopted by the board.

This bill instead would authorize the board to adopt necessary rules and regulations by emergency regulations until January 1, 2022, with the exception of regulations implementing specified existing provisions relating to criminal background history checks for persons with access to confidential, personal, or financial information. The bill would extend the authority of the Office of Administrative Law to approve more than 2 readoptions of emergency regulations until January 1, 2027. The bill would require the board to discuss a proposed rule or regulation at a properly noticed meeting prior to the adoption of the rule or regulation, as specified. The time extensions provided for in the bill also would apply to any regulation adopted prior to January 1, 2019, as specified.

Existing federal law, the federal Patient Protection and Affordable Care Act (PPACA), enacts various health care coverage market reforms that took effect January 1, 2014. Among other things, PPACA required each state to establish an American Health Benefit Exchange to facilitate the purchase of qualified health plans by qualified individuals and qualified small employers. Existing state law establishes the California Health Benefit Exchange, also known as Covered California, within state government. Existing law specifies the powers and duties of the board to implement Covered California. Existing law generally authorizes the board to adopt any necessary rules and regulations as emergency regulations until January 1, 2017, and to adopt regulations to implement the eligibility, enrollment, and appeals processes for the individual and small business exchanges, changes to the small business exchange, and other specified provisions as emergency regulations, until January 1, 2019. Existing law authorizes the Office of Administrative Law, until January 1, 2020, to approve more than 2 readoptions of the emergency regulations adopted by the board.

This bill instead would make technical, nonsubstantive changes to those provisions. authorize the board to adopt necessary rules and regulations by emergency regulations until January 1, 2022, with the exception of regulations implementing specified existing provisions relating to criminal background history checks for persons with access to confidential, personal, or financial information. The bill would extend the authority of the Office of Administrative Law to approve more than 2 readoptions of emergency regulations until January 1, 2027. The time extensions provided for in the bill also would apply to any regulation adopted prior to January 1, 2019, as specified.

Existing federal law, the federal Patient Protection and Affordable Care Act (PPACA), enacts various health care coverage market reforms that took effect January 1, 2014. Among other things, PPACA required each state to establish an American Health Benefit Exchange to facilitate the purchase of qualified health plans by qualified individuals and qualified small employers. Existing state law establishes the California Health Benefit Exchange, also known as Covered California, within state government. Existing law specifies the powers and duties of the board to implement Covered California.

This bill would make technical, nonsubstantive changes to those provisions.

SENATE THIRD READING

STR Bill Id:SB 1245

Author:(Leyva)

As Amended Ver:April 9, 2018

Majority vote

SENATE VOTE: 28-10

SUMMARY: Extends the emergency regulatory authority of the board governing California's Health Benefits Exchange (Exchange), also known as Covered California, until January 1, 2022, with two readoptions until January 1, 2027. Requires the board governing the Exchange to discuss the regulations during at least one properly noticed board meeting prior to its adoption by Covered California. Specifically, this bill:

1. Authorizes the Covered California board to adopt emergency regulations, except those implementing staff and contractor fingerprinting requirements, as specified, until January 1, 2022, and authorizes the Office of Administrative Law (OAL) to approve more than two readoptions of an emergency regulation until January 1, 2027.
2. Requires any rule or regulation adopted pursuant to 1) above to be discussed by the Covered California board during at least one properly noticed board meeting prior to the board meeting at which the board adopts the rule or regulation.
3. Applies the amendments of this bill to any regulations adopted prior to January 1, 2019.

FISCAL EFFECT: According to the Assembly Appropriations Committee, negligible state costs.

COMMENTS: According to the author, since Covered California began offering coverage in 2014, it has served more than 3 million consumers. Over the past few months, the fate of the Patient Protection and Affordable Care Act (ACA) has been under an extreme amount of uncertainty and it is unknown what regulatory changes could occur in the future. The author believes that, "It is our duty to ensure that the health care system we have here in California, specifically Covered California, has the ability to adapt and respond to these federal changes as quickly and efficiently as possible." Without this emergency rulemaking authority, Covered California regulations could conflict with federal law, which has the potential to harm its ability to properly serve their consumers.

