AB416: Bill Text

LRB-1480/3

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1995 - 1996 LEGISLATURE

1995 Assembly BILL 416

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 An Act to repeal 635.02 (5m), 635.07 and 635.26 (1) (b); to renumber and amend 635.26 (1) (a); to amend 40.51 (8), 60.23 (25), 66.184, 111.70 (1) (a), 120.13 (2) (g), 185.981 (4t), 185.983 (1) (intro.), 600.01 (2) (b), 628.34 (3) (a), 628.34 (3) (b), 632.76 (2) (a) and 632.896 (4); to repeal and recreate 635.17; and to create 40.52 (1m), 111.70 (4) (m), 111.91 (2) (k), 632.745, 632.747 and 632.749 of the statutes; relating to: group health insurance market reform, including preexisting condition exclusions and limitations, guaranteed acceptance, portability and contract termination and renewability; and collective 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 Section 1. 40.51 (8) of the statutes is amended to read:

AB416,3,4 40.51 (8) Every health care coverage plan offered by the state under sub. (6) shall comply with ss. 631.89, 631.90, 631.93 (2), 632.72 (2), 632.745, 632.747, 632.749, 632.87 (3) to (5), 632.895 (5m) and (8) to (10) and 632.896.

AB416, s. 2 Section 2. 40.52 (1m) of the statutes is created to read:

AB416,3,7 40.52 (1m) The standard plan shall comply with ss. 632.745 (2), (3) and (5) (a) 2. and (b) 2. and 632.747 (3).

AB416, s. 3 Section 3. 60.23 (25) of the statutes is amended to read:

AB416,3,12 60.23 (25) Self-insured health plans. Provide health care benefits to its officers and employes on a self-insured basis if the self-insured plan complies with ss. 631.89, 631.90, 631.93 (2), 632.745 (2), (3) and (5) (a) 2. and (b) 2., 632.747 (3), 632.87 (4) and (5), 632.895 (9) and 632.896.

AB416, s. 4 Section 4. 66.184 of the statutes is amended to read:

AB416,4,3 66.184 Self-insured health plans. If a city, including a 1st class city, or a village provides health care benefits under its home rule power, or if a town provides health care benefits, to its officers and employes on a self-insured basis, the self-insured plan shall comply with ss. 49.493 (3) (d), 631.89, 631.90, 631.93 (2), 632.745 (2), (3) and (5) (a) 2. and (b) 2., 632.747 (3), 632.87 (4) and (5), 632.895 (9) and (10), 632.896, 767.25 (4m) (d) and 767.51 (3m) (d).

AB416, s. 5 Section 5. 111.70 (1) (a) of the statutes is amended to read:

AB416,4,25 111.70 (1) (a) "Collective bargaining" means the performance of the mutual obligation of a municipal employer, through its officers and agents, and the representatives of its employes, to meet and confer at reasonable times, in good faith, with the intention of reaching an agreement, or to resolve questions arising under such an agreement, with respect to wages, hours and conditions of employment, and with respect to a requirement of the municipal employer for a municipal employe to perform law enforcement and fire fighting services under s. 61.66, except as provided in sub. (4) (m) and s. 40.81 (3) and except that a municipal employer shall not meet and confer with respect to any proposal to diminish or abridge the rights guaranteed to municipal employes under ch. 164. The duty to bargain, however, does not compel either party to agree to a proposal or require the making of a concession. Collective bargaining includes the reduction of any agreement reached to a written and signed document. The employer shall not be required to bargain on subjects reserved to management and direction of the governmental unit except insofar as the manner of exercise of such functions affects the wages, hours and conditions of employment of the employes. In creating this subchapter the legislature recognizes that the public employer must exercise its powers and responsibilities to act for the government and good order of the municipality, its commercial benefit and the health, safety and welfare of the public to assure orderly operations and functions within its jurisdiction, subject to those rights secured to public employes by the constitutions of this state and of the United States and by this subchapter.

