Existing federal law provides for the Medicare Program, which is a public health insurance program for persons 65 years of age and older and specified persons with disabilities who are under 65 years of age. Existing federal law specifies different parts of Medicare that cover specific services, such as Medicare Part B, which generally covers medically necessary services and supplies and preventive services. Existing law, the Knox-Keene Health Care Service Plan Act of 1975, provides for the licensure and regulation of health care service plans by the Department of Managed Health Care, and makes a willful violation of the act a crime. Existing law provides for the regulation of health insurers by the Department of Insurance.

Existing federal law additionally provides for the issuance of Medicare supplement policies or certificates, also known as Medigap coverage, which are advertised, marketed, or designed primarily as a supplement to reimbursements under the Medicare Program for the hospital, medical, or surgical expenses of persons eligible for the Medicare Program, including coverage of Medicare deductible, copayment, or coinsurance amounts, as specified. Existing law, among other provisions, requires supplement benefit plans to be uniform in structure, language, designation, and format with the standard benefit plans, as prescribed. Existing law prohibits an issuer from denying or conditioning the offering or effectiveness of any Medicare supplement contract, policy, or certificate available for sale in this state, or discriminating in the pricing of a contract, policy, or certificate because of the health status, claims experience, receipt of health care, or medical condition of an applicant in the case of an application that is submitted prior to or during the 6-month period beginning with the first day of the first month in which an individual is both 65 years of age or older and is enrolled for benefits under Medicare Part B. Existing law requires an issuer to make available specified Medicare supplement benefit plans to a qualifying applicant under those circumstances who is 64 years of age or younger who does not have end stage renal disease.

This bill would delete the exclusion of otherwise qualified applicants who have end stage renal disease, thereby making the specified Medicare supplement benefit plans available to those individuals. The bill, on and after January 1, 2025, would prohibit an issuer of Medicare supplement coverage in this state from denying or conditioning the issuance or effectiveness of any Medicare supplement coverage available for sale in the state, or discriminate in the pricing of that coverage because of the health status, claims experience, receipt of health care, medical condition, or age of an applicant, if an application for coverage is submitted during an open enrollment period, as specified in the bill. The bill would entitle an individual enrolled in Medicare Part B to a 90-day annual open enrollment period beginning on January 1 of each year, as specified, during which period the bill would require applications to be accepted for any Medicare supplement coverage available from an issuer, as specified. The bill would require the open enrollment period to be a guaranteed issue period.

Because a violation of the bills requirements by a health care service plan would be a crime, the bill would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Existing federal law provides for the Medicare Program, which is a public health insurance program for persons 65 years of age and older and specified persons with disabilities who are under 65 years of age. Existing federal law specifies different parts of Medicare that cover specific services, such as Medicare Part B, which generally covers medically necessary services and supplies and preventive services. Existing law, the Knox-Keene Health Care Service Plan Act of 1975, provides for the licensure and regulation of health care service plans by the Department of Managed Health Care, and makes a willful violation of the act a crime. Existing law provides for the regulation of health insurers by the Department of Insurance.

Existing federal law additionally provides for the issuance of Medicare supplement policies or certificates, also known as Medigap coverage, which are advertised, marketed, or designed primarily as a supplement to reimbursements under the Medicare Program for the hospital, medical, or surgical expenses of persons eligible for the Medicare Program, including coverage of Medicare deductible, copayment, or coinsurance amounts, as specified. Existing law, among other provisions, requires supplement benefit plans to be uniform in structure, language, designation, and format with the standard benefit plans, as prescribed. Existing law prohibits an issuer from denying or conditioning the offering or effectiveness of any Medicare supplement contract, policy, or certificate available for sale in this state, or discriminating in the pricing of a contract, policy, or certificate because of the health status, claims experience, receipt of health care, or medical condition of an applicant in the case of an application that is submitted prior to or during the 6-month period beginning with the first day of the first month in which an individual is both 65 years of age or older and is enrolled for benefits under Medicare Part B.

This bill, on and after January 1, 2025, would prohibit an issuer of Medicare supplement coverage in this state from denying or conditioning the issuance or effectiveness of any Medicare supplement coverage available for sale in the state, or discriminate in the pricing of that coverage because of the health status, claims experience, receipt of health care, medical condition, or age of an applicant, if an application for coverage is submitted during an open enrollment period, as specified in the bill. The bill would entitle an individual enrolled in Medicare Part B to a 90-day annual open enrollment period beginning on January 1 of each year, as specified, during which period the bill would require applications to be accepted for any Medicare supplement coverage available from an issuer, as specified. The bill would require the open enrollment period to be a guaranteed issue period.