1. ACA. Enacted in March 2010, the ACA provides the framework, policies, regulations and guidelines for the implementation of comprehensive health care reform by the states. The ACA expands access to quality, affordable insurance and health care. As of January 1, 2014, insurers are no longer able to deny coverage or charge higher premiums based on preexisting conditions. These aspects of the ACA, along with tax credits for low and middle income people buying insurance on their own in new health benefit exchanges, make it easier for people with preexisting conditions to gain insurance coverage.

The ACA required exchanges, also known as Marketplaces, to be established in every state by January 1, 2014, otherwise the federal government will establish one in the state. The central purpose of these new Marketplaces is to enable low and moderate income individuals, and small employers to obtain affordable health coverage. Individuals and small businesses are able to purchase private health insurance through a variety of insurance Marketplace models throughout the United States. Each state electing to establish a new Marketplace must adopt the federal standards in law and rule, and have in effect a state law or regulation that implements these standards. If a state elects not to establish a Marketplace, the ACA requires the federal Department of Health and Human Services to establish and operate one in that state. The new Marketplaces are required to carry out a number of different functions, including determining eligibility and enrolling individuals in appropriate plans; conducting plan management activities; assisting consumers; ensuring plan accountability; and providing financial management.

1. Covered California. California was the first state in the nation to enact legislation creating an Exchange under the ACA. Covered California is currently authorized to adopt emergency regulations in the area of eligibility and enrollment for the individual and small business markets until January 1, 2019. Current federal policy discussions regarding the ACA indicate the potential for significant changes to rules governing Exchanges.

Consumers Union states in support that the need for Covered California to maintain the flexibility to exercise emergency rulemaking power is important to its operations and the continued stability of the individual market. Health Access California, also in support, states that a minimum review and comment period will provide some level of transparency and accountability on Covered California board actions.

There is no known opposition to this bill.

Analysis Prepared by: Kristene Mapile / HEALTH / (916) 319-2097 FN: 0003662

Date of Hearing: June 27, 2018

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez Fletcher, Chair

SBPCA Bill Id:SB 1245

Author:(Leyva) – As Amended Ver:April 9, 2018

Urgency: No State Mandated Local Program: No Reimbursable: No

SUMMARY:

This bill extends Covered California's emergency rulemaking authority until 2022 and authorizes the Office of Administrative Law to approve more than two readoptions of such emergency regulations until 2027.

It also requires regulations to be discussed by the Covered California board during at least one properly noticed board meeting prior to the board meeting at which the board adopts the rule or regulation.

FISCAL EFFECT:

Negligible.

COMMENTS:

1. Purpose. According to the author, since Covered California began offering coverage in 2014, it has served more than 3 million consumers. Over the past few months, the fate of the federal Affordable Care Act (ACA) has been uncertain, and future federal regulatory changes could occur. The author believes this bill will provide Covered California authority to adapt and respond to these federal changes quickly and efficiently. Without this emergency rulemaking authority, Covered California regulations could conflict with federal law, which has the potential to harm its ability to properly serve its consumers. This bill is supported by health advocates and has no opposition.
2. Covered California. The federal ACA subsidizes health insurance premiums for individuals without access to affordable health care. Subsidies are available through health insurance marketplaces with standardized rules, called exchanges. California created Covered California as the state's exchange, making it the first state to enact legislation creating an exchange under the ACA. Emergency rulemaking authority was provided at that time to assist the Covered California's ACA implementation.

Covered California is authorized to adopt emergency regulations in the area of eligibility and enrollment for the individual and small business markets until January 1, 2019. Current federal policy discussions regarding the ACA indicate the potential for significant changes to rules governing exchanges.

Analysis Prepared by: Lisa Murawski / APPR. / (916) 319-2081

Date of Hearing: June 19, 2018

ASSEMBLY COMMITTEE ON HEALTH

Jim Wood, Chair

SBPCA Bill Id:SB 1245

Author:(Leyva) – As Amended Ver:April 9, 2018

SENATE VOTE: 28-10

SUBJECT: Covered California.

