BILL ANALYSIS
SB 1555
Page 1
Date of Hearing: June 15, 2004
ASSEMBLY COMMITTEE ON HEALTH
Rebecca Cohn, Chair
SB 1555 (Speier) - As Amended: June 7, 2004
SENATE VOTE : 26-12
SUBJECT : Maternity services.
SUMMARY : Requires every individual or group policy of health
insurance, as specified, to cover maternity services, as
defined. Specifically, this bill :
1)Makes findings and declarations, including:
a) Health care service plans are required by the Knox-Keene
Health Care Service Plan Act of 1975 (Knox-Keene) to
provide maternity services as a basic health care benefit;
b) Existing law does not require health insurers to provide
designated basic health care services and, therefore, they
are not required to provide coverage for maternity
services; and,
c) It is essential to clarify that all health coverage made
available to California consumers, whether issued by health
care service plans regulated by the Department of Managed
Health Care (DMHC) or by health insurers regulated by the
Department of Insurance (DOI), must include maternity
services.
1)Requires every individual or group policy of health insurance
that covers hospital, medical, or surgical expenses that is
issued, amended, renewed, or delivered on or after January 1,
2005, to cover maternity services.
2)Specifies that maternity services include prenatal care,
ambulatory care maternity services, involuntary complications
of pregnancy, neonatal care, and inpatient hospital maternity
care.
3)Exempts from the provisions of the bill Medicare supplement,
short-term limited duration health insurance, vision-only, or
Champus-supplement insurance, or to hospital indemnity,
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hospital-only, accident-only, or specified disease insurance
that does not pay benefits on a fixed benefit, cash payment
only basis.
EXISTING LAW
1)Provides for the regulation of health plans by DMHC and for
the regulation of health insurers by DOI.
2)Requires health plans to cover a number of basic health care
services and permits DMHC to define the scope of the services
and to exempt plans from the requirement for good cause.
3)Provides that "basic health care services" includes: a)
physician services, including consultation and referral; b)
hospital inpatient services and ambulatory care services; c)
diagnostic laboratory and diagnostic and therapeutic
radiological services; e) home health services; f) preventive
health services; g) emergency health care services, including
ambulance and ambulance transport services and out-of-area
coverage; and, h) hospice care.
4)Through regulations, includes maternity services among the
basic health care services provided as a condition of health
plans' licensure.
5)Prohibits health plans and health insurers from issuing
contracts and policies that contain a copayment or deductible
for inpatient hospital or ambulatory care maternity services
that exceeds the most common amount charged for the same type
of care and services provided for other covered medical
conditions.
6)Prohibits health plans and health insurers providing maternity
benefits for a person covered continuously from conception
from attaching any exclusions, reductions, or limitations to
coverage for involuntary complications of pregnancy unless
those provisions apply to all of the benefits paid by the plan
or insurer.
FISCAL EFFECT : Unknown. This bill was approved by the Senate
Appropriations Committee pursuant to Senate Rule 28.8.
COMMENTS :
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1)PURPOSE OF THIS BILL . According to the author, affordable
reproductive health care coverage continues to be an obstacle
for many women who purchase their own insurance in California.
This lack of coverage for prenatal care, delivery, and
perinatal services can have serious health and cost
ramifications for both the mother and the baby. One of the
latest trends in the individual insurance market is for
insurers to exclude maternity care within their basic plan
benefits in order to sell cheaper products to target
populations. This bill prohibits this growing practice and
ensures that pregnant women who purchase their own insurance
because they do not have employer-group coverage can obtain
affordable health care coverage in California. Pregnant
women, who pay for their own insurance, should be treated the
same as pregnant women whose employers pay for their insurance
and are regulated under Knox-Keene.
2)BACKGROUND . A number of studies have shown that comprehensive
prenatal care services are cost-effective. Results from an
American College of Obstetricians and Gynecologists (ACOG)
study of over 3000 women who delivered at a large university
hospital in California published in 2000 estimated that each
dollar cut from prenatal care could cost taxpayers up to $3.33
more in neonatal care for sick babies. Additionally, a March
of Dimes report concluded that hospital charges for premature,
low-birthweight infants totaled $13.6 billion in 2001 and
stated that premature birth was among the most common,
serious, and costly problems facing infants in the United
States and is responsible for about half of all infant
hospitalizations.
3)HEALTH BENEFITS REVIEW PROGRAM ANALYSIS . Consistent with AB
1996 (Thomson), Chapter 795, Statutes of 2002, the University
of California reviewed this bill to determine its financial
impact in relation to the entire private health insurance
market for the working-age population. As a result, although
the bill only directly affects people in DOI regulated plans,
the California Health Benefits Review Program (CHBRP) reports
costs and coverage changes for the entire private-insurance
market and the potential impact on public payers and the
number of uninsured. According CHBRP, most Californians with
private insurance (98%) have coverage for prenatal care and
maternity services. Statewide, an estimated 284,000 privately
insured individuals do not have maternity benefits. For small
firms (up to 50 employees), about 74,000 adults (1.4% of those
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employed in small firms that provide employee health benefits)
lack coverage for maternity benefits. In large firms, about
18,000 adults (0.2% of those employed in large firms that
provide employee health benefits) lack this coverage. In the
market for individual coverage, approximately 12% lack
maternity benefits. Total expenditures (including total
premiums and out-of-pocket spending for copayments and
non-covered benefits) by or on the behalf of all commercially
insured individuals were estimated to increase by 0.01% as a
result of the bill (or $0.03 per member per month). Virtually
all of the impact is expected to be concentrated in the
individual insurance market, where total costs (including
total premiums and out-of-pocket spending for copayments and
non-covered benefits) were estimated to increase by 0.10%.
