SB 40 amends California’s health care coverage laws to cap out-of-pocket costs for insulin. For large-group health care service plan contracts and health insurance policies issued, amended, delivered, or renewed on or after January 1, 2026, the bill limits copayments, coinsurance, deductibles, and other cost sharing for a 30-day supply of an insulin prescription drug to no more than $35. For individual and small-group coverage, the same cap generally applies beginning January 1, 2027, with a special tier-based rule for formularies that use drug tiers. The bill also requires that at least one insulin in each drug type be available on the formulary, and it includes an exception allowing the cap to apply to a higher-tier insulin when no clinically appropriate lower-tier option is available.
The bill further prohibits step therapy as a prerequisite to insulin coverage beginning January 1, 2026, subject to a limited exception where at least one insulin in each drug type is covered without step therapy. It preserves existing coverage mandates for diabetes-related supplies and services, including glucose monitors, pumps, syringes, glucagon, and diabetes self-management training, education, and medical nutrition therapy. The bill applies to both health care service plans regulated under the Knox-Keene Act and disability insurance policies regulated by the Insurance Code, while excluding certain policy types such as vision-only, dental-only, accident-only, specified disease, hospital indemnity, Medicare supplement, long-term care, and disability income coverage.
SB 40’s impact on state law is to create a new consumer protection standard for insulin affordability in California commercial coverage. It amends Health and Safety Code Section 1367.51 and Insurance Code Section 10176.61, adding specific cost-sharing limits, formulary requirements, and step-therapy restrictions. Because willful violations of the Knox-Keene provisions can be criminally punishable under existing law, the bill also states that it creates a state-mandated local program, while simultaneously declaring that no reimbursement is required. The bill includes a severability clause and does not apply to Medi-Cal managed care plans except as otherwise provided by contract exclusions.
The overall sentiment reflected in the legislative history is strongly supportive and noncontroversial. The recorded votes were unanimous at each stage shown, including committee votes and floor votes, indicating broad bipartisan or at least unanimous legislative agreement. The bill’s findings emphasize the health risks of diabetes, rising insulin prices, and the burden of deductibles and other cost sharing, framing the measure as a patient-affordability and access issue rather than a broader insurance-market overhaul.
The main points of potential contention are limited and technical rather than ideological. The bill’s tier-based treatment of individual and small-group formularies, the interaction with high-deductible health plans and federal requirements, and the carveout for Medi-Cal managed care plans are the most notable implementation issues. Insurers may also be concerned about formulary management, step-therapy restrictions, and the cost implications of the $35 cap, but the vote record does not show active opposition in the legislative process.
SB 40 amends Health and Safety Code Section 1367.51 and Insurance Code Section 10176.61 to require commercial health care service plans and disability insurers to cap insulin cost sharing at $35 per 30-day supply for specified policies, prohibit step therapy for insulin coverage, and ensure at least one insulin per drug type is available on formularies. It preserves existing diabetes equipment, supply, and education coverage mandates, applies primarily to large-group coverage in 2026 and individual/small-group coverage in 2027, and excludes certain limited-benefit policy types and most Medi-Cal managed care coverage.
The bill appears to have enjoyed broad, unanimous support throughout the legislative process. Committee and floor votes shown in the record were all 0 nays, suggesting little to no formal opposition. The bill’s findings and structure indicate a strong policy consensus around reducing insulin costs and improving access for people with diabetes.
The most notable areas of concern are operational rather than political: how insurers will comply with the $35 cap across tiered formularies, how the step-therapy prohibition interacts with clinical management and federal high-deductible health plan rules, and how the law applies when no lower-tier insulin is clinically appropriate. There is also a limited carveout for Medi-Cal managed care plans and certain policy types, which may reflect concerns about scope and administrative feasibility. No significant opposition is reflected in the vote record provided.