BILL NUMBER: AB 591	AMENDED
	BILL TEXT

	AMENDED IN SENATE  JULY 15, 2010
	AMENDED IN SENATE  APRIL 15, 2010
	AMENDED IN SENATE  JULY 23, 2009
	AMENDED IN ASSEMBLY  JUNE 1, 2009
	AMENDED IN ASSEMBLY  APRIL 15, 2009

INTRODUCED BY   Assembly Member De La Torre

                        FEBRUARY 25, 2009

   An act to add Sections 1385.01 and 1385.02 to the Health and
Safety Code, and to add Sections 10181 and 10182 to the Insurance
Code, relating to health care coverage, and declaring the urgency
thereof, to take effect immediately.



	LEGISLATIVE COUNSEL'S DIGEST


   AB 591, as amended, De La Torre.  Health  
Individual health  care coverage: premium rates.
    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.
Under existing law, no change in premium rates or coverage in a
health care service plan contract or health insurance policy may
become effective without written prior notification of the change to
the contractholder or policyholder. Existing law prohibits a plan or
insurer during the term of a group contract or policy from changing
the rate of the premium, copayment, coinsurance, or deductible during
specified time periods.
   This bill would prohibit a health care service plan or health
insurer from increasing the premium rate it charges a subscriber or
policyholder  of an individual contract or policy  for a
period of 90 days beginning with the date this provision becomes
operative. Thereafter, this provision would become inoperative and
the bill would prohibit a plan or insurer from increasing premium
rates  for individual contracts or policies  by more than
the average percentage increase in the medical care component of the
consumer price index for the immediately preceding calendar year, as
calculated by the United States Bureau of Labor Statistics  ,
unless the plan or insurer files an application with the Department
of Managed Health Care or the Department of Insurance, respectively,
and the application is approved by that department. The bill would
prohibit approval of an application unless the applicant completes an
audit showing that its medical loss ratio would meet or exceed a
certain percentage, as specified  .  The bill would
require any plan or insurer filing with the Department of Managed
Health Care or the Department of Insurance containing a proposed
premium rate increase for an individual contract or policy to comply
with all other state and federal laws.  The bill would also
prohibit a plan or insurer from increasing the premium rate it
charges a subscriber or policyholder  of an individual contract
or policy  during the 12 months following the last premium rate
increase. The bill would authorize the Department of Managed Health
Care and the Department of Insurance to adopt regulations
implementing  certain of  these provisions  , as
specified  .
   Because a willful violation of the bill's requirements with
respect to 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 declare that it is to take effect immediately as
an urgency statute.
   Vote: 2/3. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.