Because a violation of the bills requirements by a health care service plan would be a crime, the bill would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

SENATE COMMITTEE ON APPROPRIATIONS

Senator Anna Caballero, Chair

2023 - 2024 Regular Session

SB 1236 (Blakespear) - Medicare supplement coverage: open enrollment periods

Bill Summary:

SB 1236 would establish new open enrollment opportunities for Medicare enrollees purchasing Medicare supplement coverage.

Fiscal Impact:

• The Department of Managed Health Care (DMHC) estimates ongoing annual costs of $50,000 for state administration (Managed Care Fund).
• The California Department of Insurance (CDI) estimates costs of $3,000 in 2024-25 and $16,000 in 2025-26 for state administration (Insurance Fund).

Background:

Medicare is a federally funded and administered program for people who are 65 or older and either a U.S. citizen or a legal permanent resident with at least five years of continuous residency in the U.S.; and, people who are under 65 with a permanent disability who have received Social Security Disability Insurance benefits for 24 consecutive months, have Lou Gehrig’s disease, or have end stage renal disease. There are multiple types of Medicare coverage, which are referred to as “parts.” Part A is hospital coverage and includes home health, skilled nursing care in a facility, and hospice care. Part B is medical coverage (doctors, ambulance, labs and X-rays, diagnostic tests, durable medical equipment, preventive care, outpatient therapy and mental health services) which is voluntary, and requires payment of a monthly premium. Part C is also known as Medicare Advantage, which is administered by health insurance plans and has limited networks of contracted providers who provide benefits covered under Parts A, B, and D. Part D is prescription drug coverage.

Medicare supplement coverage, also referred to as “Medigap,” is an option for people on Medicare without employer sponsored retiree coverage or Medicaid. It helps to fill the gaps in Medicare coverage, and makes cost-sharing more predictable and stable. Existing law requires an issuer to make available specified Medicare supplement coverage to a qualifying applicant who is 64 years of age or younger who does not have end stage renal disease. As long as the premium is paid, a Medigap policy is guaranteed renewable, meaning it is automatically renewed each year. Under federal requirements, a person applying for a policy in the first six months after turning 65 who has part B, or within 63 days of a special enrollment event, cannot be denied a Medigap policy, charged a premium based on medical status, or have to endure a pre-existing condition waiting period. The DMHC and the CDI regulate Medicare supplement plans/policies in California.

Proposed Law:

Specific provisions of the bill would:

• Require that an issuer of Medicare supplement coverage cannot deny or condition the issuance or effectiveness of any Medicare supplement coverage available for sale in the state, or discriminate in the pricing of the contract/policy because of the health status, claims experience, receipt of health care, medical condition, or age of an applicant, if an application for that coverage is submitted at either of the following times:
  • Before or during the six-month period beginning with the first day of the month in which an individual first enrolled for benefits under Medicare Part B, as described in existing law.
  • During an annual open enrollment period, including, but not limited to, the open enrollment period established under this bill.
• Require that an individual enrolled in Medicare Part B is entitled to a 90-day annual open enrollment period beginning on January 1 of each year, and specify that:
  • During the open enrollment period established under this bill, applications must be accepted for any Medicare supplement coverage available from an issuer.
  • The open enrollment period established under this bill is a guaranteed issue period.
• Delete the existing exclusion of individuals who have end stage renal disease from qualifying for Medicare supplement coverage.

Staff Comments:

According to the California Health Benefits Review Program (CHBRP) analysis of SB 1236 (introduced version), the average monthly premiums for Medicare Supplement coverage will increase from $239.03 to $319.04 per member per month, a 33 percent increase, because the average new enrollees in Medicare Supplements will use more services than the average enrollee at baseline. This analysis focused primarily on impacts in the individual market.

CHBRP states that the predicted increases in Medicare Supplement premiums due to SB 1236 are driven by what is commonly known as adverse selection. Adverse selection occurs when lower cost or healthier patients forgo buying insurance until they need it, while higher cost or sicker patients actively buy insurance to protect them from risk. This imbalance in enrollment results in fewer lower cost or healthier enrollees and a greater number of higher cost or sicker enrollees in insurance products. The higher use of services by higher cost or sicker patients causes premiums to increase.

