Senate Standing Committee on Health

I invite all the panelists who are going to be presenting to come up to the panel area, please Good afternoon everyone and welcome to the Joint Assembly and Senate Health Committee Informational hearing on the 2027 Essential Health Benefits Benchmark Options.

I'm Assembly Member Mia Bonta, thankfully and gladly joined by Senator Caroline Menjivar, Chair of Senate Health the Affordable Care Act requires health plans sold in the individual and small group markets to offer a comprehensive package of items and services known as Essential Health Benefits, or EHBs.

Under this federal legislation, each state has the authority to choose its benchmark each EHB plan which details the EHBs that must be included in the scope of benefits for each health plan sold in the individual and small group markets.

California's current EHB market plans do not include coverage for a variety of benefits such as hearing aids, infertility treatments, adult dental care, chiropractic care, wigs, optometry, nutritional counseling, diet, internal dietary internal formulas or durable medical equipment.

In order to change California's EHBs, the state is required to update its existing benchmark plans through a review process which includes an actuarial analysis and stakeholder process. In order for new benefits to be in place for the 2027 plan year, the state must notify the Federal Government of its intention and proposed plan by May of this year.

Today's hearing will give the Assembly and Senate an overview of the actuarial analysis, the benefit options to consider, and provide a forum for stakeholder feedback. This is timely work.

Our committees have seen a range of bills proposing a new benefit mandate in recent years which, when individually considered, do not allow us to consider the totality of need weighed in consideration with the impacts on the cost of care.

This in part spurred us to begin this EHB review process last year with Senator Roth and me, and now carried forward with Senator Menjavar and me. While all of these benefits are worthy of coverage, the range of EHBs we can expand are limited by federal rules.

This means we have competing priorities and tough choices to make, but this is also an important opportunity for us to seize in order to address disparities in care and access for many Californians.

The Legislature and the Administration have put lots of time and effort to give us this opportunity to have a robust discussion today and I look forward to hearing from our presenters and all of the stakeholders who have joined us. I'll turn it over to Senator Menjivar for any opening remarks as well.

Thank you so much, Madam Chair. Good afternoon everyone. This is my first hearing or anything capacity under my new role. I'm very excited to be engaging in this conversation. We have a very difficult task ahead of us. Right.

We started this process last year where everything was different and now we have are seeing just everything under the health spectrum coming under attack from the Administration on the federal side. So what does that mean to this process right now? You've heard from my, the co chair talk about previous legislation that was introduced.

I myself introduced two legislation requiring different mandates, one for children hearing aids, the other one for IVF. And one of them did move forward. But what does that then mean to the smaller and medium health plans and including those benefits? So today we're going to be hearing from different perspectives who is going to get premiums increased?

You know, what have other states done? How have those premiums look in other states? What can we include in the gap in our cap? And then also what's really important is the timeline, adhering to the strict timeline that is in place in front of us and the restrictions that those timelines provide us as to why we can't look at other things.

And what we have in front of us are from previous engagements with stokehold stakeholders and is doing our a job of reflecting a most robust list of things that we're going to be reviewing today. With that Madam Chair, take it back to you.

Thanks so much. Do any other Members of the Committee have any. Welcome to our new Members on the Health Committee on the Assembly side and, and those that are a part of the Senate and we look forward to having them join us with that. Senator Menjivar, I think you are going to be introducing our first panel.

Great. Our first panel today is going to be individuals from our Department of Managed Health plan and I always do a terrible job of butchering names, so I'm going to have you introduce. I can do your first name, but that'll be it. So I'll leave you two to introduce yourselves. Thank you.

All right. Good afternoon, Senator Menjivar, Assemblymember Bonta, Members of the Senate Assembly Health Committee. My name is Mary Watanabe and I am the Director of the Department of Managed Health Care.

Before I get started, I want to take a moment to thank Senator Menjevar and Assemblymember Bonta and their staff for their leadership and partnership with the Department on the activities related to today's hearing.

I would also like to take a moment to acknowledge the California Healthcare Foundation and Covered California for their support in funding the contract with Wakely to assist us with the actuarial analysis needed for this process.

You'll hear more about Today I'll briefly repeat an overview of essential health benefits or what we refer to as EHBs and our current benchmark plan and review what the process has been to date and our timeline for next steps.

I also have our Chief Counsel, Sarah Ream here with me today to help address any technical questions from the chairs or Committee Members. Next Slide as you heard earlier, under the Affordable Care Act, all plan products in the individual and small group market must cover essential health benefits.

These Benefits must include 10 broad categories of items and services which are listed on the next slide. Within these broad categories of services, each state state can decide what specific services to include and which services plans do not have to cover. California's benchmark plan includes benefits from each of these 10 EHB categories.

The list of benefits is too long for me to go through, but I will just highlight that it includes things like primary and specialty care, emergency and urgent care, behavioral health services, maternity and hospital and surgical services.

Despite the long list of covered services you heard earlier, there are some gaps which is really the focus of our activities that we'll talk about today. Next slide More than a decade ago, California selected its benchmark plan which established what is considered an essential health benefit in California.

At the time, federal law prohibited states from making an a LA carte selection of benefits. Instead, to satisfy the federal benchmark plan process, the state had to identify an existing health plan product, then add any benefits if necessary to ensure it covered all 10 of the federally required categories of EHB.

The benefits in that identified product plus any benefits added by the state define what benefits were considered EHBs in the state. Using this benchmark plan process, California selected for its benchmark plan the Kaiser Foundation Health plan small group HMO 30 as it was sold in 2014.

The benefits included in that Kaiser product have defined what are currently the EHBs in California. Per federal law, if California didn't adopt a new benchmark plan but required plans to cover any services that are not currently in EHB in California, the additional benefits would, what we call, exceed ehb.

As such, the state would have to cover the cost associated with those additional services for any individuals receiving their coverage through Covered California. It is worth noting that while we have started this process to set a new benchmark plan in California, we are not required to do so.

We could continue with our existing benchmark plan that was set over a decade ago. Part of the reason for initiating this process was a change in federal law that allowed for more flexibility in the process for setting a new benchmark plan. Matt is going to talk A little bit more about that in just a moment.

In addition, over the years, as you've heard, there's been numerous mandate bills that attempted to add services that were not in our current benchmark plan.

Next slide Before I turn it over to Matt to talk about the new federal regulations and process, I want to just quickly cover our timeline and the work we've done to date and what comes next. For I know many in the audience here were part of our stakeholder meetings we've had to date.

The DMHC held the first public meeting on June 27th of last year. The intent was to provide an overview of this process and solicit public input on the benefits we could consider adding.

We had a meeting, I think it was just a little over two weeks ago now on January 28th to share the actuarial analysis from Wakely on the cost of adding new benefits and how much actual room we have to add benefits.

And I believe the public comments that were received following that meeting are part of the hearing materials. Obviously, we're having today's hearing and we do need to make a decision on the final set of benefits that will be part of the submission in the package to CMS if we're to meet that May 7 deadline.

And so we're really looking to make some decision on those benefits around mid February. So next, probably week or two, we do need to have a public comment period on the package that goes to cms. This includes an actuarial report plan, documents defining the benefits that we are including in EHBS and various other documents.

We anticipate a stakeholder comment period of about three weeks for that initial comment period in March. If we make any changes to that package, we need to have a subsequent public comment period, which we anticipate holding in April for another two to three weeks.

And then that package needs to go to CMS by May 7th in order for us to have an effective date of January 1st. As was noted, this is a very aggressive timeline with some tough decisions ahead of us.

You will see in the presentation from Wakely the benefits we've asked Wakely to price do not include everything that we've heard in our public comment. With limited time and actual room to add benefits, we had to make some tough decisions and give Wakely direction on what to price.

These decisions were primarily informed by the public comment, prior bills and really where there seemed to be a lot of consensus around some core benefits to add. I will note that there were some benefits that were recommended for certain age groups or conditions you'll hear that that is prohibited. Let's see that.

I think I'll wrap up my presentation. I'm happy to take questions. Or we can go on to Matt with Wakely.

Director. We do have some questions so we'll. Before we turn over to Matt and I'll kick up some questions here. Can you share with us what would happen we saw the timeline if we don't adhere to that timeline and B, what if we continue analyzing the possibilities and we submit next year? What happens?

Yeah, so it just means that we wouldn't be able to implement the new benefits in 2027. And so if we were to wait and let's just say we take another year, Sarah or Matt can remind me.

There's a very strict formula for calculating the due date, but it's probably somewhere in May that we would need to file in 2026 and then the benefits would take effect in 2028. Is that correct?

Yes, that's correct. It's the. You, you have to submit your package to CMS. I believe it's the first Wednesday or the second Wednesday in May which is two years calendar years before the January 1st of when it will take effect. So if we submitted this May, we could have.

The benchmark plan would take effect January 1st of 2027. If we submitted by May of 2026, then it would be 2028 when it would.

So in theory you can submit any year and it would go into. It will start two years following that.

That's correct under the current regulations. Correct.

And given if we want to stick to this timeline, do we have the opportunity to look at other items to include.

So. So yes, I think if we were to take more time, we could consider other options.

I think we stick into this restriction. If we were to meet this May, this year's May timeline, do we have time to look at other things to analyze to include? Very limited time.

So I think both Wakely and the DMHC need to know what we're going to move forward in that package. So there's limited time to make changes to the kind of the pricing and those decisions. But there's a small window I would say over the next short maybe week or two.

Turning over to colleagues for any questions, any questions to the Director? I'm seeing none. See none.

Thank you, Madam Chair. In the agenda it references and I understand you're with DMHC not seeing a DHCS representative on any of these panels.

I did want to talk about the hearing aid HCCP hearing aid coverage for children's program as we are referencing EHBs and seeing if there were any improvements made since the the Veto message in 2023. I understand that the Chair had a Bill in this space with SB 635 that many of us had supported.

And in the veto message there were recommendations made to dhcs that I'd like to see if there are any updates that would provide information to the conversation regarding EHBs.

For today's conversation, as somebody, I think for the purpose here, we want to see if there's opportunity to include that as a benefit within the ehb and because this Department is leading that effort, which is why we didn't have the other Department.

I think throughout the conversation, once we get to the benefit part, we'll hear more information as to the possibility and what's the cost to that benefit being included. And if your question isn't answered after that, we can follow up with the other Department because we did not ask that Department to come join us during this hearing.

I'm happy to. I also believe it's a rationale for us to be looking towards hearing aids as an essential health benefit as it's a developmental emergency and something that we should be prioritizing. It simply was whether or not we had effectuated the change over the prior year that I was asking. And it seems that by framing this conversation the way that we did, we're just moving forward, forward. So appreciate that.

hello everyone. I'm Celeste Rodriguez. I am one of the new Assembly Members. There are a lot of us in this new class and I would love if we could just take a step back and and clarify a little bit of your comments.