Total costs in the group market, for both small and large
firms, were estimated to increase by less than $0.03 per
member per month.
The report concluded that if the mandate contained in this
bill is not enacted, more commercial insurers in the
individual and group insurance markets could potentially drop
maternity benefits as a cost-saving strategy to lower premiums
and increase market share. The report also stated that this
market segmentation could drive up the premiums for insurers
who continue to offer maternity benefits, and lead to more
individuals with private insurance moving to the Medi-Cal
program to pay for their prenatal and delivery care.
4)PREVIOUS LEGISLATION . Last year, AB 897 (Speier) contained
similar provisions to this bill and was reviewed by the CHBRP,
but was not heard in any committee. SB 1411 (Speier) Chapter
880, Statutes of 2002, prohibited health plans and health
insurers from charging a higher copayment for maternity
services than for other medical services.
5)SUPPORT . ACOG and the March of Dimes, who are co-sponsoring
this bill, write that full prenatal coverage is recognized as
essential to encourage all women to use prenatal care, which
has been shown to promote better birth outcomes. In response
to the suggestion that mandated coverage for maternity care
will promote adverse selection, ACOG asserts that empirical
evidence shows women cannot accurately predict when they will
become pregnant, and therefore would not be able to time a
purchase of insurance with an expected birth. The California
Medical Association contends that prenatal and maternity
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coverage ensures that covered women have access to medically
necessary services and this bill will achieve that goal.
Planned Parenthood argues that public policy should support
women receiving proper medical care throughout pregnancy and
excluding coverage does not serve this goal and has a
disproportionate financial impact on them and their families.
Health Access California states that this bill closes a gap in
the existing law; and that if an insurer fails to provide
maternity coverage, the state picks up the cost, whether for
prenatal care provided through a public program or the costs
associated with lack of prenatal care. Finally, the
California Nurses Association states that given the societal
importance of healthy children, health insurance must provide
families coverage for the cots of prenatal care and maternity
services as it does for any other medical condition.
6)OPPOSITION . Health Net writes in opposition to the bill that
most people insured under individual policies have maternity
coverage and that those without the benefits have the option
of purchasing them. In a survey of 57 benefit plans offered by
6 carriers, Health Net found that 65% of the plans cover
maternity care. Those who choose not to purchase such
coverage would see substantial (12%) premium increases due to
this bill. Health Net estimates that its own premiums would
rise by about $7.85 to $12.84 per month. These premium
increases are anticipated to reduce the number of individual
policy holders by 4.3%. The Association of California Life
and Health Insurance Companies writes that in light of the
widespread coverage of maternity benefits, this bill is an
"individual market competition issue, rather than a health
insurance access or equity issue." The California Chamber of
Commerce writes that the increase in premiums, particularly
for those between the ages of 25 and 39 who currently purchase
individual policies without maternity benefits, should be
considered in the context of the Health Insurance Act of 2003
[SB 2 (Burton), Chapter 673, Statutes of 2003]. The Chamber
suggests that the Legislature impose a moratorium on health
mandate bills until the full effect of SB 2 can be assessed.
Blue Cross of California notes that the UC analysis of this
bill estimates that as many as 1,900 people will leave private
insurance if enacted, and that as a result, state costs will
increase as more women give birth under Medi-Cal. Blue Cross
estimates that this bill would raise premiums for low-cost,
hospital-only plans 46% for those in the 19-39 age group.
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REGISTERED SUPPORT / OPPOSITION :
Support
American College of Obstetricians and Gynecologists (co-sponsor)
March of Dimes (co-sponsor)
American Federation of State, County, and Municipal Employees,
AFL-CIO
Blue Shield of California
California Association of Nurse Anesthetists
California Association for Nurse Practitioners
California Commission on the Status of Women
California Healthcare Association
California Medical Association
California Nurses Association
California Nurse Midwives Association
California Primary Care Association
California School Employees Association, AFL-CIO
Department of Insurance
Health Access California
HealthCare Partners
Kaiser Permanente
Planned Parenthood Affiliates of California
Planned Parenthood Golden Gate
United Nurses Associations of California/Union of Health Care
Professionals
1 individual physician
Opposition
Arcadia Chamber of Commerce
Association of California Life and Health Insurance Companies
Blue Cross of California
California Chamber of Commerce
California Restaurant Association
Health Net
Mag Instrument, Inc.
National Federation of Independent Business
Analysis Prepared by : Melanie Moreno / HEALTH / (916)
319-2097