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SENATE COMMITTEE ON HEALTH

Senator Richard Roth, Chair

BILL NO: SB 1236

SUBJECT: Medicare supplement coverage: open enrollment periods

SUMMARY:

• 1. Creates new open enrollment opportunities for Medicare enrollees purchasing Medicare supplement coverage without consideration of health status, claims experience, receipt of health care, medical condition, or age of an applicant that are before or during the six-month period beginning with the first day of the month in which an individual first enrolled for benefits under Medicare Part B, as specified; or, during an annual 90-day open enrollment period.
     

Existing law:

1. Establishes, under federal law, the Medicare Program, administered by the Centers for Medicare and Medicaid Services (CMS), under which qualified individuals over 65 years old or individuals under aged 65 years old with qualifying disabilities, those who have permanent kidney failure, or those with amyotrophic lateral sclerosis (Lou Gehrig’s disease) receive health care, after applicable deductibles, coinsurance, or other required cost sharing. [42 USC §1395, et seq.]
   
2. Establishes the Department of Managed Health Care (DMHC) to regulate health plans and the California Department of Insurance (CDI) to regulate health insurance. [HSC §1340, et seq. and INS §106, et seq.]
   
3. Prohibits an issuer (health plans, insurers, fraternal benefit societies, and other entities) from denying or conditioning the offering or effectiveness of any Medicare supplement contract, policy or certificate, available for sale in California, or discriminating in the pricing of a contract because of the health status, claims experience, receipt of health care, or medical condition of an applicant in the case of an application for a contract that is submitted prior to or during the six-month period beginning with the first day of the first month in which an individual is both 65 years of age or older and is enrolled for benefits under Medicare Part B. [HSC §1358.4, §1358.11 and INS §10192.4, §10192.11]
   
4. Requires an issuer to make available specified Medicare supplement benefit if currently available, to an applicant who is 64 years of age or younger, and who does not have end-stage renal disease. Requires an individual enrolled in Medicare by reason of disability to be entitled to open enrollment described in 3) above for six months after the date of their enrollment in Medicare Part B, or if notified retroactively of their eligibility for Medicare, for six months following notice of eligibility. Prohibits sales during the open enrollment period from being discouraged by any means, including the altering of the commission structure. [HSC §1358.11 and INS §10192.11]
   
5. Requires, where a Medicare supplement contract replaces another Medicare supplement policy or certificate, or contract, the issuer to waive any preexisting condition waiting periods or probationary periods to the extent those periods were met under the original contract, or if the original policy, certificate, or contract was in effect for at least six months. [HSC §1358.23 and INS §10192.8]
6. Entitles an individual to an annual open enrollment period lasting 60 days or more, commencing with the individual’s birthday, during which time that person may purchase any Medicare supplement coverage that offers benefits equal to or lesser than those provided by the previous coverage. Prohibits an issuer from denying or conditioning the issuance or effectiveness of Medicare supplement coverage, or discriminating in the pricing of coverage, because of health status, claims experience, receipt of health care, or medical condition, if at the time of the open enrollment period, the individual is covered under another Medicare supplement policy, certificate, or contract. [HSC §1358.11 and INS §10192.11]
   
7. Entitles an individual whose Medicare Advantage plan coverage was terminated, to an additional 60-day open enrollment period after any open enrollment period authorized by federal law or regulation, for any and all Medicare supplement coverage available on a guaranteed basis under state and federal law or regulations for persons terminated by a Medicare Advantage plan. [HSC §1358.11 and INS §10192.11]
   

This bill:

1. Prohibits, on and after January 1, 2025, an issuer of Medicare supplement coverage in California from denying or conditioning the issuance or effectiveness of any Medicare supplement coverage contract, policy or certificate available for sale in California, or discriminating in the pricing of the contract, policy or certificate because of the health status, claims experience, receipt of health care, medical condition, or age of an applicant, if an application is submitted at either of the following times:
   1. Before or during the six-month period beginning with the first day of the month in which an individual first enrolled for benefits under Medicare Part B, as specified; or,
   2. During an annual open enrollment period, including, but not limited to, the open enrollment period established in 2) below.
      
2. Entitles an individual enrolled in Medicare Part B to a 90-day guaranteed issue, annual open enrollment period beginning on January 1 of each year.

