LRB-1623/1
PJK:skg:ks
1995 - 1996 LEGISLATURE
May 16, 1995 - Introduced by Senators Rosenzweig, Schultz, Buettner, A. Lasee,
Darling, Plewa and
Rude, cosponsored by Representatives Underheim,
Albers, Brancel, Ourada, Hanson, Johnsrud, Grobschmidt, Goetsch,
Handrick, Duff, Kreibich, Powers, Zukowski, Huber, Springer and Boyle.
Referred to Committee on Insurance.
SB201,2,10
1An Act to repeal 15.735 (1), 635.02 (1), 635.02 (4m), 635.02 (5), 635.02 (6), 635.02
2(7) (b), 635.02 (8), 635.09, 635.17 (1) (b) 3. and 635.23 (3);
to renumber and
3amend 635.17 (1) (a) 1., 635.17 (1) (a) 2. and 635.18 (1);
to consolidate,
4renumber and amend 635.02 (7) (intro.) and (a);
to amend 40.03 (6) (a) 2.,
5111.70 (1) (a), 185.983 (1g), 625.12 (2), 628.34 (3), 628.36 (2) (b) 5., 632.70,
6632.897 (2) (d), 632.897 (9) (c), chapter 635 (title), 635.02 (1c), 635.02 (2), 635.02
7(3f), 635.02 (3j), 635.02 (3m), 635.02 (6m), 635.07 (1) (intro.), (b), (d) and (e),
8635.07 (2), 635.07 (3), 635.11 (intro.), (1) and (4), 635.13 (1), 635.13 (2), 635.17
9(title), 635.17 (1) (a) (intro.), 635.17 (1) (a) 3., 635.17 (1) (b) 1. and 2., 635.17 (2),
10635.17 (3), 635.18 (2), 635.18 (3), 635.18 (4), 635.18 (5), 635.18 (6), 635.18 (7),
11635.18 (8), 635.20 (1), 635.20 (2), 635.20 (11), 635.21, 635.23 (title) and (1)
12(intro.), 635.23 (1) (a), (d), (dp), (dr) and (e) (intro.), 1., 2. and 3., 635.23 (1m),
13635.23 (1r), 635.23 (2), 635.23 (4) and (5), 635.25 (title), 635.25 (1) (a) (intro.),
14635.25 (1) (a) 2., 635.25 (1) (b), 635.25 (1m), 635.25 (2), 635.254, 635.26 (1),
15635.26 (1m), 635.26 (1s), 635.26 (4), 635.272 (1), 635.28 and 635.29;
to repeal
16and recreate 635.01, 635.02 (3), 635.05, 635.13 (1), 635.15 and 635.20 (13); and
17to create 15.07 (1) (b) 21., 15.735 (3), 40.02 (48g), 40.03 (6) (a) 3., 111.70 (4) (m),
1153.07 (4), 600.03 (40m), 601.424, 632.727, 632.83, 635.02 (1r), 635.02 (3h),
2635.02 (4g), 635.02 (5m) (d), 635.03, 635.06, 635.07 (1) (f), 635.17 (1) (a) 1. b.,
3635.17 (1) (a) 2. b., 635.17 (1) (ac), 635.17 (1) (am), 635.17 (1) (ar), 635.17 (1) (c),
4635.18 (1) (a) to (c), 635.18 (9), (9m) and (10), 635.20 (1b) and 635.26 (5) of the
5statutes;
relating to: expanding the small employer insurance board and
6renaming it the comprehensive health care board; modified community rating,
7fair market standards, portability, preexisting condition exclusions and
8guaranteed issue for individual and certain group health benefit plans;
9allowing the group insurance board to contract with purchasing coalitions; and
10granting rule-making authority.