SUMMARY: Extends the emergency regulatory authority of the board governing California’s Health Benefits Exchange (Exchange), also known as Covered California, until January 1, 2022, with two readoptions until January 1, 2027. Requires the board governing the Exchange to discuss the regulations during at least one properly noticed board meeting prior to its adoption by Covered California. Specifically, this bill:

1. Authorizes the Covered California board to adopt emergency regulations, except those implementing staff and contractor fingerprinting requirements, as specified, until January 1, 2022, and authorizes the Office of Administrative Law (OAL) to approve more than two readoptions of an emergency regulation until January 1, 2027.
2. Requires any rule or regulation adopted pursuant to 1) above to be discussed by the Covered California board during at least one properly noticed board meeting prior to the board meeting at which the board adopts the rule or regulation.
3. Applies the amendments of this bill to any regulations adopted prior to January 1, 2019.

EXISTING LAW:

1. Establishes the federal Patient Protection and Affordable Care Act (ACA), which enacts various health care coverage market reforms including the availability of health insurance exchanges.
2. Establishes, in state government, the Exchange, 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 Covered California 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. Authorizes the Covered California board, with respect to individual coverage made available through Covered California, to collect premiums and assist in the administration of subsidies.
   
4. Authorizes, until January 1, 2019, any necessary rules and regulations to implement the eligibility, enrollment, and appeals processes for individual and small business, changes to small business, or any act in effect that is operative on or before December 31, 2016, to be adopted as emergency regulations in accordance with the Administrative Procedure Act, as specified.
5. Requires any emergency regulation adopted pursuant to 4) above to be repealed by operation of law unless the adoption, amendment, or repeal of the regulation is promulgated by the Covered California board, as specified, within five years of the initial adoption of the emergency regulation. Authorizes, until January 1, 2020, the OAL to approve more than two readoptions of an emergency regulation adopted pursuant to 4) above.
6. Authorizes the Covered California board to standardize products offered through the Exchange. Requires any products standardized by the board to be discussed by the board during at least one properly noticed board meeting prior to the board meeting at which the board adopts the standardized products to be offered through the Exchange.
   

FISCAL EFFECT: According to the Senate Appropriations Committee, pursuant to Senate Rule 28.8, negligible state costs.

COMMENTS:

1. PURPOSE OF THIS BILL. According to the author, since Covered California began offering coverage in 2014, it has served more than 3 million consumers. Over the past few months, the fate of the ACA has been under an extreme amount of uncertainty and it is unknown what regulatory changes could occur in the future. The author believes that, “It is our duty to ensure that the health care system we have here in California, specifically Covered California, has the ability to adapt and respond to these federal changes as quickly and efficiently as possible.” Without this emergency rulemaking authority, Covered California regulations could conflict with federal law, which has the potential to harm its ability to properly serve their consumers.
2. BACKGROUND.
   1. ACA.  Enacted in March 2010, the ACA provides the framework, policies, regulations and guidelines for the implementation of comprehensive health care reform by the states.  The ACA expands access to quality, affordable insurance and health care.  As of January 1, 2014, insurers are no longer able to deny coverage or charge higher premiums based on preexisting conditions.  These aspects of the ACA, along with tax credits for low and middle income people buying insurance on their own in new health benefit exchanges, make it easier for people with preexisting conditions to gain insurance coverage. 

The ACA required exchanges, also known as Marketplaces, to be established in every state by January 1, 2014, otherwise the federal government will establish one in the state. The central purpose of these new Marketplaces is to enable low and moderate income individuals, and small employers to obtain affordable health coverage. Individuals and small businesses are able to purchase private health insurance through a variety of insurance Marketplace models throughout the United States. Each state electing to establish a new Marketplace must adopt the federal standards in law and rule, and have in effect a state law or regulation that implements these standards. If a state elects not to establish a Marketplace, the ACA requires the federal Department of Health and Human Services (HHS) to establish and operate one in that state. The new Marketplaces are required to carry out a number of different functions, including determining eligibility and enrolling individuals in appropriate plans; conducting plan management activities; assisting consumers; ensuring plan accountability; and providing financial management.

• 1. Covered California. California was the first state in the nation to enact legislation creating an Exchange under the ACA. Covered California is currently authorized to adopt emergency regulations in the area of eligibility and enrollment for the individual and small business markets until January 1, 2019. Current federal policy discussions regarding the ACA indicate the potential for significant changes to rules governing Exchanges.

