AB 17, as introduced, McCarty. Health insurance: prohibition on health insurance sales: health care service plans.
Existing law, the Knox-Keene Health Care Service Plan Act of 1975 (Knox-Keene), 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. Under existing law, a person who transacts disability insurance without a valid and unrevoked certificate of authority from the Insurance Commissioner is generally guilty of a misdemeanor. Under existing law, a nonprofit hospital corporation regulated under Knox-Keene that substantially indemnified subscribers and enrollees and was operating in 1965 under specified provisions of the Insurance Code enjoys the privileges that would have been available had it been registered under the Knox-Mills Health Plan Act and applied for a license under Knox-Keene in 1976.
This bill would repeal the latter provision. The bill would further prohibit an entity licensed under Knox-Keene from offering, marketing, or selling health insurance, whether issued on a group or individual basis, to an existing or new customer. By expanding the scope of an existing crime, the bill would impose a state-mandated local program.
Under existing law, a person or other entity that provides coverage in this state for medical, surgical, chiropractic, physical therapy, speech pathology, audiology, professional mental health, dental, hospital, or optometric services, whether by direct payment, reimbursement, or otherwise, and that enters into an arrangement or contract with, or underwrites, a preferred provider organization or specified arrangement, is subject to the jurisdiction of the Department of Insurance. Under existing law, a person or entity subject to regulation under Knox-Keene is not subject to the jurisdiction of the department.
This bill would delete the latter provision that excludes a person or entity subject to regulation under Knox-Keene from the jurisdiction of the department.
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 1396.5 of the Health and Safety Code is
2repealed.
A nonprofit hospital corporation which substantially
4indemnified subscribers and enrollees and was operating in 1965
5under Chapter 11A (commencing with Section 11490) of Part 2
6of Division 2 of the Insurance Code and which is regulated under
7the Knox-Keene Health Care Service Plan Act shall enjoy the
8privileges under the act which would have been available to it had
9it been registered under the Knox-Mills Health Plan Act and
10applied for a license under the Knox-Keene Health Care Service
11Plan Act in 1976.
Section 1396.6 is added to the Health and Safety Code,
13to read:
An entity licensed under this chapter shall not offer,
15market, or sell health insurance, as defined in subdivision (b) of
16Section 106 of the Insurance Code, including, but not limited to,
17a preferred provider organization or arrangement described in
P3 1Section 10133 of the Insurance Code, whether issued on a group
2or individual basis, to an existing or new customer.
Section 742 of the Insurance Code is amended to read:
begin delete(a)end deletebegin delete end deletebegin deleteAny end deletebegin insertA end insertperson or other entity that provides coverage
5in this state for medical, surgical, chiropractic, physical therapy,
6speech pathology, audiology, professional mental health, dental,
7hospital, or optometric services, whether this coverage is by direct
8payment, reimbursement, or otherwise, and that enters into an
9arrangement or contract with, or underwrites, a preferred provider
10organization or arrangement subject to Section 10133 is subject
11to the jurisdiction of the Department of Insurance.
12(b) Any person or entity subject to regulation under Chapter 2.2
13(commencing with Section 1340) of Division 2 of the Health and
14Safety Code shall not be subject to this section.
No reimbursement is required by this act pursuant to
16Section 6 of Article XIII B of the California Constitution because
17the only costs that may be incurred by a local agency or school
18district will be incurred because this act creates a new crime or
19infraction, eliminates a crime or infraction, or changes the penalty
20for a crime or infraction, within the meaning of Section 17556 of
21the Government Code, or changes the definition of a crime within
22the meaning of Section 6 of Article XIII B of the California
23Constitution.
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