Read the AARP's Letter to State Senator Kuehl on AB 1X1

January 9, 2008

The Honorable Sheila Kuehl, Chair
Senate Health Committee
California State Capitol
Room 5108
Sacramento, CA  95814

Re: AB 1X1 (Nunez & Perata) -- Health Care Reform -- SUPPORT IF AMENDED

Dear Senator Kuehl:

On behalf of AARP and its over 3.3 million California members, I urge you to approve AB 1X1 on January 16, after making any adjustments the committee believes necessary. This is an extraordinary opportunity to make vast improvements in the health care system for Californians. We strongly believe that this measure, essentially as it passed the Assembly, should be enacted. Compared to the status quo, this will be a tremendous improvement for our members and Californians of all ages.

Health care is very important to AARP members. While our members 65+ are fortunate to have the security of Medicare, about half of our membership, those 50--64 years old, have far less confidence that they will have the health care they need when they need it. Losing health care coverage at any age can spell disaster, but it is especially problematic in mid-life. In California, it is often impossible to buy affordable health insurance, or any health insurance at all, if ineligible for an employer-sponsored plan. Insurance companies can refuse to sell a person health insurance because of their medical history, or insist on a premium so high that it is unaffordable. People 50+ are much more likely than younger people to have a medical history that causes health insurers to avoid them.

AARP's membership is impacted by virtually every aspect of the health care reform debate. Having access to affordable, quality health care is the bottom line objective, but this cuts across many issues. About half of AARP's membership is still working, so stemming the deterioration of employment--based coverage is important. Requiring insurers to issue policies at reasonable rates to all who apply is important to those without access to employment-based or public program coverage. Children’s coverage is also important to our members, particularly the growing number who are raising their grandchildren. Additionally, spiraling, out-of-control health care costs are straining the budgets of insured individuals and placing health care out of reach of more and more consumers. AB 1X1 (Nunez & Perata) deals with the issues most important to AARP members:

*Guaranteed Issue. Insurers will no longer be able to deny insurance to our members because of their health condition. All Californians will have access to health insurance, in the individual market if they are not eligible for coverage under an employer or public plan.

*Individual Market Reforms. The individual market will be organized and structured so that insurance policies will be priced reasonably, and insurers will compete based on price, quality and service, rather than on risk selection. Insurers will be required to offer benchmark policies defined by the regulators in each of five coverage choice categories, making it much easier for consumers to compare products. Rates will be permitted to vary only on the basis of benefit variation, provider network, geography, family size, and age. The maximum variance based on age will be limited, which is particularly important to AARP members. The office of the patient Advocate will provide information on a website to enable consumers to more easily compare products.

*Cost Containment. Cost containment is threaded throughout this legislation. We are particularly pleased with the provisions which will create the infrastructure to collect and publicly report comprehensive information on the cost and quality of medical services. Providing this basic information to consumers and other purchasers, as well as to providers, is necessary in order to improve the market for medical services, increasing quality and reducing costs. We are also pleased to see the recognition that efforts to improve the health of the population, though interventions to prevent diabetes, obesity, and smoking related illnesses, is a key to long term cost control. The bulk purchasing of drugs and the expansion of local coverage initiatives also has potential to mitigate costs.

*Expanded Public Programs. The expanded public programs will help our members in a variety of ways. Our lower-income, uninsured members will benefit directly though expanded eligibility for public programs, including the new Cal-CHIPP purchasing pool. Our insured members should see far less cost-shifting to the cost of their policies because of the reduction in the uninsured and the increase in Medi--Cal reimbursements to medical service providers.

*Affordability. Affordability has been the issue on which we have most focused over the year and, with one exception, this bill now does a reasonable job of ensuring the cost of coverage that is mandated will be affordable for our members. All uninsured children, and uninsured adults up to 250% of poverty will receive comprehensive coverage with little cost sharing. A tax credit is provided to make coverage more affordable for persons between 250% and 400% of the federal poverty level, and there is expressed intent to also add an early retiree tax credit for persons who have a higher level of income but higher costs due to their age. The one amendment that we need before unconditionally supporting this measure would ensure that individuals, with the tax credit, will be able to afford a policy that provides basic services before any deductible -- doctor visits, drugs, and prevention services, including the management of chronic conditions.

We are comfortable with the structure of the initiative that has been filed to finance this measure, monitor the adequacy of revenues, and to trigger off the individual mandate to buy insurance if the funds necessary to subsidize coverage are not forthcoming.

We believe this is truly a historic opportunity to make significant improvements to the health care and financial security for all Californians, and to show the nation that an issue as difficult as this one can be meaningfully addressed with sufficient effort, determination, and creativity.

AARP strongly urges the Senate Health Committee to make any necessary adjustments to the bill determined necessary, and approve it at the hearing on January 16.

If you have any questions, or would like to discuss AARP’s position, please contact me at (916) 556--3018 or by email at cyoung@aarp.org.

Respectfully,

Casey L. Young
Advocacy Manager  

cc
Members, Senate Health Committee
The Honorable Fabian Nunez
The Honorable Don Perata
Peter Hansel, Consultant, Senate Health Committee
Joe Parra, Consultant, Senate Republican Caucus      
Tom Porter, AARP State Director
Jeannine English, AARP State President