Legislative Analysis of ABX1-1 and Running Notes on the Hearing

The Assembly Health Committee is underway. For those who might be listening I thought you might like to see the analyses of the bills prepared by the Committee’s staff. Here is the ABX1-1 (Nunez) Staff Analysis  and the ABX1-8 (Villines) Staff Analysis. (As a reminder for those without a program, ABX1-1 is the Democratic Legislative Leadership’s health care reform plan and ABX1-8 is the package put forward by the Assembly Republican Caucus.

What follows are notes and observations I’m posting during the hearing. I’ll write more about the meaning of what’s happening in a later post.

3:10:As was pre-ordained, the legislation is going to pass. The Committee is hearing witnesses on the bill now, but it’s clear this is a formality. In fact, it sounds like many of the Comittee members have left the room, leaving a smaller group of Legislators to hear testimony from the public. So far it appears the only amendments being made are fairly technical in nature which would suggest more negotiations will be required.

3:30: A win for Speaker Nunez: a lot of consumer groups and unions are lining up behind ABX1-1 (not all of them, but the majority). There was some question as to whether Labor and their allies would support the bill. It appears they are, although most are calling for amendments to, among other things, better define minimum coverage, warn against tightening the exemption to the requirement that all Californians obtain health care coverage, and the need to clarify how the state will pay for the reforms. There are other concerns being expressed (for example, broadening eligibility to enroll in the purchasing pool), but the key news here is that the Speaker’s supporters have not deserted him.

One other interesting element: it appears the assurances the California Hospital Association negotiated with the Governor in exchange for their support of a four percent tax on hospital gross revenues are not in ABX1-1. So there’s still some drafting to do on that account or the hospitals will pull their support. This would make it much more difficult to pass the bill this month and the financing initiative next November. 

3:40: The spokeswoman for the Department of Health and Human Services just testified representing the Administration. While praising several elements of the bill she did express several “significant” concerns. Her strongest language focused on the exemption to the mandate that individuals buy coverage. She described it as undermining the mandate and pretty much called it unacceptable Clearly, the Governor is not on board with ABX1-1.

3:50: Blue Shield’s spokesperson noted that, while the industry supports efforts to make improvements, the changes Committee is considering are dangerous. He only had time to give one example: guarantee issue will only work in conjunction with a strong, effective mandate to purchase coverage.

 4:00: An Association of California Life and Health Insurance Companies spokeswoman opposed the bill for a long laundry list of reasons. She asked the Committee to remove the small group reforms which are in ABX1-1, but not in the Governor’s proposal. She noted the required Medical Loss Ratio provision is drafted in a way which would be disastrous for the marketplace, again recommending the bill be amended to accept the Governor’s approach on the issue. She also warned against giving the state-run purchasing pool in the marketplace. There was more, but I couldn’t keep up. I’ll try to find something on their web site and post it later.

4:15: The Blue Cross spokesman only had a minute to explain why they opposed the bill. The only points he was able to make is that, if ABX1-1 were to pass, 892,000 of Blue Cross’ individual members would face substantial rate increases due to the bills ineffective enforcement of the requirement residents have health care coverage. He also said more than 500,000 of their individual members would have to change health plans as their current coverage would be unlikely to meet the definition of acceptable minimum coverage. A short time later the Kaiser Permanente spokesman stated that ABX1-1 exempts roughly 50 percent of the individual market from the mandate to buy coverage. (I think I heard that right). He recommended California consider an exemption more along the lines of that enacted in Massachusetts.

4:20:After 60 visits the Committee passed ABX1-1 on a party line vote. The bill will now move on to the Appropriations Committee. The Committee is now listening to a presentation on ABX1-8 (Villines), the health care reform plan put forward by the Assembly Republican Caucus.

4:45: The Assembly Republican bill is being strongly attacked most often along three main lines: 

  1. ABX1-8 permits out-of-state carriers to sell in California. Critics point out these carriers would not need to meet California regulations, putting in-state carriers at a disadvantage and endangering California consumers;
  2. AX1-8 promotes HSAs in several ways. Critics contend HSAs, as high deductible plans, results in consumers failing to obtain preventive care. (Clearly the HSA community has some educating to do.)
  3. AX1-8 allows carriers to offer mandate free plans. Critics claim these mandates are important and should be required.

4:50: ABX1-8 just failed to pass the Committee, effectively killing the bill.

So that’s the way it went. No surprises. And not much progress as I’ll discuss in a later post.