BILL NUMBER: AB 1072	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  APRIL 18, 2007

INTRODUCED BY   Assembly Member Gaines

                        FEBRUARY 23, 2007

   An act to add Part 6.6 (commencing with Section 12739.10) to 
Division 2 of  the Insurance Code, relating to health care
coverage  , and making an appropriation therefor  .


	LEGISLATIVE COUNSEL'S DIGEST


   AB 1072, as amended, Gaines. Health care coverage: California
Health Insurance Exchange.
   Existing law creates the Managed Risk Medical Insurance Board that
administers various programs to arrange for the provision of health
care coverage to persons meeting specified eligibility criteria.
   This bill would establish the California Health Insurance Exchange
that would be administered by the board  to facilitate the
purchase of health insurance products, as defined, and would
authorize employers to adopt   . The bill would,
beginning September 1, 2008, allow an employer who sponsors  a
cafeteria plan in compliance with federal law  allowing their
employees to purchase health insurance products through the exchange
  and who has entered into an agreement with the board,
to transmit premium payments for individual plan contracts and
individual insurance policies obtained by his or her employees
through the cafeteria plan to the exchange for remittance to the
issuing plan or insurer that has agreed to participate in the
exchange  . The bill would create the California Health
Insurance Exchange Fund where  an appropriation from the
General Fund in the annual Budget Act in an unspecified sum would be
deposited and would be available to the board, upon appropriation by
the Legislature,   the premium payments would be
deposited prior to remittance to the carrier. The bill would continu
  ously  appropriate  the revenues in the 
 California Health Insurance Exchange Fund to  the board for
purposes of operating the exchange. The bill would require the board
to report certain information to the Governor and the Legislature
relating to the exchange.
   Vote: majority. Appropriation:  no   yes
 . Fiscal committee: yes. State-mandated local program: no.



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

  SECTION 1.  This act shall be known and may be cited as the
 Fair Health Insurance Purchasing Act.  
California Health Insurance Exchange Act. 
  SEC. 2.  The Legislature finds and declares the following:
   (a) With the notable  exception of a high
deductible health plan coupled with a health savings account, federal
tax law discourages  individual purchases of  
individuals from purchasing  health care coverage unless an
individual's employer offers health care coverage and the individual
is eligible for it and chooses to obtain that coverage.
   (b) Though many employers, particularly small businesses, would
like to provide health care coverage to their employees, existing
regulations and increasing health care costs limit their options for
directly offering health care coverage to their employees.
   (c) Though high deductible health plans coupled with health
 saving   savings  accounts are gaining in
popularity, these types of products do not meet the needs of every
individual and every family.
   (d) Government should not artificially limit choice in health care
coverage products by offering tax preferences only to an individual
who couples a high deductible health plan with a health savings
account or to an employee whose employer offers, and whose employer's
eligibility requirements allow the employee to obtain, health care
coverage.
   (e) Eighty-one percent of the population without health care
coverage is employed by private employers who could establish
affordable cafeteria plans under Section 125 of Title 26 of the
United States Code, to assist their employees' use of pretax income,
as well as pretax employer contributions, to purchase health care
coverage.
   (f) Providing an equivalent tax benefit for the individual
purchase of health care coverage that reduces the out-of-pocket
premium cost of purchasing health care coverage is a vital component
for extending health care coverage to those without it.
   (g) Creating a mechanism whereby an individual can use multiple
pretax employer contributions will increase access to, and the
affordability of, health care coverage.
  SEC. 3.  Part 6.6 (commencing with Section 12739.10) is added to
 Division 2 of  the Insurance Code, to read:

      PART 6.6.  The California Health Insurance Exchange


      CHAPTER 1.  GENERAL


   12739.10.  The following definitions apply for the purposes of
this part:
   (a) "Board" means the Managed Risk Medical Insurance Board. 
   (b) "Carrier" means a health care service plan licensed by the
Department of Managed Health Care or a health insurer holding a
certificate of authority from the commissioner.  
   (c) "Employee" means an individual who has obtained either an
individual plan contract or an individual health insurance policy
from a carrier through a cafeteria plan established by his or her
employer.  
   (d) "Employer" means an employer in this state who has established
a cafeteria plan pursuant to Section 125 of Title 26 of the United
States Code.  
   (b) "Enrollee" means a person who has obtained a health insurance
product through the exchange.  
   (c) 
    (e)  "Exchange" means the California Health Insurance
Exchange. 
   (d) "Health insurance products" means a health care service plan
contract issued by a plan licensed pursuant to Chapter 2.2
(commencing with Section 1340) of Division 2 of the Health and Safety
Code and a health insurance policy issued by a health insurer
holding a certificate of authority from the commissioner. 
   12739.11.  The California Health Insurance Exchange is hereby
established and shall be administered by the board. The purpose
 of the exchange is to facilitate the purchase of health
insurance products in the individual market by residents of this
state using pretax funds.   of the exchange is to
administer the payment of premiums for health care coverage obtained
by an employee pursuant to a cafeteria plan established by his or her
employer. 
      CHAPTER 2.  ADMINISTRATION


