BILL NUMBER: SB 2	CHAPTERED
	BILL TEXT

	CHAPTER  673
	FILED WITH SECRETARY OF STATE  OCTOBER 6, 2003
	APPROVED BY GOVERNOR  OCTOBER 5, 2003
	PASSED THE ASSEMBLY  SEPTEMBER 13, 2003
	PASSED THE SENATE  SEPTEMBER 12, 2003
	CONFERENCE REPORT NO.  1
	PROPOSED IN CONFERENCE  SEPTEMBER 9, 2003
	AMENDED IN ASSEMBLY  JUNE 23, 2003
	AMENDED IN SENATE  JUNE 3, 2003
	AMENDED IN SENATE  MARCH 18, 2003

INTRODUCED BY   Senators Burton and Speier
   (Principal coauthor:  Assembly Member Frommer)
   (Coauthor:  Assembly Member Cohn)

                        DECEMBER 2, 2002

   An act to amend Section 6254 of the Government Code, to add
Article 3.11 (commencing with Section 1357.20) to Chapter 2.2 of
Division 2 of the Health and Safety Code, to add Section 12693.55 to,
and to add Chapter 8.1 (commencing with Section 10760) to Part 2 of
Division 2 of, the Insurance Code, to add Part 8.7 (commencing with
Section 2120) to Division 2 of the Labor Code, to amend Section 131
of, and to add Section 976.7 to, the Unemployment Insurance Code, and
to amend Section 14124.91 of, and to add Sections 14105.981,
14124.915, and 14124.916 to, the Welfare and Institutions Code,
relating to health care coverage, and making an appropriation
therefor.



	LEGISLATIVE COUNSEL'S DIGEST


   SB 2, Burton.  Health care coverage.
   Existing law does not provide a system of health care coverage for
all California residents and does not require employers to provide
health care coverage for employees and dependents, other than
coverage provided as part of the workers' compensation system for
work-related employee injuries.  Existing law provides for the
creation of various programs to provide health care services to
persons who have limited incomes and meet various eligibility
requirements.  These programs include the Healthy Families Program
administered by the Managed Risk Medical Insurance Board, and the
Medi-Cal program administered by the State Department of Health
Services.  Existing law provides for the regulation of health care
service plans by the Department of Managed Health Care and health
insurers by the Department of Insurance.
   This bill would create the State Health Purchasing Program, which
would be administered by the Managed Risk Medical Insurance Board.
The bill would require specified health benefits to be provided
directly by employers or through the program.  The bill would require
the board to arrange health plan coverage for certain employers, who
would be required to pay a fee for employee health coverage, except
that employers who provide health care coverage directly would
receive a credit against the fee.  The bill would require employees
and dependents of large employers to be covered beginning January 1,
2006, while it would require employees of medium employers to be
covered beginning January 1, 2007, subject to certain conditions.
Small employers would be exempt from the requirement to provide
coverage and from the fee.  The bill would require the board to
determine the fee to be paid by employers, and would provide that the
associated employee contributions, which employers would be required
to collect from employees, may not exceed 20% of the employer fee.
The fees, including the employee contributions, would be collected by
the Employment Development Department and would be deposited in the
newly created State Health Purchasing Fund.  The moneys in the fund
would be continuously appropriated to the board for the purposes of
the program.  The bill would authorize the board to coordinate
coverage under the program with coverage available under the Medi-Cal
program, the Healthy Families Program, and other public programs,
and would impose various requirements on the board and the State
Department of Health Services in that regard.  The bill would
authorize a loan from the General Fund to the board for startup costs
related to the State Health Purchasing Program, subject to
appropriation by the Legislature.  The bill would enact other related
provisions.
   Existing law requires health care service plans and health
insurers to comply with various requirements relating to health care
coverage for small employers.  A willful violation of provisions
governing health care service plans is a crime.
   This bill would extend the application of these requirements to
health care coverage provided directly by employers under the bill,
and would impose various other requirements.  Because a willful
violation of these provisions by health care service plans would be a
crime, the bill would impose a state-mandated local program.
  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.
   This bill would provide that it shall not become operative unless
AB 1528 is also enacted and becomes operative.
   Appropriation:  yes.


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


  SECTION 1.  The Legislature finds and declares all of the
following:
   (a) The Legislature finds and declares that working Californians
and their families should have health insurance coverage.
   (b) The Legislature further finds and declares that most working
Californians obtain their health insurance coverage through their
employment.
   (c) The Legislature finds and declares that in 2001, more than
6,000,000 Californians lacked health insurance coverage at some time
and 3,600,000 Californians had no health insurance coverage at any
time.
   (d) The Legislature finds and declares that more than 80 percent
of Californians without health insurance coverage are working people
or their families.  Most of these working Californians without health
insurance coverage work for employers who do not offer health
benefits.
   (e) The Legislature finds and declares that employment-based
health insurance coverage provides access for millions of
Californians to the latest advances in medical science, including
diagnostic procedures, surgical interventions, and pharmaceutical
therapies.
   (f) The Legislature finds and declares that people who are covered
by health insurance have better health outcomes than those who lack
coverage.  Persons without health insurance are more likely to be in
poor health, more likely to have missed needed medications and
treatment, and more likely to have chronic conditions that are not
properly managed.
   (g) The Legislature finds and declares that persons without health
insurance are at risk of financial ruin and that medical debt is the
second most common cause of personal bankruptcy in the United
States.
   (h) The Legislature further finds and declares that the State of
California provides health insurance to low- and moderate-income
working parents and their children through the Medi-Cal and Healthy
Families programs and pays the cost of coverage for those working
people who are not provided health coverage through employment.  The
Legislature further finds and declares that the State of California
and local governments fund county hospitals and clinics, community
clinics, and other safety net providers that provide care to those
working people whose employers fail to provide affordable health
coverage to workers and their families as well as to other uninsured
persons.
   (i) The Legislature further finds and declares that controlling
health care costs can be more readily achieved if a greater share of
working people and their families have health benefits so that cost
shifting is minimized.
   (j) The Legislature finds and declares that the social and
economic burden created by the lack of health coverage for some
workers and their dependents creates a burden on other employers, the
State of California, affected workers, and the families of affected
workers who suffer ill health and risk financial ruin.
   (k) It is therefore the intent of the Legislature to assure that
working Californians and their families have health benefits and that
employers pay a user fee to the State of California so that the
state may serve as a purchasing agent to pool those fees to purchase
coverage for all working Californians and their families that is not
tied to employment with an individual employer.  However, consistent
with this act, if the employer voluntarily provides proof of health
care coverage, that employer is to be exempted from payment of the
fee.
   (l) It is further the intent of the Legislature that workers who
work on a seasonal basis, for multiple employers, or who work
multiple jobs for the same employer should be afforded the
opportunity to have health coverage in the same manner as those who
work full-time for a single employer.
   (m) The Legislature recognizes the vital role played by the health
care safety net and the potential impact this act may have on the
resources available to county hospital systems and clinics, including
physicians or networks of physicians that refer patients to such
hospitals and clinics, as well as community clinics and other safety
net providers.  It is the intent of the Legislature to preserve the
viability of this important health care resource.
   (n) Nothing in this act shall be construed to diminish or
otherwise change existing protections in law for persons eligible for
public programs including, but not limited to, Medi-Cal, Healthy
Families, California Children's Services, Genetically Handicapped
Persons Program, county mental health programs, programs administered
by the Department of Alcohol and Drug Programs, or programs
administered by local education agencies.  It is further the intent
of the Legislature to preserve benefits available to the recipients
of these programs, including dental, vision, and mental health
benefits.
  SEC. 2.  Part 8.7 (commencing with Section 2120) is added to
Division 2 of the Labor Code, to read:

      PART 8.7.  EMPLOYEE HEALTH INSURANCE
      CHAPTER 1.  TITLE AND PURPOSE

   2120.  This part shall be known and may be cited as the Health
Insurance Act of 2003.
   2120.1.  (a) Large employers, as defined in Section 2122.3, shall
comply with the provisions of this part applicable to large employers
commencing on January 1, 2006.
   (b) Medium employers, as defined in Section 2122.4, shall comply
with the provisions of this part applicable to medium employers
commencing on January 1, 2007, except that those employers with at
least 20 employees but no more than 49 employees are not required to
comply with the provisions of this part unless a tax credit is
enacted that is available to those employers with at least 20
employees but no more than 49 employees.  The tax credit shall be 20
percent of net cost to the employer of the fee owed under Chapter 4
(commencing with Section 2140).  "Net cost" means the dollar amount
of the employer fee or the credit consistent with Section 2160.1
reduced by the employee share of that fee or credit and further
reduced by the value of state and federal tax deductions.
   2120.2.  It is the purpose of this part to ensure that working
Californians and their families are provided health care coverage.
   2120.3.  This part shall not be construed to diminish any
protection already provided pursuant to collective bargaining
agreements or employer-sponsored plans that are more favorable to the
employees than the health care coverage required by this part.

