BILL NUMBER: AB 2759 CHAPTERED 09/13/04 CHAPTER 489 FILED WITH SECRETARY OF STATE SEPTEMBER 13, 2004 APPROVED BY GOVERNOR SEPTEMBER 13, 2004 PASSED THE ASSEMBLY AUGUST 18, 2004 PASSED THE SENATE AUGUST 16, 2004 AMENDED IN SENATE AUGUST 9, 2004 AMENDED IN SENATE JULY 14, 2004 AMENDED IN SENATE JUNE 22, 2004 AMENDED IN ASSEMBLY MAY 10, 2004 AMENDED IN ASSEMBLY APRIL 27, 2004 AMENDED IN ASSEMBLY APRIL 22, 2004 AMENDED IN ASSEMBLY APRIL 15, 2004 INTRODUCED BY Assembly Members Levine and Wiggins (Principal coauthor: Assembly Member Koretz) (Coauthors: Assembly Members Goldberg, Jackson, Laird, and Leno) (Coauthor: Senator Soto) FEBRUARY 20, 2004 An act to add Section 1366.3 to the Health and Safety Code, and to add Section 10127.18 to the Insurance Code, relating to health care. LEGISLATIVE COUNSEL'S DIGEST AB 2759, Levine. Health care coverage. Existing law provides for regulation of health care service plans by the Department of Managed Health Care. Existing law provides for regulation of health insurers by the Insurance Commissioner. A willful violation of the provisions governing health care service plans is a crime. This bill, on and after January 1, 2005, would require a health care service plan or health insurer issuing individual plan contracts or individual policies of health insurance and that ceases to offer individual coverage in this state, to continue to provide coverage to the subscribers or policyholders who had been covered by those contracts and policies at the time of withdrawal under certain terms and conditions. The bill would also require a health care service plan that ceases to offer individual coverage in a service area other than coverage provided by a preferred provider organization, to continue to offer that coverage to subscribers who had been covered by those contracts at the time of withdrawal if it continues to offer group coverage in the service area. The bill would also provide that these provisions would not apply when a plan participating in a contract to provide health coverage with a government entity no longer contracts with the government entity to provide that coverage in the state or a specified area of the state or when a plan ceases to offer and issue any and all forms of coverage in any part of the state after the effective date of this section. Because a violation of these requirements by a health care service plan 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. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Section 1366.3 is added to the Health and Safety Code, to read: 1366.3. (a) On and after January 1, 2005, a health care service plan issuing individual plan contracts that ceases to offer individual coverage in this state shall offer coverage to the subscribers who had been covered by those contracts at the time of withdrawal under the same terms and conditions as provided in paragraph (3) of subdivision (a), paragraphs (2) to (4), inclusive, of subdivision (b), subdivisions (c) to (e), inclusive, and subdivision (h) of Section 1373.6. (b) A health care service plan that ceases to offer individual coverage in a service area shall offer the coverage required by subdivision (a) to subscribers who had been covered by those contracts at the time of withdrawal, if the plan continues to offer group coverage in that service area. This subdivision shall not apply to coverage provided pursuant to a preferred provider organization. (c) The department may adopt regulations to implement this section. (d) This section shall not apply when a plan participating in Medi-Cal, Healthy Families, Access for Infants and Mothers, or any other contract between the plan and a government entity no longer contracts with the government entity to provide health coverage in the state, or a specified area of the state, nor shall this section apply when a plan ceases entirely to market, offer, and issue any and all forms of coverage in any part of this state after the effective date of this section. SEC. 2. Section 10127.18 is added to the Insurance Code, to read: 10127.18. (a) On and after January 1, 2005, a health insurer issuing individual policies of health insurance that ceases to offer individual coverage in this state shall offer coverage to the policyholders who had been covered by those policies at the time of withdrawal under the same terms and conditions as provided in paragraph (3) of subdivision (a), paragraphs (2) to (4), inclusive, of subdivision (b), subdivisions (c) to (e), inclusive, and subdivision (h) of Section 12682.1. (b) The department may adopt regulations to implement this section. (c) This section shall not apply when a plan participating in Medi-Cal, Healthy Families, Access for Infants and Mothers, or any other contract between the plan and a government entity no longer contracts with the government entity to provide health coverage in the state, or a specified area of the state, nor shall this section apply when a plan ceases entirely to market, offer, and issue any and all forms of coverage in any part of this state after the effective date of this section. SEC. 3. 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.