   12739.20.  The board shall have all of the following powers:
   (a) To contract with professional service firms as may be
necessary in its judgment and to fix their compensation.
   (b) To contract with companies that provide third-party
administrative and billing services  for health insurance
products . 
   (c) To contract with employers and carriers to administer the
payment of premiums for health care coverage. 
   12739.21.  The board may hire an executive director to supervise
the administrative affairs and general management and operations of
the exchange. The executive director shall receive a salary
commensurate with the duties of the office. The executive director
shall, with approval of the board, take the following actions:
   (a) Employ professional and clerical staff as necessary.
   (b) Report to the board on all operations under his or her
supervision.
   (c) Manage the administrative expenses of the exchange.
   (d) Undertake any activities necessary to implement this part.
   12739.22.  The board shall maintain an accurate account of all of
the activities, receipts, and expenditures of the exchange and shall
annually report this information at the end of its fiscal year to the
Governor and the Legislature. The exchange shall be subject to
audits by the State Auditor.
   12739.23.  (a) No later than two years after the board begins
operation of the exchange and annually thereafter, the board shall
study the exchange and its enrollees and report in writing to the
Governor and the Legislature on the status and activities of the
exchange based on data collected in the study.
   (b) The study shall review the following matters:
   (1) The operation and administration of the exchange, including
 surveys and reports of health insurance products purchased
by enrollees, and on the experience of health care service plans and
health insurers that issued those products.   surveys
and reports on the plan contracts and policies purchased by the
employees and on the experience of the carriers that issued those
plan contracts and policies. 
   (2) Any significant observations regarding utilization and
adoption of the exchange.
      CHAPTER 3.  OPERATION


   12739.30.  On and after  ____   September 1,
2008  , the exchange shall  begin facilitating the
purchase of health insurance products.   administer the
payment of premiums for health care coverage obtained by an employee
pursuant to a cafeteria plan established by his or her employer.

   12739.31.  The board shall develop a plan of operation for the
exchange on or before  March 31, 2008  , that shall include,
but not be limited to, the following components:
   (a) Procedures for operation of the exchange.
   (b) Procedures for communications with the executive director.

   (c) Enrollment procedures.  
   (c) Procedures for contracting with employers and carriers. 
   (d) A system of collecting all premium payments made by, or on
behalf of,  enrollees   employees and remitting
those payments to carriers  . 
   (e) A system of remitting premium assistance payments to the
issuers of the health insurance product.  
   (f) 
    (e)  A plan for publicizing the existence of the
exchange  and its enrollment procedures  . 
   (f) Procedures for resolving disputes arising from the operation
of the exchange.  
   12739.32.  Notwithstanding any other provision of law, an employer
doing business in the state eligible to adopt and maintain a
cafeteria plan that satisfies Section 125 of Title 26 of the United
States Code, may allow employees to use pretax employer or employee
contributions for the purchase of health insurance products through
the exchange.  
   12739.32.  (a) A carrier may apply to the board for participation
in the exchange.
   (b) To participate in the exchange, the carrier shall enter into
an agreement with the board that all premiums for an individual plan
contract or an individual policy that it issued to an employee shall
be made to the carrier through the exchange.
   (c) The board shall not impose on a carrier seeking to participate
in the exchange any terms or conditions, including any requirements
or agreements, with respect to rates or benefits.  
   12739.33.  (a) An employer with employees in this state may apply
to the board for participation in the exchange.
   (b) The application shall contain the following information:
   (1) The name of each employee who has obtained an individual plan
contract or individual policy through the cafeteria plan.
   (2) The name of the carrier who issued the plan contract or
policy.
   (3) The premium amount for each plan contract or policy.
   (4) The amount of the premium paid by the employee and by the
employer.
   (c) To participate in the exchange, the employer shall enter into
an agreement with the board containing the following provisions:
   (1) The employer agrees to transmit to the exchange all premium
payments for health care coverage issued to employees specified in
the employer's application by a carrier participating in the
exchange.
   (2) The employer agrees to transmit the premium payments described
in paragraph (1) to the exchange, at minimum, 15 days prior to the
due date required by the carrier.
   (3) The employer shall notify the board within 10 days of learning
of any change in the information set forth in the application. 

   12739.34.  (a) The board shall deposit all premium payments
received pursuant to Section 12739.33 in the California Health
Insurance Exchange Fund.
   (b) The board shall remit the premium payments received for an
employee's individual plan contract or individual policy to the
carrier that issued the plan contract or policy prior to the due date
required by the carrier.  
   12739.35.  The exchange shall operate in accordance with all
requirements and restrictions set forth in this part and all other
applicable federal and state laws and regulations. 
      CHAPTER 4.  REVENUE


   12739.40.  (a) There is hereby created in the State Treasury the
California Health Insurance Exchange Fund. 
   (b) The sum of ____ dollars ($____) shall be appropriated by the
Legislature in the annual Budget Act from the General Fund to the
California Health Insurance Exchange Fund. Revenue in the California
Health Insurance Exchange Fund shall be available to the board for
expenditure to implement this part upon appropriation by the
Legislature in the annual Budget Act.  
   (b) Notwithstanding Section 13340 of the Government Code, revenue
in the California Health Insurance Exchange Fund shall be
continuously appropriated to the board for the purposes of this part.

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