FISCAL EFFECT:

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

COMMENTS:

1. Author’s statement. According to the author, the Affordable Care Act protects people with pre-existing conditions from being denied health coverage, but some people are still falling through the cracks. Currently, private insurers that offer Medicare Supplemental insurance, known as Medigap, from penalizing seniors for their pre-existing health conditions under a narrow set of circumstances. Outside those circumstances, seniors can be charged exorbitant rates for coverage or even be denied coverage. This bill ensures that people seeking Medigap insurance are protected from being penalized for having preexisting medical conditions the same way all Americans are protected in the regular private health insurance markets. Last fall, Scripps Health, one of the three major health systems in San Diego County, announced it would not renew its contract with Medicare Advantage plans due to the plans’ administrative issues and low reimbursement rates. Thousands of patients had to switch providers or change their insurance plans. Many found that switching to Medigap would be unaffordable for them, due to their pre-existing medical conditions, leaving them with few options - that’s not right or fair. Under this bill, patients could switch to a Medigap plan and still see their providers without an unexpected increase in health costs.
   
2. Medicare coverage. Medicare is a federally funded and administered program for people who are 65 or older and either a U.S. citizen or a legal permanent resident with at least five years of continuous residency in the U.S.; and, people who are under 65 with a permanent disability who have received Social Security Disability Insurance benefits for 24 consecutive months, have Lou Gehrig’s disease, or have end stage renal disease. There are multiple types of Medicare coverage, which are referred to as “parts.” Part A is hospital coverage and includes home health, skilled nursing care in a facility, and hospice care. Most people get part A for free based on their earnings or those of a spouse, parent, or child. The worker must have a specified number of quarters of coverage (dependent upon age or disability). Others may have to pay a premium for part A coverage. For 2024, the Part A premium is either $278 or $505 per month depending upon work quarters. Part B is medical coverage (doctors, ambulance, labs and X-rays, diagnostic tests, durable medical equipment, preventive care, outpatient therapy and mental health services) which is voluntary, and requires payment of a monthly premium. The standard monthly premium for part B for 2024 is $174.70. High income earners ($103,000 for a single filer, $206,000 for joint filers) pay more. Eligibility rules for part B depend on whether a person is eligible for premium-free part A or whether the individual has to pay a premium for part A coverage. A person must actively enroll in part B. If a person initially refused to enroll in part B or terminated their enrollment, they have to enroll during certain enrollment periods and to pay a late enrollment penalty for as long as the person has part B. The penalty is 10% of the premium for every 12-month period that the person could have had part B coverage but did not. Part A and B are considered “original Medicare.” Part C is also known as Medicare Advantage, which is an option for someone with part A coverage. Medicare Advantage is administered by health insurance plans and has limited networks of contracted providers who provide benefits covered under Parts A, B, and D. Part D is prescription drug coverage.
   
3. Original Medicare enrollment periods. The initial enrollment period for Medicare begins three months before the month of a person’s 65^th birthday and ends three months after that date, for a total of seven months. A general enrollment period is a three month period that takes place from January 1 through March 31 of each year. Part B and premium part A coverage begins the month after a person enrolls during the general enrollment period. Special enrollment periods allow a person to sign up for part B (and premium part A) without paying a late enrollment penalty. Special enrollment periods are time limited. If a person doesn’t enroll during a special enrollment period, they will have to wait for the next general enrollment period and they might have to pay a late enrollment penalty. An example of a special enrollment period is when an individual loses a group health plan based on a spouse’s employment that has ended. An individual can enroll at any time while covered under the group health plan or during the special enrollment period that begins the month the employment ends or the group health plan coverage ends, whichever comes first.
   