1. SUPPORT. Consumers Union states that the need for Covered California to maintain the flexibility to exercise emergency rulemaking power is important to its operations and the continued stability of the individual market. Health Access California states that a minimum review and comment period will provide some level of transparency and accountability on Covered California board actions.
2. PREVIOUS LEGISLATION.
   1. SB 833 (Committee on Budget & Fiscal Review), Chapter 30, Statues of 2016, extends the emergency regulation authority for Covered California until January 1, 2019, to implement the eligibility, enrollment and appeals processes for the individual and small business exchanges, and changes to the small business exchange, or legislation, that is enacted prior to December 31, 2016.
      
   2. AB X1 2 (Pan), Chapter 1, Statutes of 2013-14 First Extraordinary Session and SB X1 2 (Hernandez), Chapter 2, Statutes of 2013-14 First Extraordinary Session, establish health insurance market reforms contained in the ACA specific to individual purchasers, such as prohibiting insurers from denying coverage based on preexisting conditions; and, make conforming changes to small employer health insurance laws resulting from final federal regulations.
   3. SB 961 (Hernandez) and AB 1461 (Monning) of 2012 were identical bills that would have reformed California’s individual market similar to the provisions in SBX1 2. SB 961 and AB 1461 were vetoed by Governor Brown who indicated that without the strong foundation that federal law provides, a state-level mandate on insurers alone could encourage healthy people to wait until they got sick or injured before purchasing coverage and would lead to skyrocketing premiums, making coverage more unaffordable.
   4. AB 1083 (Monning), Chapter 854, Statutes of 2012, establishes reforms in the small group health insurance market to implement the ACA.
   5. AB 1602 (John A Pérez), Chapter 655, Statutes of 2010, and SB 900 (Alquist), Chapter 659, Statutes of 2010, establishes the Exchange in California and its powers and duties.

REGISTERED SUPPORT / OPPOSITION:

Support

California Pan-Ethnic Health Network

Consumers Union

Health Access California

Western Center on Law and Poverty

Opposition

None on file.

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

 THIRD READING  

Bill No: SB 1245

Author: Leyva (D)

Amended: 4/9/18

Vote: 21

SENATE HEALTH COMMITTEE: 8-1, 4/18/18

AYES: Hernandez, Nguyen, Leyva, Mitchell, Monning, Newman, Pan, Roth

NOES: Nielsen

SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8

SUBJECT: Covered California

SOURCE: Author

DIGEST:

This bill extends the Covered California Executive Board emergency regulation authority until January 1, 2022, with two readoptions until January 1, 2027, and requires the rule or regulation to be discussed by the Covered California Executive Board during at least one properly noticed board meeting prior to the board meeting at which the board adopts the rule or regulation.

ANALYSIS:

Existing law:

1. Establishes Covered California as an independent entity in state government not affiliated with any state agency or department, governed by a five-member board. Requires the Covered California Executive Board to establish and use a competitive process to select participating carriers and other contractors. [GOV §100500 -100522]
2. Authorizes the Covered California Executive Board, with respect to individual coverage made available through Covered California, to collect premiums and assist in administration of subsidies. [GOV §100504]
3. Authorizes the Covered California Executive Board to adopt necessary rules and regulations, as necessary, and until January 1, 2017, as emergency regulations in accordance with the Administrative Procedures Act, as specified. [GOV §100504]
4. Authorizes, until January 1, 2019, any necessary rules and regulations to implement the eligibility, enrollment, and appeals processes for the individual and small business exchanges, changes to the small business exchange, or any act in effect that is operative on or before December 31, 2016, to be adopted as emergency regulations in accordance with the Administrative Procedure Act, as specified. Requires the adoption of emergency regulations to be deemed to be an emergency and necessary for the immediate preservation of the public peace, health and safety, or general welfare. [GOV §100504]
5. Requires any emergency regulation adopted pursuant to 4), above, to be repealed by operation of law unless the adoption, amendment, or repeal of the regulation is promulgated by the Covered California Executive Board, as specified, within five years of the initial adoption of the emergency regulation. Authorizes, until January 1, 2020, the Office of Administrative Law to approve more than two readoptions of an emergency regulation adopted pursuant to 4), above. [GOV§100504]

This bill:

1. Authorizes the Covered California Executive Board, until January 1, 2022, to adopt emergency regulations, except those implementing staff and contractor fingerprinting requirements, as specified, and until January 1, 2027, authorizes the Office of Administrative Law to approve more than two readoptions of an emergency regulation pursuant to this bill.
2. Requires any rule or regulation adopted pursuant to 1), above, to be discussed by the Covered California Executive Board during at least one properly noticed board meeting prior to the board meeting at which the board adopts the rule or regulation.
3. Requires the amendments made pursuant to this bill to also apply to any regulations adopted prior to January 1, 2019.