      CHAPTER 2.  DEFINITIONS

   2122.  Unless the context requires otherwise, the definitions set
forth in this chapter shall govern the construction and meaning of
the terms and phrases used in this part.
   2122.1.  "Dependent" means the spouse, domestic partner, minor
child of a covered enrollee, or child 18 years of age and over who is
dependent on the enrollee, as specified by the board.  "Dependent"
does not include a dependent who is provided coverage by another
employer or who is an eligible enrollee as a consequence of that
dependent's employment status.
   2122.2.  "Enrollee" means a person who works at least 100 hours
per month for any individual employer and has worked for that
employer for three months.  The term includes sole proprietors or
partners of a partnership, if they are actively engaged at least 100
hours per month in that business.
   2122.3.  "Large employer" means a person, as defined in Section
7701(a) of the Internal Revenue Code, or public or private entity
employing for wages or salary 200 or more persons to work in this
state.
   2122.4.  "Medium employer" means a person, as defined in Section
7701(a) of the Internal Revenue Code, or public or private entity
employing for wages or salary at least 20 but no more than 199
persons to work in this state.
   2122.5.  "Small employer" means a person, as defined in Section
7701(a) of the Internal Revenue Code, or public or private entity
employing for wages or salary at least 2 but no more than 19 persons
to work in this state.
   2122.6.  "Employer" means an employing unit as defined in Section
135 of the Unemployment Insurance Code, that is either a large
employer or medium employer, as defined in Sections 2122.3 and
2122.4.  For purposes of this part, an employer shall include all of
the members of a controlled group of corporations.  A "controlled
group of corporations" means controlled group of corporations as
defined in Section 1563(a) of the Internal Revenue Code, except that
"more than 50 percent" shall be substituted for "at least 80 percent"
each place it appears in Section 1563(a)(1) of the Internal Revenue
Code and the determination shall be made without regard to Sections
1563(a)(4) and 1563(e)(3)(C) of the Internal Revenue Code.
   2122.7.  "Principal employer" means the employer for whom an
enrollee works the greatest number of hours in any month.
   2122.8.  "Wages" means wages as defined in subdivision (a) of
Section 200 paid directly to an individual by his or her employer.
   2122.9.  "Fund" means the State Health Purchasing Fund created
pursuant to Section 2210.
   2122.10.  "Program" means the State Health Purchasing Program,
which includes a purchasing pool providing health care coverage for
enrollees, and, if applicable, their dependents, which will be
financed by fees paid by employers and contributions by enrollees.
   2122.11.  "Board" means the Managed Risk Medical Insurance Board.

   2122.12.  "Fee" means the fee as determined in Chapter 4
(commencing with Section 2140).

      CHAPTER 3.  STATE HEALTH PURCHASING PROGRAM

   2130.  The State Health Purchasing Program is hereby created.  The
program shall be managed by the Managed Risk Medical Insurance
Board, which shall have those powers granted to the board with
respect to the Healthy Families Program under Section 12693.21 of the
Insurance Code, except that the emergency regulation authority
referenced in subdivision (o) of that section shall only be in effect
for this program from the effective date of this part until three
years after the requirements of this program are in effect for large
and medium employers as provided in Section 2120.1.
   2130.1.  Notwithstanding any other provisions of law to the
contrary, the board shall have authority and fiduciary responsibility
for the administration of the program, including sole and exclusive
fiduciary responsibility over the assets of the fund.  The board
shall also have sole and exclusive responsibility to administer the
program in a manner that will assure prompt delivery of benefits and
related services to the enrollees, and, if applicable, dependents,
including sole and exclusive responsibility over contract, budget,
and personnel matters.  Nothing in this section shall preclude
legislative or state auditor oversight over the program.
   2130.2.  The board shall arrange coverage for enrollees, and, if
applicable, dependents eligible under this part by establishing and
maintaining a purchasing pool.  The board shall negotiate contracts
with those health care service plans and health insurers that choose
to participate for the benefit package described in this part and
shall not self-insure or partially self-insure the health care
benefits under this part.
   2130.3.  The health care benefits coverage provided to enrollees,
and, if applicable, dependents, shall be equivalent to the coverage
required under subdivision (a) or (b) of Section 2160.1.
   2130.4.  The program shall be funded by employer fees and enrollee
contributions as described in this part.  The board shall administer
the program in a manner that assures that the fees and enrollee
contributions collected pursuant to this part are sufficient to fund
the program, including administrative costs.

      CHAPTER 4.  EMPLOYER FEE

   2140.  Except as otherwise provided in this part, every large
employer and every medium employer shall pay a fee as specified in
this chapter.
   2140.1.  The board shall establish the level of the fee by
determining the total amount necessary to pay for health care for all
enrollees, and, if applicable, their dependents eligible for the
program.  In setting the fee the board may include costs associated
with the administration of the fund, including those costs associated
with collection of the fee and its enforcement by the Employment
Development Department.  The program implemented pursuant to this
part shall be fully supported by the fees and enrollee contributions
collected pursuant to this part.  The fees and enrollee contributions
collected pursuant to this part shall not be used for any purpose
other than providing health coverage for enrollees and, if
applicable, their dependents, as well as costs associated with the
administration of the fund and with collection of the fee and its
enforcement by the Employment Development Department.
   2140.2.  The board shall provide notice to the Employment
Development Department of the amount of the fee in a time and manner
that permits the Employment Development Department to provide notice
to all employers of the estimated fee for the budget year pursuant to
Section 976.7 of the Unemployment Insurance Code.
   2140.3. The Employment Development Department shall waive the fee
of any employer that is entitled to a credit under the terms of this
part.  The Employment Development Department shall specify the manner
and means by which that credit may be claimed by an employer.
   2140.4.  Revenue from the fee and from the enrollee contributions
specified in this part shall be deposited into the fund.
   2140.5.  The fee paid by employers shall be based on the cost of
coverage for all enrollees, and, if applicable, their dependents.
The fee to be paid by each employer shall be based on the number of
potential enrollees, and if applicable, dependents, using the
employer's own workforce on a date specified by the board as the
basis for the allocation and such other factors as the board may
determine in order to provide coverage that meets the standards of
this part.  To assist the board in determining the fee, each employer
shall provide to the board information as specified by the board
regarding potential enrollees, and, if applicable, dependents.  To
the extent feasible, the board shall work with the Employment
Development Department to facilitate the provision of information
regarding the number of potential enrollees and dependents.
   2140.6.  A large employer shall pay a fee to the fund for the
purpose of providing health care coverage pursuant to this part.  The
fee paid by a large employer shall be based on the number of
enrollees and dependents.
   2140.7.  A medium employer shall pay a fee to the fund for the
purpose of providing health care coverage pursuant to this part.  The
fee paid by a medium employer shall be based on the number of
enrollees.
   2140.8.  Coverage of an enrollee or, if applicable, dependents
shall not be contingent upon payment of the fee required pursuant to
this part by the employer of that enrollee or, if applicable,
dependents.  If an employer fails to pay the required fee, for
whatever reason, the employer shall be responsible to the fund for
payment of a penalty of 200 percent of the amount of any fee that
would have otherwise been paid by the employer including for the
period that the enrollee and, if applicable, dependents should have
received coverage but for the employer's conduct in violation of this
section.
   2140.9.  All amounts due and unpaid under this part, including
unpaid penalties, shall bear interest in accordance with Section 1129
of the Unemployment Insurance Code.
   2140.10.  Nothing in this part shall preclude an employer from
purchasing additional benefits or coverage, in addition to paying the
fee.