AB416, s. 6 Section 6. 111.70 (4) (m) of the statutes is created to read:

AB416,5,4 111.70 (4) (m) Health benefit plan requirements. The municipal employer is prohibited from bargaining collectively with respect to compliance with the health benefit plan requirements under ss. 632.745, 632.747 and 632.479.

AB416, s. 7 Section 7. 111.91 (2) (k) of the statutes is created to read:

AB416,5,7 111.91 (2) (k) Compliance with the health benefit plan requirements under ss. 632.745, 632.747 and 632.749.

AB416, s. 8 Section 8. 120.13 (2) (g) of the statutes is amended to read:

AB416,5,12 120.13 (2) (g) Every self-insured plan under par. (b) shall comply with ss. 49.493 (3) (d), 631.89, 631.90, 631.93 (2), 632.745 (2), (3) and (5) (a) 2. and (b) 2., 632.747 (3), 632.87 (4) and (5), 632.895 (9) and (10), 632.896, 767.25 (4m) (d) and 767.51 (3m) (d).

AB416, s. 9 Section 9. 185.981 (4t) of the statutes is amended to read:

AB416,5,16 185.981 (4t) A sickness care plan operated by a cooperative association is subject to ss. 252.14, 631.89, 632.72 (2), 632.745, 632.747, 632.749, 632.87 (2m), (3), (4) and (5), 632.895 (10) and 632.897 (10) and ch. 155.

AB416, s. 10 Section 10. 185.983 (1) (intro.) of the statutes is amended to read:

AB416,5,23 185.983 (1) (intro.) Every such voluntary nonprofit sickness care plan shall be exempt from chs. 600 to 646, with the exception of ss. 601.04, 601.13, 601.31, 601.41, 601.42, 601.43, 601.44, 601.45, 611.67, 619.04, 628.34 (10), 631.89, 631.93, 632.72 (2), 632.745, 632.747, 632.749, 632.775, 632.79, 632.795, 632.87 (2m), (3), (4) and (5), 632.895 (5), (9) and (10), 632.896 and 632.897 (10), subch. II of ch. 619 and chs. 609, 630, 635, 645 and 646, but the sponsoring association shall:

AB416, s. 11 Section 11. 600.01 (2) (b) of the statutes is amended to read:

AB416,6,2 600.01 (2) (b) Group or blanket insurance described in sub. (1) (b) 3. and 4. is not exempt from s. 632.745, 632.747 or 632.749 or ch. 633 or 635.

AB416, s. 12 Section 12. 628.34 (3) (a) of the statutes is amended to read:

AB416,6,10 628.34 (3) (a) No insurer may unfairly discriminate among policyholders by charging different premiums or by offering different terms of coverage except on the basis of classifications related to the nature and the degree of the risk covered or the expenses involved, subject to s. ss. 632.365 and 632.745. Rates are not unfairly discriminatory if they are averaged broadly among persons insured under a group, blanket or franchise policy, and terms are not unfairly discriminatory merely because they are more favorable than in a similar individual policy.

AB416, s. 13 Section 13. 628.34 (3) (b) of the statutes is amended to read:

AB416,6,17 628.34 (3) (b) No insurer may refuse to insure or refuse to continue to insure, or limit the amount, extent or kind of coverage available to an individual, or charge an individual a different rate for the same coverage because of a mental or physical disability except when the refusal, limitation or rate differential is based on either sound actuarial principles supported by reliable data or actual or reasonably anticipated experience, subject to ss. 632.745, 632.747, 632.749, 635.09 and 635.26.

AB416, s. 14 Section 14. 632.745 of the statutes is created to read:

AB416,6,21 632.745 Coverage requirements for group health benefit plans. (1) Group health insurance market reform; definitions. In this section and ss. 632.747 and 632.749:

AB416,7,3 (a) "Eligible employe" means an employe who works on a permanent basis and has a normal work week of 30 or more hours. The term includes a sole proprietor, a business owner, including the owner of a farm business, a partner of a partnership and a member of a limited liability company if the sole proprietor, business owner, partner or member is included as an employe under a health benefit plan of an employer, but the term does not include an employe who works on a temporary or substitute basis.