Analysis by the Legislative Reference Bureau
Health insurance market reform
Scope of reform
This bill imposes a number of insurance market reform requirements on
insurers with respect to individual health benefit plans and group health benefit
plans sold to employers with 2 to 100 employes with a normal work week of 30 or more
hours. A health benefit plan is defined in the bill as any hospital or medical policy
or certificate, including a conversion health insurance policy, but excluding such
insurance policies as dental, vision, long-term care, medicare supplement, medicare
replacement, worker's compensation, specified disease, health insurance
risk-sharing plan (HIRSP) and automobile medical payment insurance policies.
Community rating
All health benefit plans subject to the market reform requirements must be
community rated. The community rates, however, may be modified by the insured's
age, gender, geographic area and tobacco use and by whether the insured's coverage
is single or family. An insured's "geographic area" for this purpose may not be less
than an entire county. The commissioner of insurance (commissioner) must by rule
prescribe rate bands for the modifications and may also by rule prescribe rate
restrictions that provide for a transition to the modified community rates.
Additionally, an insurer may provide discounts for insured individuals for healthy
lifestyle choices.
Guaranteed issue
With some exceptions, an insurer that has in force a health benefit plan that
is subject to the market reform requirements must issue a group health benefit plan
to an employer that agrees to pay the premium and comply with all other plan
provisions, and to all of the employer's employes with a normal work week of 30 or
more hours, including employes who were excluded from coverage previously and
employes who become eligible for coverage after the commencement of the
employer's coverage, without regard to health condition or claims experience. Such
an insurer is also required to issue an individual health benefit plan to an individual
who agrees to pay the premium and comply with all other plan provisions, without
regard to health condition or claims experience. An insurer, however, may limit its
issuance of health benefit plans to group plans, and related individual conversion
policies, for employers with 2 to 25 employes, to group plans, and related individual
conversion policies, for employers with 26 to 100 employes or to individual plans.
Preexisting conditions and portability
Under current law a group health benefit plan issued to an employer with 2 to
25 employes 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. Additionally,
such a plan must waive any period applicable to a preexisting condition exclusion or
limitation that was satisfied under another plan under which the insured had
coverage to a date not less than 30 days before the effective date of coverage under
the new plan.
Under the bill, except for a conversion health insurance policy, which under
current law may not impose any preexisting condition limitations or exclusions, a
group or an individual health benefit plan subject to the market reform requirements
may not exclude or limit benefits on account of a preexisting condition for more than
12 months. A group or individual health benefit plan may not define a preexisting
condition more restrictively than a pregnancy existing on the effective date of
coverage, except that coverage may not be excluded for any covered prenatal care
expenses or for other covered expenses that exceed a deductible amount prescribed
by the commissioner by rule. The deductibles prescribed by the commissioner may
not exceed $5,000 and must be based on a sliding scale related to the stage of the
pregnancy on the effective date of coverage. Additionally, a group health benefit plan
may not define a preexisting condition more restrictively than a condition for which
the insured sought or should have sought medical care during the 6 months
immediately preceding coverage, and an individual plan may not define a
preexisting condition more restrictively than a condition for which the insured
sought or should have sought medical care during the 12 months immediately
preceding coverage. An individual who has been a resident for at least 6 months or
an employe who has satisfied any necessary waiting period may obtain coverage
under a group or individual health benefit plan without any preexisting condition
exclusion or limitation if the individual or employe applies for coverage within 30
days after the later of the date on which the individual or employe becomes 18 years
old or the date on which the individual's or employe's coverage under a health benefit
plan as a dependent ceases or during a biennial 30-day open enrollment period
specified by the commissioner by rule. Both group and individual health benefit
plans subject to the market reform requirements must waive any period applicable
to a preexisting condition exclusion or limitation that was satisfied under another
plan, including HIRSP, under which the insured had coverage if that coverage
terminated 60 days or less before the effective date of coverage under the new plan.
Contract renewability and fair marketing standards
A health benefit plan that is subject to the market reform requirements 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 health benefit
plan only if the insurer thereafter ceases to issue or renew any health benefit plans
for a minimum of 5 years.