4. Medicare supplement coverage. According to the 2012 Medicare Guide on KFF.org, about one in three Medicare beneficiaries receive supplemental coverage through employer sponsored retiree health coverage. Other beneficiaries with limited incomes have access to supplemental coverage under Medicaid. Medicare supplement coverage, also referred to as “Medigap,” is an option for people on original Medicare without employer sponsored retiree coverage or Medicaid. It helps to fill the gaps in original Medicare coverage, and makes cost-sharing more predictable and stable. Medigap is very different from a Medicare Advantage plan although Medigap policies are also sold by private health insurance companies. Medigap policies do not have a network of providers, and they cover the cost-sharing required under original Medicare. Generally, a person must have Medicare part A and part B coverage in order to buy a Medigap policy. A person pays the monthly Medicare part B premium and the Medigap policy premium. As long as the premium is paid, a Medigap policy is guaranteed renewable, meaning it is automatically renewed each year. Insurance companies can only sell a “standardized” Medigap policy that follows federal and state laws (these standardized policies are identified by letters A through N). It is important to compare Medigap policies, because costs can vary, but the basic benefits per letter standard are the same. Essentially the standardized benefits vary from covering coinsurance and copays, deductibles, excess charges, foreign emergency travel, hospice and skilled nursing facilities. However, some Medigap policies cover extra benefits that are not typically covered by Medicare, like hearing, dental, vision or preventive care. Spouses must buy separate Medigap policies, and guaranteed rights to buy Medicare supplement policies vary under certain circumstances as well as a person’s guaranteed right to buy a particular standardized plan.
   
5. Medigap enrollment periods. Under federal requirements, a person applying for a policy in the first six months after turning 65 who has part B, or within 63 days of a special enrollment event, cannot be denied a Medigap policy, charged a premium based on medical status, or have to endure a pre-existing condition waiting period. Some states have broader open enrollment periods. Federally, people under age 65 who have Medicare because of a disability are not entitled to these same open enrollment periods. Most states do not extend guarantee issue protections to people over age 65 beyond a one-time open enrollment period. According to the California Health Benefit Review Program (CHBRP) Connecticut, Massachusetts, Maine, New York, Rhode Island, and Vermont require either continuous or annual guaranteed issue protections for Medigap enrollees ages 65 and older regardless of medical history. Minnesota has passed a similar law that will be in effect in 2025.
   
6. Coverage in California. Approximately 6.6 million Californians are enrolled in Medicare, including five million Medicare-only beneficiaries, and 1.6 million beneficiaries who are dually eligible for Medicare and Medi-Cal. Across all people on Medicare in California, approximately 90% are age 65 and older. People who are dually eligible for Medicare and Medi-Cal may be eligible for other types of state administered Medicare Savings Programs. CHBRP indicates there are approximately 1.1 million Californians in Medigap policies and the average annual premium for a Medigap policy in California is over $2,800.
   
7. Comparison of states. According to a February 2023 report published by America’s Health Insurance Plans (AHIP) the percent of original Medicare enrollees with Medigap policies in December of 2021 shows 32.3% in California, 24.3% in New York, 42.2% in Vermont, 33.1% in Maine, 35.5% in Massachusetts, 43.3% in Rhode Island, 42.4% in Connecticut, and 44.4% in Minnesota. This shows a smaller enrollment percentage in California (with the exception of New York) compared to other states that have policies similar to this bill.
   
8. Kaiser Family Foundation (KFF). A 2023 Medicare Snapshot published by KFF indicates that two in ten Medicare beneficiaries have Medigap coverage. In 2021 they were more likely to be White, have incomes above $20,000 per person, self-report excellent, very good, or good health, and have a bachelor’s degree or higher. The report indicates that Medigap policies can be costly and can rise with age, among other factors, depending upon the state in which they regulated.
   
9. CHBRP report. AB 1996 (Thomson, Chapter 795, Statutes of 2002) requests the University of California to assess legislation proposing a mandated benefit or service and prepare a written analysis with relevant data on the medical, economic, and public health impacts of proposed health plan and health insurance benefit mandate legislation. CHBRP was created in response to AB 1996, and reviewed this bill. Key findings include:
   1. Enrollment and premium impacts. CHBRP estimates that the population of people in Medicare supplement policies will drop by 9% (or 104,500) from 1,131,751 to 1,027,251 because of this bill. This drop is predicted because premiums will increase and because a person will be able to enroll for Medigap coverage at a later date when/if they need it. CHBRP indicates average monthly premiums will increase by 33% from $239.03 to $319.04 per member per month because the average new enrollees will use more services and have higher costs. Average monthly claim costs are estimated to increase by $64. Some of the new entrants will include people who were previously denied Medicare supplement coverage or faced waiting periods or exclusions. Some high cost enrollees may have been enrolled in Medicare Advantage but will move to traditional Medicare with a Medigap policy to improve their ability to seek care from a broader group of providers.
      
   2. Medi-Cal. Medicare enrollees with Medi-Cal coverage already have cost-sharing protections and are unlikely to purchase Medicare supplement coverage.
      