This is our first hearing or it's wonderful that we're together with the Senate and the Assembly. Did I just understand that there is a timeline here that makes it that we're unable to add things like hearing aids for children, which a lot of us are supportive of in this current timeline. And then with that, like what is the goal for today, if I may ask?

That I'll clarify for the Assembly Members. So we're essentially opening up the process to review what the optionality and what items we want to be able to consider for inclusion in the new EHB benchmarking process. As a part of that, one of the things that they will offer us a presentation on are things including hearing aids, durable medical equipment, infertility. And in the next panels we'll kind of see a little bit more of a breakdown around that.

We had a little bit of a hit around that with the EHB categories that were offered in that slide there. So we're going to have more discussion about that. We're not missing any part of the timeline. I think the part is this is launching our ability to do that.

I think the comment around the timeline was essentially whatever we do now is essentially a two year process from whatever we implement, whatever we submit to cms, and then when we actually have the ability to have it be adopted, which is in 2027.

Thank you for the clarification. Yeah, thank you.

I think our Vice Chair Patterson has a thought. Yes, go ahead.

Great. Thank you so much. So maybe, maybe this appropriate question for the chairs. But it does. Does this process also contemplate potential? And that might be the very next panel savings.

If you do certain coverages, like for example, if you do hearing aids, then maybe you're actually saving money from other types of therapies later down the line, or chiropractic. Maybe you're saving money. Do the actuarials include that? That's a great question to ask for the next.

We'll have two panels. They're gonna talk about the reports they did on that. And that's a great question we'll be able to ask.

Great. Thanks.

And I also think that we'll. I think we'll get at Dr. Arambula's question as well.

Senator Richardson.

Thank you, Madam Chair. My first question is the current federal Administration has been looking into ways to repeal or undercut the Affordable Care Act. What happens if we increase the EHBs and the Administration is successful in cutting access to care? How do you see that that would impact the program?

Yeah, maybe I'll start. I will just say I think we have a presentation from Covered California later on too, who may just talk about the potential impacts to Covered California. I will just say that I think there's a lot of uncertainty of what could happen with the federal Administration.

So I don't want to speculate now, but I think as we'll hear likely from my colleagues, just being mindful of potential impacts to premiums and the cost, I think in Wakely and some of the other presentations, we'll just hear about, you know, all of these new benefits will add to the cost of healthcare. So it's just something we need to be mindful of.

Okay. And Madam Chairs, am I correct in understanding that the next panel might be covering the durable equipment and the addition of wigs?

The next panel is going to be led by Matt, who works for Wakely, who was contracted by the Department to do a Report, report on the possible scenarios of things that we can add, the cost to them, the potential increase in premiums and how we can stay within the Max of our capacity of what we can add.

So it's going to be those two on top of IVF hearing aids. So it's dme, wigs, Chiropractic Services. Okay, I'll hold my final two questions for that then. Thank you. Any other questions for the Director?

I have a question for the Director. Thank you. So, Director Watanabe, so you talked about kind of the timeline for this process moving forward.

Is there a timeline at which or kind of a staleness to the analysis in terms of whether we'd have to essentially go back to Wakeley to have them do further analysis if we choose to defer application or making a decision about this that we also need to consider?

Yeah, no, and I should probably ask Matt to answer this. I mean, I think some of the analysis is probably still relevant but would likely need to be updated. And obviously this will depend on how long we wait, too.

Matt, I don't know if you want to jump in and add anything, but we've talked a little bit about this.

Yeah, I think the bulk of the analysis will remain relevant in future years. I do think updating with.

Could you put the microphone closer than.

Yeah, I do believe the bulk of the analysis will remain relevant. I think the time frame, if it's next year, most of it will be relevant. Maybe we'd want to update on some more recent data just to use the most recent data.

So CMS as they're reviewing, we'll be happy with that and we're still using the most relevant data if things change. But yeah, I think if we start going a couple years out or if there's material changes to the ACA or benefit coverages and there is a possibility of additional analysis being needed.

So basically any changes to the ACA would be a triggering factor, as well as a duration of more than sounds like 24 months or something where we would have to go back and basically redo this analysis?

Yeah, I think that would be fair to say.

Okay. Assembly Member.

Yeah. So I mean, we've been talking about essential benefits. I think, you know, the first I learned about it, you know, when you're on Health Committee, you learn about, you know, takes a long time to get up to speed. It's my third year now.

But, you know, the first discussion we had that I remember was through the hearing aids, because when the Bill is disappointingly vetoed, that was the reason for It. So, so just so I understand the timeline and this is appropriate timing for this, is that you want to have something this month, like decisions made this month, February 2025. And is there. I am. I don't know how to say it, but could we have done this earlier?

It's a question I probably ask myself all the time. So we started this process last summer. I think, you know, it started with stakeholder meeting in June and really wanted to take the time to get public input on what we were going to ask Wakely to price that analysis. Took time. We had discussions.

So I, you know, I think we've moved as quickly as we could, you know, being thoughtful about a lot of changes that are happening in the healthcare space right now, too. So I think if we in fact want to file in May to have it take effect in 2027, we do need to make some. Some decisions quickly.

I think as long as there's not too many changes and Wakely has to go back and price a lot of new things, I think we can still meet that time frame. Again. I think Wakely, Matt's going to present and show you. We don't have room to add everything. So there are some tough choices.

I think a lot of the services that are of interest to both the Committee and the public have been priced. And so it's just some decisions about what to move forward with. I think if there were a desire to take more time or consider things that haven't been priced, that's where we may need to take more time.

Look at submitting it another year. Okay. But, yeah, I think, you know, collectively we've had a lot of engagement across the Legislature and Administration and tried to move as quickly as we could.

Just, just so I'm clear on that, we might have a little bit of latitude if there's, I mean, because we got a lot of people up here, you know, that are interested in this process. But we might, depending on how this hearing goes, have a little bit of latitude if there's some tweaks we want to make.

reiterate a little bit to.

Do it this year. Okay. And just last question. How long have we sort of been aware that this was going to be the. The time frame we needed?

So the federal regulations were finalized. Was it last year? Sometime. So the process has changed and I think it was fairly recently. The Fed. I'm looking to Sarah.

So in 2005, 2024. So this is the Federal Government issues regulations, I believe it's about six months in advance of the plan year that the regulation will apply to and they're constantly tweaking the process. I believe it was in Matt, tell me if I'm wrong.

Was it 2023 or 2024 where the Federal Government opened up the ability of a plan to do an a LA carte sort of benefit design. Prior to that, a state was limited in how it selected a new benchmark plan.

You had to look at a product that was being offered in your state or to a benchmark plan that was offered in another state. So you could not say, well, we would like to have hearing aids and we would like to have IVF, but we don't want to have something else because we don't have room. You had to pick up and move a product over.

But, but we knew that this was going to be a process that was going to come to a head around this time for I would imagine, more than six months or, or more than a year. I mean, because when the Bill was.

Vetoed, Vice Chair, we, we had just to perhaps shed some light. So Senator Roth and I both had an EHB Bill last year to basically open the benchmarking process. And so we're essentially. Which spurred us to be able to start the process with Wakely to do the analysis that they, that they did.

The timing of the delivery of the report of the analysis was such that we kind of ran, weren't able to meet the deadline for consideration at the end of our legislative cycle. And so we're picking it up at the first time that we can in this, in this time frame, if that's helpful to you.

Thank you, Director. Madam Chair, kick off the next panel.

Thanks so much. We are going to move now to our second panel which will have Matt Sauter from the Senior Consulting Actuary with Wakely Consulting Group present the actuarial analysis with more definition around the EHB benchmarking items that we will have under our consideration. Please go ahead.

Thank you. So my name is Matt Sauter, Senior Consulting Actuary with Wakely and I'm the actuary supporting California in the analysis of the Central Health Benefit Benchmark Plan.

And previously I have supported four states, Vermont, Colorado, Alaska and Washington on their successful EHB benchmark plan applications as well as the slides start to pop up there, I do want to remind everyone that these are estimates in evolving analysis that we're currently targeting for May 2025 submission that are being provided for draft and illustrative purposes.

Things may change here in the next as we continue to discuss these benefits items might change and then ultimately if an application does move forward in May, the benchmark plan will be contingent on CMS approval. So as we jump ahead, two or three slides here did want to shed some more light on the federal regulations that were exist.

So as we were talking about briefly before in the 2019 notice of benefit and payment parameters, there was new regulation that allowed states to really start to be able to change their essential health benefit packages with significant flexibility.

And this is what started the wave that about I think now 13 or so states have successfully updated their benchmark plans. And then there was recent regulation in the 2024 MVPP that kind of made some additional flexibilities and lessen the burden on the application process as well.

So there's three pathways that states can use to expand that benchmark plan. To date, everyone has used the third sub bullet there in bold to select a new set of benchmark plan benefits. In practice, what this has looked like is just taking the existing benchmark plan and then layering on a couple additional benefits as well.

Again, as we've kind of stated this May deadline that's coming up that would make it effective for a 2027 benefit year. And under current regulation, if we were to wait a year, the benefit year would also get delayed a year there. Working backwards from that May 7 deadline, there is in regulation a need for reasonable public comment.

We believe that to be a minimum of two weeks. So as you start walking back from that May 7 deadline, you do see that timeline emerge. That application package will include an actual report and some other supporting documents as well as an updated benchmark plan document.

And the biggest test, that biggest kind of guardrail and requirement that we need to keep in mind here is going to be that typicality test standard, which is basically putting a ceiling on the benefit richness that can be added.

There's other limitations that should be kept in mind in the ACA and essential health benefits, such as there's no lifetime or annual dollar maximums. And then also discriminatory benefits have been in the forefront of CMS's mind as well.

So for example, if there's a benefit in the benchmark plan that says foot care for diabetics, since that's contingent on a condition, they'd consider that discriminatory and they'd ask that it gets revised. And this would not be considered a change to be considered an intercost analysis that would be revised to foot care as medically necessary.

And in practice that may not actually change what's Covered, but just moving to more universal language there as medically necessary. Okay, as we move to the next slide, going to focus on this typicality test standard, one of the main requirements of the new benchmark plan.

Again, this is basically putting a ceiling or a maximum on the benefit richness that we can include in a state benchmark plan. The typicality test gets its name from a typical employer plan.

