LRB-1480/3
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1995 - 1996 LEGISLATURE
May 30, 1995 - Introduced by Representatives Underheim, Ourada, Urban, F.
Lasee, Ziegelbauer, Wasserman, Johnsrud, Kelso, Huber, Handrick,
Springer, Gard, Ladwig, Baldus, Zukowski, Silbaugh, Hahn, Boyle, Albers,
Otte, Ainsworth, Ott and Freese, cosponsored by Senators Rosenzweig,
Rude and Buettner. Referred to Committee on Health.
AB416,1,9
1An Act to repeal 635.02 (5m), 635.07 and 635.26 (1) (b);
to renumber and
2amend 635.26 (1) (a);
to amend 40.51 (8), 60.23 (25), 66.184, 111.70 (1) (a),
3120.13 (2) (g), 185.981 (4t), 185.983 (1) (intro.), 600.01 (2) (b), 628.34 (3) (a),
4628.34 (3) (b), 632.76 (2) (a) and 632.896 (4);
to repeal and recreate 635.17;
5and
to create 40.52 (1m), 111.70 (4) (m), 111.91 (2) (k), 632.745, 632.747 and
6632.749 of the statutes;
relating to: group health insurance market reform,
7including preexisting condition exclusions and limitations, guaranteed
8acceptance, portability and contract termination and renewability; and
9collective bargaining of certain health care coverage requirements.
Analysis by the Legislative Reference Bureau
Health insurance market reform
Scope of reform
This bill imposes a number of general market reform requirements on insurers
with respect to health benefit plans. A health benefit plan is defined in the bill as
any hospital or medical policy or certificate, excluding conversion policies and such
insurance policies as dental, vision, long-term care, medicare supplement, medicare
replacement, worker's compensation, specified disease and automobile medical
payment insurance policies. The market reform requirements apply to group health
benefit plans sold to employers, including the state and municipalities, and to
individual health benefit plans covering eligible employes (those who normally work
30 or more hours per week) when 3 or more are sold to an employer. Most
requirements also apply to self-insured health plans of the state and municipalities.
Guaranteed issue; guaranteed acceptance
Under current law, an insurer that offers health benefit plan coverage to small
employers (employers with 2 to 25 eligible employes) must offer coverage to all of a
small employer's eligible employes. Such an insurer must issue a basic benefits plan
to any small employer, covering all eligible employes, without regard to health
condition or claims experience, if the small employer agrees to pay the premium and
comply with all other plan provisions. The insurer must provide coverage under the
basic benefits plan to any employe who becomes eligible for coverage after the
commencement of the employer's coverage.
The bill provides that an insurer that offers group health benefit plan coverage
to any employer (not only small employers) must offer coverage to all of the
employer's eligible employes. Although such an insurer is not required under the bill
to issue a group health benefit plan to any employer that applies for coverage (other
than a basic benefits plan to any small employer that applies for a basic benefits
plan), an insurer that does provide coverage to an employer group under a group
health benefit plan must provide coverage under the plan to any employe who
becomes eligible for coverage under the plan after the commencement of the
employer's coverage. Additionally, such an insurer must provide coverage under the
group health benefit plan to an eligible employe who waived coverage previously
because he or she was covered as a dependent (usually as a spouse) under another
health benefit plan, if the employe's coverage under the other health benefit plan was
terminated not more than 30 days before the effective date of coverage under the
group health benefit plan due to a divorce from the employe's spouse or due to the
spouse's death or loss of coverage under the other health benefit plan. These
requirements also apply to self-insured plans of the state or of municipalities.
Preexisting conditions and portability
Under current law a group health benefit plan issued to a small employer may
not exclude or limit benefits on account of a preexisting condition for more than 12
months after the commencement of coverage and may not define a preexisting
condition more restrictively than a pregnancy existing on the effective date of
coverage or a condition for which the insured sought or should have sought medical
care during the 6 months immediately preceding coverage. The bill expands these
same requirements regarding preexisting condition exclusions and limitations to all
group health benefit plans and to self-insured plans of the state or of municipalities.
Under current law, a group health benefit plan issued to a small employer must
waive any period applicable to a preexisting-condition exclusion or limitation that
was satisfied under another plan under which an insured had coverage that
terminated not more than 30 days before the effective date of coverage under the new
plan. Under the bill, group health benefit plans, including group plans sold to small
employers, must waive any period applicable to a preexisting condition exclusion or
limitation that was satisfied under another plan under which the insured had
coverage that terminated 60 or fewer days before the effective date of coverage under
the new plan. This requirement also applies to self-insured plans of the state or of
municipalities.
