Health Care Overhaul's Consumer Protections Pass California Legislature

Reforms to the individual health insurance market passed out of the Assembly and Senate in Sacramento on Thursday. Included in the bills were popular consumer provisions including: guaranteed issue, requiring insurers to cover all who apply; and rate setting rules that will make it illegal to charge people with pre-existing conditions more than anyone else or redline those conditions.

From here, the Assembly bill, AB 1X 2, will be heard in the Senate. The Senate's bill, SB 1X 2, heads to the Assembly.

The bills are moving through a special session of the legislature. The Legislature is working to pass bills to bring the state in line with the requirements of the federal health care overhaul, the Affordable Care Act.

Assemblymember Richard Pan (D-Sacramento), chair of the Assembly Health committee, authored AB 1X 2. "I'm certainly happy it passed," Pan said in an interview. "It showed the legislature understands the nature of these historic reforms that we're putting place for California."

The ACA permits rate setting on four factors: family size, age, geographic region and tobacco use. But in Pan's bill tobacco use cannot be a factor in rate setting. Federal rules would have allowed smokers to be charged premiums up to 50 percent higher than others.

Pan opposes this provision. He believes allowing smokers to be charged more would make insurance unaffordable to them and leave smokers uninsured. "Certainly inability to have health insurance is not going to get them to stop smoking," Pan said. "The way to get them to quit is to get them covered and get them smoking cessation treatment."

Nicole Evans, with the California Association of Health Plans, is cautious about the bills. The legislation does not "tie back" directly to the ACA, she says. Without this protection, insurance companies worry that if the federal government makes changes in the ACA's individual mandate requirement, healthy people would be more likely to go without insurance, leaving insurance companies required to insurance the sickest people remaining. Under this scenario, Evans says, insurance premiums would skyrocket.

"Our position is: 'oppose unless amended,'" Evans said.

Gov. Brown vetoed a similar bill on consumer protections last fall because he did not feel the connection to the ACA was sufficient. Brian O'Hara, a staffer with Assemblymember Pan, says this question is currently "in negotiation."

The two bills also set just six geographic regions for pricing insurance in the individual market in California. But reforms passed last year to the small group market called for 19 regions. The CoveredCA health exchange also is using 19 regional areas. Evans says it could create tremendous confusion, possibly delaying the timeline to the January 1st rollout of the ACA, if all insurance markets do not use the same number of regions and the same regional lines.