So really, in practice, this is saying as we're evaluating how rich a plan can be in a given state, it can't be richer than a typical employer plan. So CMS, we'll actually laid out 10 base benchmark plans and regulations that we can choose from.

A state can look at and say, okay, out of these 10 plans, some small group plans in the state, some state employer plans, and then three federal employee plans, and then also a large group option. Out of those 10 plans, we can identify through a benefit comparison which plan is the richest out of those.

And then that plan, through an analysis will kind of set our maximum benefit richness. So we'll start with that plan comparison. We'll then price out those benefit differences.

And then ultimately, as we look at these benefits that we want to consider to add and put together a new benchmark plan, we'll make sure that those new set of benefits is not richer than that typicality test there on the next slide. I'm just putting that into slightly different words.

We did line up those 10 plans, compared them benefit by benefit. So we'd look at are PCP visits covered, is acupuncture covered, chiropractic care, and went down that list. And wherever a difference occurred, we would quantify that on an allowed cost basis, which is what EHBs are defined on.

And then through that analysis, we identified the Kaiser large group plan for the University of California to be the most generous plan, the richest benefit coverage there. And a few of the benefits that drove that decision were coverage of infertility services, a rich DME coverage, hearing aid coverage, and chiropractic care. Next slide, jump down one more.

So with that in mind, that kind of sets our. The typicality test sets the ceiling of the benefit richness. Wanted to talk a little bit about the benefit pricing and selection. So as Mary was talking to, there is a list of benefits that were provided to us to price and consider for inclusion in the benchmark plan.

So we looked at those benefits and how we price. That would be with a combination of using some internal proprietary databases which add actual ACA commercial data. We also use publicly available data sources, some California stakeholder and issuer input and then also actuarial judgment.

And then we will eventually, as we get input from this group and elsewhere, we'll compare those that benchmark plan with the new benefits to that typicality test to ensure compliance and then if that is the case then that would be a potential option for the new benchmark plan.

Jumping on the next slide, just wanted to also give some more background on how we are doing this analysis and how we're looking at costs and how the federal regulations mandate us to look at these costs. We are going to look at total allowed costs so the plan paid and Member paid in there at 100% AB.

So this is slightly this is different than the premium impact since we're looking at plan and Member paid and the premium impact may and likely will differ. As came up earlier, when we price these benefits we are looking at the steady state cost of the benefit.

So we're not necessarily looking at the pent up demand in year one. And similarly we're looking, we're just pricing the benefit at hand. We're not looking at downstream costs.

So for example, we're not looking at the cost of savings from less falls from hearing aids, but we're also not looking at the downstream costs of additional births due to infertility.

So again want to state that these will be looking at allowed steady state costs for the benefits and may differ and will differ from the premium impact changes.

And we also expect plans to price these benefits if they were to go into effect differently for various reasons such as anti selection, prior authorization and a variety of other factors.

I just want to stop you there. I think that answers Assemblymember Patterson's question around whether or not we'd actually have an opportunity to look at the cost savings associated with any of these. And it seems like the answer is no.

Correct? Yeah, but we'll be looking at just the benefit that's being added in isolation and the steady cost there not incorporating any pent up demand. And that has been consistent with what we've done in prior states as well.

Jumping to the next slide, just go into a little bit more detail on the data sources and pricing methodology that we used. So our top source of data that we attempted to use for all these benefits was going to be our proprietary ACA database, the exact market and exact market that we would be pricing it on.

In some cases though, the ACA data that we had was not credible or available for some of these benefits. For example, IVF and some DME coverages were not very credible and not often came up in the data. We did use some large group data as well to check for reasonability.

And in those cases where that ACA data was not available, we would go out to publicly available data and industry research to fill in any gaps. We also used other states analyses and EHB reports to help gut check reasonability and make sure that our estimates were in the reasonable range.

And then actual judgment also played a role in these pricing as well. So with that background on the federal regulations and the pricing methodology, we'll jump to the next slide. So this slide is going to look at the high level summary of the typicality test.

So again, this typicality test is basically comparing the current benchmark plan to the richest plan in our options of plans that we could look at and placing a ceiling on the richness that we can have.

So in the first column we'll have a list of benefit that differ between the current benchmark plan which that coverage is listed in the second column. And in the third column we have that Kaiser University of California plan their benefit coverage for those benefits. You can see there's differences here summarized at a high level.

And then we quantified those differences on an allowed basis as a percent of total allowed. So putting it on a percent of total allowed just helps us normalize and compare different plans in different markets. And we also put a allowed PMPM there just to kind of ballpark what that translates to on a dollar amount as well.

The reason for the ranges are several. The main ones being one, there's just a level of uncertainty on how these benefits will emerge and then also the impact of various things such as prior authorization and other factors that issuers may use to influence unit cost and utilization.

The main takeaway on this page is the bottom row where we effectively get the range of benefits that we the room now that we have to add benefits so that 1% to 2.25% is really what we can increase benefit richness at a maximum by.

So that'll come into play on the next slide where we are looking at the benefits to be added that are being considered to be added. So on that leftmost column are the benefits that we looked at and then a brief benefit description where applicable in the second column.

And then our pricing estimates of those benefits are there on the right. Another factor for the range on this table is the definition of the benefits. So things like ivf. We've priced several different benefit packages with varying richness, some being more lean and others being more generous with higher benefit richness. For example, if you look at wigs.

There's a wide range of the unit cost of wigs as you go from synthetic to mid range to fully authentic hair. As we sum these up and look at the third from the bottom row, we see that the total value of these benefits has a range of 1.6% to about 3.5%. So a big range there.

And then as we look at the subsequent row from the last slide, the typicality test is a max of 2.25. So we do have just with the benefits priced here, it's going to be more rich than the room we have available.

So, just meaning that we will have to take a subset of these benefits and we won't be able to add them all.

Can you just Clarify, is it 2.25% maximum or 2.23% maximum?

Correct. Yeah. So we have a 1.06% to a 2.23% range to add there.

Okay. Are you, are you done with your presentation?

Few more slides, few more slides. And then on the next slide, we also wanted to call out adult dental benefits not included in the last table, but we did price this as well. Both preventive services and comprehensive dental in the right side there, the benefits that we priced are shown here.

And generally speaking, these are high cost benefits. So you can see at the top row there, the preventive had a range of 1.26% to 1.83%. And then once we included all dental services, so this does include preventive, it was 2.6% to 4.6%.

And as we remember from the last slide, that 4.6% there is higher than the room that we have allowed there. The next slide breaks down the relatively wide range of DME that we had that we priced.

And on this slide you can see the breakout of each of those components with CPAP machines, really representing the bulk of that cost.

Then the next slide, we break out IVF into three options that we priced here. There are a multitude of options and benefit structures that are available for IVF. These represent just three. There are leaner options, there are richer options.

But we just want to try to illustrate a couple different options and how changing various components make the magnitude of those changes in terms of cost. The next slide just breaks down those IVF. And I know we're jumping through here a little fast, but happy to go back to a slide and discuss further.

But this slide just puts that graph into word form. Just as another option to read. The blue text here represents the marginal difference from the pathway above it. So, for example, as we look at pathway two, we can see that there's two rounds of donor sperm and egg cryopreservation included, among other benefits there as well.

And then the last slide I have is just a description of what we've included in some of those cost categories that you see in IVF. So just some definitions to help understand what's in each bucket.

So again, I know that some of those last few slides, a lot of information, a lot of numbers on there, going through fast, but just wanted to give a quick overview which does conclude my presentation.

Thank you. And we'll open it now for questions. Assemblymember Patel and then Senator Richardson. We'll move down there.

Yes, thank you for this presentation. My clarifying question is just you mentioned hearing aids a couple times on your charts. Like my many colleagues up here, very interested in pediatric hearing aids being covered, especially as it relates to accessing public education for some of our youngest learners.

When you have hearing aids marked here, is that pediatric specifically or is it all?

The hearing aids here, currently in the benchmark plan, there is no hearing aids covered, so what we price would be for all ages. And that actually is somewhat related to the discriminatory language earlier because interestingly, some states had child hearing aids covered.

And through this discriminatory regulation, we was able to expand that to hearing aids are covered for all ages without having to do an EHB pathway change. But unfortunately, California did not have that coverage, so we weren't able to utilize that option.

So we get to avoid being discriminatory and just going straight for it. Thank you.

Senator Richardson.

Yes, thank you, Madam Chair. I have a few questions. One, I see that wigs are being considered as a part of the expanded benefits. Why are we only considering wigs for alopecia patients when there are other medical conditions such as cancer, lupus, thyroid, et cetera that need wigs for their condition?

And also, have you considered changing the word from wigs to hairpieces, which is the more appropriate term these days?

Yeah, we can absolutely change the benefit language there. And what we price was actually for all conditions, again, kind of going back to the discriminatory regulations, we're not able to say hair pieces for one condition. It really would be hair pieces are covered as medically necessary.

Okay.

And then it kind of just maybe subsequent question would be like, well, what is medically necessary? There will be some defined definitions for certain benefits that are accepted broadly. But also I think that would come down to a bit of the issuer and the state kind of overseeing that process as well.

Okay, my next question is, the current benchmarks plan covers durable medical equipment is extremely limited. Is it too late to consider or include oral internal nutritional formulas, including polymeric and semi-elemental formulas as a part of medically necessary durable medical equipment? See, these formulas help a wide range of patients with serious health conditions.

So like for example, if a person's on a feeding tube and so on, it's, you know, it's one thing to cover the equipment, but if you don't include the food, what's the point of the equipment?

Absolutely.

Before you answer, you know, we discussed early on that we put all these benefits options together from stakeholders coming forward during the process in the past couple of months. So these are the main things that came and were proposed in these stakeholder meetings. Additionally, we asked, do we have time to add any additional items to be considered?

You've seen that we're in a time crunch. If we want to consider them this year and to add them. The Director mentioned that there's a very, very small window available for us potentially looking at something else because we would have to do another analysis. Cost analysis, is going to say within the, what's the test you mentioned? The fatality test.

The Fatality test.

So obviously everything's on the table as an option. But if we're going to ask can we add this, can we add this, could we just be mindful that, yes, we can add something. Maybe it's not going to be included in this year's timeline, maybe it's next year.

So I think moving forward, yes, we can add anything you want to ask for. Just being mindful that if we want to do it this year, it'll be a little bit more difficult if we want to punt it to next year, maybe we can look at that.

But the answer is always going to be yes, we can look at it. With the caveat of depending on the time we choose.

Okay. Reclaiming my time. Reclaiming my time. I had some additional questions.

Please, go ahead Senator Richardson.

Okay. I noticed it was interesting that obesity and weight loss is not included. And maybe it's because there was, you know, such dramatic information that has happened. Coming back to your statement, Madam Chair, and it's also to our presenters here.

