New Bill Proposes Insurer Fee to Expand Residencies

An Assembly committee yesterday approved a plan to provide a major boost to California’s physician-training residency programs by generating roughly $100 million a year with a $5-per-covered-life fee to be imposed on health care insurers.

The new bill is one of several legislative efforts to address a provider shortage in California that’s likely to intensify when the Affordable Care Act is implemented and Medi-Cal is expanded starting in 2014.

AB 1176, co-authored by Assembly member Raul Bocanegra (D-Pacoima) and Assembly member Rob Bonta (D-Oakland), would expand the number of resident physicians in California by an estimated 1,000 with the expectation that new physicians would remain in California and practice in the underserved areas where they fulfilled their residency training.

“We expect a shortage of 17,000 physicians in the next three years, particularly in underserved areas,” Bocanegra said, “so we would be assessing [insurers] a $5 fee for every covered life on their rolls. There are five other states with similar programs to address their shortage.”

According to Thomas Balsbaugh, family practice residency director at UC- Davis Medical Center, the bill to expand the state’s number of resident physicians helps with both short- and long-term shortages

“In the short term, there will be more residency hours available in underserved areas. And in the long term, we are expecting many physicians to stay and practice in those areas,” Balsbaugh said.

 Paying for all of that ultimately means higher health care premiums for consumers, said Nick Louizos, director of legislative affairs for the California Association of Health Plans.

“No one disputes that more residencies would be good for the health care system,” Louizos said. “What is bad for the health care system is another tax and … another mandate. We estimate the cost to be $100 million, and it could be more.”

At a time when health insurers are paying a number of fees and taxes — including a $5 reinsurance assessment, a 2.5% ACA insurer fee, as well as a participation fee with the state’s health benefit exchange that amounts to roughly $14 per person per month — imposing another cost that will further increase premiums is a burden, both to insurers and ultimately to consumers, Louizos said.

“We believe any additional taxes are untenable at this time,” Louizos said.

According to Pat Johnston, president and CEO of the health plans association, the figure might rise above $100 million because it’s unclear which lines of health care coverage would be assessed. “Adding another new tax to premiums amid significant change and expansion of health care is not best for California,” Johnston said.

The exchange wants insurers to submit premium rates this summer, so no adjustment could be made if this bill is approved, Johnston said. “Plans would be unable to include new taxes and fees in health exchange premiums, since the rates will be finalized before the Legislature adjourns this year,” Johnston said. “In addition, state law precludes mid-year premium adjustments.”

AB 1176 passed on a 10-5 vote, and now goes to the Assembly Committee on Appropriations.

The Assembly Committee on Health approved AB 565 by Assembly member Rudy Salas (D-Bakersfield) yesterday. Salas said his bill would ensure that physicians in the state’s repayment program would practice in underserved areas.

It passed on a 12-0 vote and heads to Appropriations.

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