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Home Providing Consumer Protection Preventing Underinsurance and Medical Debt AB977: Oversight of High-Deductible Plans and Other Out-of-Pocket Costs

AB977 Fact Sheet
AB977 Sample Support Letter

AB977: Oversight of High-Deductible Plans and Other Out-of-Pocket Costs
- printable version - (MS Word Doc)

AB977 by Assemblymember Nava  

AB977, as introduced by Assembly Member Pedro Nava and sponsored by Health Access California, would create a public process for review and approval of co-pays, deductibles and other out of pocket costs and would provide guidelines against which these must be reviewed by the Dept. of Managed Health Care and the Dept. of Insurance. AB977 would create a mechanism for limiting out of pocket costs, which have increased dramatically in recent years. 

Problem: In recent years, the share of health care costs paid by consumers, even those with health insurance on the job, has climbed as employers have shifted a greater share of health insurance costs to employees and their families.

  • For family coverage, California employees now pay an average of $2580, 27% of the cost of the health insurance premium.
  • Similarly co-payments, deductibles and other out of pocket costs have increased. Many employees have no cap on the out of pocket maximum to be paid for health benefits.
  • Half of employees now face co-payments for prescription drugs, as well as hospital care.
  • Deductibles of $1000, $1500 or even $5000 per person exist. Out of pocket costs may be capped at several thousand dollars – or not at all.

Under existing law, the Dept. of Managed Health Care and the Dept. of Insurance approve changes in out of pocket costs without any public input or public review. Consumers have no voice in designing health benefits. There is literally no way for consumer groups to affect what benefits are being provided – what the deductibles are, what the co-payments are, or what the out of pocket maximum is. These decisions are made in secret by the Department of Managed Health Care and the Department of Insurance.

Legislation: AB977, would

  • create a public process for reviewing changes in out of pocket costs for health insurance.
  • set standards for review of out of pocket costs by DMHC and DOI that include affordability, accessibility of care, and impact on clinical outcome

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