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

  SECTION 1.  Section 1385.01 is added to the Health and Safety Code,
to read:
   1385.01.  (a) Notwithstanding  Section 1374.20 or
 any other provision of law, a health care service plan
shall not increase the premium rate it charges a subscriber  of
an individual plan contract  for a period of 90 days beginning
on the date this section becomes operative.
   (b) This section shall not apply to a plan that increases the
premium rate it charges a subscriber  of an individual plan
contract  when the subscriber enters into a new or amended
contract that includes increased benefits, provided that the
increased premium rate is equivalent to the premium rate charged by
the plan for contracts that include similar increased benefits.
   (c) This section shall not apply to a health care service plan
contract that is issued through a publicly funded state health care
coverage program, including the Medi-Cal program and the Healthy
Families Program, or to Medicare supplement contracts.  This
subdivision shall not be construed to exempt health care service plan
contracts issued through the Public Employees' Medical and Hospital
Care Act. 
   (d) This section shall become inoperative 90 days after it becomes
operative.
  SEC. 2.  Section 1385.02 is added to the Health and Safety Code, to
read:
   1385.02.  (a) A health care service plan shall not increase the
premium rate it charges a subscriber  of an individual plan
contract  by more than the average percentage increase in the
medical care component of the consumer price index for the
immediately preceding calendar year, as calculated by the United
States Bureau of Labor  Statistics, unless it submits an
application to the department, and the application is approved by the
department. An application shall not be approved unless the
applicant completes an audit showing that the medical loss ratio of
the applicant, taking into account the proposed premium rate
increase, would meet or exceed the applicable percentage provided for
in Section 2718 of the federal Public Health Service Act (Public Law
111-148). The department shall have six months following the receipt
of an application to approve or disapprove the application.
  Statistics. In addition, any plan filing with the
department containing a proposed premium rate increase for an
individual plan contract shall comply with all other state and
federal laws. 
   (b) A health care service plan shall not increase the premium rate
it charges a subscriber  of an individual plan contract 
during the 12 months following the effective date of the immediately
preceding premium rate increase applied by the plan to the
subscriber.
   (c) The department may adopt regulations to implement this section
in accordance with Chapter 3.5 (commencing with Section 11340) of
Division 3 of Title 2 of the Government Code.
   (d) This section shall not apply to a health care service plan
contract that is issued through a publicly funded state health care
coverage program, including the Medi-Cal program and the Healthy
Families Program, or to Medicare supplement contracts.  This
subdivision shall not be construed to exempt health care service plan
contracts issued through the Public Employees' Medical and Hospital
Care Act. 
   (e) This section shall become operative on the date that Section
1385.01 becomes inoperative.
  SEC. 3.  Section 10181 is added to the Insurance Code, to read:
   10181.  (a) Notwithstanding  Section 10199.48 or 
any other provision of law, a health insurer shall not increase the
premium rate it charges a policyholder  of an individual health
insurance policy  for a period of 90 days beginning on the date
this section becomes operative.
   (b) This section shall not apply to an insurer that increases the
premium rate it charges a policyholder  of an individual health
insurance policy  when the policyholder enters into a new or
amended policy that includes increased benefits, provided that the
increased premium rate is equivalent to the premium rate charged by
the insurer for policies that include similar increased benefits.
   (c) This section shall not apply to a health insurance policy that
is issued through a publicly funded state health care coverage
program, including the Medi-Cal program and the Healthy Families
Program, or to Medicare supplement policies.  This
subdivision shall not be construed to exempt health insurance
policies issued through the Public Employees' Medical and Hospital
Care Act. 
   (d) This section shall become inoperative 90 days after it becomes
operative.
  SEC. 4.  Section 10182 is added to the Insurance Code, to read:
   10182.  (a) A health insurer shall not increase the premium rate
it charges a policyholder  of an individual health insurance
policy  by more than the average percentage increase in the
medical care component of the consumer price index for the
immediately preceding calendar year, as calculated by the United
States Bureau of Labor  Statistics, unless it submits an
application to the department, and the application is approved by the
department. An application shall not be approved unless the
applicant completes an audit showing that the medical loss ratio of
the applicant, taking into account the proposed premium rate
increase, would meet or exceed the applicable percentage provided for
in Section 2718 of the federal Public Health Service Act (Public Law
111-148). The department shall have six months following the receipt
of an application to approve or disapprove the application.
  Statistics. In addition, any health insurer filing
with the department containing a proposed premium rate increase for
an individual health insurance policy shall comply with all other
state and federal laws. 
   (b) A health insurer shall not increase the premium rate it
charges a policyholder  of an individual health insurance policy
 during the 12 months following the effective date of the
immediately preceding premium rate increase applied by the insurer to
the policyholder.
   (c) The department may adopt regulations to implement this section
in accordance with Chapter 3.5 (commencing with Section 11340) of
Division 3 of Title 2 of the Government Code.
   (d) This section shall not apply to a health insurance policy that
is issued through a publicly funded state health care coverage
program, including the Medi-Cal program and the Healthy Families
Program, or to Medicare supplement policies.  This
subdivision shall not be construed to exempt health insurance
policies issued through the Public Employees' Medical and Hospital
Care Act. 
   (e) This section shall become operative on the date that Section
10181 becomes inoperative.
  SEC. 5.  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.
  SEC. 6.  This act is an urgency statute necessary for the immediate
preservation of the public peace, health, or safety within the
meaning of Article IV of the Constitution and shall go into immediate
effect. The facts constituting the necessity are:
   In order to protect consumers from  health care coverage
premium rate increases   premium rate increases on
individual health care coverage  , it is necessary that this act
take effect immediately.