I noticed that weight loss, for example, obesity, is not included. However, given now the use of some of the medications that have come out. I'm just curious, was that something you even looked at? And given the significant medical impacts that have been determined from.

I know we can't use specific illnesses like diabetes or blood pressure or whatever, but it just seems to be quite shortsighted if we'd be willing to look, you know, three years out, four years out, before we even had a discussion about it. So I'm curious.

I know they were coming out, these products were coming out, you know, 12-18 months ago. But was there any consideration or look at the obesity and weight loss treatment drugs?

North Dakota actually currently has that as one of their benchmarks capacity. But a lot of these items that we put on the list were from previous bills that were brought forward to the Legislature as a recurring theme. So the hearing aids was brought up maybe, I think two to three times and through legislation.

So we utilize the information of previous bills and what members, what conversations were had in the Legislature and that's how we also got to this list.

So my point though is, and I completely get that. My point though is that many of these drugs were only really coming out of people talking about it in the last, I think, 12 to 18 months.

And so if it was included in North Dakota, would that be something we could potentially include without having to go through a whole process? Because there has been significant information and data regarding the benefits.

Perhaps DMHC can address what is already covered and, and what is that?

Sure yeah. No, and I mean, maybe this is better for a follow up too. But I mean, I think there's already some coverage for weight loss drugs for those that meet a certain threshold for obesity, as well as for other conditions.

I will just say one of the things that we, one of the tough decisions we had to make going into this process with limited funding, limited time was we are not looking at prescription drugs and the prescription drug benefits, you probably don't see any drug benefits in this analysis.

So that was kind of one of the decisions we had to make early on. Appreciate the concern, growing concern, and the cost of weight loss drugs and the need for those. But that was just not part of this process. Just generally we didn't look at prescription drugs, which is where that would have fallen into.

And just to be able to open up the rationale a little bit around what was considered and what was not, can you just take a little bit of a step back and talk more specifically about the maximum allowed costs that we can present and the extent to which some of these benefit options are just really at this point kind of out of the scope of what is economically feasible?

Maybe let me take adult dental. I will say when we started this process and had our first stakeholder meeting, we were, I think collectively very excited about the policy possibility of adding adult dental.

We had subsequent conversation with CMS and what they informed us is that we couldn't consider the cost of a standalone dental plan even if it was offered as part of the benefit package to all employees. And so we thought, many of us probably have a separate dental plan that we have. We thought we could count that cost.

We don't typically have adult or dental embedded in our health plans in California. And so given that limitation, we just didn't have that extra room to add associated with the cost of a standalone dental plan.

So as you can see, we had wakely price two options, kind of a lower cost preventative visit or more of a comprehensive benefit package. And really, even if you were to go with the very narrow preventative only, it would be a cost of I think up to 1.83, which would use most of that room of 2.23.

So it's again, we could do that, but it would really narrow the other benefits that we could add. So I think that's a good example of, you know, there's some tough choices here.

Even as I think Matt showed on the slide, if we were to add all of, even the benefits that we did have them price, it goes above that 2.23.

Okay, again, Madam Chairwoman from the Senate, when you said that North Dakota does include weight loss drugs, does that mean since it's a part of an existing plan, we would be able to potentially include it?

I think I was just sharing as an example, you know, these are à la carte. You get, there's a menu and each state picks which benefit they want to add. I was just sharing that that state did pick that benefit.

And part of the process here is, I mean it'd be, I don't want to speak for my Madam Chair, for my Co-Chairs, is we've gone so much into the process of this to wipe everything out and start a new. I think it would be.

Cause a lot of heartache to a lot of stakeholders in this process. I think that's. I was just stating that another state did that.

I would never suggest that we start all over and throw everything out, most certainly. But I thought when I was reading and I am a new member to the Committee, I thought that in order to add a particular benefit, it had to be in another plan at another location.

And so that's why I was asking the clarifying question. If it was in another plan, would that then make it allowable for a plan that we might want to accept? That was the question.

But my last question is, and this might sound a little embarrassing, but I don't know of any other way to say it, are the male treatments for infertility and those issues, are they covered within our current existing prescription drugs? Yes. Spoken as a Doctor. She said it without me, kind of grinning sheepishly.

Okay, erectile dysfunction, is that included? I'm just curious in the prescription drug section.

So our analysis of the current benchmark plan did not have any infertility diagnosis or treatment actually revealed as covered. So that's on the medical side. The prescription side is a little convoluted with the number of RxQEs that are required in a therapeutic class.

I don't recall looking at that specifically, but my guess would be it's not included. But I did not look at that specifically.

Because I thought Members of the Committee and maybe this is more for Karen. I'm not sure, but I thought I had heard that those drugs and treatments are included in some of the insurance and if it is, at some point, as we're pushing towards infertility drugs and assistance for families for couples, we may want to consider, you know, if one is.

If something is offered for males but it's not offered for couples. And we're getting into the picking between what we can and we cannot include. At some point we probably should have that discussion of why, especially since we're from such an incredibly progressive thoughtward, forward state, us considering how we would push back to provide that. That's it, thank you.

Thank you, Senator Richardson. Senator Rubio.

Thank you, Madam Chair. I have a question on something that you shared and it's based on the IVF, and I see that there's three options here and they're very different in terms, I imagine costs from limited to two transfers to unlimited. So, but I don't see any cost associated with this.

And maybe you don't have it now, but is there somewhere where I can look to, just to see for my own information how you're pricing this? And I think someone mentioned right now, I believe it was you, that the more we add, the more limited we are in terms of what we can add as a menu. Correct?

And so having these. I'm just curious why these three options, especially since they're so different in terms of pricing.

Maybe I'll start with. So I think we have, in the typicality test, we have the room to add, which is 2.23. I think of that as like our budget. And then we have our à la carte menu where we can kind of pick and choose what to add.

And so for the three benefits, they range from 0.61 up to 0.87. That is shown in percentages, which I know is challenging to wrap our heads around. That doesn't have anything to do with, like, the actual cost of the services.

And I think we'll hear later about the actual premium impact to what people pay monthly for their premiums. But I think we wanted to have a range of options. I think storage is a really big issue that we heard from our stakeholders. So we wanted to have kind of a range of option on storage.

I don't want to, like, make it sound like there was any other reason than we tried to have three options ranging from kind of a very narrow benefit to a more robust. As Matt indicated.

I think if you look in the materials for the public meeting for January 28, we released some materials afterwards that actually has the cost associated with each component. And so you could take that and kind of mix and match and create a benefit, too. I don't know if you'd have anything else you'd add.

I agree. I believe there was some material released on that last public comment that helps give some illustrative numbers. I would just add that those are meant to be illustrative.

It gets pretty nuanced as you put together these various scenarios, but that should help you get an idea of where the majority of the costs are located and what can be increased for more or less cost than other aspects.

Thank you. I imagine as we're trying to be thoughtful and make sure that we're including what's essential. When I saw these three packages, I just, even though they're in percentages, you know, I imagine the cost is just, you know, increases exponentially just based on a limited versus a few.

But thank you for that, maybe I'll just look into what's made public so I can get the pricing. Thank you.

Assemblymember Patterson.

Great. Thank you. Appreciate the questions from Senator Richardson. I think, you know, even if we can't include it now, I think it's a good time to have these conversations. I mean, when's another time we're going to. Unless there's a Bill on it. Right? So we might as well talk about this.

And actually, both points she brought up were of interest to me. You know, I think, I mean, I don't think as very many people, this is a question to anybody. But, you know, obesity is, I think, classified currently as the leading cause of preventable death.

I mean, there's a lot of factors that go into that, things like that. So that's something I'm really excited about those conversations as the year goes on. And I think they'll probably be with scientific advancements, there'll probably be some more conversations.

And also I think the male infertility question, and I don't know if you were just asking if whether that's included and then a female is not included and they should be equal or maybe you were just saying they should be equal, but I agree, they should be equal.

That's a problem for a lot of families trying to conceive and have children. And I think that's something to consider in the future. A couple questions going back to this slideshow I don't fully understand on page 11, acupuncture, the negative numbers. Can you help illustrate that for me in a picture?

Absolutely. So the current benchmark plan did have acupuncture covered, and that was unlimited. And then the comparison plan, the Kaiser University of California had a combined maximum of 24 visits with acupuncture and chiropractic. So in other words, there's members that can go out there and utilize 50 services of acupuncture in a given year.

So since that was an instance where the current benchmark plan actually was richer, that kind of works against the other way than the other benefits, such as chiropractic care, where the typicality test, the Kaiser plan, had that coverage while the current benchmark plan did not. So those kind of offset to a degree.

Okay, and I understand that. And then just two quick questions, I think again now on Page 12, we have the total benefit cost, 1.63 to 3.48. And then typicality, which I had never heard that word until today. Typicality test, room to add benefits, 1.06 to 2.23 both of those. What exactly is the test room?

The total benefit cost we added these things is 1.63, correct? To 3.48, correct?

Yes.

So then what is the 1.06 to 2.23? Okay, I see what you're saying. All right. And then subtracting those two numbers. I was a math major, actually.

Yeah. And I know it's a bit confusing. I like Mary's analogy where that 1.06 or 2.23 is our budget and then the 1.63 to 3.4.

Well, I can add now that, as somebody described it, it's just Joe add here, but I didn't know if that was like some kind of wiggle room or something in case there was, you know, I don't know, inflation or something. But last question I have is going to these. In terms of not including potential savings for adding certain benefits.

We, you know, just kind of going back to the child hearing aid. And by the way, I understand sort of, you know, not being able to discriminate against age groups, although I think the.

I don't think there's any doubt that the medical necessities for a person who has lost hearing is different than a person who doesn't have hearing to begin with in the first place. There are two different diagnoses as they go on. The development is different. And I'm not really judging one over the other. I'm just saying is it.

Was there some kind of legal ruling or something that said it is discriminatory, some kind of regulatory ruling that said it is discriminatory if we were to choose to only cover children versus everybody?

Yes, the answer is yes to that. The Federal Government has come out and told other states, as Matt mentioned, that I think Rhode Island was one of the states, there may have been some others that had in their benchmark plan hearing aids for children only.

And the Federal Government said you cannot do that. If you have a hearing aids for children, you have to have hearing aids for middle-aged folks, seniors, if it's medically necessary. You also cannot say, we will provide this benefit for someone who never had hearing versus someone who had hearing and now has hearing loss.

It has to be condition agnostic. So if you add hearing aids, it has to be across the board, all conditions, all ages.

So is infertility diagnosis coverage only for women?