Insurers that offer health benefit plans that are subject to the requirements
must actively market such health benefit plans and are prohibited from such
marketing practices as discouraging an employer or individual from applying for
coverage, or encouraging an employer or individual to seek coverage from a different
insurer, for reasons related to health condition, claims experience or other
characteristics of the employer or individual.
These contract renewability and fair marketing provisions apply under current
law to group health benefit plans that are issued to an employer with 2 to 25
employes.
Comprehensive health care board and reinsurance
The bill creates a comprehensive health care board (board) as an expansion of
the small employer insurance board. The board consists of the commissioner, the
secretary of employe trust funds, 3 members of the board on health care information
who are elected by the board on health care information and the following members
appointed for 3-year terms: 5 members who represent employers, 3 members who
represent eligible employes, one member who represents a labor organization and
3 members who represent purchasing coalitions. (A purchasing coalition is a
corporation or cooperative that purchases or arranges for the purchase of health care
coverage or services for 2 or more employers and that is controlled by those
employers.)
The bill repeals the small employer insurance board and the comprehensive
health care board assumes the duties of the small employer insurance board with
respect to administering the small employer health insurance plan under current
law. In addition, the board is given additional duties to provide data or technical
assistance to any purchasing coalition, develop quality outcomes measures, quality
and practice pattern standards and health plan performance criteria, provide
information on technology assessment to any purchasing coalition and recommend
cost containment measures and provide assessments of health care needs to any
purchasing coalition. The board must also submit proposed legislation for a
reinsurance program for insurers that are subject to the market reform
requirements. The reinsurance program must be optional, must allow an insurer to
select among 3 different threshold amounts, must require the commissioner to pay
80% of claims above the threshold amount selected by an insurer and must provide
for a premium and assessment arrangement for funding a health reinsurance fund
out of which the claims will be paid.
Other
Electronic claims
The bill requires every insurer that offers health insurance (called disability
insurance in the statutes) to accept all claims electronically and to allow electronic
access to eligibility and claims status information. Insurers must have this
capability and use it beginning on January 1, 1997. Also beginning on that date,
health care providers that have annual gross revenues of more than $1,000,000 must
be able to transmit health insurance claims electronically. All other health care
providers must have and use this capability beginning on January 1, 1998.
Health insurance risk-sharing plan reports
The bill requires the commissioner to study the effects that the health
insurance market reforms under the bill have on enrollment in, and other aspects
of, HIRSP. Beginning on October 1, 1999, the commissioner must submit an annual
report to the legislature on the effects.
Group insurance board
The bill authorizes the group insurance board to enter into contracts with
purchasing coalitions to further the purposes of the health care plans for state
employes.
For further information see the state 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:
SB201, s. 1
1Section
1. 15.07 (1) (b) 21. of the statutes is created to read:
SB201,5,32
15.07
(1) (b) 21. The members of the comprehensive health care board
3appointed under s. 15.735 (3) (b) 1. to 4.
SB201, s. 2
4Section
2. 15.735 (1) of the statutes is repealed.
SB201, s. 3
5Section
3. 15.735 (3) of the statutes is created to read:
SB201,5,66
15.735
(3) Comprehensive health care board. (a) In this subsection:
SB201,6,37
1. "Eligible employe" means an employe who works on a full-time basis and has
8a normal work week of 30 or more hours. The term includes a sole proprietor, a
9business owner, including the owner of a farm business, a partner of a partnership,
10a member of a limited liability company and an independent contractor if the sole
1proprietor, business owner, partner, member or independent contractor is included
2as an employe under a health benefit plan of an employer, but the term does not
3include an employe who works on a part-time, temporary or substitute basis.
SB201,6,44
2. "Employer" means any of the following:
SB201,6,75
a. 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, and that employs in this state not more than 100 eligible employes.
SB201,6,98
b. A municipality, as defined in s. 16.70 (8), that employs not more than 100
9eligible employes.
