Bill Text: CA AB786 | 2009-2010 | Regular Session | Introduced

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Insurance: retained-asset accounts.

Spectrum: Partisan Bill (Democrat 2-0)

Status: (Engrossed - Dead) 2010-08-19 - Read second time. To third reading. Re-referred to Com. on RLS. pursuant to Senate Rule 29.10 (c) . [AB786 Detail]

Download: California-2009-AB786-Introduced.html

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BILL NUMBER: AB 786	INTRODUCED
	BILL TEXT


INTRODUCED BY   Assembly Member Jones

                        FEBRUARY 26, 2009

   An act to add Sections 1399.819 and 127664.5 to the Health and
Safety Code, and to add Section 10903 to the Insurance Code, relating
to health care coverage.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 786, as introduced, Jones.  Individual health care coverage:
coverage choice categories.
   Existing law, the Knox-Keene Health Care Service Plan Act of 1975,
provides for the licensure and regulation of health care service
plans by the Department of Managed Health Care and makes a willful
violation of the act a crime. Existing law also provides for the
regulation of health insurers by the Department of Insurance.
Existing law requires health care service plans and health insurers
that offer contracts or policies to individuals to comply with
specified requirements.
   This bill would require, by September 1, 2010, the Department of
Managed Health Care and the Department of Insurance to jointly, by
regulation, develop a system to categorize all health care service
plan contracts and health insurance policies offered and sold to
individuals into 5 coverage choice categories that meet specified
requirements. The bill would require individual health care service
plan contracts and individual health insurance policies offered or
sold on or after January 1, 2011, to contain a maximum dollar limit
on out-of-pocket costs for covered benefits. The bill would authorize
health care service plans and health insurers to offer plan
contracts in any coverage choice category subject to specified
restrictions. The bill would also require health care service plans
and health insurers to establish prices for the products offered to
individuals that reflect a reasonable continuum between the products
offered in the coverage choice category with the lowest level of
benefits and the products offered in the coverage choice category
with the highest level of benefits. The bill would require the
Department of Managed Health Care and the Department of Insurance to
develop a notice providing information on the coverage choice
categories and would require this notice to be provided with the
marketing, purchase, and renewal of individual contracts and
policies, as specified. The bill would require the Director of
Managed Health Care and the Insurance Commissioner to annually report
on the contracts and policies offered in each coverage choice
category and on the enrollment in those contracts and policies. The
bill would also require, commencing January 1, 2013, and every 3
years thereafter, the director and the commissioner to jointly
determine whether the coverage choice categories should be revised to
meet the needs of consumers. The bill would enact other related
provisions.
   Because a willful violation of the bill's requirements relative to
health care service plans would be a crime, the bill would impose a
state-mandated local program.
   Existing law requests the University of California to establish
the California Health Benefit Review Program to assess legislation
proposing to mandate or repeal a benefit or service, as defined, and
to prepare a written analysis in accordance with specified criteria.
   This bill would request the University of California, as part of
that program, to prepare a written analysis with relevant data on,
among other things, the health insurance and health care service plan
products sold in the individual market. The bill would request the
University of California to provide this report 3 months prior to the
implementation of the bill's other provisions and would authorize
the Department of Managed Health Care or the Insurance Commissioner
to request that analysis prior to specified annual reports and
triennial reviews. The bill would also require those departments to
require data from health care service plans and health insurers in
order to assist the University of California in fulfilling these
responsibilities.
   The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
   This bill would provide that no reimbursement is required by this
act for a specified reason.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 1399.819 is added to the Health and Safety
Code, to read:
   1399.819.  (a) On or before September 1, 2010, the department and
the Department of Insurance shall jointly, by regulation, develop a
system to categorize all health care service plan contracts and
health insurance policies offered and sold to individuals pursuant to
this chapter and Part 2 (commencing with Section 10110) of Division
2 of the Insurance Code into five coverage choice categories. These
coverage choice categories shall do all of the following:
   (1) Reflect a reasonable continuum between the coverage choice
category with the lowest level of health care benefits and the
coverage choice category with the highest level of health care
benefits based on the actuarial value of each product.
   (2) Permit reasonable benefit variation within each coverage
choice category.
   (3) Be enforced consistently between health care service plans and
health insurers in the same marketplace regardless of licensure.
   (4) Within each coverage choice category, include one standard
health maintenance organization (HMO) contract and one standard
preferred provider organization (PPO) contract, as defined by
regulation. For the coverage choice category with the highest cost
sharing and the least comprehensive benefit, the standard HMO
contract and the standard PPO contract shall not be the lowest
benefit level in that category.
   (5) Within each coverage choice category, have a maximum dollar
limit on out-of-pocket costs, including, but not limited to,
copayments, coinsurance, and deductibles, for covered benefits.
   (6) Use standard definitions and terminology for covered benefits
and cost sharing between health care service plans and health
insurers in the same marketplace regardless of licensure.
   (7) Be developed by taking into account any written analysis
provided by the University of California pursuant to Section
127664.5.
   (b) The regulations developed by the department and the Department
of Insurance pursuant to this section shall identify and require the
submission of any information needed to categorize each health care
service plan contract and health insurance policy subject to this
section.
   (c) All health care service plan contracts offered or sold to
individuals on or after January 1, 2011, shall contain a maximum
dollar limit on out-of-pocket costs, including, but not limited to,
copayments, coinsurance, and deductibles, for covered benefits.
   (d) All health care service plans shall submit filings no later
than April 1, 2011, for all individual health care service plan
contracts to be offered or sold on or after that date, and thereafter
any additional individual health care plan contracts shall be filed
with the department. The director shall categorize each individual
health care service plan contract offered by a plan into the
appropriate coverage choice category within 90 days of the date the
contract is filed pursuant to this section. A health care service
plan shall not offer or sell an individual health care service plan
contract until the director has categorized the contract pursuant to
this subdivision.
   (e) To facilitate accurate information about consumer choices, a
health care service plan may offer plan contracts in any coverage
choice category. However, if a plan offers a plan contract in the
least comprehensive category, it shall also offer the standard
contract the least comprehensive category, the standard contract in
one of the two most comprehensive categories, and the standard
contract in the middle category. Every plan shall offer at least the
standard contract in the middle category, except that a plan that
offers the standard contract in one of the two most comprehensive
categories shall not be required to offer contracts in the less
comprehensive categories. For purposes of this subdivision, "standard
contract" means the contract developed pursuant to paragraph (4) of
subdivision (a). A plan may meet its obligations under this
subdivision with products filed with and approved by the department
as well as products filed with and approved by the Department of
Insurance.
   (f) To facilitate consumer comparison shopping, the department and
the Department of Insurance shall develop a notice that provides
information about the coverage choice categories developed pursuant
to this section, including the range of cost sharing and the benefits
and services provided in each category, including any variation in
those benefits and services. For each product, the notice shall
include the percentage of expense paid by the coverage, the estimated
annual out-of-pocket cost and the estimated total annual cost,
including both premium and out-of-pocket costs for persons with
average health care costs and persons with high health care needs. A
health care service plan, solicitor, or solicitor firm shall provide
this notice when marketing any individual health care service plan
contract. The notice shall also accompany the purchase and renewal of
an individual health care service plan contract. With the agreement
of the consumer, the notice may be provided electronically.
   (g) A health care service plan shall establish prices for its
products that reflect a reasonable continuum between the products
offered in the coverage choice category with the lowest level of
benefits and the products offered in the coverage choice category
with the highest level of benefits. A health care service plan shall
not establish a standard risk rate for a product in a coverage choice
category at a lower rate than a product offered in a lower coverage
choice category for a consumer of the same age and the same risk rate
living in the same geographic region. For purposes of this
subdivision, "geographic region" shall mean the geographic regions
established pursuant to paragraph (3) of subdivision (k) of Section
1357.
   (h) The director shall annually report on the health care service
plan contracts offered by plans in each coverage choice category
pursuant to this section and on the enrollment in those contracts
within each coverage choice category. Commencing January 1, 2013, and
every three years thereafter, the director and the Insurance
Commissioner shall jointly determine whether the coverage choice
categories should be revised to meet the needs of consumers.
   (i) The department shall require data from health care service
plans in order to assist the University of California in fulfilling
the responsibilities of Section 127664.5 and shall promptly provide
that data to the University of California.
   (j) This section shall not apply to Medicare supplement plans or
to coverage offered by specialized health care service plans or
government-sponsored programs.
  SEC. 2.  Section 127664.5 is added to the Health and Safety Code,
to read:
   127664.5.  (a) In order to assist the Department of Managed Health
Care and the Insurance Commissioner with the implementation of
Section 1399.819 of this code and Section 10903 of the Insurance
Code, the Legislature requests the University of California, as part
of the California Health Benefit Review Program established pursuant
to Section 127660, to prepare a written analysis with relevant data
on all of the following:
   (1) The health care service plan and health insurance products
that are sold in the individual market.
   (2) The benefits and services covered by the products described in
paragraph (1), including any limitations or exclusions.
   (3) The cost sharing applicable to the products described in
paragraph (1), including deductibles, copayments, coinsurance,
maximum out-of-pocket limits, and other limits or exclusions that
require individual consumers to pay for basic health care services in
whole or in part.
   (4) The distribution of health care service plan and health
insurance products purchased by individuals in terms of the benefits
and services included and the cost sharing involved.
   (5) The share of the individual health care coverage market that
is short-term coverage, conversion coverage, renewal of existing
coverage, or coverage sold to a person not previously covered by
individual health care coverage.
   (b) In providing the data described in subdivision (a), the
University of California is requested to distinguish between products
provided by entities regulated by the Department of Managed Health
Care and those provided by entities regulated by the Insurance
Commissioner.
   (c) The Legislature requests that the written analysis described
in subdivision (a) be provided three months prior to the
implementation of Section 1399.819 of this code and Section 10903 of
the Insurance Code.
   (d) The Department of Managed Health Care in consultation with the
Insurance Commissioner shall request the University of California to
provide the written analysis described in subdivision (a) prior to
the annual reports and triennial reviews required by Section 1399.819
of this code and Section 10903 of the Insurance Code.
   (e) The Department of Managed Health Care and the Department of
Insurance shall assist the University of California by requiring and
collecting data from health care service plans and health insurers in
order to fulfill the responsibilities of this section and of Section
1399.819 of this code and Section 10903 of the Insurance Code.
   (f) The work of the University of California in providing the
written analyses specified in this section shall be supported by
moneys in the fund established pursuant to Section 127662.
  SEC. 3.  Section 10903 is added to the Insurance Code, to read:
   10903.  (a) On or before September 1, 2010, the department and the
Department of Managed Health Care shall jointly, by regulation,
develop a system to categorize all health insurance policies and
health care service plan contracts offered and sold to individuals
pursuant to this part and Chapter 2.2 (commencing with Section 1340)
of Division 2 of the Health and Safety Code into five coverage choice
categories. These coverage choice categories shall do all of the
following:
   (1) Reflect a reasonable continuum between the coverage choice
category with the lowest level of health care benefits and the
coverage choice category with the highest level of health care
benefits based upon the actuarial value of each product.
   (2) Permit reasonable benefit variation within each coverage
choice category.
   (3) Be enforced consistently between health insurers and health
care service plans in the same marketplace regardless of licensure.
   (4) Within each coverage choice category, include one standard
preferred provider organization (PPO) policy, as defined by
regulation. For the coverage choice category with the highest cost
sharing and the least comprehensive benefit, the standard PPO policy
shall not be the lowest benefit level in that category.
   (5) Within each coverage choice category, have a maximum dollar
limit on out-of-pocket costs, including, but not limited to,
copayments, coinsurance, and deductibles, for covered benefits.
   (6) Use standard definitions and terminology for covered benefits
and cost sharing between health insurers and health care service
plans in the same marketplace regardless of licensure.
   (7) Be developed by taking into account any written analysis
provided by the University of California pursuant to Section 127664.5
of the Health and Safety Code.
   (b) The regulations developed by the department and the Department
of Managed Health Care pursuant to this section shall identify and
require the submission of any information needed to categorize each
health insurance policy and health care service plan contract subject
to this section.
   (c) All health insurance policies offered or sold to individuals
on or after January 1, 2011, shall contain a maximum dollar limit on
out-of-pocket costs, including, but not limited to, copayments,
coinsurance, and deductibles, for covered benefits.
   (d) All health insurers shall submit the filings no later than
April 1, 2011, for all individual health insurance policies to be
offered or sold on or after that date, and thereafter any additional
individual health insurance policies shall be filed with the
commissioner. The commissioner shall categorize each individual
health insurance policy offered by a health insurer into the
appropriate coverage choice category within 90 days of the date the
policy is filed pursuant to this section. A health insurer shall not
offer or sell an individual health insurance policy until the
commissioner has categorized the policy pursuant to this subdivision.

   (e) To facilitate accurate information about consumer choices, a
health insurer may offer health insurance policies in any coverage
choice category. However, if a health insurer offers a health
insurance policy in the least comprehensive category, it shall also
offer the standard policy in the least comprehensive category, the
standard policy in one of the two most comprehensive categories, and
the standard policy in the middle category. Every insurer shall offer
at least the standard policy in the middle category, except that an
insurer that offers the standard policy in one of the two most
comprehensive categories shall not be required to offer policies in
the less comprehensive categories. For purposes of this subdivision,
"standard policy" means the policy developed pursuant to paragraph
(4) of subdivision (a). An insurer may meet its obligations under
this subdivision with products filed with and approved by the
department as well as products filed with and approved by the
Department of Managed Health Care.
   (f) To facilitate consumer comparison shopping, the department and
the Department of Managed Health Care shall develop a notice that
provides information about the coverage choice categories developed
pursuant to this section, including the range of cost sharing and the
benefits and services provided in each category, including any
variation in those benefits and services. For each product, the
notice shall include the percentage of expense paid by the coverage,
the estimated annual out-of-pocket cost and the estimated total
annual cost, including both premium and out-of-pocket costs for
persons with average health care costs and persons with high health
care needs. A health insurer, broker, or agent shall provide this
notice when marketing any individual health insurance policy. The
notice shall also accompany the purchase and renewal of an individual
health insurance policy. With the agreement of the consumer, the
notice may be provided electronically.
   (g) A health insurer shall establish prices for its products that
reflect a reasonable continuum between the products offered in the
coverage choice category with the lowest level of benefits and the
products offered in the coverage choice category with the highest
level of benefits. A health insurer shall not establish a standard
risk rate for a product in a coverage choice category at a lower rate
than a product offered in a lower coverage choice category for a
consumer of the same age and the same risk rate living in the same
geographic region. For purposes of this subdivision, "geographic
region" shall mean the geographic regions established pursuant to
paragraph (3) of subdivision (v) of Section 10700.
   (h) The commissioner shall annually report on the health insurance
policies offered by health insurers in each coverage choice category
pursuant to this section and on the enrollment in those policies
within each coverage choice category. Commencing January 1, 2013, and
every three years thereafter, the commissioner and the Director of
the Department of Managed Health Care shall jointly determine whether
the coverage choice categories should be revised to meet the needs
of consumers.
   (i) All health insurance policies offered and sold to individuals
on or after January 1, 2011, shall contain a maximum dollar limit on
out-of-pocket costs, shall cover physician services, hospitals, and
preventive services, and shall, at a minimum, meet existing coverage
requirements.
   (j) The department shall require data from health insurers in
order to assist the University of California in fulfilling the
responsibilities of Section 127664.5 of the Health and Safety Code
and shall promptly provide that data to the University of California.

   (k) Nothing in this section shall be construed to limit disability
insurance, including, but not limited to, hospital indemnity,
accident only, and specified disease insurance that pays benefits on
a fixed benefit, cash payment only basis, from being sold as
supplemental insurance.
   (l) This section shall not apply to Medicare supplement, Tricare
supplement, or CHAMPUS supplement insurance, to specialized health
insurance policies, as defined in subdivision (c) of Section 106, or
to coverage offered by government-sponsored programs.
  SEC. 4.  No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.