Comments

1. Author’s statement. According to the author, since it began offering coverage in 2014, Covered California has served more than three million consumers. Over the past few months, the fate of the Affordable Care Act (ACA) has been under an extreme amount of uncertainty and it is unknown what regulatory changes could occur in the future. It is our duty to ensure that the health care system we have here in California, specifically Covered California, has the ability to adapt and respond to these federal changes as quickly and efficiently as possible. Without this emergency rulemaking authority, Covered California regulations could conflict with federal law, which has the potential to harm its ability to properly serve their more than three million consumers.
2. Implementation of the ACA. Under the ACA, most people are required by law to have health insurance or pay a tax penalty. The ACA also established a federal health benefit exchange and authorized states to establish state based health benefit exchanges where Americans can purchase individual and small group health insurance. Qualified individuals can also obtain premium subsidies and cost sharing reductions to help offset the expense of health insurance purchased through an exchange. California created a state based health insurance exchange, called Covered California. An individual is exempt from the ACA insurance penalty if he or she lacks access to affordable coverage (defined as costing less than 8.16% of household income in 2018). In 2018, the penalty is $695/adult, $347.50/child under 18 (up to $2,085/family) or 2.5% of annual household income over an individual’s tax filing threshold, whichever is higher. The 2017 federal tax overhaul law makes the tax penalty zero beginning in 2019. Covered California recently released a report on premium hike projections that indicates that 378,000 Californians could drop coverage without the penalty which would create at least a seven percent increase in premiums in 2019. Other federal policy changes propose to allow less comprehensive coverage options that would not be available for all (guaranteed issue) as are current ACA policies. In total, California could see rates increase in 2019 in the range of 12% to 32%.
3. Federal financial assistance. To be eligible for premium assistance a person must be a citizen or lawfully present, must have qualifying income (between 138% and 400% of the federal poverty level (FPL), which is approximately $34,948 and $98,400 for a family of four), and not be eligible for government programs or have affordable coverage through an employer (which is considered affordable if the premium for the employee only, not including dependents, is less than 9.5% of the employee’s household income). Premium assistance is a tax credit (formally called the Advanced Premium Tax Credit, or APTC) to reduce a person’s monthly premium cost. This subsidy works to cap the amount people who receive this subsidy pay for their premiums to an amount that can be no more than 9.56% of household income. The government either pays the tax credit directly to an insurance company each month, and the insurer bills the individual for the rest of the premium cost; or, an individual can choose to pay the full price of the health insurance premium payment each month and then receive the entire premium assistance amount in the form of a tax refund when the individual’s tax return is completed for the year. Cost-sharing reductions are subsidies to reduce an individual’s out-of-pocket costs (copays, coinsurance, deductible and out-of-pocket maximum). An individual is eligible if he or she has an annual household income up to 250% FPL ($61,500 for a family of four) and chooses a “silver” level plan (silver refers to the actuarial value level of the plan). The cost sharing subsidies are automatically applied. Cost-sharing reductions are required to be applied under the ACA and were funded by the federal government until 2018. Many states (including California) have developed work-arounds to limit the impacts of this policy change on premium increases for most enrollees.

Related/Prior Legislation

SB 833 (Committee on Budget and Fiscal Review, Chapter 30, Statues of 2016) extended the emergency regulation authority for Covered California until January 1, 2019, to implement the eligibility, enrollment and appeals processes for the individual and small business exchanges, changes to the small business exchange, or legislation, that amends the Title that established the California Health Benefit Exchange, that is enacted prior to December 31, 2016.