   3. Community rating. In general, an enrollees’ age can have an impact on the initial premium charge and the rate of premium increase as an enrollee ages. Medigap premiums can be based on an enrollees’ age at the time they buy a policy (this is called Issue-age-rated), which means premiums are lower for people who buy at an earlier age and as the person gets older age won’t be a factor in premium increases. Premiums can also be based on an enrollees’ current age (this is called Attained-age-rate) which means as a person ages, age will be a factor in premium increases. Community rating is another option and it means that age is never a factor. In any of these cases, premiums can and will increase because of inflation or other factors. CHBRP assumes this bill excludes age as a factor for premiums and because of this, fewer younger people will be incentivized to buy Medigap policies at younger ages and instead will wait to enroll later when needed. This leads to adverse selection. Adverse selection occurs when lower cost or healthier patients forgo buying insurance until they need it, while higher cost or sicker patients actively buy insurance to protect them from risk. This imbalance in enrollment results in fewer lower cost or healthier enrollees and a greater number of higher cost or sicker enrollees in insurance products. The higher use of services by higher cost or sicker patients causes premiums to increase. The enrollees likely to opt into or disenroll from a Medigap policy are more likely to be in individual market products, rather than group market products. The high-need clinical conditions are skilled nursing service use (2.2% of Medicare beneficiaries), lymphoma (1.7%), leukemia (0.3%), and lung cancer (1.3%). High health care spending was defined as spending more than $10,000 (1.1%) each year, after excluding the previously listed categories.
      
   4. Long-term impacts. According to CHBRP, premiums are likely to increase significantly in the Medigap coverage market postmandate. The 33% premium increase estimated by CHBRP could be an underestimate over time given the assumption that only 20% of enrollees with skilled nursing needs, cancer diagnosis, or more than $10,000 in claims would enroll in a Medigap policy in 2025. If all potential “high-risk” applicants decided to enroll in a Medigap policy to address their perceived cost-sharing risk each year, premiums would more than double as lower cost enrollees exit the market and higher cost enrollees enter. However, based on current market conditions and the assumption that 20% of higher cost or higher need applicants would enroll in a plan, it is likely that an equilibrium will be established in the Medigap market around the estimated premium increase of 33% stated by CHBRP. Additionally, a majority of California’s Medicare enrollees (55%) enroll in Medicare Advantage plans which may blunt the long-term impacts as not all applicants will take advantage of these new open enrollment opportunities for Medigap policies.
10. Prior legislation. SB 407 (Monning, Chapter 157, Statutes of 2019) requires an issuer of a Medigap contract with new or innovative benefits to identify the portion of the premium attributed to the new or innovative benefits as a separate line item on the payment or invoice, and extends the Medigap open enrollment period by 30 days. SB 407 requires DMHC and CDI to collaborate to develop and implement policies and procedures that standardize new or innovative benefits for purposes of allowing consumer comparison of benefits, out-of-pocket costs, and premiums.
11. Support. According to the Leukemia & Lymphoma Society, one of this bill’s cosponsors, unfortunately, unless somebody enrolls in Medigap during an initial enrollment window when they first become eligible for Medicare, Medigap plans can use Californians’ pre-existing conditions to charge higher rates or deny coverage altogether. This means that many patients may be unable to obtain supplementary coverage, exposing them to significant out-of-pocket costs. This contributes to a medical debt crisis nationally and in California, where we know that four in five Californians worry about affording their healthcare in the future, and 23% of Californians over 65 went without care or rationed medicine due to cost. These are unacceptable outcomes for patients who are living with or newly diagnosed with a chronic condition like cancer. There are many situations where Medicare patients may need to switch their healthcare coverage, and they should be given coverage they can afford regardless of their preexisting conditions. This bill provides patients with that opportunity. California Health Advocates, another cosponsor, writes it is unacceptable for a Medicare beneficiary to be denied a Medigap plan and consequently trapped in a Medicare Advantage plan due to the loss of access to their treating provider. This situation can have significant implications for the individual's health care. Similarly, a veteran who relocates to an area without a VA treatment center should not be denied access to a Medigap plan when they need to rely on their Medicare benefits outside the VA system and need supplemental coverage. Furthermore, a family should not face refusal of a Medigap plan for a low-income disabled adult child who has Medicare but is not eligible for Medi-Cal. This bill provides a critical lifeline to health care coverage for Medicare beneficiaries in these situations. These individuals deserve access to coverage irrespective of their age or health status. According to the California Alliance for Retired Americans, guaranteed issue and community rating in the Medigap insurance market can help patients better afford their care. Without guaranteed issue and community rating, companies can deny patients access to Medigap plans entirely or charge much higher rates based on health and age. For seniors, these two policy changes will simplify the complex Medicare market, helping patients get the right coverage at the right time. Moreover, guaranteed issue enables Medicare Advantage enrollees to switch to traditional Medicare with a Medigap supplement, providing more choice for our senior population, and protection from exorbitant out of pocket costs.
    