No.

Okay. So men can get this new benefits would cover men and women to be diagnosed infertility. But the treatment options added would only be for women in IVF.

No, that's incorrect too. So if you have a woman with diagnosed with infertility, she would have access to the services that are provided under the plan. If you have a male that's diagnosed with infertility, he would have access to the services that are provided under the plan as well.

Now, those services may be different because the individuals are different, but you cannot discriminate based on sex. It has to be infertility treatment for men and for women.

Okay, so the plan currently covers more. I think this goes back to the Senator's questions. I'm just really trying to key in on this a little bit the current. Because what I see being added here is infertility diagnosis, infertility, artificial insemination, which would not be applicable to men. And then the next one is infertility IVF cycle.

So does the current plan then have infertility treatments for men?

The existing benchmark plan does not. Let me think of a scenario where there would be a male. You could have a couple—male, female. The man is diagnosed with infertility, the female is not. Then the health plan is, the male would have collection of his gametes, creation potentially of embryos, and artificial insemination into his female partner.

Okay, I'm gonna have some. Outside of this, I'm gonna have more follow-up questions on that because I could dominate the time, but there is no inclusion of savings, basically. And is that in terms of if they get treatment on something now and there's future savings as a result of having treatment on something now?

This does not cover that. We can't calculate that into this. But is that sort of the way we do it or is that the way it's done in every state?

I will defer to MAPPA. That is the way the Federal Government sets it up.

Okay, that's what I'm wondering,

Again, we're looking at the richness of the quote, unquote typical employer plan, and that. So it's just the richness of the benefit. And it does not take into, as Matt said, you know, you're saving because you're spending a little money now to treat someone with hearing loss, but you're not spending money later to treat another condition.

Okay. But that's a federal situation, right?

Correct.

Yeah. And I would add, I don't believe it's black and white in the regulation, but through our conversations with CMS over the past four years in our applications, that is what we have kind of landed on. And I'd also be hesitant to go to CMS with an application with big savings and using that to fit in.

I'm not saying big savings. They won't say no if you don't ask.

Agreed. But I think that would kind of put the application in jeopardy, especially with a tight timeline, if there were to be pushback on those savings, which would then result in some benefits not being able.

All right, thank you. Thank you.

Just wanted to make clear for our committees what we are actually kind of have the ability to make decisions on and what we don't. Related. I want to go back to slides 12,14, and 15. So are we able to mix and match benefit ranges to get to our 2.23 maximum on slide 12, for instance?

Like, are we allowed to say we want the benefit range that's more in the 0.11% for hearing exam and hearing aids, but we want the, you know, the total allowable of 0.03 for infertility? Artificial insemination?

Yeah, so it does get a bit complicated. I apologize for that. The ranges exist for a couple reasons. One, such as IVF, there's benefit richness differences. And two, just to kind of give us some flexibility as we are defining these benefits and trying to make the pieces fit, if you will.

So where there is flexibility to change the benefit richness, we do have some wiggle room. But the other thing to keep in mind is if something is in this benefit pricing list and then also the typicality, those kind of move in lockstep, if you will.

So if it's in our budget and it's also in something we're trying to add, those need to move in lockstep. So the short answer is, in most cases, no, we can't pick the minimum on one end and the maximum on the other. But there is some leeway on certain benefits, such as IVF and wigs.

And then as we continue to go through this process of picking benefits and really defining the benefit, such as DME, we can get more narrow ranges and more discrete options.

So on the kind of, the benefit definition, if we go to 14 and 15, how does what you just said interact with the menu of options that we have available for infertility and DME?

Yeah, so the IVF is probably the easiest one to look at. That is a case where we could go down to kind of that lower end of the range by picking a less rich benefit.

As we look at DME, a lot of what's driving the range there is kind of the one, definition, and two, just the wide range of unit costs and utilization that we've seen. So also understanding how issuers may utilize utilization management in these scenarios and how the state would enforce that utilization management would help narrow these ranges further.

For example, if we're adding a benefit, it's, you know, the intent that members would use it and issuers, you know, wouldn't put undo utilization management on it. But oftentimes that does come down to the regulatory arm and how the state will enforce that. So I think those are some questions that could help narrow those ranges.

We're going to go with Senator Richardson's follow-up question. Then we'll go to Assemblymember Addis.

I just had a follow-up question and thank you Madam-Chairs for indulging me for that. The percentage of 2.23 or whatever that is, can that go up based upon potential benefits that would provide a greater savings or is that the maximum allowed that we can work within? I just wanted to. Because it wasn't clear to me in the material.

Yeah, that will be the maximum allowed that we can work with right now under the current regulations.

Okay.

Assemblymember Addis.

Yeah, this maybe is more better place for the next panel. It's a question on premiums and what wigs. Is that the next panel? Okay. And then I just want to clarify. I'll save that question.

Just clarify on hair pieces to make sure I understand what you said, that there is a range of benefit on hairpieces or there's a range that we could do within the changes if we decide to make changes.

Generally speaking, yes, I think it comes down to how that benefit will be defined in the benchmark plan and then also how the state plans to enforce that benefit definition since there is such a wide range of hairpiece unit cost.

So understanding better how that we would want that benefit to look and how that benefit will be defined and enforced would help dictate and narrow that range and whether that's going to be on the lower end or the higher end.

And when would we get that information to be able to consider, if we wanted to consider this, how and when would we get the information as pertaining to hairpieces?

Yeah, I think a decision would need to be made, you know, in these next few weeks on what that benefit would look like and then that would dictate where on the range that that benefit pricing would fall.

Maybe, if I can just clarify. Wakely has priced hairpieces.

Okay.

So you see the cost there and it's one wig per year. So that's what's already been priced. I think if there were maybe some other frequency or some variation on what would be covered under hair pieces, that's what we're really looking for the decisions today, is if your recommendation is to include hair pieces either at what's been priced or it's something different. That's really what we need to know quickly. Sorry.

Okay, so you need to know if we want something on hair pieces that is not reflected in what you shared with us.

Correct.

Okay. And the range of possibilities is where though.

Well, I think what they're saying is that they would have to know whether or not we want to do two wigs covered per year to have that priced out. But there has already been analysis around the type of hairpieces. Correct?

Wakely has already done that to be able to give us some underlying cost rationale for this, the overall allowed cost that's provided here. So I'm thinking that what the information that you want has already been gathered and it could just be having another conversation with Wakely to be able get that.

Got it. Okay, super helpful. Thank you for those answers.

Dr. Weber Pierson.

Thank you. Thank you, Chair. Thank you to the panel. I do apologize. I've been in Judiciary Committee, so some of these questions you may have already answered. With the Wakely determination of the cost, I noticed that there was a difference between what you projected or estimated versus what I saw under the Chapurb analysis.

Do you have an explanation for the difference?

Yeah, I can talk high level to that. One, how we are pricing EHBs and how we must in federal regulations will be on a total allowed cost. So the plan paid or the premium and then also the member paid. So slightly different bases there. The underlying data and methodology used differed slightly.

So we use, Wakely use some of their internal ACA databases and then where sufficient credible data was not available, we'd use public data and industry research and then try to gut check that against other industry research, other state's EHB and then also some of our large group data.

And then in often cases, especially for some of these more unique DME benefits and even IVF, there's really not credible ACA commercial data. So there's a lot of assumptions that go into that different public sources out there, especially as we're getting into the different IVF benefit ranges.

As you're looking, you know, what's the difference between seven transfers versus eight? It's really hard to get to that detailed data. So there's a lot of assumptions that go into that.

And then there's also the discussion of how are issuers going to use utilization management and other types of utilization management there prior auth step therapy items like that to kind of manage these costs. Those are other factors that can kind of go in and cause some variance.

And I think you know the wigs example too is another example of how much unit costs can really vary if we're using synthetic versus high-end authentic hair. So there's a wide range of unit costs and utilization on some more niche benefits that credible data doesn't exist for out there.

So I guess my concern with that is how do we know what we would be voting on or what we would actually be implementing? If you're providing one cost, another entity is providing a completely different cost and you say there's all these different variables into it.

How can we make an educated assessment of what should be done, if anything should be done, if we're getting different pictures from different entities?

Appreciate the question. I think there, again, they are on two different bases. So we are going to get even with the same data we would get two different estimates as one's an allowed total cost and another is a plan paid premium.

And then there's also different methodologies such as, you know, we're looking at this kind of steady state and then premium impacts are also going to vary if this goes forward and during rate review you'll get a different premium impact from each issuer as they vary by all these things as well their own internal data.

So you're definitely going to get different price points with each one as they look at their morbidity, their anti selection, their assumptions on utilization management. But we do believe that what we've put together are reasonable estimates.

We have provided ranges to try to capture some of that uncertainty and we believe this would be defensible with CMS and has followed similar practices that we've put forth in our prior successful applications of ehp.

Are the presenters from the first presentation. Okay, great. Thank you. Thank you. So this may have been asked already, but, you know, one of the questions that I'm having about this and just a lot of things right now is, you know, we have a new Administration that has done a lot of things or has signaled that they plan on doing a lot of things.

And you know, his first day in office, our, our current President revoked Biden's Executive order from 2021. The order was entitled Strengthening Medicaid and the Affordable Care Act. And we know that our Exchange Health Benefit is tied to our ACA. And there has been multiple conversations from this individual about revoking that, changing that.

How is that going to position potentially impact what we're trying to do here with our Exchange Health Benefit program? Are we even going to be able to change anything? Is it something that we should be looking at at this point, considering the fact that this Administration, who would be approving this is really hard to predict.

Yeah. No. And maybe I'll just say I think CHBRP will be talking about the premium impact. We actually have not had that presentation. And then Covered California here is here as well. To talk about the potential impact to Covered California. I will just say I think there is a lot of uncertainty. We don't know.

I think the thought of increasing premiums, even I think, you know, five to $7 is not insignificant for many families. Thinking about the potential impact of subsidies and other things that particularly could impact the individual market and those on Covered California, this would be, you know, adding on to whatever those changes would be.

So I think collectively it's something that weighs very heavily on us and we should all be thinking about. But it might be helpful to get through CHBRP's analysis of the impact of premiums as well as Covered California's.

I will just say, you know, on Matt's comments about the comparison, I mean, I think we could maybe revisit that after the CHBRP presentation. But I think the PMPM analysis that's in Wakeley's analysis is a little bit different from the premium impact and CHBRP's analysis.

So they're not quite apples to apples, but I think hopefully you'll be able to walk away with a General sense of what would that impact be to consumers on a monthly basis and then, you know, just contemplating the unknown of what could happen at the federal level that could add to that. So I hope that kind of answers your question, at least for now.