SB 900 (Alquist, Chapter 659, Statutes of 2010) and AB 1602 (Perez, Chapter 655, Statutes of 2010) established Covered California.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No

SUPPORT: (Verified 5/15/18)

Consumers Union

Health Access California

Western Center on Law and Poverty

OPPOSITION: (Verified 5/15/18)

None received

ARGUMENTS IN SUPPORT: Health Access California writes that since its creation, Covered California has sought emergency rulemaking authority and received such authority to meet and act on immediate federal actions related to ACA implementation. The early days and years of the ACA necessitated such authority which made Covered California adaptive and proactive in promulgating rules for implementation, which Health Access also supported. Given federal uncertainty and ongoing federal actions that sabotages our ACA implementation and threatens our overall health care system, Covered California seeks emergency rule-making authority until 2022 in order respond to such federal actions. This will provide at least some public review and comment period for proposed changes.

Western Center on Law and Poverty writes that the Trump administration has caused considerable chaos for Covered California by continually shifting course, refusing to pay cost-sharing reductions, and redoing previously existing ACA regulations. As a result, Covered California has been forced to continually revisit its own regulations in order to comply with federal law and protect consumers to the greatest extent possible. Instead of being in an era when Covered California should be finalizing its existing regulations, many issues have been reopened.

Prepared by:

5/16/18 10:58:21

**** END ****

SENATE COMMITTEE ON HEALTH

Senator Ed Hernandez, O.D., Chair

BILL NO: SB 1245

SUBJECT: Covered California

SUMMARY:

Extends the Covered California Executive Board emergency regulation authority until January 1, 2022, with two readoptions until January 1, 2027, and requires the rule or regulation to be discussed by the Covered California Executive Board during at least one properly noticed board meeting prior to the board meeting at which the board adopts the rule or regulation.

Existing law:

1. Establishes Covered California as an independent entity in state government not affiliated with any state agency or department, governed by a five member board. Requires the Covered California Executive Board to establish and use a competitive process to select participating carriers and other contractors. [GC §100500 -100522]
2. Authorizes the Covered California Executive Board, with respect to individual coverage made available through Covered California, to collect premiums and assist in administration of subsidies. [GC §100504]
   
3. Authorizes the Covered California Executive Board to adopt necessary rules and regulations, as necessary, and until January 1, 2017, as emergency regulations in accordance with the Administrative Procedures Act, as specified. [GC §100504]
   
4. Authorizes, until January 1, 2019, any necessary rules and regulations to implement the eligibility, enrollment, and appeals processes for the individual and small business exchanges, changes to the small business exchange, or any act in effect that is operative on or before December 31, 2016, to be adopted as emergency regulations in accordance with the Administrative Procedure Act, as specified. Requires the adoption of emergency regulations to be deemed to be an emergency and necessary for the immediate preservation of the public peace, health and safety, or general welfare. [GC §100504]
5. Requires any emergency regulation adopted pursuant to 4) above to be repealed by operation of law unless the adoption, amendment, or repeal of the regulation is promulgated by the Covered California Executive Board, as specified, within five years of the initial adoption of the emergency regulation. Authorizes, until January 1, 2020, the Office of Administrative Law to approve more than two readoptions of an emergency regulation adopted pursuant to 4) above. [GC §100504]
   

This bill:

1. Authorizes the Covered California Executive Board, until January 1, 2022 to adopt emergency regulations, except those implementing staff and contractor fingerprinting requirements, as specified, and until January 1, 2027, authorizes the Office of Administrative Law to approve more than two readoptions of an emergency regulation pursuant to this bill.
   
2. Requires any rule or regulation adopted pursuant to 1) above to be discussed by the Covered California Executive Board during at least one properly noticed board meeting prior to the board meeting at which the board adopts the rule or regulation.
   
3. Requires the amendments made pursuant to this bill to also apply to any regulations adopted prior to January 1, 2019.

FISCAL EFFECT:

This bill has not been analyzed by a fiscal committee.

COMMENTS:

1. Author’s statement. According to the author, since it began offering coverage in 2014, Covered California has served more than three million consumers. Over the past few months, the fate of the Affordable Care Act (ACA) has been under an extreme amount of uncertainty and it is unknown what regulatory changes could occur in the future. It is our duty to ensure that the health care system we have here in California, specifically Covered California, has the ability to adapt and respond to these federal changes as quickly and efficiently as possible. Without this emergency rulemaking authority, Covered California regulations could conflict with federal law, which has the potential to harm its ability to properly serve their more than three million consumers.
   