12. Opposition. The California Association of Health Plans, the Association of California Life and Health Insurance Companies, and AHIP write Medigap coverage allows seniors – many of whom are on fixed incomes – to budget for medical costs and avoid the confusion and inconvenience of handling complex medical bills. Among enrollees, 91% say that losing their Medigap coverage would cause them worry about losing financial security. With that in mind, all Medicare supplement policies are sold on a guaranteed renewable basis. This means that the issuer cannot cancel the policy or change the benefits, as long as the policyholder pays their premiums. When a new enrollee signs up for a Medigap policy, the premium they are quoted is structured on the assumption that the policyholder will keep the policy for the rest of their life. Today in California, one is generally eligible to purchase any Medigap policy offered in the state during an initial six-month open enrollment period when they are first enrolled in Medicare Part B. This limited open enrollment period ensures that the risk pool includes a mix of healthy individuals and those with higher health care needs. If an enrollee later decides to change to a Medigap policy outside of that initial open enrollment period and is not covered by limited exceptions (such as a plan bankruptcy), insurers can require medical underwriting or take health status into consideration when reviewing the application; premiums with the new plan can be higher or the application can be rejected altogether. However, existing law does allow existing Medigap policyholders an annual, 60-day opportunity, commencing on the individual’s birthday, to switch to another Medigap plan providing equal or lesser coverage compared to their current plan. While this provision allows Medigap policyholders a great deal of flexibility and choice in their coverage options, it includes safe guards that prevent people from gaming the system and adversely selecting into higher levels of coverage when they are sick or in need of more health care services. Additionally, it should be noted that establishing an annual guaranteed issue/open enrollment (GI/OE) period creates an incentive for eligible seniors to delay enrollment in Medigap until they need coverage for a health condition or treatment. The annual GI/OE period not only allows for this practice, but in fact encourages it, exposing current Medigap enrollees – many of whom are seniors on fixed incomes – to drastically higher premiums. This outcome is particularly likely given the bill’s failure to limit open enrollment/guaranteed issue rights to existing Medigap enrollees. California Agents & Health Insurance Professionals write this bill would significantly increase premiums for seniors and would likely reduce access to coverage by driving competition out of the Medicare marketplace as seen in other states that have implemented similar enrollment.
    
13. Amendments. The author is requesting the committee adopt an amendment to remove the permission for plans to exclude persons under the age of 65 with end stage renal disease from the Medigap market in California.

SUPPORT AND OPPOSITION:

Support: The Leukemia & Lymphoma Society (cosponsor)

California Health Advocates (cosponsor)

California Alliance for Retired Americans (cosponsor)

AARP California

Alliance of Californians for Community Empowerment Action

Alzheimer’s Association

APLA Health

Calexico Wellness Center

California Chronic Care Coalition

California Hospital Association

California Human Development

California Rural Legal Assistance Foundation, INC

California State Association of Psychiatrists

California Teamsters Public Affairs Council

Caring Across Generations

Center for Employment Training

Center for Medicare Advocacy

Central Valley Opportunity Center

Chronic Disease Coalition

Comite Civico Del Valle

Community Health Councils

Courage California

Disability Rights Education & Defense Fund

Farmworkers Institute of Education & Leadership Development

First Day Foundation

Friends Committee on Legislation of California

Health Access California

Healthy California Now

LA Cooperativa Campesina de California

Los Amigos De LA Comunidad, INC

Maternal and Child Health Access

Movement to End Privatization of Medicare

National Psoriasis Foundation

National Union of Healthcare Workers

Proteus, Inc.

Senior Coastsiders

Together We Will/Indivisible – Los Gatos

Western Center on Law and Poverty

7 Individuals

Oppose: America’s Health Insurance Plans

Association of California Life and Health Insurance Companies

California Agents & Health Insurance Professionals

California Association of Health Plans

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