Yeah. Thank you.

So if, if we choose, if we chose not to do anything with our Exchange health Benefit Program at this point, would we have the ability in the near future, next year, two years, three years, to then go back and decide that we want to make some changes if we chose to just kind of wait during these very uncertain times?

Yeah, no, and I think I alluded to this a little bit in my opening remarks. But we don't have to change our benchmark plan. It will essentially stay in place until such time as CMS approves a new benchmark plan.

And so there is this time frame that every year in May, you have the opportunity under the current requirements to submit a package to change your benchmark plan. Unfortunately, there's about a two year lag for it taking effect. So if we were to not submit this year, it would not take effect in 2027.

We could revisit this again in 2026 for a 2028 effective date. Again, lots of uncertainty. This whole process could change. But for now, with our existing process with the Federal Government to change a benchmark plan, you have this opportunity every May to submit.

Thank you.

I think, Senator Menjivar, you want to have some final questions for this panel before we move on.

Thank you. Matt, can you explain to me because we're trying to pinch pennies here. Right. There's an other part under DME on the augmented communication devices. What does other stand for?

Yeah, that's a good question. So we basic, I believe we were asked to break out the high tech augmented communication devices. So we did some industry research just on identifying those CBT codes and those costs for those high tech ones and then others just kind of our catch all bucket for those. I don't have a great definition of those right now, but I can definitely follow up with more information.

Be great. Just as we're looking to see if we want to even further pick and choose within each category, it'd be great to know what we're picking and choosing.

And then under IVF on your screen, Matt, you when you shared plan A, B or C, you had surrogacy not covered for C, but what was given to us has it covered for C. I just want to get clarification on that.

Yeah. So our option C, I do believe we did have surrogacy coverage listed as yes in that option C and just want to be clear and that there's some text at the bottom of that slide as well that that is just covering the IVF medical care for that surrogate and it does not include a payment to the surrogate for carrying the baby.

Okay. Because you had language on the screen. It said surrogacy not covered under plan. C.

Okay, I'll have to check on that. But I.

It wasn't chart. It was like it was in blue ink.

Oh, was it the next. The cost of the surrogate not covered. So maybe a better phrasing of that would be the payment to the surrogate for carrying the baby. Thank you. Was not covered. But the surrogate isn't covered. Clarify that in subsequent.

And then can you. I know we've been talking about discriminatory. Discriminatory language and moving away from that. You know, I see South Dakota has ABA treatment therapy for treatment for those with autism. And they specifically point out those with autism. Is that. Is that. I'm saying that's allowed.

So I have to triple check. I think South Dakota may have been one of the earlier ones in 2020 or earlier in the process. And I think CMS did not make their big discriminatory push at. At that time. So I think that would get flagged in the future by cms.

But CMS also has allowed some leeway if you really want to spell things out or signal a certain way. We have seen CMS be a little lenient on language, but nonetheless the coverage would have to be non discriminatory. So I think that would be ABA coverage as medically necessary, if that.

Thanks. And. And under DME, are we taking into account step therapy for different items or like if you need a wheelchair before you get to a motorized scooter and so forth?

Yeah, to the best of our ability. We've tried to incorporate that. I think that's absolutely one of the drivers of difference in cost estimates that could occur. Not only the unit cost of things like wheelchair, huge gambit there. But also the type of utilization management that's being implied by issuers and enforced by the state.

I know Dr. Weber Pearson asked this question regarding what's at stake, the potential, a lot of it is unknown and neither maybe you, Director or Matt can answer. But is there a scenario where we go put in requests and they can even decrease their current benefits that we have now? Are those untouchable?

So the law says they. If they don't approve a new benchmark plan, the current benchmark plan stays in effect. That's what the law says. Don't know what might happen.

Thank you. I get what you're saying. It's a full response. Thank you. I think we can move on now to panel number three.

Good afternoon. Can you hear me?

All right. On the third panel, we are going to be hearing on premium impact and what other states are doing. We have here chapurb, also known as California Health Benefits Review Program.

Thank you very much. Can you hear me? Is it coming through?

Try again.

Can you hear me? Really lean close. Okay. Good afternoon. I'm Garen Corbett, the Director of the California Health Benefits Program.

You're gonna have to. Why don't you put.

Just go like this. Yes, sir. I'll just hold it.

Yes Okay.

I want to make sure that folks who are watching online can hear what I'm saying. So thank you. My presentation is going to load in a moment, but again, I'm Garen Corbett, the Director of the California Health Benefits Review Program. I am not an actuary. I just want to make that as my first caveat. But I'm bringing lots of actuarial analysis to this hearing, so.

Okay, let's see. And I think our presentation is loading up.

It's going to. It's hard hearing you, sir. Sure. Yeah. I'm just waiting for the. Okay.

Okay, so moving into the first slide, just as a recap for those of you who are new to CHBRP, we are independent. A program based out of the University of California for the last 22 years has provided unbiased independent analysis directly to the Legislature.

We are represented by a core team based out of UC Berkeley, and we work with 35 to 40 faculty researchers across the University of California. We are known for speed. Our analyses, which many of you have probably seen during sessions, are done in 60 days or less on introduced legislation. Typically.

We also have a host of other resources on our website. This is an unusual example of speed in that we have completed this analysis with our actuaries in two weeks. Our role is to provide value directly to you and offer rigor. Next slide. So a couple of caveats.

I just want to underscore that our table that we're going to go through was undertaken again in under two weeks. Wherever possible, significant reliance was placed on prior work that we have done with our actuaries or drawing from similar coverage in other states. We assumed no coverage of any benefits at baseline. So this is an important context.

When you look at analyses that we do for the Legislature on an introduced Bill like IVF or other topics in that 60 days, we're able to query each of the health plans by market share to see where there are gaps in coverage. So we do that. It's called our baseline coverage calculation.

So 30% of the large group market may have coverage. 70% doesn't. Different ratios in the individual, small group and large group by regulator. And then we calculate that marginal or incremental impact in calculating the total expenditures. This is really just looking at assuming zero coverage. What would be the premium impact or the estimated cost.

We have not performed a detailed comparison of Wakely's definition of these benefits to ours since our analysis was done yesterday, although we have been trying to dive in and answer questions from staff and others yesterday. So with that, let me jump into the next slide. Our analytic approach. The actuarial analysis provided today was led by Milliman.

Some of you may recall that Milliman worked with us and Covered California in the last two analyses around essential health benefits benefit benchmarks. We've done a couple of those analysis over the last 10 years. Now Milliman provides the actuarial services component of each CHBRP report and that's a requirement set in statute.

This analysis uses Milliman's Consolidated Health Sources database, which is a proprietary database. Similar Wakely mentioned that they have their own proprietary database database and each actuary sort of has different tools with which they are looking at different claims and getting different inputs to make the magic happen, so to speak.

Now, for benefits that are already in other states, EHB plans, we looked at utilization levels from that state, but then calculated the unit cost from California for newer benefits that are still emerging. And this is to my colleague's point, some of these are really quite new and there's not a lot of credible information.

We used estimates for unit cost and utilization to develop those potential costs. Next slide. And so our table is going to provide key fiscal impacts based on the. Again, this is for the silver plan on a per Member per month basis. And so this is, you know, again, so that per Member per month.

And if you want that total number for impact on premiums for the year, you multiply by 12. And then the estimated premium increase also includes both the medical benefits that's in question as well as the administrative costs.

So for every dollar that you increase premiums, 85% of it or so would be for the underlying benefits that you're paying for. And, and 15% is administrative profit and whatever else goes in that component. So I just want to call that out that our numbers are sort of 100%. And I don't.

It's one thing for us to double check with Wakely to see if they use that same methodology. Next slide. And so here are the fiscal estimates that we came up with. Again, I just want to underscore that these are estimates based on the Silver plan for hearing aids.

We assumed that utilization would be on average about 25% of enrollees accessing that benefit per year. It seemed reasonable in that for adults generally the warranties are for about five years. Sorry, for four years. For children they're for five years. And again, we also relied on earlier CHBRP analyses on this topic. For hair pieces.

I just want to sort of call out that we. We did a recent analysis, I think it was just last year. But we also incorporated for male pattern and female pattern baldness, which was not in our estimates the last time we looked at this and we came up with a 31 PMPM estimate. Do want to underscore.

Sorry, I skipped past the hearing aids. For those who are trying to revisit the small screen, it's $1.52 per Member per month. Next is chiropractic benefit. We based our estimate on a 10 visit a year limit. I think that's important. There's different methodologies.

There are assumptions about the number of visits that would obviously have a different impact on what that premium amount would be. We estimated that at $0.78 per Member per month. Next is durable medical equipment under sort of the General category. This including things like cpap, walkers, wheelchairs.

Yes, electric wheelchairs was a question that came up in electric scooters. I do want to underscore that we assumed that plans would utilize step therapy and that it, you know, would in fact probably be a bit difficult for people to access those very expensive electric wheelchairs and scooters.

That that there would be steps that people would have to go through to get that coverage. We estimated that coverage at $1.64 per Member per month. Next is the DM. How we bucketed it was the durable medical equipment augmented communication devices. This is really around synthesized speech devices.

And this has a 3 cent per Member per month estimated impact. The next bottom on the left column is the neuromodulators at a penny per Member per month. And this is some of these treatments are things like for depression, an electric treatment. And then finally what we've been talking a lot about today is infertility.

We estimated that impact to be at $5.36 per Member per month. Again, I want to underscore, I think one thing that I didn't hear as one of the potential differences between some of these estimates are assumptions around medical trend between now and 2027.

I want to underscore that in past analyses that Chirburb used, we were looking at not too long ago at like 4% medical trend. These estimates and I think what we're going to be using in our CHRRP analysis for this coming year, even for benefits in the year upon implementation, is like a 7.58% medical trend.

So something to sort of keep in the back of your mind as to why these numbers might be starting to look higher than even some of our recent analyses is not only is the underlying population changing, but the actual trend rate that we're building these premium estimates on are going up significantly faster than they have not too long ago.

And so with that, I think I will turn it over to my colleague as we give you insights about from other states.

Great. Go ahead.

Just kidding. Good. All right. My name is An-Chi Tsou. I'm a principal analyst with the California Health Benefits Review Program. Next slide on that presentation I think. Awesome. Great.

And as my colleagues did, I'm going to give an overview of a comparison of how other states compare to the options that you are considering in the new EHB benchmark plan. So next slide. So since 2020 there have been 11 states and the District of Columbia or D.C. that have updated their EHB benchmark plans.