Contract termination and renewability
Under the bill, a group health benefit plan may not be canceled before the
expiration of the agreed term, and must be renewed at the option of the policyholder,
except for such reasons as failure to pay a premium when due or fraud or
misrepresentation. An insurer may elect not to renew a group health benefit plan
only if the insurer thereafter ceases to issue or renew any group health benefit plans
for a minimum of 5 years. These same contract termination and renewability
provisions apply under current law to group health benefit plans that are issued to
small employers.
For further information see the state and local fiscal estimate, which will be
printed as an appendix to this bill.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
AB416, s. 1
1Section
1. 40.51 (8) of the statutes is amended to read:
AB416,3,42
40.51
(8) Every health care coverage plan offered by the state under sub. (6)
3shall comply with ss. 631.89, 631.90, 631.93 (2), 632.72 (2),
632.745, 632.747,
4632.749, 632.87 (3) to (5), 632.895 (5m) and (8) to (10) and 632.896.
AB416, s. 2
5Section
2. 40.52 (1m) of the statutes is created to read:
AB416,3,76
40.52
(1m) The standard plan shall comply with ss. 632.745 (2), (3) and (5) (a)
72. and (b) 2. and 632.747 (3).
AB416, s. 3
8Section
3. 60.23 (25) of the statutes is amended to read:
AB416,3,129
60.23
(25) Self-insured health plans. Provide health care benefits to its
10officers and employes on a self-insured basis if the self-insured plan complies with
11ss. 631.89, 631.90, 631.93 (2),
632.745 (2), (3) and (5) (a) 2. and (b) 2., 632.747 (3), 12632.87 (4) and (5), 632.895 (9) and 632.896.
AB416, s. 4
13Section
4. 66.184 of the statutes is amended to read:
AB416,4,3
1466.184 Self-insured health plans. If a city, including a 1st class city, or a
15village provides health care benefits under its home rule power, or if a town provides
16health care benefits, to its officers and employes on a self-insured basis, the
1self-insured plan shall comply with ss. 49.493 (3) (d), 631.89, 631.90, 631.93 (2),
2632.745 (2), (3) and (5) (a) 2. and (b) 2., 632.747 (3), 632.87 (4) and (5), 632.895 (9) and
3(10), 632.896, 767.25 (4m) (d) and 767.51 (3m) (d).
AB416, s. 5
4Section
5. 111.70 (1) (a) of the statutes is amended to read:
AB416,4,255
111.70
(1) (a) "Collective bargaining" means the performance of the mutual
6obligation of a municipal employer, through its officers and agents, and the
7representatives of its employes, to meet and confer at reasonable times, in good faith,
8with the intention of reaching an agreement, or to resolve questions arising under
9such an agreement, with respect to wages, hours and conditions of employment, and
10with respect to a requirement of the municipal employer for a municipal employe to
11perform law enforcement and fire fighting services under s. 61.66, except as provided
12in
sub. (4) (m) and s. 40.81 (3) and except that a municipal employer shall not meet
13and confer with respect to any proposal to diminish or abridge the rights guaranteed
14to municipal employes under ch. 164. The duty to bargain, however, does not compel
15either party to agree to a proposal or require the making of a concession. Collective
16bargaining includes the reduction of any agreement reached to a written and signed
17document. The employer shall not be required to bargain on subjects reserved to
18management and direction of the governmental unit except insofar as the manner
19of exercise of such functions affects the wages, hours and conditions of employment
20of the employes. In creating this subchapter the legislature recognizes that the
21public employer must exercise its powers and responsibilities to act for the
22government and good order of the municipality, its commercial benefit and the
23health, safety and welfare of the public to assure orderly operations and functions
24within its jurisdiction, subject to those rights secured to public employes by the
25constitutions of this state and of the United States and by this subchapter.
AB416, s. 6
1Section
6. 111.70 (4) (m) of the statutes is created to read:
AB416,5,42
111.70
(4) (m)
Health benefit plan requirements. The municipal employer is
3prohibited from bargaining collectively with respect to compliance with the health
4benefit plan requirements under ss. 632.745, 632.747 and 632.479.
AB416, s. 7
5Section
7. 111.91 (2) (k) of the statutes is created to read:
AB416,5,76
111.91
(2) (k) Compliance with the health benefit plan requirements under ss.
7632.745, 632.747 and 632.749.
AB416, s. 8
8Section
8. 120.13 (2) (g) of the statutes is amended to read:
AB416,5,129
120.13
(2) (g) Every self-insured plan under par. (b) shall comply with ss.
1049.493 (3) (d), 631.89, 631.90, 631.93 (2),
632.745 (2), (3) and (5) (a) 2. and (b) 2.,
11632.747 (3), 632.87 (4) and (5), 632.895 (9) and (10), 632.896, 767.25 (4m) (d) and
12767.51 (3m) (d).
AB416, s. 9
13Section
9. 185.981 (4t) of the statutes is amended to read:
AB416,5,1614
185.981
(4t) A sickness care plan operated by a cooperative association is
15subject to ss. 252.14, 631.89, 632.72 (2),
632.745, 632.747, 632.749, 632.87 (2m), (3),
16(4) and (5), 632.895 (10) and 632.897 (10) and ch. 155.
AB416, s. 10
17Section
10. 185.983 (1) (intro.) of the statutes is amended to read:
AB416,5,2318
185.983
(1) (intro.) Every such voluntary nonprofit sickness care plan shall be
19exempt from chs. 600 to 646, with the exception of ss. 601.04, 601.13, 601.31, 601.41,
20601.42, 601.43, 601.44, 601.45, 611.67, 619.04, 628.34 (10), 631.89, 631.93, 632.72
21(2),
632.745, 632.747, 632.749, 632.775, 632.79, 632.795, 632.87 (2m), (3), (4) and (5),
22632.895 (5), (9) and (10), 632.896 and 632.897 (10), subch. II of ch. 619 and chs. 609,
23630, 635, 645 and 646, but the sponsoring association shall:
AB416, s. 11
24Section
11. 600.01 (2) (b) of the statutes is amended to read:
AB416,6,2
1600.01
(2) (b) Group or blanket insurance described in sub. (1) (b) 3. and 4. is
2not exempt from
s. 632.745, 632.747 or 632.749 or ch. 633 or 635.
AB416, s. 12
3Section
12. 628.34 (3) (a) of the statutes is amended to read:
AB416,6,104
628.34
(3) (a) No insurer may unfairly discriminate among policyholders by
5charging different premiums or by offering different terms of coverage except on the
6basis of classifications related to the nature and the degree of the risk covered or the
7expenses involved, subject to
s. ss. 632.365
and 632.745. Rates are not unfairly
8discriminatory if they are averaged broadly among persons insured under a group,
9blanket or franchise policy, and terms are not unfairly discriminatory merely
10because they are more favorable than in a similar individual policy.
AB416, s. 13
11Section
13. 628.34 (3) (b) of the statutes is amended to read:
AB416,6,1712
628.34
(3) (b) No insurer may refuse to insure or refuse to continue to insure,
13or limit the amount, extent or kind of coverage available to an individual, or charge
14an individual a different rate for the same coverage because of a mental or physical
15disability except when the refusal, limitation or rate differential is based on either
16sound actuarial principles supported by reliable data or actual or reasonably
17anticipated experience
, subject to ss. 632.745, 632.747, 632.749, 635.09 and 635.26.
AB416, s. 14
18Section
14. 632.745 of the statutes is created to read:
AB416,6,21
19632.745 Coverage requirements for group health benefit plans. (1) 20Group health insurance market reform; definitions. In this section and ss. 632.747
21and 632.749:
AB416,7,322
(a) "Eligible employe" means an employe who works on a permanent basis and
23has a normal work week of 30 or more hours. The term includes a sole proprietor,
24a business owner, including the owner of a farm business, a partner of a partnership
25and a member of a limited liability company if the sole proprietor, business owner,
1partner or member is included as an employe under a health benefit plan of an
2employer, but the term does not include an employe who works on a temporary or
3substitute basis.
AB416,7,44
(b) "Employer" means any of the following:
AB416,7,75
1. An individual, firm, corporation, partnership, limited liability company or
6association that is actively engaged in a business enterprise in this state, including
7a farm business.
AB416,7,88
2. A municipality, as defined in s. 16.70 (8).
AB416,7,1310
(c) "Group health benefit plan" means a health benefit plan that is issued by
11an insurer to an employer on behalf of a group consisting of eligible employes of the
12employer. The term includes individual health benefit plans covering eligible
13employes when 3 or more are sold to an employer.
AB416,7,2214
(d) "Health benefit plan" means any hospital or medical policy or certificate.
15"Health benefit plan" does not include accident-only, credit accident or health,
16dental, vision, medicare supplement, medicare replacement, long-term care,
17disability income or short-term insurance, coverage issued as a supplement to
18liability insurance, worker's compensation or similar insurance, automobile medical
19payment insurance, individual conversion policies, specified disease policies,
20hospital indemnity policies, as defined in s. 632.895 (1) (c), policies or certificates
21issued under the health insurance risk-sharing plan or an alternative plan under
22subch. II of ch. 619 or other insurance exempted by rule of the commissioner.
AB416,8,423
(e) "Insurer" means an insurer that is authorized to do business in this state,
24in one or more lines of insurance that includes health insurance, and that offers
25group health benefit plans covering eligible employes of one or more employers in
1this state. The term includes a health maintenance organization, as defined in s.