SB201,6,1510
(b) There is created a comprehensive health care board that is attached to the
11office of the commissioner of insurance under s. 15.03, consisting of the commissioner
12of insurance or his or her designee, the secretary of employe trust funds or his or her
13designee, 3 members of the board on health care information who are elected by the
14board on health care information and the following members appointed for 3-year
15terms:
SB201,6,1616
1. Five members who represent employers.
SB201,6,1717
2. Three members who represent eligible employes.
SB201,6,1818
3. One member who represents a labor organization.
SB201,6,2019
4. Three members who represent purchasing coalitions, as defined in s. 600.03
20(40m).
SB201,6,2221
(c) Notwithstanding s. 15.07 (2) (intro.), the commissioner of insurance shall
22be a nonvoting member who shall serve permanently as chairperson of the board.
SB201, s. 4
23Section
4. 40.02 (48g) of the statutes is created to read:
SB201,6,2424
40.02
(48g) "Purchasing coalition" has the meaning given in s. 600.03 (40m).
SB201, s. 5
25Section
5. 40.03 (6) (a) 2. of the statutes is amended to read:
SB201,7,6
140.03
(6) (a) 2. May, wholly or partially in lieu of subd. 1., on behalf of the state,
2provide any group insurance plan on a self-insured basis in which case the group
3insurance board shall approve a written description setting forth the terms and
4conditions of the plan, and may contract directly with providers of hospital, medical
5or ancillary services to provide insured employes with the benefits provided under
6this chapter
.; or
SB201, s. 6
7Section
6. 40.03 (6) (a) 3. of the statutes is created to read:
SB201,7,108
40.03
(6) (a) 3. May, wholly or partially in lieu of subd. 1., on behalf of the state,
9enter into a contract with one or more purchasing coalitions to further the purpose
10of ss. 40.51 and 40.52.
SB201, s. 7
11Section
7. 111.70 (1) (a) of the statutes is amended to read:
SB201,8,712
111.70
(1) (a) "Collective bargaining" means the performance of the mutual
13obligation of a municipal employer, through its officers and agents, and the
14representatives of its employes, to meet and confer at reasonable times, in good faith,
15with the intention of reaching an agreement, or to resolve questions arising under
16such an agreement, with respect to wages, hours and conditions of employment, and
17with respect to a requirement of the municipal employer for a municipal employe to
18perform law enforcement and fire fighting services under s. 61.66, except as provided
19in
sub. (4) (m) and s. 40.81 (3) and except that a municipal employer shall not meet
20and confer with respect to any proposal to diminish or abridge the rights guaranteed
21to municipal employes under ch. 164. The duty to bargain, however, does not compel
22either party to agree to a proposal or require the making of a concession. Collective
23bargaining includes the reduction of any agreement reached to a written and signed
24document. The employer shall not be required to bargain on subjects reserved to
25management and direction of the governmental unit except insofar as the manner
1of exercise of such functions affects the wages, hours and conditions of employment
2of the employes. In creating this subchapter the legislature recognizes that the
3public employer must exercise its powers and responsibilities to act for the
4government and good order of the municipality, its commercial benefit and the
5health, safety and welfare of the public to assure orderly operations and functions
6within its jurisdiction, subject to those rights secured to public employes by the
7constitutions of this state and of the United States and by this subchapter.
SB201, s. 8
8Section
8. 111.70 (4) (m) of the statutes is created to read:
SB201,8,129
111.70
(4) (m)
Health insurance market reform. A municipal employer that is
10an employer under the definition specified in s. 635.02 (3h) (b) is prohibited from
11bargaining collectively with respect to the health insurance requirements under
12subch. I of ch. 635.
SB201, s. 9
13Section
9. 153.07 (4) of the statutes is created to read:
SB201,8,1514
153.07
(4) The board shall elect 3 members to serve on the comprehensive
15health care board.
SB201, s. 10
16Section
10. 185.983 (1g) of the statutes is amended to read: