BILL NUMBER: SB 1522	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  AUGUST 15, 2008
	AMENDED IN ASSEMBLY  AUGUST 8, 2008
	AMENDED IN ASSEMBLY  JUNE 11, 2008
	AMENDED IN SENATE  APRIL 17, 2008
	AMENDED IN SENATE  APRIL 2, 2008

INTRODUCED BY   Senator Steinberg

                        FEBRUARY 22, 2008

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


	LEGISLATIVE COUNSEL'S DIGEST


   SB 1522, as amended, Steinberg. Individual health care coverage:
coverage choice categories.
   Existing law, the Knox-Keene Health Care Service Plan Act of 1975,
provides for the licensure and regulation of health care service
plans by the Department of Managed Health Care and makes a willful
violation of the act a crime. Existing law also provides for the
regulation of health insurers by the Department of Insurance.
Existing law requires health care service plans and health insurers
that offer contracts or policies to individuals to comply with
specified requirements.
   This bill would require, by a specified date, the Department of
Managed Health Care and the Department of Insurance to jointly, by
regulation, develop a system to categorize all health care service
plan contracts and health insurance policies offered and sold to
individuals into 5 coverage choice categories that meet specified
requirements. The bill would require individual health care service
plan contracts and individual health insurance policies  offered
or sold on or after January 1, 2010,  to contain a maximum 
dollar  limit on out-of-pocket costs for covered benefits. The
bill would authorize health care service plans and health insurers to
offer plan contracts in any coverage choice category subject to
specified restrictions. The bill would also require health care
service plans and health insurers to establish prices for the
products offered to individuals that reflect a reasonable continuum
between the products offered in the coverage choice category with the
lowest level of benefits and the products offered in the coverage
choice category with the highest level of benefits. The bill would
require the Department of Managed Health Care and the Department of
Insurance to develop a notice providing information on the coverage
choice categories and would require this notice to be provided with
the marketing, purchase, and renewal of individual contracts and
policies, as specified. The bill would require the Director of
Managed Health Care and the Insurance Commissioner to annually report
on the contracts and policies offered in each coverage choice
category and on the enrollment in those contracts and policies. The
bill would also require, commencing January 1, 2012, and every 3
years thereafter, the director and the commissioner to jointly
determine whether the coverage choice categories should be revised to
meet the needs of consumers. The bill would enact other related
provisions.
   Because a willful violation of the bill's requirements relative to
health care service plans would be a crime, the bill would impose a
state-mandated local program.
   Existing law requests the University of California to establish
the California Health Benefit Review Program to assess legislation
proposing to mandate or repeal a benefit or service, as defined, and
to prepare a written analysis in accordance with specified criteria.
   This bill would request the University of California, as part of
that program, to prepare a written analysis with relevant data on,
among other things, the health insurance and health care service plan
products sold in the individual market. The bill would request the
University of California to provide this report 3 months prior to the
implementation of the bill's other provisions and would authorize
the Department of Managed Health Care or the Insurance Commissioner
to request that analysis prior to specified annual reports and
triennial reviews.  The bill would also require those departments
to require data from health care service plans and health insurers
in order to assist the University of California in fulfilling these
responsibilities. 
   The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
   This bill would provide that no reimbursement is required by this
act for a specified reason.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.


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

  SECTION 1.  Section 1399.819 is added to the Health and Safety
Code, to read:
   1399.819.  (a) On or before  April  
September  1, 2009, the department and the Department of
Insurance shall jointly, by regulation, develop a system to
categorize all health care service plan contracts and health
insurance policies offered and sold to individuals pursuant to this
article and Chapter 9.5 (commencing with Section 10900) of Part 2 of
Division 2 of the Insurance Code into five coverage choice
categories. These coverage choice categories shall do all of the
following:
   (1) Reflect a reasonable continuum between the coverage choice
category with the lowest level of health care benefits and the
coverage choice category with the highest level of health care
benefits  based on the actuarial value of each product  .
   (2) Permit reasonable benefit variation within each coverage
choice category.
   (3) Be enforced consistently between health care service plans and
health insurers in the same marketplace regardless of licensure.
   (4) Within each coverage choice category, include one standard
health maintenance organization (HMO)  contract  and one
standard preferred provider organization (PPO)  contract, as
defined by regulation  . For the coverage choice category with
the highest cost sharing and the least comprehensive benefit, the
standard HMO  contract  and the standard PPO  contract
 shall not be the lowest benefit level in that category.
   (5) Within each coverage choice category, have a maximum 
dollar  limit on out-of-pocket costs, including, but not limited
to, copayments, coinsurance, and deductibles, for covered benefits.

   (6) Use standard definitions and terminology for covered benefits
and cost sharing between health care service plans and health
insurers in the same marketplace regardless of licensure.  
   (7) Be developed by taking into account any written analysis
provided by the University of California pursuant to Section
127664.5.  
   (b) The regulations developed by the department and the Department
of Insurance pursuant to this section shall identify and require the
submission of any information needed to categorize each health care
service plan contract and health insurance policy subject to this
section.  
   (b) 
    (c)  All health care service plan contracts offered or
sold to individuals on or after January 1,  2009 
 2010  , shall contain a maximum  dollar  limit on
out-of-pocket costs, including, but not limited to, copayments,
coinsurance, and deductibles, for covered benefits. 
   (c) 
    (d)  All health care service plans shall submit filings
no later than  October 1, 2009   April 1, 2010
 , for all individual health care service plan contracts to be
offered or sold on or after that date, and thereafter any additional
individual health care plan contracts shall be filed with the
department. The director shall categorize each individual health care
service plan contract offered by a plan into the appropriate
coverage choice category within 90 days of the date the contract is
filed pursuant to this section. A health care service plan shall not
offer or sell an individual health care service plan contract until
the director has categorized the contract pursuant to this
subdivision. 
   (d) 
    (e)  To facilitate accurate information about consumer
choices, a health care service plan may offer plan contracts in any
coverage choice category. However, if a plan offers a plan contract
in the least comprehensive category, it shall also offer the standard
contract  developed pursuant to paragraph (4) of subdivision
(a)  in the least comprehensive category  as well
as   ,  the standard contract in one of the two
most comprehensive  categories. A   categories,
and the standard contract in the middle category. Every plan shall
offer at least the standard contract in the middle category, except
that a  plan that offers the standard contract in one of the two
most comprehensive categories shall not be required to offer
contracts in the less comprehensive categories.  For purposes of
this subdivision, "standard contract" means the contract developed
pursuant to paragraph (4) of   subdivision (a). A plan may
meet its obligations under this subdivision with products filed and
approved by the department as well as products filed and approved by
the Department of Insurance.  
   (e) 
    (f)  To facilitate consumer comparison shopping, the
department and the Department of Insurance shall develop a notice
that provides information about the coverage choice categories
developed pursuant to this section, including the range of cost
sharing and the benefits and services provided in each category,
including any variation in those benefits and services.  The
  For each product, the  notice shall include the
percentage of expense paid by the coverage, the estimated annual
out-of-pocket cost and the  estimated  total annual cost,
including both premium and out-of-pocket costs  for persons with
average health care costs and persons with high health care needs
 . A health care service plan, solicitor, or solicitor firm
shall provide this notice when marketing any individual health care
service plan contract. The notice shall also accompany the purchase
and renewal of an individual health care service plan contract. 
With the agreement of the consumer, the notice may be provided
electronically.  
   (f) 
    (g)  A health care service plan shall establish prices
for its products that reflect a reasonable continuum between the
products offered in the coverage choice category with the lowest
level of benefits and the products offered in the coverage choice
category with the highest level of benefits. A health care service
plan shall not establish a standard risk rate for a product in a
coverage choice category at a lower rate than a product offered in a
lower coverage choice category  for a consumer of the same age
and the same risk rate living in the same geographic region. For
purposes of this subdivision, "geographic region" shall mean the
geographic regions established pursuant to paragraph (3) of
subdivision (k) of Section 1357  . 
   (g) 
    (h)  The director shall annually report on the health
care service plan contracts offered by plans in each coverage choice
category pursuant to this section and on the enrollment in those
contracts within each coverage choice category. Commencing January 1,
2012, and every three years thereafter, the director and the
Insurance Commissioner shall jointly determine whether the coverage
choice categories should be revised to meet the needs of consumers.