2609.01 (2), a preferred provider plan, as defined in s. 609.01 (4), an insurer operating
3as a cooperative association organized under ss. 185.981 to 185.985 and a limited
4service health organization, as defined in s. 609.01 (3).
AB416,8,65
(f) "Qualifying coverage" means benefits or coverage provided under any of the
6following:
AB416,8,77
1. Medicare or medicaid.
AB416,8,108
2. A group health benefit plan or an employer-based health benefit
9arrangement that provides benefits similar to or exceeding benefits provided under
10a basic health benefit plan under subch. II of ch. 635.
AB416,8,1311
3. An individual health benefit plan that provides benefits similar to or
12exceeding benefits provided under a basic health benefit plan under subch. II of ch.
13635, if the individual health benefit plan has been in effect for at least one year.
AB416,8,1514
(g) "Self-insured health plan" means a self-insured health plan of the state or
15a county, city, village, town or school district.
AB416,8,21
16(2) Preexisting conditions. A group health benefit plan, or a self-insured
17health plan, may not deny, exclude or limit benefits for a covered individual for losses
18incurred more than 12 months after the effective date of the individual's coverage
19due to a preexisting condition. A group health benefit plan, or a self-insured health
20plan, may not define a preexisting condition more restrictively than any of the
21following:
AB416,8,2522
(a) A condition that would have caused an ordinarily prudent person to seek
23medical advice, diagnosis, care or treatment during the 6 months immediately
24preceding the effective date of coverage and for which the individual did not seek
25coverage.
AB416,9,3
1(b) A condition for which medical advice, diagnosis, care or treatment was
2recommended or received during the 6 months immediately preceding the effective
3date of coverage.
AB416,9,44
(c) A pregnancy existing on the effective date of coverage.
AB416,9,10
5(3) Portability. (a) A group health benefit plan, or a self-insured health plan,
6shall waive any period applicable to a preexisting condition exclusion or limitation
7period with respect to particular services for the period that an individual was
8previously covered by qualifying coverage that provided benefits with respect to such
9services, if the qualifying coverage terminated not more than 60 days before the
10effective date of the new coverage.
AB416,9,1511
(b) Paragraph (a) does not prohibit the application of a waiting period to all new
12enrollees under a group health benefit plan or a self-insured health plan; however,
13a waiting period may not be applied when determining whether the qualifying
14coverage terminated not more than 60 days before the effective date of the new
15coverage.
AB416,9,21
16(4) Minimum participation of employes. (a) Except as provided in par. (d),
17requirements used by an insurer in determining whether to provide coverage under
18a group health benefit plan to an employer, including requirements for minimum
19participation of eligible employes and minimum employer contributions, shall be
20applied uniformly among all employers that apply for or receive coverage from the
21insurer.
AB416,9,2422
(b) An insurer may vary its minimum participation requirements and
23minimum employer contribution requirements only by the size of the employer group
24based on the number of eligible employes.
AB416,10,6
1(c) In applying minimum participation requirements with respect to an
2employer, an insurer may not count eligible employes who have other coverage that
3is qualifying coverage in determining whether the applicable percentage of
4participation is met, except that an insurer may count eligible employes who have
5coverage under another health benefit plan that is sponsored by that employer and
6that is qualifying coverage.
AB416,10,97
(d) An insurer may not increase a requirement for minimum employe
8participation or a requirement for minimum employer contribution that applies to
9an employer after the employer has been accepted for coverage.
AB416,10,14
10(5) Prohibited coverage practices. (a) 1. If an insurer offers a group health
11benefit plan to an employer, the insurer shall offer coverage to all of the eligible
12employes of the employer and their dependents. An insurer may not offer coverage
13to only certain individuals in an employer group or to only part of the group, except
14for an eligible employe who has not yet satisfied an applicable waiting period, if any.
AB416,10,2015
2. If the state or a county, city, village, town or school district offers coverage
16under a self-insured health plan, it shall offer coverage to all of its eligible employes
17and their dependents. The state or a county, city, village, town or school district may
18not offer coverage to only certain individuals in the employer group or to only part
19of the group, except for an eligible employe who has not yet satisfied an applicable
20waiting period, if any.
AB416,10,2421
(b) 1. An insurer may not modify a group health benefit plan with respect to
22an employer or an eligible employe or dependent, through riders, endorsements or
23otherwise, to restrict or exclude coverage for certain diseases or medical conditions
24otherwise covered by the group health benefit plan.
AB416,11,4
12. The state or a county, city, village, town or school district may not modify a
2self-insured health plan with respect to an eligible employe or dependent, through
3riders, endorsements or otherwise, to restrict or exclude coverage for certain diseases
4or medical conditions otherwise covered by the self-insured health plan.
AB416, s. 15
5Section
15. 632.747 of the statutes is created to read: