BILL NUMBER: AB 2052 CHAPTERED 09/03/02 CHAPTER 336 FILED WITH SECRETARY OF STATE SEPTEMBER 3, 2002 APPROVED BY GOVERNOR AUGUST 31, 2002 PASSED THE ASSEMBLY AUGUST 15, 2002 PASSED THE SENATE AUGUST 12, 2002 AMENDED IN SENATE AUGUST 7, 2002 AMENDED IN SENATE JUNE 24, 2002 AMENDED IN SENATE JUNE 12, 2002 AMENDED IN ASSEMBLY MAY 13, 2002 AMENDED IN ASSEMBLY APRIL 30, 2002 AMENDED IN ASSEMBLY APRIL 18, 2002 INTRODUCED BY Assembly Member Goldberg (Coauthors: Assembly Members Cohn, Frommer, Koretz, Negrete McLeod, Richman, and Wayne) FEBRUARY 15, 2002 An act to amend the heading of Article 5.5 (commencing with Section 1374.20) to Chapter 2.2 of Division 2 of, and to amend, renumber, and add Section 1374.20 to, the Health and Safety Code, and to add Section 10199.48 to the Insurance Code, relating to health care. LEGISLATIVE COUNSEL'S DIGEST AB 2052, Goldberg. Health care service plans and health insurance: group contract or policy rate changes. Existing law provides that, with respect to group health care service plans and group health insurance, no change in premium rate or coverage is effective unless the plan or the insurer meets specified notification requirements. A violation of the provisions regulating health care service plans is a crime. This bill would prohibit, except as specified, a health care service plan or a health insurer from changing its premium rates or applicable copayments or coinsurances or deductibles for group health care service plans or group health insurance after the group contractholder or group policyholder has delivered written acceptance of the contract or policy, after the start of the open enrollment period, or after receipt of the premium payment for the first month of coverage. The bill would provide for exemptions from the prohibition where the change is authorized or required in the group contract or policy, is agreed to under a preliminary agreement, or is mutually agreed to in writing, as specified. Because a violation of this bill's prohibition against a group health care service plan changing premium rates or applicable copayments or coinsurances or deductibles would be a crime, the bill would impose a state-mandated local program. This bill would declare the Legislature's intent to protect consumers from being charged a higher rate after enrolling in or renewing a contract with a health care service plan or a health insurer. 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. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. It is the intent of the Legislature to protect consumers from being charged higher rates after enrolling in or renewing a contract with a health care service plan or a health insurer for coverage for the following year. SEC. 2. The heading of Article 5.5 (commencing with Section 1374.20) of Chapter 2.2 of Division 2 of the Health and Safety Code is amended to read: Article 5.5. Health Care Service Plan Coverage Contract Changes SEC. 3. Section 1374.20 of the Health and Safety Code is amended and renumbered to read: 1374.29. The purpose of this article is to promote the public interest, to prevent unfair and unlawful health care business practices, and to promote adequate consumer and employer advance notice of changes in the cost of health coverage in order to allow for comparative shopping and to reduce the cost of health coverage. SEC. 4. Section 1374.20 is added to the Health and Safety Code, to read: 1374.20. (a) No group health care service plan shall change the premium rates or applicable copayments or coinsurances or deductibles for the length of the contract, except as specified in subdivision (b), during any of the following time periods: (1) After the group contractholder has delivered written notice of acceptance of the contract. (2) After the start of the employer's annual open enrollment period. (3) After the receipt of payment of the premium for the first month of coverage in accordance with the contract effective date. (b) Changes to the premium rates or applicable copayments or coinsurances or deductibles of a contract shall, subject to the plan meeting the requirements of this article, be allowed in any of the following circumstances: (1) When authorized or required in the group contract. (2) When the contract was agreed to under a preliminary agreement that states that it is subject to execution of a definitive agreement. (3) When the plan and contractholder mutually agree in writing. SEC. 5. Section 10199.48 is added to the Insurance Code, to read: 10199.48. (a) No health insurer shall, with regard to a group contract, change the premium rates or applicable copayments or coinsurances or deductibles for the length of the contract, except as specified in subdivision (b), during any of the following time periods: (1) After the group policyholder or group contractholder has delivered written notice of acceptance of the contract or policy. (2) After the start of the employer's annual open enrollment period. (3) After the receipt of payment of the premium for the first month of coverage in accordance with the contract or policy effective date. (b) Changes to the premium rates or applicable copayments or coinsurances or deductibles of a contract or policy shall, subject to the insurer meeting the requirements of this chapter, be allowed in any of the following circumstances: (1) When authorized or required in the group contract or policy. (2) When the contract or policy was agreed to under a preliminary agreement that states that it is subject to execution of a definitive agreement. (3) When the insurer and the policyholder or contractholder mutually agree in writing. SEC. 6. 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.