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Insurance Market Reforms Moving

Next week is going to be an exciting one for health policy in Sacramento. In addition to voting on the High Risk Pool, the 1115 Hospital Waiver, and the Health Insurance Exchange, the Legislature will also be taking up important insurance market reforms.

On June 29th, the Assembly Health Committee will be hearing Senate Bill 890 (Alquist & Steinberg), legislation that addresses many of the shortcomings in the state’s individual health insurance market and provides a bridge to the full implementation of federal reform.

In particular, the bill:

• Requires there be only five standardized insurance products (5 HMO products and 5 PPO products) so people buying coverage can make an “apples-to-apples” comparison of identical products;
• Requires all health insurance products to cover medically necessary care, and would prohibit annual or lifetime benefit limits;
• Allows people to switch to a different plan offered by a competing plan or insurer if, after one year, the person goes to a competitor’s plan with equal or lower benefits;
• Requires plans to use a standard application for individual coverage with standard scoring for purposes of offering coverage;
• Require plans to change premium rates for adults based on one year changes in a person’s age; and
• Requires plans to meet a medical loss ratio (MLR) in the large group market of 85%, with an MLR of 80% or better in the individual and small group market. The MLR is the percentage of premiums a health plan spends on medical care, versus administration, marketing and profit. If a plan doesn’t meet this standard, the plan would have to provide a refund to consumers at the end of the rate year.

Stay tuned to the blog for updates as SB 890 and other the other health reform implementation legislation moves through the Capitol this summer.

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