      CHAPTER 5.  ENROLLEE CONTRIBUTION

   2150.  The applicable enrollee contribution, not to exceed 20
percent of the fee assessed to the employer, shall be collected by
the employer and paid concurrently with the employer fee.  The
employer may agree to pay more than 80 percent of the fee, resulting
in an enrollee, and, if applicable, dependent contribution of less
than 20 percent.  For enrollees making a contribution for family
coverage and whose wages are less than 200 percent of the federal
poverty guidelines for a family of three, as specified annually by
the United States Department of Health and Human Services, the
applicable enrollee contribution shall not exceed 5 percent of wages.
  For enrollees making a contribution for individual coverage and
whose wages are less than 200 percent of the federal poverty
guidelines for an individual, the applicable enrollee contribution
shall not exceed 5 percent of wages.
   2150.1.  (a) The board shall establish the required enrollee and
dependent deductibles, coinsurance or copayment levels for specific
benefits, including total annual out-of-pocket cost.
   (b) No out-of-pocket costs other than copayments, coinsurance, and
deductibles in accordance with this section shall be charged to
enrollees and dependents for health benefits.
   (c) In determining the required enrollee and dependent
deductibles, coinsurance, and copayments, the board shall consider
whether the proposed copayments, coinsurance, and deductibles deter
enrollees and dependents from receiving appropriate and timely care,
including those enrollees with low or moderate family incomes.  The
board shall also consider the impact of out-of-pocket costs on the
ability of employers to pay the fee.
   This section shall apply to coverage provided through the program
only and is not intended to apply coverage that is not provided
through the program.
   2150.2.  In the event that the employer fails to collect or
transmit the enrollee contribution provided for under this part in a
timely manner, the employer shall become liable for a penalty of 200
percent of the amount that the employer has failed to collect or
transmit, and the employee shall be relieved of all liability for
that failure.  In no event shall the employer's failure to collect or
transmit the required enrollee's contribution or to provide
enrollment information about an employee affect the employee's
coverage arranged pursuant to Chapter 3 (commencing with Section
2130), nor may an employer withhold or collect any amount that is not
withheld and transmitted in the manner and at such times as
specified by the Employment Development Department pursuant to this
part.  An employee for whom enrollment information is not otherwise
received by the board may demonstrate eligibility for coverage by any
reliable means of demonstrating employment as provided for in
regulation.  To the extent feasible, the board shall work with the
Employment Development Department to facilitate the provision of
information regarding the eligibility of enrollees and to provide
information regarding any failure of an employer to collect or
transmit employee contributions as required by this part.

      CHAPTER 6.  EMPLOYER CREDIT AGAINST THE FEE

   2160. An employer required to pay a fee to the fund may apply to
the Employment Development Department for a credit against the fee by
providing proof of coverage for eligible enrollees and their
dependents, if applicable, consistent with Section 2140.3.
   2160.1.  Proof of coverage shall be demonstrated by any of the
following:
   (a) Any health care coverage that meets the minimum requirements
set forth in Chapter 2.2 (commencing with Section 1340) of Division 2
of the Health and Safety Code.
   (b) A group health insurance policy, as defined in subdivision (b)
of Section 106 of the Insurance Code, that covers hospital,
surgical, and medical care expenses, provided the maximum
out-of-pocket costs for insureds do not exceed the maximum
out-of-pocket costs for enrollees of health care service plans
providing benefits under a preferred provider organization policy.
For the purposes of this section, a group health insurance policy
shall not include Medicare supplement, vision-only, dental-only, and
Champus-supplement insurance.  For purposes of this section, a group
health insurance policy shall not include hospital indemnity,
accident-only, and specified disease insurance that pays benefits on
a fixed benefit, cash-payment-only basis.
   (c) Any Taft-Hartley health and welfare fund or any other lawful
collective bargaining agreement which provides for health and welfare
coverage for collective bargaining unit or other employees thereby
covered.
   (d) Any employer sponsored group health plan meeting the
requirements of the federal Employee Retirement Income Security Act
of 1974, provided it meets the benefits required under subdivision
(a) or (b) of this section.
   (e) A multiple employer welfare arrangement established pursuant
to Section 742.20 of the Insurance Code, provided that its benefits
have not changed after January 1, 2004, or that it meets the benefits
required under subdivision (a) or (b) of this section.
   (f) Coverage provided under the Public Employees' Medical and
Hospital Care Act (Part 5 (commencing with Section 22850) of Division
5 of Title 2 of the Government Code, provided it meets the benefits
required under subdivision (a) or (b) of this section or is otherwise
collectively bargained.
   (g) Health coverage provided by the University of California to
students of the University of California who are also employed by the
University of California.
   2160.2.  Nothing in this part shall preclude an employer from
providing additional benefits or coverage.
   2160.3.  It shall be unlawful for an employer to designate an
employee as an independent contractor or temporary employee, reduce
an employee's hours of work, or terminate and rehire an employee if a
purpose of which is to avoid the employer's obligations under this
part.  An employer that violates this section shall be responsible to
the fund for a penalty of 200 percent of the amount of any fee that
would have otherwise been paid by the employer including for the
period that the enrollee, and, if applicable, dependents should have
received coverage but for the employer's conduct in violation of this
section.  The rights established under this section shall not reduce
any other rights established under any other provision of law.
   2160.4.  An employer shall not request or otherwise seek to obtain
information concerning income or other eligibility requirements for
public health benefit programs regarding an employee, dependent, or
other family member of an employee, other than that information about
the employee's employment status otherwise known to the employer
consistent with existing state and federal law and regulation.  For
these purposes, public health benefit programs include, but are not
limited to, the Medi-Cal program, Healthy Families Program, Major
Risk Medical Insurance Program, and Access for Infants and Mothers
program.
   2160.5.  The Employment Development Department shall adopt
regulations to ensure that employers abide by the provisions of this
chapter.  The regulations may initially be adopted as emergency
regulations in accordance with the Administrative Procedure Act
(Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3
of Title 2 of the Government Code, but those emergency regulations
shall be in effect only from the effective date of this part until
after the requirements of this program are in effect for large and
medium employers as provided in Section 2120.1.
   2160.7.  (a) Any new employer or existing employer that previously
was not subject to this part shall begin complying with all
applicable provisions of this part within one month of the date it
became subject to this part.
   (b) Any existing employer previously subject to this part but no
longer subject to this part shall notify the Employment Development
Department in a manner prescribed by that department within 15 days
of this change before discontinuing to comply with the provisions of
this part.

      CHAPTER 7.  PARTICIPATING HEALTH PLANS

   2170.  Notwithstanding any other provision of law, the board shall
not be subject to licensure or regulation by the Department of
Insurance or the Department of Managed Health Care.
   2171.  The board shall contract only with insurers that can
demonstrate compliance with Section 10761.2 of the Insurance Code and
only with health care service plans that can demonstrate compliance
with the requirements of Section 1357.23 of the Health and Safety
Code.
   2173.  (a) The board shall develop and utilize appropriate cost
containment measures to maximize the cost-effectiveness of health
care coverage offered under the program.  The board shall consider
the findings of the California Health Care Quality Improvement and
Cost Containment Commission.
   (b) Health care service plans, health insurers, and providers are
encouraged to develop innovative approaches, services, and programs
that may have the potential to deliver health care that is both
cost-effective and responsive to the needs of enrollees.

      CHAPTER 8.  ENROLLMENT AND COORDINATION WITH PUBLIC PROGRAMS

   2190.  (a) Employers shall provide information to the board
regarding potential enrollees, and, if applicable, dependents as
prescribed by the board to assist the board in obtaining information
necessary for enrollment.  In no case shall the board require the
employer to obtain from the potential enrollee information about the
family income or other eligibility requirements for Medi-Cal, Healthy
Families, or other public programs other than that information about
the enrollee's employment status otherwise known to the employer
consistent with existing state and federal law and regulation.
   (b) The board shall obtain enrollment information from potential
enrollees and, if applicable, dependents to be covered by the
program.  The enrollee may voluntarily provide information sufficient
to determine whether the enrollee or dependents may be eligible for
coverage under Medi-Cal, Healthy Families, or other public programs
if the enrollee chooses to seek enrollment in those programs.  The
board shall use a uniform enrollment form for obtaining that
information.  The board shall provide information to enrollees
covered by the program regarding the coverage available under the
program and other programs, including Medi-Cal and Healthy Families,
for which enrollees or dependents may be eligible.
   2190.1.  (a) An enrollee or dependent who would qualify for
Medi-Cal pursuant to Chapter 7 (commencing with Section 14000) of
Part 3 of Division 6 of the Welfare and Institutions Code and who
chooses to provide information about eligibility for the Medi-Cal
program shall be enrolled in the Medi-Cal program if determined by
the State Department of Health Services to be eligible for that
program and shall be charged share-of-cost, copays, coinsurance, or
deductibles in
accordance with the requirements of that program.
   (b) An enrollee or dependent who would qualify for the Healthy
Families Program pursuant to Part 6.2 (commencing with Section 12693)
of the Insurance Code and who chooses to provide information about
eligibility for the Healthy Families Program shall be enrolled in the
Healthy Families Program if determined eligible for that program and
shall be charged share-of-premium, copays, coinsurance, or
deductibles in accordance with the requirements of that program.
   2190.2.  (a) The board shall provide to the State Department of
Health Services information concerning the potential or continuing
eligibility of enrollees and dependents in the program for Medi-Cal.

   (b) (1) For those enrollees and dependents of the program who are
determined to be eligible for Medi-Cal, the board shall provide the
state share of financial participation for the cost of Medi-Cal
coverage provided through the program.
   (2) For those enrollees and dependents of the program who are
determined to be eligible for Healthy Families, the board shall
provide the state share of financial participation for the cost of
Healthy Families coverage provided through the program.
   (c) Nothing in this part shall affect the authority of the State
Department of Health Services or the board to verify eligibility as
required by federal law.
   (d) The board shall have authority to make any necessary
repayments of enrollee contributions to persons whose coverage is
provided under this section, and may also delegate to the State
Department of Health Services the authority to repay those
contributions.
   (e) The State Department of Health Services shall seek all state
plan amendments and federal approvals as necessary to maximize the
amount of any federal financial participation available.
   2190.3.  Nothing in this part shall be construed to diminish or
otherwise change existing protections in law for persons eligible for
public programs, including, but not limited to, California Children'
s Services, Genetically Handicapped Persons Program, county mental
health programs, programs administered by the Department of Alcohol
and Drug Programs, or programs administered by local education
agencies.
   2190.4.  In implementing this part, the board shall consult with
organizations representing the interests of enrollees, particularly
those who may be covered by public programs as well as family
members, providers, advocacy organizations, and plans providing
coverage under public programs.

      CHAPTER 9.  ADMINISTRATION

   2200.  A contract entered into by the board pursuant to this part
shall be exempt from any provision of law relating to competitive
bidding, and shall be exempt from the review or approval of any
division of the Department of General Services.  The board shall not
be required to specify the amounts encumbered for each contract, but
may allocate funds to each contract based on the projected or actual
enrollee enrollments to a total amount not to exceed the amount
appropriate for the program including applicable contributions.
   2210.  (a) The State Health Purchasing Fund is hereby created in
the State Treasury and, notwithstanding Section 13340 of the
Government Code, is continuously appropriated to the board for the
purposes specified in this part.
   (b) The board shall authorize the expenditure from the fund of
applicable employer fees and enrollee contributions that are
deposited into the fund.  This shall include the authority for the
board to transfer funds to two separate special deposit funds to be
established by the board pursuant to this part, and administered
respectively by the State Department of Health Services and the
board, to be used as the state's share of financial participation for
the respective costs of Medi-Cal or Healthy Families coverage
provided to enrollees, and, if applicable, dependents, who enroll in
Medi-Cal or Healthy Families.
   (c) Notwithstanding Section 2130.4, the board is authorized to
obtain a loan from the General Fund for all necessary and reasonable
expenses related to the establishment and administration of this part
prior to the collection of the employer fee.  The proceeds of the
loan are subject to appropriation in the annual Budget Act.  The
board shall repay principal and interest, using the rate of interest
paid under the Pooled Money Investment Account, to the General Fund
no later than five years after the first year of implementation of
the employer fee.
  SEC. 3.  Article 3.11 (commencing with Section 1357.20) is added to
Chapter 2.2 of Division 2 of the Health and Safety Code, to read:

      Article 3.11.  Insurance Market Reform

   1357.20.  If the provisions of Part 8.7 (commencing with Section
2120) of Division 2 of the Labor Code are held invalid, then the
provisions of this article shall become inoperative.
   1357.21.  (a) Notwithstanding any other provision of law, on and
after January 1, 2006, except as specified in subdivision (b), all
requirements in Article 3.1 (commencing with Section 1357) applicable
to offering, marketing, and selling health care service plan
contracts to small employers as defined in that article, including,
but not limited to, the obligation to fairly and affirmatively offer,
market, and sell all of the plan's contracts to all employers,
guaranteed renewal of all health care service plan contracts, use of
the risk adjustment factor, and the restriction of risk categories to
age, geographic region, and family composition as described in that
article, shall be applicable to all health care service plan
contracts offered to all small and medium employers providing
coverage to employees pursuant to Part 8.7 (commencing with Section
2120) of Division 2 of the Labor Code, except as follows:
   (1) For small and medium employers with two to 50 eligible
employees, all requirements in that article shall apply.  As used in
this article, "small employer" shall have the meaning as defined in
Section 2122.5 of the Labor Code and "medium employer" shall have the
meaning as defined in Section 2122.4 of the Labor Code, unless the
context otherwise requires.
   (2) For medium employers with 51 or more eligible employees, all
requirements in that article  shall apply, except that the health
care service plan may develop health care coverage benefit plan
designs to fairly and affirmatively market only to medium employer
groups of 51 to 199 eligible employees, and apply a risk adjustment
factor of no more than 115 percent and no less than 85 percent of the
standard employee risk rate.
   (b) Health care service plans shall be required to comply with
this section only beginning with the date when coverage begins to be
offered through the State Health Purchasing Program pursuant to Part
8.7 (commencing with Section 2120 of Division 2 of the Labor Code.
   1357.22.  On and after January 1, 2006, a health care service plan
contract with an employer as defined in Section 2122.6 of the Labor
Code providing health coverage to enrollees or subscribers shall meet
all of the following requirements:
   (a) The employer shall be responsible for the cost of health care
coverage except as provided in this section.
   (b) An employer may require a potential enrollee to pay up to 20
percent of the cost of the coverage, proof of which is provided by
the employer in lieu of paying the fee required by Part 8.7
(commencing with Section 2120) of Division 2 of the Labor Code,
unless the wages of the potential enrollee are less than 200 percent
of the federal poverty guidelines, as specified annually by the
United States Department of Health and Human Services.  For enrollees
making a contribution for family coverage and whose wages are less
than 200 percent of the federal poverty guidelines for a family of
three, the applicable enrollee contribution shall not exceed 5
percent of wages.  For enrollees making a contribution for individual
coverage and whose wages are less than 200 percent of the federal
poverty guidelines for an individual, the applicable enrollee
contribution shall not exceed 5 percent of wages of the individual.
   (c) If an employer, as defined in Section 2122.6 of the Labor
Code, chooses to purchase more than one means of coverage for
potential enrollees and, if applicable, dependents, the employer may
require a higher level of contribution from potential enrollees as
long as one means of coverage meets the standards of this section.
   (d) An employer, as defined in Section 2122.6 of the Labor Code,
may purchase health care coverage that includes additional
out-of-pocket expenses, such as copayments, coinsurance, or
deductibles.  In reviewing subscriber or enrollee share-of-premium,
deductibles, copayments, and other out-of-pocket costs, the
department shall consider those permitted by the board under Part 8.7
(commencing with Section 2120) of Division 2 of the Labor Code.
   (e) Notwithstanding subdivision (b), a medium employer may require
an enrollee to contribute more than 20 percent of the cost of
coverage if both of the following apply:
   (1) The coverage provided by the employer includes coverage for
dependents.
   (2) The employer contributes an amount that exceeds 80 percent of
the cost of the coverage for an individual employee.
   (f) The contract includes prescription drug coverage with
out-of-pocket costs for enrollees consistent with subdivision (d).
   1357.23.  On and after January 1, 2006, all health care service
plans contracting with employers consistent with Section 1357.22 or
with the State Health Purchasing Program shall make reasonable
efforts to contract with county hospital systems and clinics,
including providers or networks of providers that refer enrollees to
such hospitals and clinics, as well as community clinics and other
safety net providers.  This section shall not prohibit a plan from
applying appropriate credentialing requirements consistent with this
chapter.  This section shall not apply to a nonprofit health care
service plan that provides hospital services to its enrollees
primarily through a nonprofit hospital corporation with which the
health care service plan shares an identical board of directors.
  SEC. 4.  Chapter 8.1 (commencing with Section 10760) is added to
Part 2 of Division 2 of the Insurance Code, to read:

      CHAPTER 8.1.  INSURANCE MARKET REFORM

   10760.  If the provisions of Part 8.7 (commencing with Section
2120) of Division 2 of the Labor Code are held invalid, then the
provisions of this chapter shall become inoperative.
   10761.  (a) Notwithstanding any other provision of law, on and
after January 1, 2006, except as specified in subdivision (b), all
requirements in Chapter 8 (commencing with Section 10700) applicable
to offering, marketing, and selling health benefit plans to small
employers as defined in that chapter, including, but not limited to,
the obligation to fairly and affirmatively offer, market, and sell
all of the insurer's health benefit plans to all employers,
guaranteed renewal of all health benefit plans, use of the risk
adjustment factor, and the restriction of risk categories to age,
geographic region, and family composition as described in that
chapter, shall be applicable to all health benefit plans offered to
all small and medium employers providing coverage to employees
pursuant to Part 8.7 (commencing with Section 2120) of Division 2 of
the Labor Code, except as follows:
   (1) For small and medium employers with two to 50 eligible
employees, all requirements in that chapter shall apply.  As used in
this chapter, "small employer" shall have the meaning as defined in
Section 2122.5 of the Labor Code and "medium employer" shall have the
meaning as defined in Section 2122.4 of the Labor Code, unless the
context otherwise requires.
   (2) For medium employers with 51 or more eligible employees, all
requirements in that chapter shall apply, except that the health
insurers may develop health care coverage benefit plan designs to
fairly and affirmatively market only to medium employer groups of 51
to 199 eligible employees, and apply a risk adjustment factor of no
more than 115 percent and no less than 85 percent of the standard
employee risk rate.
   (b) Insurers shall be required to comply with this section only
beginning with the date when coverage begins to be offered through
the State Health Purchasing Program pursuant to Part 8.7 (commencing
with Section 2120) of Division 2 of the Labor Code.
   10762.  On and after January 1, 2006, a health insurer selling a
policy to an employer, as defined in Section 2122.6 of the Labor
Code, providing health coverage to insureds pursuant to Part 8.7
(commencing with Section 2120) of Division 2 of the Labor Code shall
meet all of the following requirements:
   (a) The employer shall be responsible for the cost of health care
coverage except as provided in this section.
   (b) An employer may require a potential enrollee to pay up to 20
percent of the cost of the coverage, proof of which is provided by
the employer in lieu of paying the fee required by Part 8.7
(commencing with Section 2120) of Division 2 of the Labor Code,
unless the wages of the potential enrollee are less than 200 percent
of the federal poverty guidelines, as specified annually by the
United States Department of Health and Human Services.  For enrollees
making a contribution for family coverage and whose wages are less
than 200 percent of the federal poverty guidelines for a family of
three, the applicable enrollee contribution shall not exceed 5
percent of wages.  For enrollees making a contribution for individual
coverage and whose wages are less than 200 percent of the federal
poverty guidelines for an individual, the applicable enrollee
contribution shall not exceed 5 percent of wages of the individual.
   (c) If an employer, as defined in Section 2122.6 of the Labor
Code, chooses to purchase more than one means of coverage for
potential enrollees and, if applicable, dependents, the employer may
require a higher level of contribution from potential enrollees as
long as one means of coverage meets the standards of this section.
   (d) An employer, as defined in Section 2122.6 of the Labor Code,
may purchase health care coverage that includes additional
out-of-pocket expenses, such as copayments, coinsurance, or
deductibles.  In reviewing enrollee share-of-premium, deductibles,
copayments, and other out-of-pocket costs, the department shall
consider those permitted by the board under Part 8.7 (commencing with
Section 2120) of Division 2 of the Labor Code.
   (e) Notwithstanding subdivision (b), a medium employer may require
an enrollee to contribute more than 20 percent of the cost of
coverage if both of the following apply:
   (1) The coverage provided by the employer includes coverage for
dependents.
   (2) The employer contributes an amount that exceeds 80 percent of
the cost of the coverage for an individual employee.
   (f) The contract includes prescription drug coverage with
out-of-pocket costs for enrollees consistent with subdivision (d).
   10763.  On and after January 1, 2006, all insurers that sell
insurance policies to employers consistent with Section 10762 or to
the State Health Purchasing Program shall make reasonable efforts to
include as preferred providers county hospital systems and clinics,
including providers or networks of providers that refer enrollees to
those hospitals and clinics, as well as community clinics and other
safety net providers.  This section shall not prohibit a plan from
applying appropriate credentialing requirements consistent with this
chapter.  This section shall not apply to a nonprofit health care
service plan that provides hospital services to its enrollees
primarily through a nonprofit hospital corporation with which the
plan shares an identical board of directors.
   10764.  (a) On and after January 1, 2006, except as provided in
subdivision (b), health insurers shall not offer or sell the
following insurance policies to employers providing coverage to
employees pursuant to Part 8.7 (commencing with Section 2120) of
Division 2 of the Labor Code:
   (1) A Medicare supplement, vision-only, dental-only, or
Champus-supplement insurance policy.
   (2) A hospital indemnity, accident-only, or specified disease
insurance policy that pays benefits on a fixed benefit,
cash-payment-only basis.
   (b) However, an insurer may sell one or more of the types of
policies listed in paragraph (1) or (2) of subdivision (a) if the
employer has purchased or purchases concurrently health care coverage
meeting the standards of Part 8.7 (commencing with Section 2120) of
Division 2 of the Labor Code.
   (c) If an employer, as defined in Section 2022.6 of the Labor
Code, chooses to purchase more than one means of coverage, the
employer may require a higher level of contribution from potential
enrollees so long as one means of coverage meets the standards of
this section.
   (d) An employer, as defined in Section 2122.6 of the Labor Code,
may purchase health care coverage that includes additional
out-of-pocket expenses, such as coinsurance or deductibles.  In
reviewing the share-of-premium, deductibles, copayments, and other
out-of-pocket costs paid by insureds, the department shall consider
those permitted by the board under Part 8.7 (commencing with Section
2120) of Division 2 of the Labor Code.
   (e) Notwithstanding subdivision (b), a medium employer, as defined
in Section 2122.4 of the Labor Code, may require an enrollee to
contribute more than 20 percent of the cost of coverage if both of
the following apply:
   (1) The coverage provided by the employer includes coverage for
dependents.
   (2) The employer contributes an amount that exceeds 80 percent of
the cost of the coverage for an individual employee
   (f) The policy includes prescription drug coverage, which shall be
subject to coinsurance, deductibles, and other out-of-pocket costs
consistent with (d).
  SEC. 5.  Section 12693.55 is added to the Insurance Code, to read:

   12693.55.  (a) Prior to implementation of the Health Insurance Act
of 2003, the board shall to the maximum extent permitted by federal
law ensure that persons who are either covered or eligible for
Healthy Families will retain the same amount, duration, and scope of
benefits that they currently receive or are currently eligible to
receive, including dental, vision and mental benefits.  The board
shall consult with a stakeholder group that shall include all of the
following:
   (1) Consumer advocate groups that represent persons eligible for
Healthy Families.
   (2) Organizations that represent persons with disabilities.
   (3) Representatives of public hospitals, clinics, safety net
providers, and other providers.
   (4) Labor organizations that represent employees whose families
include persons likely to be eligible for Healthy Families.
   (5) Employer organizations.
   (b) The board shall develop a Healthy Families premium assistance
program for eligible individuals as permitted under federal law to
reduce state costs and maximize federal financial participation by
providing health care coverage to eligible individuals through a
combination of available employer-based coverage and a wraparound
benefit that covers any gap between the employer-based coverage and
the benefits required by this part.
   (c) The board shall do all of the following in implementing the
premium assistance program:
   (1) Require eligible individuals with access to employer-based
coverage to enroll themselves or their family or both in the
available employer-based coverage if the board finds that enrollment
in that coverage is cost-effective.
   (2) Promptly reimburse an eligible individual for his or her share
of premium cost under the employer-based coverage, minus any
contribution that an individual would be required to pay pursuant to
Section 12693.43.
   (d) If federal approval of a premium assistance program cannot be
obtained, the board in consultation with the stakeholder group shall
explore alternatives that provide that persons who are either covered
or eligible for Healthy Families retain the same amount, duration
and scope of benefits that they currently receive or are currently
eligible to receive, including vision, dental and mental health
benefits.
  SEC. 6.  Section 131 of the Unemployment Insurance Code is amended
to read:
   131.  "Contributions" means the money payments to the Unemployment
Fund, Employment Training Fund, State Health Purchasing Fund, or
Unemployment Compensation Disability Fund which are required by this
division.
  SEC. 7.  Section 976.7 is added to the Unemployment Insurance Code,
to read:
   976.7.  (a) In addition to other contributions required by this
division and consistent with the requirements of Chapter 6
(commencing with Section 2160) of Part 8.7 of Division 2 of the Labor
Code, an employer shall pay to the department for deposit into the
State Health Purchasing Fund a fee in the amount set by the Managed
Risk Medical Insurance Board for the State Health Purchasing Program
in accordance with Chapter 4 (commencing with Section 2140) of Part
8.7 of Division 2 of the Labor Code.  The fees shall be collected in
the same manner and at the same time as any contributions required
under Sections 976 and 1088.
   (b) In notifying employers of the contributions required under
this section, the department shall also provide notice of required
employee contribution amounts consistent with Section 2150 of the
Labor Code.
   (c) An employer shall provide information to all newly hired and
existing employees regarding the availability of Medi-Cal coverage
for low-and moderate-income employees, including the availability of
Medi-Cal premium assistance as well as Medi-Cal coverage for persons
receiving coverage through the State Health Purchasing Fund.  The
Employment Development Department, in consultation with the State
Department of Health Services and the Managed Risk Medical Insurance
Board shall develop a simple, uniform notice containing that
information.
  SEC. 8.  Section 14105.981 is added to the Welfare and Institutions
Code, to read:
   14105.981.  (a) Prior to the implementation of the Health
Insurance Act of 2003, annually for five years after its
implementation, and every five years thereafter, the department shall
report to the Legislature and the Managed Risk Medical Insurance
Board regarding utilization patterns for Medi-Cal pursuant to Chapter
7 (commencing with Section 14000) of Part 3 of Division 6 at
county-owned hospitals and clinics, community clinics, and vital
institutional safety net providers eligible for Medi-Cal payments
under Section 14105.98, including determining the number of Medi-Cal
inpatient days and outpatient visits as well as the nature and cost
of care provided to Medi-Cal patients.
   (b) If Medi-Cal fee-for-service utilization or Medi-Cal
fee-for-service payments to county-owned hospitals and clinics,
community clinics, and other vital institutional safety net providers
eligible for Medi-Cal payments under Section 14105.98 have been
reduced, then the department shall review statute, regulations,
policies and procedures, payment arrangements or other mechanisms to
determine what changes may be necessary to protect Medi-Cal funding
and maximize federal financial participation to protect the financial
stability of county-owned hospitals and clinics, community clinics,
and other vital institutional safety net providers.  The department
shall consult with representatives of county-owned hospital systems,
community clinics, vital institutional safety net providers eligible
for Medi-Cal payments under Section 14105.98, legal services
advocates, and recognized collective bargaining agents for the
specified providers.
  SEC. 9.  Section 14124.91 of the Welfare and Institutions Code is
amended to read:
   14124.91.  (a) The State Department of Health Services shall,
whenever it is cost-effective, pay the premium for third-party health
coverage for beneficiaries under this chapter.  The State Department
of Health Services shall, when a beneficiary's third-party health
coverage would lapse due to loss of employment or change in health
status, lack of sufficient income or financial resources, or any
other reason, continue the health coverage by paying the costs of
continuation of group coverage pursuant to federal law or converting
from a group to an individual plan, whenever it is cost-effective.
Notwithstanding any other provision of a contract or of law, the time
period for the department to exercise either of these options shall
be 60 days from the date of lapse of the policy.
   (b) In addition, contingent on federal financial participation,
the department shall implement a Medi-Cal premium assistance program
to reduce state costs and maximize allowable federal financial
participation by paying the premium for employer-based health care
coverage available to persons who are eligible for Medi-Cal, and in
combination with employer-based health care coverage providing a
wraparound benefit that covers any gap between the employer-based
health care coverage and the benefits provided by the Medi-Cal
program.
   (c) The department in implementing the premium assistance program
shall promptly reimburse an applicant for Medi-Cal for his or her
share of premium, minus any share of cost required pursuant to this
part.  Once enrolled in both the premium assistance program and
employer-based health care coverage repayment to Medi-Cal covered
enrollees of any share of premium shall coincide with the payment by
the enrollee of the premium for the available employer-based health
care coverage.  Where the applicant or beneficiary avails himself or
herself of the wraparound benefit, Medi-Cal shall pay for any
copayments, deductibles, and other allowable out-of-pocket medical
costs under the employer-based coverage.
   (d) The department shall seek all state plan amendments and
federal approvals as necessary to maximize the amount of any federal
financial participation available.
  SEC. 10.  Section 14124.915 is added to the Welfare and
Institutions Code, to read:
   14124.915.  (a) Six months prior to implementation of Part 8.7
(commencing with Section 2120) of Division 2 of the Labor Code, the
department shall notify Medi-Cal enrollees of the implementation of
the Health Insurance Act of 2003, the categories of enrollees
covered, the requirements of the program, the availability of
Medi-Cal coverage for those persons, including the availability of a
premium assistance program for those persons eligible for Medi-Cal
who are also covered by employer-based coverage.
                                      (b) Three months prior to the
implementation of each phase of the program created by the Health
Insurance Act of 2003, those persons enrolled in Medi-Cal shall be
offered the opportunity to enroll in a Medi-Cal premium assistance
program.
  SEC. 11.  Section 14124.916 is added to the Welfare and
Institutions Code, to read:
   14124.916.  (a) Prior to the implementation of the Health
Insurance Act of 2003, the department shall convene a stakeholder
group that includes, but is not limited to, the following members:
   (1) The Managed Risk Medical Insurance Board.
   (2) Representatives of county welfare departments.
   (3) Consumer advocacy groups that represent persons enrolled in or
eligible to be enrolled in the Medi-Cal program.
   (4) Organizations that represent persons with disabilities.
   (5) Labor organizations that represent employees and their
dependents who are likely to be eligible for enrollment in Medi-Cal.

   (6) Representatives of public hospitals, clinics, provider groups,
and safety net providers.
   (b) The department in consultation with the stakeholder group
shall develop a plan to accomplish the following objectives:
   (1) Provide that enrollees and, if applicable, dependents who
receive coverage consistent with the Health Insurance Act of 2003 and
who are enrolled in Medi-Cal retain the same amount, duration, and
scope of benefits to which those beneficiaries currently are
entitled.
   (2) Provide that enrollees and, if applicable, dependents who
receive coverage consistent with the Health Insurance Act of 2003 and
who are enrolled in Medi-Cal do not incur greater cost-sharing,
including premiums, deductibles, and copays, than currently allowed
under federal Medicaid law.
   (3) Maximize continuity of care for enrollees and, if applicable,
dependents who receive coverage consistent with the Health Insurance
Act of 2003 and who are enrolled in Medi-Cal.
   (4) Streamline and simplify eligibility and enrollment
requirements for Medi-Cal beneficiaries who also have other coverage.

   (c) The department shall report to the Legislature every six
months and shall submit its final plan to the Legislature three
months prior to initial implementation of the Health Insurance Act of
2003.
   (d) The department shall seek all state plan amendments and
federal approvals as necessary to maximize the amount of any federal
financial participation available.
  SEC. 12.  Section 6254 of the Government Code is amended to read:
   6254.  Except as provided in Sections 6254.7 and 6254.13, nothing
in this chapter shall be construed to require disclosure of records
that are any of the following:
   (a) Preliminary drafts, notes, or interagency or intra-agency
memorandums that are not retained by the public agency in the
ordinary course of business, provided that the public interest in
withholding those records clearly outweighs the public interest in
disclosure.
   (b) Records pertaining to pending litigation to which the public
agency is a party, or to claims made pursuant to Division 3.6
(commencing with Section 810), until the pending litigation or claim
has been finally adjudicated or otherwise settled.
   (c) Personnel, medical, or similar files, the disclosure of which
would constitute an unwarranted invasion of personal privacy.
   (d) Contained in or related to any of the following:
   (1) Applications filed with any state agency responsible for the
regulation or supervision of the issuance of securities or of
financial institutions, including, but not limited to, banks, savings
and loan associations, industrial loan companies, credit unions, and
insurance companies.
   (2) Examination, operating, or condition reports prepared by, on
behalf of, or for the use of, any state agency referred to in
paragraph (1).
   (3) Preliminary drafts, notes, or interagency or intra-agency
communications prepared by, on behalf of, or for the use of, any
state agency referred to in paragraph (1).
   (4) Information received in confidence by any state agency
referred to in paragraph (1).
   (e) Geological and geophysical data, plant production data, and
similar information relating to utility systems development, or
market or crop reports, that are obtained in confidence from any
person.
   (f) Records of complaints to, or investigations conducted by, or
records of intelligence information or security procedures of, the
office of the Attorney General and the Department of Justice, and any
state or local police agency, or any investigatory or security files
compiled by any other state or local police agency, or any
investigatory or security files compiled by any other state or local
agency for correctional, law enforcement, or licensing purposes,
except that state and local law enforcement agencies shall disclose
the names and addresses of persons involved in, or witnesses other
than confidential informants to, the incident, the description of any
property involved, the date, time, and location of the incident, all
diagrams, statements of the parties involved in the incident, the
statements of all witnesses, other than confidential informants, to
the victims of an incident, or an authorized representative thereof,
an insurance carrier against which a claim has been or might be made,
and any person suffering bodily injury or property damage or loss,
as the result of the incident caused by arson, burglary, fire,
explosion, larceny, robbery, carjacking, vandalism, vehicle theft, or
a crime as defined by subdivision (c) of Section 13960, unless the
disclosure would endanger the safety of a witness or other person
involved in the investigation, or unless disclosure would endanger
the successful completion of the investigation or a related
investigation.  However, nothing in this division shall require the
disclosure of that portion of those investigative files that reflect
the analysis or conclusions of the investigating officer.
   Notwithstanding any other provision of this subdivision, state and
local law enforcement agencies shall make public the following
information, except to the extent that disclosure of a particular
item of information would endanger the safety of a person involved in
an investigation or would endanger the successful completion of the
investigation or a related investigation:
   (1) The full name and occupation of every individual arrested by
the agency, the individual's physical description including date of
birth, color of eyes and hair, sex, height and weight, the time and
date of arrest, the time and date of booking, the location of the
arrest, the factual circumstances surrounding the arrest, the amount
of bail set, the time and manner of release or the location where the
individual is currently being held, and all charges the individual
is being held upon, including any outstanding warrants from other
jurisdictions and parole or probation holds.
   (2) Subject to the restrictions imposed by Section 841.5 of the
Penal Code, the time, substance, and location of all complaints or
requests for assistance received by the agency and the time and
nature of the response thereto, including, to the extent the
information regarding crimes alleged or committed or any other
incident investigated is recorded, the time, date, and location of
occurrence, the time and date of the report, the name and age of the
victim, the factual circumstances surrounding the crime or incident,
and a general description of any injuries, property, or weapons
involved.  The name of a victim of any crime defined by Section 220,
261, 261.5, 262, 264, 264.1, 273a, 273d, 273.5, 286, 288, 288a, 289,
422.6, 422.7, 422.75, or 646.9 of the Penal Code may be withheld at
the victim's request, or at the request of the victim's parent or
guardian if the victim is a minor.  When a person is the victim of
more than one crime, information disclosing that the person is a
victim of a crime defined by Section 220, 261, 261.5, 262, 264,
264.1, 273a, 273d, 286, 288, 288a, 289, 422.6, 422.7, 422.75, or
646.9 of the Penal Code may be deleted at the request of the victim,
or the victim's parent or guardian if the victim is a minor, in
making the report of the crime, or of any crime or incident
accompanying the crime, available to the public in compliance with
the requirements of this paragraph.
   (3) Subject to the restrictions of Section 841.5 of the Penal Code
and this subdivision, the current address of every individual
arrested by the agency and the current address of the victim of a
crime, where the requester declares under penalty of perjury that the
request is made for a scholarly, journalistic, political, or
governmental purpose, or that the request is made for investigation
purposes by a licensed private investigator as described in Chapter
11.3 (commencing with Section 7512) of Division 3 of the Business and
Professions Code, except that the address of the victim of any crime
defined by Section 220, 261, 261.5, 262, 264, 264.1, 273a, 273d,
273.5, 286, 288, 288a, 289, 422.6, 422.7, 422.75, or 646.9 of the
Penal Code shall remain confidential.  Address information obtained
pursuant to this paragraph shall not be used directly or indirectly
to sell a product or service to any individual or group of
individuals, and the requester shall execute a declaration to that
effect under penalty of perjury.
   (g) Test questions, scoring keys, and other examination data used
to administer a licensing examination, examination for employment, or
academic examination, except as provided for in Chapter 3
(commencing with Section 99150) of Part 65 of the Education Code.
   (h) The contents of real estate appraisals or engineering or
feasibility estimates and evaluations made for or by the state or
local agency relative to the acquisition of property, or to
prospective public supply and construction contracts, until all of
the property has been acquired or all of the contract agreement
obtained.  However, the law of eminent domain shall not be affected
by this provision.
   (i) Information required from any taxpayer in connection with the
collection of local taxes that is received in confidence and the
disclosure of the information to other persons would result in unfair
competitive disadvantage to the person supplying the information.
   (j) Library circulation records kept for the purpose of
identifying the borrower of items available in libraries, and library
and museum materials made or acquired and presented solely for
reference or exhibition purposes.  The exemption in this subdivision
shall not apply to records of fines imposed on the borrowers.
   (k) Records, the disclosure of which is exempted or prohibited
pursuant to federal or state law, including, but not limited to,
provisions of the Evidence Code relating to privilege.
   (l) Correspondence of and to the Governor or employees of the
Governor's office or in the custody of or maintained by the Governor'
s legal affairs secretary, provided that public records shall not be
transferred to the custody of the Governor's Legal Affairs Secretary
to evade the disclosure provisions of this chapter.
   (m) In the custody of or maintained by the Legislative Counsel,
except those records in the public database maintained by the
Legislative Counsel that are described in Section 10248.
   (n) Statements of personal worth or personal financial data
required by a licensing agency and filed by an applicant with the
licensing agency to establish his or her personal qualification for
the license, certificate, or permit applied for.
   (o) Financial data contained in applications for financing under
Division 27 (commencing with Section 44500) of the Health and Safety
Code, where an authorized officer of the California Pollution Control
Financing Authority determines that disclosure of the financial data
would be competitively injurious to the applicant and the data is
required in order to obtain guarantees from the United States Small
Business Administration.  The California Pollution Control Financing
Authority shall adopt rules for review of individual requests for
confidentiality under this section and for making available to the
public those portions of an application that are subject to
disclosure under this chapter.
   (p) Records of state agencies related to activities governed by
Chapter 10.3 (commencing with Section 3512), Chapter 10.5 (commencing
with Section 3525), and Chapter 12 (commencing with Section 3560) of
Division 4 of Title 1, that reveal a state agency's deliberative
processes, impressions, evaluations, opinions, recommendations,
meeting minutes, research, work products, theories, or strategy, or
that provide instruction, advice, or training to employees who do not
have full collective bargaining and representation rights under
these chapters.  Nothing in this subdivision shall be construed to
limit the disclosure duties of a state agency with respect to any
other records relating to the activities governed by the employee
relations acts referred to in this subdivision.
   (q) Records of state agencies related to activities governed by
Article 2.6 (commencing with Section 14081), Article 2.8 (commencing
with Section 14087.5), and Article 2.91 (commencing with Section
14089) of Chapter 7 of Part 3 of Division 9 of the Welfare and
Institutions Code, that reveal the special negotiator's deliberative
processes, discussions, communications, or any other portion of the
negotiations with providers of health care services, impressions,
opinions, recommendations, meeting minutes, research, work product,
theories, or strategy, or that provide instruction, advice, or
training to employees.
   Except for the portion of a contract containing the rates of
payment, contracts for inpatient services entered into pursuant to
these articles, on or after April 1, 1984, shall be open to
inspection one year after they are fully executed.  In the event that
a contract for inpatient services that is entered into prior to
April 1, 1984, is amended on or after April 1, 1984, the amendment,
except for any portion containing the rates of payment, shall be open
to inspection one year after it is fully executed.  If the
California Medical Assistance Commission enters into contracts with
health care providers for other than inpatient hospital services,
those contracts shall be open to inspection one year after they are
fully executed.
   Three years after a contract or amendment is open to inspection
under this subdivision, the portion of the contract or amendment
containing the rates of payment shall be open to inspection.
   Notwithstanding any other provision of law, the entire contract or
amendment shall be open to inspection by the Joint Legislative Audit
Committee.  The committee shall maintain the confidentiality of the
contracts and amendments until the time a contract or amendment is
fully open to inspection by the public.
   (r) Records of Native American graves, cemeteries, and sacred
places maintained by the Native American Heritage Commission.
   (s) A final accreditation report of the Joint Commission on
Accreditation of Hospitals that has been transmitted to the State
Department of Health Services pursuant to subdivision (b) of Section
1282 of the Health and Safety Code.
   (t) Records of a local hospital district, formed pursuant to
Division 23 (commencing with Section 32000) of the Health and Safety
Code, or the records of a municipal hospital, formed pursuant to
Article 7 (commencing with Section 37600) or Article 8 (commencing
with Section 37650) of Chapter 5 of Division 3 of Title 4 of this
code, that relate to any contract with an insurer or nonprofit
hospital service plan for inpatient or outpatient services for
alternative rates pursuant to Section 10133 or 11512 of the Insurance
Code.  However, the record shall be open to inspection within one
year after the contract is fully executed.
   (u) (1) Information contained in applications for licenses to
carry firearms issued pursuant to Section 12050 of the Penal Code by
the sheriff of a county or the chief or other head of a municipal
police department that indicates when or where the applicant is
vulnerable to attack or that concerns the applicant's medical or
psychological history or that of members of his or her family.
   (2) The home address and telephone number of peace officers,
judges, court commissioners, and magistrates that are set forth in
applications for licenses to carry firearms issued pursuant to
Section 12050 of the Penal Code by the sheriff of a county or the
chief or other head of a municipal police department.
   (3) The home address and telephone number of peace officers,
judges, court commissioners, and magistrates that are set forth in
licenses to carry firearms issued pursuant to Section 12050 of the
Penal Code by the sheriff of a county or the chief or other head of a
municipal police department.
   (v) (1) Records of the Major Risk Medical Insurance Program
related to activities governed by Part 6.3 (commencing with Section
12695) and Part 6.5 (commencing with Section 12700) of Division 2 of
the Insurance Code, and that reveal the deliberative processes,
discussions, communications, or any other portion of the negotiations
with health plans, or the impressions, opinions, recommendations,
meeting minutes, research, work product, theories, or strategy of the
board or its staff, or records that provide instructions, advice, or
training to employees.
   (2) (A) Except for the portion of a contract that contains the
rates of payment, contracts for health coverage entered into pursuant
to Part 6.3 (commencing with Section 12695) or Part 6.5 (commencing
with Section 12700) of Division 2 of the Insurance Code, on or after
July 1, 1991, shall be open to inspection one year after they have
been fully executed.
   (B) In the event that a contract for health coverage that is
entered into prior to July 1, 1991, is amended on or after July 1,
1991, the amendment, except for any portion containing the rates of
payment, shall be open to inspection one year after the amendment has
been fully executed.
   (3) Three years after a contract or amendment is open to
inspection pursuant to this subdivision, the portion of the contract
or amendment containing the rates of payment shall be open to
inspection.
   (4) Notwithstanding any other provision of law, the entire
contract or amendments to a contract shall be open to inspection by
the Joint Legislative Audit Committee.  The committee shall maintain
the confidentiality of the contracts and amendments thereto, until
the contract or amendments to a contract is open to inspection
pursuant to paragraph (3).
   (w) (1) Records of the Major Risk Medical Insurance Program
related to activities governed by Chapter 14 (commencing with Section
10700) of Part 2 of Division 2 of the Insurance Code, and that
reveal the deliberative processes, discussions, communications, or
any other portion of the negotiations with health plans, or the
impressions, opinions, recommendations, meeting minutes, research,
work product, theories, or strategy of the board or its staff, or
records that provide instructions, advice, or training to employees.

   (2) Except for the portion of a contract that contains the rates
of payment, contracts for health coverage entered into pursuant to
Chapter 14 (commencing with Section 10700) of Part 2 of Division 2 of
the Insurance Code, on or after January 1, 1993, shall be open to
inspection one year after they have been fully executed.
   (3) Notwithstanding any other provision of law, the entire
contract or amendments to a contract shall be open to inspection by
the Joint Legislative Audit Committee.  The committee shall maintain
the confidentiality of the contracts and amendments thereto, until
the contract or amendments to a contract is open to inspection
pursuant to paragraph (2).
   (x) Financial data contained in applications for registration, or
registration renewal, as a service contractor filed with the Director
of the Department of Consumer Affairs pursuant to Chapter 20
(commencing with Section 9800) of Division 3 of the Business and
Professions Code, for the purpose of establishing the service
contractor's net worth, or financial data regarding the funded
accounts held in escrow for service contracts held in force in this
state by a service contractor.
   (y) (1) Records of the Managed Risk Medical Insurance Board
related to activities governed by Part 6.2 (commencing with Section
12693) or Part 6.4 (commencing with Section 12699.50) of Division 2
of the Insurance Code, and that reveal the deliberative processes,
discussions, communications, or any other portion of the negotiations
with health plans, or the impressions, opinions, recommendations,
meeting minutes, research, work product, theories, or strategy of the
board or its staff, or records that provide instructions, advice, or
training to employees.
   (2) (A) Except for the portion of a contract that contains the
rates of payment, contracts entered into pursuant to Part 6.2
(commencing with Section 12693) or Part 6.4 (commencing with Section
12699.50) of Division 2 of the Insurance Code, on or after January 1,
1998, shall be open to inspection one year after they have been
fully executed.
   (B) In the event that a contract entered into pursuant to Part 6.2
(commencing with Section 12693) or Part 6.4 (commencing with Section
12699.50) of Division 2 of the Insurance Code is amended, the
amendment shall be open to inspection one year after the amendment
has been fully executed.
   (3) Three years after a contract or amendment is open to
inspection pursuant to this subdivision, the portion of the contract
or amendment containing the rates of payment shall be open to
inspection.
   (4) Notwithstanding any other provision of law, the entire
contract or amendments to a contract shall be open to inspection by
the Joint Legislative Audit Committee.  The committee shall maintain
the confidentiality of the contracts and amendments thereto until the
contract or amendments to a contract are open to inspection pursuant
to paragraph (2) or (3).
   (5) The exemption from disclosure provided pursuant to this
subdivision for the contracts, deliberative processes, discussions,
communications, negotiations with health plans, impressions,
opinions, recommendations, meeting minutes, research, work product,
theories, or strategy of the board or its staff shall also apply to
the contracts, deliberative processes, discussions, communications,
negotiations with health plans, impressions, opinions,
recommendations, meeting minutes, research, work product, theories,
or strategy of applicants pursuant to Part 6.4 (commencing with
Section 12699.50) of Division 2 of the Insurance Code.
   (z) Records obtained pursuant to paragraph (2) of subdivision (c)
of Section 2891.1 of the Public Utilities Code.
   (aa) A document prepared by a local agency that assesses its
vulnerability to terrorist attack or other criminal acts intended to
disrupt the public agency's operations and that is for distribution
or consideration in a closed session.
   (bb) (1) Records of the Managed Risk Medical Insurance Board
related to activities governed by Part 8.7 (commencing with Section
2120) of Division 2 of the Labor Code, and that reveal the
deliberative processes, discussions, communications, or any other
portion of the negotiations with entities contracting or seeking to
contract with the board, or the impressions, opinions,
recommendations, meeting minutes, research, work product, theories,
or strategy of the board or its staff, or records that provide
instructions, advice, or training to employees.
   (2) (A) Except for the portion of a contract that contains the
rates of payment, contracts entered into pursuant to Part 8.7
(commencing with Section 2120) of Division 2 of the Labor Code on or
after January 1, 2004, shall be open to inspection one year after
they have been fully executed.
   (B) In the event that a contract entered into pursuant to Part 8.7
(commencing with Section 2120) of Division 2 of the Labor Code is
amended, the amendment shall be open to inspection one year after the
amendment has been fully executed.
   (3) Three years after a contract or amendment is open to
inspection pursuant to this subdivision, the portion of the contract
or amendment containing the rates of payment shall be open to
inspection.
   (4) Notwithstanding any other provision of law, the entire
contract or amendments to a contract shall be open to inspection by
the Joint Legislative Audit Committee.  The committee shall maintain
the confidentiality of the contracts and amendments thereto until the
contract or amendments to a contract are open to inspection pursuant
to paragraph (2) or (3).
   Nothing in this section prevents any agency from opening its
records concerning the administration of the agency to public
inspection, unless disclosure is otherwise prohibited by law.
   Nothing in this section prevents any health facility from
disclosing to a certified bargaining agent relevant financing
information pursuant to Section 8 of the National Labor Relations
Act.
  SEC. 13.  (a) The provisions of this act are severable. If any
provision of this act or its application is held invalid, that
invalidity shall not affect other provisions or applications that can
be given effect without the invalid provision or application, except
as provided in subdivision (b) or (c).
   (b) In the event that the provisions of Section 2160.1 of the
Labor Code are held invalid and this action is affirmed on final
appeal, an employer may qualify for a full credit for those amounts
spent for providing or reimbursing health care benefits, allowable by
state law as a deductible business expense if the amount spent
equals or exceeds the lower of the cost for Healthy Families or 150
percent of the cost for Medi-Cal 1931(b) coverage. In no instance
shall the amount of the credit exceed the amount of the fee that
would otherwise have been paid.  The Employment Development
Department shall specify the manner and means of submitting proof to
obtain the credit.
   (c) In the event that Chapter 8.7 (commencing with Sec. 2120) of
Division 2 of the Labor Code is held invalid, Article 3.11
(commencing with Section 1357.20) of Chapter 2.2 of Division 2 of the
Health and Safety Code and Chapter 8.1 (commencing with Section
11760) of Part 2 of Division 2 of the Insurance Code shall become
inoperative.
  SEC. 14.  This act shall not become operative unless AB 1528 of the
2003-04 Regular Session is also enacted and becomes operative.
  SEC. 15.  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.