Senate Health Bill Could End Medical Bankruptcy in California

Posted on 18 April 2013

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By Linda Leu

Wednesday afternoon, the California Senate Health Committee passed SB639 (Hernandez), which implements many provisions of the Affordable Care Act that will help ensure consumers will be able to purchase affordable coverage. This includes the limiting of out-of-pocket expenses, aligning plans by value, and standardizing plan benefits, both within and external to the state health exchange marketplace.

Limits Out-of-Pocket Expenses

In accordance with the ACA, SB639 limits the expenses that individuals have to pay out-of-pocket for all covered benefits - this includes co-pays, co-insurance, and deductibles. As per the ACA, the limit would be $6,050 for individuals and approximately $13,000 per family per year. Senator Ed Hernandez (D-West Covina), the bill's author, explained that this effectively ends medical bankruptcy, as Californians will no longer face medical bills of tens or hundreds of thousands of dollars.

Categorizes Plans By Actuarial Value

In accordance with the ACA, SB639 categorizes health plans into 4 tiers: Platinum, Gold, Silver, and Bronze, based on the average percentage of health care costs the plan covers. An individual who purchases a Platinum plan can expect that the plan will cover approximately 90% of their health care costs, and someone who purchases a Bronze plan can expect approximately 60% of costs to be covered (but Bronze plans will likely have lower premiums).

Standardizing Benefits

Covered California, the state's health insurance marketplace, will only be selling plans with a standard benefit design - allowing consumers to make "apples to apples" comparisons between plans so they can get a better understanding of what they are getting for their premium dollar. SB639 requires that plans sold on the individual market outside of Covered California will also adhere to the standardized benefit design.

SB639 is an important measure that will require insurance companies to compete for customers based on quality and price, rather than trying to make profits by avoiding sick people; it also makes important strides toward making health care affordable for all Californians. The bill passed on a party line vote (with Senator Pavely absent) and now moves on to Senate Appropriations.

Linda Leu is a health care policy analyst for Health Access California, a statewide health care consumer advocacy coalition of over 200 groups.

No matter what the legislature does, it does not change the fact that we really need a single-payer system wihtout any greedy insuance companies.