California: HUGE: Gov. Brown signs bills cracking down on #ShortAssPlans & more!
2019 OPEN ENROLLMENT ENDS (most states)
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BREAKING: Governor @JerryBrownGov today signed several #Care4AllCA bills that protects patients and places greater accountability on health insurers now on Gov's desk:#SB910 & #SB1375 to ban/limit "junk" insurance;#AB2499 on MLR; and#AB2472 on a public option study.
— Health Access CA (@healthaccess) September 22, 2018
I've written about these before, of course, and it's not surprising that they all passed the heavily-Democratic California state legislature, but there was some concern that Governor Jerrry Brown might veto one or two of them. Fortunately, he's signed off on all four. Given the sheer size and influence of California's population and economy, this is great news for anyone supporting protecting and strengthening of the ACA.
As a reminder, here's what these four bills--now laws--will actually do:
- SB910: Prohibits insurance companies from selling short-term insurance plans in California. These short-term plans lack the Affordable Care Act’s (ACA) important consumer protections: they do not provide comprehensive coverage or cover essential health benefits, and people with pre-existing conditions can be denied coverage or have their coverage dropped when they get sick. SB 910 would maintain the stability of California’s individual market by ensuring health coverage sold in California provides comprehensive benefits and consumer protections.
- SB1375: This bill would change the definition of who is eligible for small employer health plans so that individuals who are self-employed cannot join association health plans. Entities with a sole proprietor or no employees would only be eligible for individual health benefit plans.
This is, in some ways, the exact opposite of a law recently passed in Virginia which specifically allows self-employed individuals to enroll in small group market plans, although Virginia (and in particular, Charlottesville) is a special case.
- AB2499: This locks in the ACA's current Medical Loss Ratio rules for the Individual, Small Group and Large Group markets (80% for the Individual and Small Group markets, 85% for the Large Group market).
- AB2472: The California Health Benefit Exchange would be required “to prepare an analysis and evaluation, known as a feasibility analysis, to determine the feasibility of a public health insurance plan option to increase competition and choice for health care consumers. The bill would require the feasibility analysis to contain, among other things, an actuarial and economic analysis of a public health insurance plan and an analysis of the extent to which a new public health insurance plan option could address the underlying factors that limit health plan choices in some regions. The bill would require the board to submit the feasibility analysis to the Legislature on or before January 1, 2020.”
The first two laws neatly cancel out two ways in which the Trump Administration is attempting to bifurcate the ACA market by siphoning healthy enrollees off onto substandard healthcare policies (which, in turn, hurts the ACA-compliant individual market risk pool).
The third law protects the ACA's 80/20 MLR (85/15 for the large group market), which limits insurance carriers to no more than a 20% (15%) gross margin on premium revenue...anything over that has to either be spent on actual medical claims or they have to rebate the balance back to the policyholder. This is one of the ways in which the ACA prevents excessive price gouging on premiums (some may argue about how effective this has been, since 20% of a higher number is still a higher number, but that's a different conversation).