So we took a look at all of the benchmark plans that are available right now for all 50 states and DC to see what has been up to and the changes that have been made when if you are looking at the updated plans since 2020 that have and what they have actually updated in their plans, there have been five states and D.C.

that have updated at least one benefit that California is also looking at. And I can give you details if you really want later, but we'll get through the presentation first. Next slide please. So for this overview there were six benefits that were looked at.

One was adult dental, which was defined as routine or basic dental care and services for adults. Cranial prosthesis, also known as scalp prostheses or medical wigs or hairpieces chiropractic care, which is also known as spinal manipulation hearing aids, regardless of the age of the enrollee.

But there was also information that it was included on pediatric cover just as a comparison to see the states that have done it before the discrimination regulation, just so you have that information. And then we also looked at infertility tests, treatments and services.

I will make the caveat that we did not look at all three of the specific options that were laid out by Wakeley because the differences in the options covered by each state are very different and that would have taken very long Time. So, moving on to the next slide. For adult dental, it is very straightforward.

No states consider adult dental and EHB in their benchmark plan. Next slide. For chiropractic care, there are 45 states and the District of Columbia that consider chiropractic care an EHB and include it in coverage.

The states all differ in the quantity limits and the frequency of visits, but it typically ranges between 10 and 40 visits per benefit year. I will say that not from a technical analysis, but most of them were somewhere between 20 and 30, though it was 10 was on the lower side. Next slide.

For cranial prostheses, there are 17 states that consider coverage for cranial prosthesis and EHB and included in the EHB benchmark plan. The terms and conditions of this coverage does vary between the states, with some states being more specific and only covering specific conditions.

A lot of the states only covered if the enrollee had undergone cancer treatment or radiation therapy. And then there were other states that specified that the enrollee had to have a diagnosis of alopecia areata or second or third degree burns.

Again, this goes to Matt's previous point about the old regulations being in effect when those benchmark plans were implemented. There are five states at this time that are in green on the screen that did not specify any particular medical condition was necessary for eligibility for this coverage. Next slide please.

For durable medical equipment, we only looked at wheelchairs specifically just in the interest of time. There are 28 states right now and the District of Columbia that explicitly include wheelchairs as a type of DME that's covered under their benchmark plan.

Other states may actually cover wheelchair access and equipment, but within their benchmark plans, they did not explicitly say that wheelchairs were a type of DME that was covered and so they were not included on this map. For those states that do cover wheelchairs, there is again differences in terms and conditions of that coverage.

For example, some states require prior authorizations cover for the lowest level or type of wheelchair that is available, and some states do not cover any customizations whatsoever. Next slide please. For hearing AIDS, there are 16 states right now that include hearing aids and exams regardless of the enrollee age in their benchmark plan.

And then there are 13 states that include coverage for pediatric enrollees. The ages for that pediatric coverage do vary where some states cover up to 18 and some states will cover even 19 through 26 year old enrollees, but they have to be enrolled in an accredited institution for higher education. Again, this goes back to that because.

They were grandfathered in. They didn't have to include all ages?

Yeah. I think that. I can't remember what you said when the new regulation came in, but if they were going to update their benchmark plan, they would have to update that again.

The terms and conditions of the coverage for the hearing aids does vary between states, but in General they cover one annual exam and then one hearing aid per ear for every one to three years of benefit coverage. Next slide. Finally, for infertility, there are 21 states and DC that consider infertility treatment.

In EHB, the benefits for infertility treatment vary a lot between the different states. There are seven states that currently only cover diagnosis and testing. And even within this, there was a little bit of differences. There are some states that will only cover that diagnosis of infertility.

There are other states that will include treatment of the underlying cause of infertility, but then not actually provide any infertility services to help with conceiving a child. One state, North Carolina, does cover diagnosis and treatment, sorry, in testing rather, and some prescription drugs for the infertility. Another eight states cover all of that in addition to artificial insemination.

And then finally another five states and DC include artificial insemination, all of the diagnosis and testing and the drugs and in vitro fertilization. And again within that, there are variations in terms of who covers storage and different freezing and other techniques that are considered advanced reproductive technology. And that is it. Open to questions.

Thank you so much. I'll kick it off with some questions here on your infertility. I know. Well, actually, let's back up. You go to the slide that has the numbers of the approximate amount per Member per month of premium increases. I know this is not period, kind of, this is the amount. But essentially we could just.

This is what we would add up. And essentially that's how much it would increase in premiums. Correct?

Correct. If just one thing to sort of consider that we, we built this model on the analysis that we did. So it was on the SB 729. So if you change the sort of parameters of the coverage, obviously that would have an impact on premiums.

So the $5.36, the infertility services are everything that's covered under SB 729.

Correct.

Great, thank you. And then. Sorry, my other question was regarding. I've lost my questions. Here we go. You answered that one already. Can you. Are you. I don't know if you're able to share with us when was the last time premiums increased? Or maybe this is a Covered California question.

Sorry, not sure. What? Each year. I'm sorry,

Just the last time premiums have increased. I don't know if you. In any of your analyses that you've done. Okay. They increase every year.

Yeah, generally. I mean, every now and again there could be a blue moon. And prices have occasionally like three times in the 30 years I've been in health policy have declined year over year. But generally the pressures are upwards, not downwards.

Okay. And then we're essentially, and I was looking at this, the sheet that you were going over, we're essentially talking about adding benefits to 12.1% of Californians.

Correct.

And of those 12.1% are everyone. Would everyone be eligible to see an increase if. Should we add these benefits.

Assuming that, they are able to afford and maintain coverage? Right. So there's one of the uncertainties. I know that Senator Weber talked about the new Administration, but the issue of the premium subsidies from the Federal Government would have, I think, a direct correlation with affordability for people being able to maintain coverage. So that 12.1% group could decrease. Right.

Because fewer people would have coverage, which then might make some of these premiums actually higher because of the way the risk profile, the risk pool might be changed.

And then I know dental has been brought up and I know you share that no state has added dental. Why do you think that is?

I have a couple of thoughts and then I'm happy for my colleagues to turn over, but we were asked by the by staff to try to look at dental in two weeks. We just couldn't do it. But a couple of things.

One is that typically you would see in dental plans that employers have a dollar cap like a 1200 or a 1500. You couldn't do that embedded in health insurance because you can't have dollar caps under an ACA plan. So I think that's one real strong reason why that hasn't move over from other states.

Okay, thank you, colleagues. So someone add to that, Matt?

Yeah, I might add to that. I think the recent gonna miss. Miss the year. But in the past 18 to 24 months, there's been new regulation that allowed additional flexibility for adult dental.

So I think that's something that's new and California's kind of taken the first pass at that, that other states haven't had an option or hasn't been an option in the past couple years.

Any other questions? I just have one question. In the presentation, you indicated that 20 states cover some sort of infertility treatment as an EHB. Do any of those states cover surrogacy as a benefit.

Anyone else?

I would have to double check, but I can get back to you on that. Okay. Most of the ones that I looked at did not. And similar to what Matt was saying, they also did not provide payment for the surrogate parent.

What about coverage of donor sperm and eggs?

Donor sperm and eggs I did see. I would have to double check on the number of states that did that though.

Okay.

And I know Matt answered this about not looking at the potential savings. Did CHBRP look at potential savings?

If we add benefits, we too sort of use the steady state, but typically it's, you know, so in short, when you're pricing premiums for coverage in the sort of two years out or the year out, very seldom are there cost savings that get materially factored into the premiums. And so we did not look at that.

I can think of, you know, a half dozen reports over the years that we have done where we were able to find an offset from the literature to sort of materially adjust our premium estimates for introduced mandate Bill.

It does happen, but for this exercise, you know, sort of a decision support exercise, it was really about calculating what reasonable assumptions would be for the premium impact. So, you know, sometimes there are savings, but the question is who are the savings to?

Might be to other parts of state government, other social services outcomes for the family, but it doesn't show up in premium.

I think one of the major challenges that we have overall is that we very rarely actually within additional health care savings account for the savings that we have when we're engaging in more preventative aspects of care. And it's one of our greatest downfalls in our healthcare system.

I know we've been talking about it, but if you can, Matt, the IVF differences in the calculations, can you give it to me? Can you explain to me one more time? It just seems like we have a greater cost in your analysis to yours, Matt.

I believe our range of 0.61 to 0.87 enveloped their estimate of 0.76. So I do believe we're somewhere in that range for.

So you're on the higher end of this range is what you're saying?

Yeah. And we are pricing different benefits, but I believe they're closer to our higher.

And can you tell me what did you add that wasn't calculated in this one or what did you not add?

I would have to do a better comparison to tell you I know what's different between the options we priced, but I don't have the. The exact differences between our option C and what they priced.

Okay. And I do think just to add that the even sort of differences in assumptions about underlying trend out two years may be enough of that difference even before we get into comparison of exact benefits.

Yeah. And again, these are all good points. Again, we're talking two different calculations as well. Allowed cost premium with admin. So there are, it's apples and oranges as well. But I am comforted that generally speaking they're, they're still in a ballpark range. Great, thank you.

Can I just ask a clarifying question on this point? Because we've had it raised in several different panels. We're submitting an application to CMS that will get reviewed by cms. What cost assumptions will we be including in that application?

That will be the allowed cost that is included in our analysis. That's what is required in the EHP federal regulations. So it's absolutely important to keep in mind the premium impacts as well. But those will differ and then they will also differ from each issuer, I would imagine as well.

And you've successfully, your analyses have successfully been included in other applications from other states, correct?

Yeah, Wakeley has. I've signed, I believe, four other states successful EHB applications. And all those are on the allowed cost basis that CMS requires.

Okay, thank you.

Thank you. So along those lines. So with your analysis looking at the allowed cost, it's allowed within.

Senator, I called you Assembly Member.

Oh, I didn't even pay attention to that. Okay, I'll take either one. That's fine. Anyway, it's allowed within the exchange health benefit range. Right. That's when you're talking about allowed cost.

Yeah, when we're talking allowed, we really mean plan paid and Member paid together.

Okay. But at the end of the day, what the patient consumer is going to see is the actual allowed plus the premium.

So I think it'll be complicated. And they're going to see the premium on a PMPM basis, on a monthly basis. Right. And then they'll also incur their cost sharing and that cost sharing will also vary by the plan selection they have. And just the metal tier as well.

Bronze is going to have really high cost sharing with a high deductible, high moop platinum plan. If maybe a gold plan will have more rich cost sharing. So that Member is going to have lower cost sharing there and there's also going to be plan plan variation on how they kind of impose those.

But the Member will, a Member utilizing the new services will have cost sharing that's going to be dependent on their plan selection. And metal tier selection and then also the premium impact there.

