California Governor, Lawmakers Nearing Agreements on Health Care Bills

California Gov. Arnold Schwarzenegger (R) and Democratic legislators are nearing agreements on several pieces of legislation that would limit insurers' profits on individual health plans, require plans to provide a minimum set of benefits and restrict insurers' ability to rescind coverage, the Los Angeles Times reports. According to the Times, "The new focus reflects how far Schwarzenegger remains from his original health care goal: to orchestrate medical insurance for the five million Californians who lack it." State lawmakers rejected Schwarzenegger's proposal in January, but many of the measures now being considered were included in the governor's plan.

For example, state Sen. Sheila Kuehl (D) says she is "very near" an agreement with the governor on legislation that would require insurers to spend at least 85% of premium income on medical care. Aides to the governor have requested that the bill (SB 1440) be amended to exempt new types of health insurance coverage from the 85% threshold for the first two years that they are available.

In addition, Schwarzenegger is in talks with Sen. Darrel Steinberg (D-Sacramento) over changes to a bill (SB 1522) that would require individual health insurance policies to cover physician services, preventive care and hospital services. It also would cap members' annual out-of-pocket costs and require state regulators to classify health plans into five categories, with the aim of making it easier for consumers to compare health insurance options. Gov. Schwarzenegger has asked Steinberg to drop the coverage mandates from the bill and keep it focused on categorizing health plans.

Three bills dealing with health insurance policy rescissions also are making their way through the state Legislature. Democrats want to require health insurers to seek state regulators' approval before rescinding policies and permitting rescissions only in the first 18 months that a member has a health insurance policy. Schwarzenegger supports allowing insurers to retain the ability to rescind policies, but he wants to create a process that would have independent arbitrators determine whether insurers could cancel coverage. He also supports creating new rules intended to boost insurers' review of applicants' medical histories (Rau, Los Angeles Times, 8/4).

Other Bills
Summaries of news about other recent action on health insurance regulation in California appear below.

• "Balance Billing": The California Department of Managed Health Care on Friday announced that it has completed new regulations aimed at limiting the practice of "balance billing" in emergency care situations. Balance billing occurs when health care providers bill patients directly for medical charges that health plans do not cover. The new rules permit DMHC to take action against providers who use balance billing (Glover, Sacramento Bee, 8/2).
  
  
• DMHC authority: Also on Friday, the governor vetoed a bill (AB 1155) that would have widened DMHC's authority to fine health insurers that did not pay medical bills. Schwarzenegger said the bill was aimed at sidestepping DMHC's independent dispute resolution process (Los Angeles Times, 8/2).