2. Implementation of the ACA. Under the ACA, most people are required by law to have health insurance or pay a tax penalty. The ACA also established a federal health benefit exchange and authorized states to establish state based health benefit exchanges where Americans can purchase individual and small group health insurance. Qualified individuals can also obtain premium subsidies and cost sharing reductions to help offset the expense of health insurance purchased through an exchange. California created a state based health insurance exchange, called Covered California. An individual is exempt from the ACA insurance penalty if he or she lacks access to affordable coverage (defined as costing less than 8.16% of household income in 2018). In 2018, the penalty is $695/adult, $347.50/child under 18 (up to $2,085/family) or 2.5% of annual household income over an individual’s tax filing threshold, whichever is higher. The 2017 federal tax overhaul law makes the tax penalty zero beginning in 2019. Covered California recently released a report on premium hike projections that indicates that 378,000 Californians could drop coverage without the penalty which would create at least a seven percent increase in premiums in 2019. Other federal policy changes propose to allow less comprehensive coverage options that would not be available for all (guaranteed issue) as are current ACA policies. In total, California could see rates increase in 2019 in the range of 12% to 32%.
   
3. Federal financial assistance. To be eligible for premium assistance a person must be a citizen or lawfully present, must have qualifying income (between 138% and 400% of the federal poverty level (FPL), which is approximately $34,948 and $98,400 for a family of four), and not be eligible for government programs or have affordable coverage through an employer (which is considered affordable if the premium for the employee only, not including dependents, is less than 9.5% of the employee’s household income). Premium assistance is a tax credit (formally called the Advanced Premium Tax Credit, or APTC) to reduce a person’s monthly premium cost. This subsidy works to cap the amount people who receive this subsidy pay for their premiums to an amount that can be no more than 9.56% of household income. The government either pays the tax credit directly to an insurance company each month, and the insurer bills the individual for the rest of the premium cost; or, an individual can choose to pay the full price of the health insurance premium payment each month and then receive the entire premium assistance amount in the form of a tax refund when the individual’s tax return is completed for the year. Cost-sharing reductions are subsidies to reduce an individual’s out-of-pocket costs (copays, coinsurance, deductible and out-of-pocket maximum). An individuals is eligible if he or she has an annual household income up to 250% FPL ($61,500 for a family of four) and chooses a “silver” level plan (silver refers to the actuarial value level of the plan). The cost sharing subsidies are automatically applied. Cost-sharing reductions are required to be applied under the ACA and were funded by the federal government until 2018. Many states (including California) have developed work-arounds to limit the impacts of this policy change on premium increases for most enrollees.
4. Prior legislation. SB 833 (Committee on Budget & Fiscal Review, Chapter 30, Statues of 2016) extends the emergency regulation authority for Covered California until January 1, 2019, to implement the eligibility, enrollment and appeals processes for the individual and small business exchanges, changes to the small business exchange, or legislation, that amends the Title that established the California Health Benefit Exchange, that is enacted prior to December 31, 2016.
   
5. SB 900 (Alquist, Chapter 659, Statutes of 2010) and AB 1602 (Perez, Chapter 655, Statutes of 2010) establishes Covered California.
   
6. Support. Health Access California writes that since its creation, Covered California has sought emergency rulemaking authority and received such authority to meet and act on immediate federal actions related to ACA implementation. The early days and years of the ACA necessitated such authority which made Covered California adaptive and proactive in promulgating rules for implementation, which Health Access also supported. Given federal uncertainty and ongoing federal actions that sabotages our ACA implementation and threatens our overall health care system, Covered California seeks emergency rule-making authority until 2022 in order respond to such federal actions. This will provide at least some public review and comment period for proposed changes. Western Center on Law and Poverty writes that the Trump administration has caused considerable chaos for Covered California by continually shifting course, refusing to pay cost-sharing reductions, and redoing previously existing Affordable Care Act regulations. As a result, Covered California has been forced to continually revisit its own regulations in order to comply with federal law and protect consumers to the greatest extent possible. Instead of being in an era when Covered California should be finalizing its existing regulations, many issues have been reopened.
   

SUPPORT AND OPPOSITION:

Support: Health Access California

Consumer Union (if amended)

Western Center on Law and Poverty

Oppose: None received

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