So I guess from our standpoint, because, you know, we're. We're having to take into account everything because we are accountable to the residents of California and cost is a huge issue today. How are we to make these decisions if there's. So again, I've asked you this before, but there's so many different variables.

So if we're going down this road, like one. One road, and we come back and we find out that at the end of the day now our constituents, you know, premiums and everything and subsidies are gone because the new Administration have gone up significantly higher.

I mean, we definitely don't want to increase the cost of a very costly system. So how are we to make, like I said before, an educated decision in this space?

Can I just. I'll build on that question a little bit and just put it within the framework of timing and procedure. So we'll at some point have the ability to have this application submitted to the Federal Government. They will review that. I think that there is. We're unclear.

It is my understanding we are unclear about the timing associated with their review and then we will essentially have an opportunity at that point to accept whether or not we want to implement that.

Yeah. Historically, the submission has been in May, and I believe the review has wrapped up between August and November. So what's that, three to six months later? That's. The historical timeline could be different. We have seen states change, alter that application in one way or another during that review process.

I'm not sure I saw anyone do it after the review has been completed and the benchmark plan has been approved. I'm not 100% sure if that's possible after that review. I'd have to check on that.

My understanding is that once CMS approves the new benchmark plan, assuming they did, that would now be the new benchmark plan for California. So we're committing if we submit an application is what you're saying. I think you're committing if you submit an application and the application is approved. I don't know if Matt has had.

I haven't seen this happen, but presumably a state could potentially withdraw the application during that process rather than, you know, continuing to have the application move through with cms. But once CMS approves the new benchmark plan, that. That is the new plan for the state. Okay.

I would just encourage probably an open line of communication if there's any uncertainty with cms. They've usually really good with working with states on this.

Director Corbett CHBRP was involved in the previous EHB conversations and did an analysis there. How did it compare to reality once everything was put into place?

How close was your analysis then and how did you and if it was on point or it wasn't, how did you alter I know this one's a different it was a two week time period that you had but were there anything that were taken into consideration from the first one?

That's a great question. I mean the world is different so I mean each of these pieces have some variations that are a little bit different. I would say it's sort of at a high level. Nothing jumped out as wow, this is so surprising. Other than that I think the underscoring the assumptions around trend are so much higher.

So some of these premium impacts sort of pop a bit higher because the cost of health care, the cost of these services projecting out two years during a period of rapidly increasing medical care cost trend are higher. So that's the thing that sort of jumps out to me the most.

So are you saying that perhaps from lessons learned you're being more conservative and doing a higher trend because of that's what you learned back then?

No, I'm not. It's just that what we're experiencing right now and what we're sort of anticipating over the next couple of years is a period of higher healthcare costs. The trend is growing faster than it was when we looked at this in the past.

Okay, Any other questions? Such a Before we move into our last panel, back to you.

Thanks. For our last panel we'll have a conversation about EHB expansion impact on Covered California. Doug Mckeever from the Chief Deputy Executive Director for Programs of Covered California is here to present.

Thank you very much and thank you to the co chairs Members of the Committee. We greatly appreciate the opportunity to be here today. We also want to thank the Newsom Administration and the full Legislature for really fostering this dialogue. There's been a lot covered today, much of which I was going to cover.

So for the sake of time I'm going to get to the point which is Covered California views everything through the lens of affordability, access and quality. And I'm going to focus on the affordability equation as it relates to the discussion that we're having today, specifically the cost impacts.

I also think it's important to note that as of today we have not done an assessment financially of what the premium impact will be if any or all of the considered benefits are included. That'll be something that we would have to do later once we understood what the actual benefit changes are.

And as been noted, every plan is going to be different based upon their particular membership, how old the individuals are, where they live, how long they've been in the plan, are they younger, healthier, are they older, sicker. So all of those variables will be something that we will take into consideration if and when that time comes.

I also want to state this in a very positive, intentional way. Actuaries tend to be very conservative. I've been negotiating rates now for 20 years, and I will tell you, the actuaries that we deal with on an ongoing basis view this through more of a conservative lens than not, which means that what they may be saying, the prices are tend to be a little bit higher than what they might have anticipated.

So I would just keep that in mind. What we know today. Senator Weber, you've talked about uncertainty. There's a lot of that right now on the federal level. And I'm going to speak to what we know today and the impacts to covered and then translate that to the dialogue of this afternoon.

So we know that there are enhanced subsidies that are set to expire at the end of this year. Right now, 90%, almost 90% of our enrollees receive funds federal assistance in order for them to afford the health benefits that they receive through us.

I'm pleased to say that our open enrollment just concluded we are at nearly 2 million consumers. That is the largest consumer base that we have covered since we've opened our doors. Much of it has to do with the federal financial assistance and the enhanced subsidies that have been provided to our consumers directly.

I also want to note clearly the Legislature and the Governor also approved additional state enhancements which have also helped our consumers afford health coverage more than ever before, generating that nearly $2 million figure. So we've done some analysis. We've looked at what would happen if those enhanced subsidies were to go away.

We're looking at potentially losing 400,000 consumers. Where would they go? Most likely being uninsured. We don't want to go backwards. And that's the that is the potential risk that we are currently looking at if those enhanced subsidies are not extended.

I want to give you some specific examples of what that really means to the person who is receiving those enhanced subsidies today. For lower income enrollees, those who are earning less than 400% of the federal poverty level, they could see their average monthly Premiums rise from $121 a month up to 191.

Those earning between 150% and 200 of the FPL could see their premiums double from $68 to 1:36. Older enrollees, those who tend to be a little bit more unhealthy and seek additional care, would see the highest premium increases from $219 up to $364. And these are monthly premium figures.

Middle income enrollees earning above $60,000 a year could lose all premium subsidies and bear the full cost of coverage. Most concerning are communities of color which would be disproportionately affected with Latino enrollees facing an 80% increase and black and African American enrollees seeing a 67% increase in their premiums.

So obviously without the continued federal subsidies, even modest premium increases from an EHB expansion could drive consumers to no longer have health benefits through Covered California. Obviously this could result in continued reduced consumers with Covered California. When that happens, that could weaken the risk pool.

Again, if you have older sicker individuals in the pool as opposed to the young and healthy who choose to leave, that will have an impact on the premiums when the carriers price for the upcoming plan year.

And then it also could reduce our ability to effectively negotiate with the health plans given the fact that they've lost membership and so they're going to want to reflect that in their pricing strategy. Expanding EHBs has the potential to improve access to care, reduce the long term healthcare costs and enhance marketplace stability.

However, we believe any expansion must be carefully evaluated to balance consumer affordability with those benefit enhancements. We remain committed to working with policymakers to ensure that any changes to the benchmark plan project and protect consumers and sustain an affordable high quality insurance marketplace. Thank you.

Thank you. Do any of us have any questions? Senator Menjivar.

Last year we were able to, for the first time or two years ago now, I think, utilize the Fund to offset deductibles and premiums and so forth. If we were to choose these and we increase premiums per month, could that Fund offset the increases in premiums?

We'd have to do an analysis to see how the dollar for dollar that would be impacted. I will tell you that the enhanced subsidies and the federal subsidies that come into California equal about $2 billion.

So there's no way that the existing state monies would be able to offset the dramatic decrease that we will see from the federal dollars.

If it, if we don't see a decrease and we continue to get those ACA subsidies and we increase premiums with the benefits we choose, and we're continuing to utilize the Fund to offset those, there could be a world where that Fund could offset the increases in these premiums.

We would have to do the analysis to make that determination. But that, that process that you just outlined would be much more feasible than if the subsidies were to go away, right?

If the subsidies were to continue, would those beneficiaries also see an increase? Should we see these, should we accept these benefits? Because I know it's not eligible for. Not everyone under cover of California has those subsidies. Correct.

About 90% currently receive federal assistance.

Okay, so it's not. These premium increases could impact everybody, not just the people that aren't on the subsidies or obtaining it will impact every single individual in our plan.

And the ones that don't receive the subsidies will have the highest impact because they're not receiving any assistance to lower the premium for them on a monthly basis.

But even if we don't do anything, that fear still exists that at the end of 2024-2025 those subsidies can go away if we do something or not.

That's correct.

Dr. Weber Pierson.

Thank you so much for, for that presentation. So, just to kind of piggyback, I mean, at the end of the day, we don't control whether or not the Federal Government will extend the subsidies. Correct?

We do not. However, I would strongly suggest that not only you all as elected officials, but others play a strong advocacy role right now to ensure that individuals at the federal elected level understand the impacts to them. In fact, our Executive Director, Jessica Altman, is in D.C. this week doing just that.

So we, we are strongly providing as much technical assistance as possible so individuals understand the impacts, like those that I read to you this afternoon, that they fully understand what the impacts will be to their constituents, right?

No, that is definitely important. But if the. So I guess the question though is if the subsidies go away and we have not done anything to expand our Exchange Health Benefit Program, there will be an increase in cost, but not as much as if we expand our Exchange Health Benefit program.

Yeah.

I believe that's correct.

Okay, thank you.

Do you capture or do you have information of the lives you have coverage for any complaints of benefits they wish to be covered? Do you hear from the beneficiaries?

Typically, no. We do do annual surveys and there might be some information in the surveys that we could glean from on what benefits they would like to see that they are not currently offered. But typically, no, we don't get information from the consumers directly on what benefits they want added.

And so I hear you correctly, worst case scenario here is that subsidies expire and we increase this. So that's double premium increases. That's your worst case scenarios for your beneficiaries?

It would be our consumers worst case scenarios, yeah. For your beneficiaries, yeah. Yes.

Okay.

Just to kind of put into perspective, the ACA is wildly popular amongst United States in states red and blue across the state. I think last polling had something like 68 to 70% of people being very happy with the fact that we had the ACA with all of our subsidies to keep us from.

We obviously need to be conservative and aware. We also need to, as you said indicate, push on the advocacy front so that that doesn't come to be the reality that we're facing.

We're all kind of living with that reality every single day, very aware of the number of people who would essentially lose coverage altogether and the impacts that that would have on our state as well as for some of our other programs to depending on the federal administration's approach.

And we also have this opportunity to be able to move forward an agenda in the State of California and have some ability to be able to toggle should things change.

So I just want to get much more specific about your opening statement, which I think I heard was you haven't done any analysis right now around the cost impacts of EHBs to your range of consumers.

Yeah. We have not taken the time to not only speak to each one of our 12 health carriers who we contract with. We have also not had the opportunity to speak with our consulting actuary in order for them to tell us what might be the premium impact if these benefits were added.

Okay. How. What do you need to be able to do that? What would the timing need to be associated with that. And would it be possible before our submission?