   (i) The department shall require data from health care service
plans in order to assist the University of California in fulfilling
the responsibilities of Section 127664.5 and shall promptly provide
that data to the University of California.  
   (j) This section shall not apply to Medicare supplement plans or
to coverage offered by specialized health care service plans or
government-sponsored programs. 
  SEC. 2.  Section 127664.5 is added to the Health and Safety Code,
to read:
   127664.5.  (a) In order to assist the Department of Managed Health
Care and the Insurance Commissioner with the implementation of
Section 1399.819 of this code and Section 10903 of the Insurance
Code, the Legislature requests the University of California, as part
of the California Health Benefit Review Program established pursuant
to Section 127660, to prepare a written analysis with relevant data
on all of the following:
   (1) The health care service plan and health insurance products
that are sold in the individual market.
   (2) The benefits and services covered by the products described in
paragraph (1), including any limitations or exclusions.
   (3) The cost sharing applicable to the products described in
paragraph (1), including deductibles, copayments, coinsurance,
maximum out-of-pocket limits, and other limits or exclusions that
require individual consumers to pay for basic health care services in
whole or in part.
   (4) The distribution of health care service plan and health
insurance products purchased by individuals in terms of the benefits
and services included and the cost sharing involved.
   (5) The share of the individual health care coverage market that
is short-term coverage, conversion coverage, renewal of existing
coverage, or coverage sold to a person not previously covered by
individual health care coverage.
   (b) In providing the data described in subdivision (a), the
University of California is requested to distinguish between products
provided by entities regulated by the Department of Managed Health
Care and those provided by entities regulated by the Insurance
Commissioner.
   (c) The Legislature requests that the written analysis described
in subdivision (a) be provided three months prior to the
implementation of Section 1399.819 of this code and Section 10903 of
the Insurance Code.
   (d) The Department of Managed Health Care in consultation with the
Insurance Commissioner shall request the University of California to
provide the written analysis described in subdivision (a) prior to
the annual reports and triennial reviews required by Section 1399.819
of this code and Section 10903 of the Insurance Code.
   (e) The Department of Managed Health Care and the Department of
Insurance shall assist the University of California  in
collecting data by requiring   by requiring and
collecting  data from health care service plans and health
insurers in order to fulfill the responsibilities of this section and
of Section 1399.819 of this code and Section 10903 of the Insurance
Code. 
   (f) The work of the University of California in providing the
written analyses specified in this section shall be supported by
moneys in the fund established pursuant to Section 127662. 
  SEC. 3.  Section 10903 is added to the Insurance Code, to read:
   10903.  (a) On or before  April   September
 1, 2009, the department and the Department of Managed Health
Care shall jointly, by regulation, develop a system to categorize all
health insurance policies and health care service plan contracts
offered and sold to individuals pursuant to this chapter and Article
11.5 (commencing with Section 1399.801) of Chapter 2.2 of Division 2
of the Health and Safety Code into five coverage choice categories.
These coverage choice categories shall do all of the following:
   (1) Reflect a reasonable continuum between the coverage choice
category with the lowest level of health care benefits and the
coverage choice category with the highest level of health care
benefits  based upon the actuarial value of each product  .
   (2) Permit reasonable benefit variation within each coverage
choice category.
   (3) Be enforced consistently between health insurers and health
care service plans in the same marketplace regardless of licensure.
   (4) Within each coverage choice category, include one standard
preferred provider organization (PPO)  policy, as defined by
regulation  . For the coverage choice category with the highest
cost sharing and the least comprehensive benefit, the standard PPO
 policy  shall not be the lowest benefit level in that
category.
   (5) Within each coverage choice category, have a maximum 
dollar  limit on out-of-pocket costs, including, but not limited
to, copayments, coinsurance, and deductibles, for covered benefits.

   (6) Use standard definitions and terminology for covered benefits
and cost sharing between health insurers and health care service
plans in the same marketplace regardless of licensure.  
   (7) Be developed by taking into account any written analysis
provided by the University of California pursuant to Section 127664.5
of the Health and Safety Code.  
   (b) The regulations developed by the department and the Department
of Managed Health Care pursuant to this section shall identify and
require the submission of any information needed to categorize each
health insurance policy and health care service plan contract subject
to this section.  
   (b) 
    (c)  All health insurance policies offered or sold to
individuals on or after January 1,  2009   2010
 , shall contain a maximum  dollar  limit on
out-of-pocket costs, including, but not limited to, copayments,
coinsurance, and deductibles, for covered benefits. 
   (c) 
    (d)  All health insurers shall submit the filings no
later than  October 1, 2009   April 1, 2010
 , for all individual health insurance policies to be sold on or
after that date, and thereafter any additional individual health
insurance policies shall be filed with the commissioner. The
commissioner shall categorize each individual health insurance policy
offered by a health insurer into the appropriate coverage choice
category within 90 days of the date the policy is filed pursuant to
this section. A health insurer shall not offer or sell an individual
health insurance policy until the commissioner has categorized the
policy pursuant to this subdivision. 
   (d) 
    (e)  To facilitate accurate information about consumer
choices, a health insurer may offer health insurance policies in any
coverage choice category. However, if a health insurer offers a
health insurance policy in the least comprehensive category, it shall
also offer the standard  contract developed pursuant to
paragraph (4) of subdivision (a)   policy  in the
least comprehensive category  as well as the standard
contract   , the standard policy  in one of the two
most comprehensive  categories. A plan  
categories,   and the standard policy in the middle
category. Every insurer shall offer at least the standard policy in
the middle category, except that an insurer  that offers the
standard  contract   policy  in one of the
two most comprehensive categories shall not be required to offer
 contracts   policies  in the less
comprehensive categories.  For purposes of this subdivision,
"standard policy" means the policy developed pursuant to paragraph
(4) of subdivision (a). An insurer may meet its obligations under
this subdivision with products filed and approved by the department
as well as products filed and approved by the Department of Managed
Health Care.  
   (e) 
    (f)  To facilitate consumer comparison shopping, the
department and the Department of Managed Health Care shall develop a
notice that provides information about the coverage choice categories
developed pursuant to this section, including the range of cost
sharing and the benefits and services provided in each category,
including any variation in those benefits and services.  The
  For each product, the  notice shall include the
percentage of expense paid by the coverage, the estimated annual
out-of-pocket cost and the  estimated  total annual cost,
including both premium and out-of-pocket costs  for persons with
average health care costs and persons with high health care needs
 . A health insurer, broker, or agent shall provide this notice
when marketing any individual health insurance policy. The notice
shall also accompany the purchase and renewal of an individual health
insurance policy.  With the agreement of the consumer, the
notice may be provided electronically.  
   (f) 
    (g)  A health insurer shall establish prices for its
products that reflect a reasonable continuum between the products
offered in the coverage choice category with the lowest level of
benefits and the products offered in the coverage choice category
with the highest level of benefits. A health insurer shall not
establish a standard risk rate for a product in a coverage choice
category at a lower rate than a product offered in a lower coverage
choice category  for a consumer of the same age and the same risk
rate living in the same geographic region. For purposes of this
subdivision, "geographic region" shall mean the geographic regions
established pursuant to paragraph (3) of subdivision (v) of Section
10700  . 
   (g) 
    (h)  The commissioner shall annually report on the
health insurance policies offered by health insurers in each coverage
choice category pursuant to this section and on the enrollment in
those policies within each coverage choice category. Commencing
January 1, 2012, and every three years thereafter, the commissioner
and the Director of the Department of Managed Health Care shall
jointly determine whether the coverage choice categories should be
revised to meet the needs of consumers.
   (i) All health insurance policies offered and sold to individuals
on or after January 1,  2009   2010, shall
contain a maximum dollar limit on out-of-pocket costs  , shall
cover physician services, hospitals, and preventive services, and
shall, at a minimum, meet existing coverage requirements. 
This subdivision shall not apply to a specialized health insurance
policy, as defined in subdivision (c) of Section 106.  
   (j) The department shall require data from health insurers in
order to assist the University of California in fulfilling the
responsibilities of Section 127664.5 of the Health and Safety Code
and shall promptly provide that data to the University of California.
 
   (j) 
    (k)  Nothing in this section shall be construed to limit
disability insurance, including, but not limited to, hospital
indemnity, accident only, and specified disease insurance that pays
benefits on a fixed benefit, cash payment only basis, from being sold
as supplemental insurance. 
   (l) This section shall not apply to Medicare supplement, Tricare
supplement, or CHAMPUS supplement insurance, to specialized health
insurance policies, as defined in subdivision (c) of Section 106, or
to coverage offered by government-sponsored programs. 
  SEC. 4.  No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.