The Senate Committee on Appropriations yesterday approved a bill to ban a certain type of selection criteria when insurers issue stop-loss health care coverage to small employers.
The bill was one of a small mountain of bills before the Appropriations committee yesterday. The policy committees have finished their legislative work for this session, and bills need to either clear Appropriations this week or be put on suspense to wait for next session. The committee yesterday put 76 proposed laws on the suspense file.
SB 161 by Sen. Ed Hernandez (D-West Covina) made it out of committee to be heard on the Senate floor, but it still has a little way to go, Hernandez said.
“The attachment point [for defining stop-loss coverage] may be too high,” Hernandez told the committee. “We’re not there yet.”
The importance of this bill, which would limit adverse selection by health insurers, goes beyond the impact on individual plans, Hernandez said.
“I believe there’s something much bigger at hand here,” he said, “and that’s the safety of the exchange. Even the opposition would agree that we need to do something about this.”
The bill would end the practice of cherry-picking healthy employees from the pool of workers within small businesses by stop-loss insurers, said Beth Capell, legislative advocate for Health Access California.
“We think this will ensure all small employers are playing by the same rules, rather than skimming off the healthier lives,” Capell said.
Sen. Bob Huff (R-Diamond Bar), who was a guest legislator attending the hearing, wondered whether the small businesses who use stop-loss insurance might drop their employees and funnel them to the Medi-Cal program, instead.
“Seems like this bill will drive employees to Medi-Cal,” Huff said. “Have we quantified what that cost will be?”
Sen. Kevin De León (D-Los Angeles), chair of Appropriations and author of a similar bill that failed last legislative session, said those costs are unknown.
“Some small businesses may opt to drop coverage,” De León said. “It’s a complicated measure.”
“Given all you just said,” Huff said, “it seems like this would be a good candidate for suspense.”
“This is a do-pass recommendation to the Senate floor,” De León said.
The bill passed on a 7-2 vote.
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