BP BHEAD INT H

AN ACT Relating to the stabilization of the health insurance market; amending RCW 48.14.0201, 48.18.100, and 48.43.025; adding new sections to chapter 48.41 RCW; creating a new section; providing expiration dates; and declaring an emergency.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1. A new section is added to chapter 48.41 RCW to read as follows:

(1) The legislature finds that a series of major modifications in statutes governing health insurance has produced significant volatility in the health insurance market, particularly affecting individual health insurance purchasers. Because of changes, some individuals have had difficulty in purchasing adequate coverage at an affordable price, while health carriers have been hampered in their ability to secure adequate premiums and accurately predict beneficiary utilization. While it is unclear whether or not this volatility will diminish with long-term market stability, the problem is of such concern to require, at least provisionally, immediate attention. It is therefore the intent of the legislature to establish a Washington health insurance market stabilization program the purpose of which is to: Provide provisional resources and authority to stabilize the cost of health insurance, improve the availability of health insurance to individuals, and study the need for a more long-term solution to the problem.

(2) The Washington health insurance market stabilization program is created. The program's board of directors shall be the same board of directors that governs the Washington state health insurance pool created by RCW 48.41.040. Unless otherwise indicated, the provisions of the following sections apply to the program: RCW 48.41.030; 48.41.040; 48.41.060; 48.41.070; 48.41.080; 48.41.130; 48.41.170; 48.41.190; 48.41.210; and 48.41.910. Further, the definition of "pool" in RCW 48.41.030 shall also include the Washington health insurance market stabilization program.

(3) This section shall expire July 1, 1999.

NEW SECTION. Sec. 2. A new section is added to chapter 48.41 RCW to read as follows:

(1) The board shall develop a plan of operation which shall take effect July 1, 1996. The plan shall be submitted to the Washington state health care policy board created under RCW 43.73.010 for review by June 1, 1996, and filed with the commissioner by July 1, 1996. In implementing the plan, the board shall develop procedures for:

(a) Handling and accounting of assets and funds of the program;

(b) Setting times and places for meetings of the board of directors;

(d) Setting and collection of assessments pursuant to section 4 of this act;

(e) Setting loss ratio standards;

(f) Developing reinsurance policy coverage pursuant to section 3 of this act;

(g) Publicizing the existence of the program, the eligibility requirements, and procedures for enrollment and maintaining public awareness of the plan;

(h) Permitting members to file grievances reviewed by an impartial body and reported to the board; and

(i) Setting premiums for reinsurance.

(2) This section shall expire July 1, 1999.

NEW SECTION. Sec. 3. A new section is added to chapter 48.41 RCW to read as follows:

(1) Beginning July 1, 1996, and terminating July 1, 1999, the board of directors shall operate, for the benefit of members offering individual insurance coverage, reinsurance coverage with the purpose of stabilizing the cost of health insurance and improving the availability of health insurance to individuals. The board has the power to set premiums. Conditions for eligibility are as follows:

(a) Reinsurance losses must have been incurred between July 1, 1996, and July 1, 1999;

(b) Reinsurance losses may only be paid based on loss ratios standards established by the board;

(d) Aggregate claims payments are limited to the funds available pursuant to section 4 of this act; and

(e) Members must meet other conditions, as set by the board.

(2) This section shall expire July 1, 1999.

NEW SECTION. Sec. 4. A new section is added to chapter 48.41 RCW to read as follows:

(1) The board shall establish a member assessment to cover program administration and incurred losses for twelve-month periods beginning July 1, 1996, July 1, 1997, and July 1, 1998. However, the aggregate assessment must not exceed twenty-five million dollars in any one twelve-month period.

(2) Each member's proportion of assessment is to be determined by the board in a fair and efficient manner, consistent with good principles of accounting, and complementary to the fund stability.

(3) Any surplus available after payment of claims from the period July 1, 1996, to July 1, 1999, must be deposited in the health services account established in RCW 43.72.900.

(4) This section shall expire July 1, 1999.

Sec. 5. RCW 48.14.0201 and 1993 sp.s. c 25 s 601 are each amended to read as follows:

(1) As used in this section, "taxpayer" means a health maintenance organization, as defined in RCW 48.46.020, a health care service contractor, as defined in RCW 48.44.010, or a certified health plan certified under RCW 48.43.030.

(2) Each taxpayer shall pay a tax on or before the first day of March of each year to the state treasurer through the insurance commissioner's office. The tax shall be equal to the total amount of all premiums and prepayments for health care services received by the taxpayer during the preceding calendar year multiplied by the rate of two percent.

(3) Taxpayers shall prepay their tax obligations under this section. The minimum amount of the prepayments shall be percentages of the taxpayer's tax obligation for the preceding calendar year recomputed using the rate in effect for the current year. For the prepayment of taxes due during the first calendar year, the minimum amount of the prepayments shall be percentages of the taxpayer's tax obligation that would have been due had the tax been in effect during the previous calendar year. The tax prepayments shall be paid to the state treasurer through the commissioner's office by the due dates and in the following amounts:

(a) On or before June 15, forty-five percent;

(b) On or before September 15, twenty-five percent;

(4) For good cause demonstrated in writing, the commissioner may approve an amount smaller than the preceding calendar year's tax obligation as recomputed for calculating the health maintenance organization's, health care service contractor's, or certified health plan's prepayment obligations for the current tax year.

(5) Moneys collected under this section shall be deposited in the general fund through March 31, 1996, and in the health services account under RCW 43.72.900 after March 31, 1996.

(6) The taxes imposed in this section do not apply to:

(a) Amounts received by any taxpayer from the United States or any instrumentality thereof as prepayments for health care services provided under Title XVIII (medicare) of the federal social security act. This exemption shall expire July 1, 1997.

(b) Amounts received by any health care service contractor, as defined in RCW 48.44.010, as prepayments for health care services included within the definition of practice of dentistry under RCW 18.32.020. This exemption does not apply to amounts received under a certified health plan certified under RCW 48.43.030.

(7) Until July 1, 1999, taxpayers shall be given a credit from this tax equal to the amount of the assessment paid pursuant to section 4 of this act.

NEW SECTION. Sec. 6. (1) The Washington state health care policy board created by RCW 43.73.010, in coordination with the board of directors of the Washington health market stabilization program, shall study the necessity of an ongoing policy to stabilize the health insurance market for individuals. Items to be studied are:

(a) Health carrier participation;

(b) Enrollee eligibility;

(d) Funding sources;

(e) Claims procedures;

(f) Risk adjustment mechanism;

(g) Cost control requirements, including case management, managed care, and utilization review;

(h) Role of government; and

(i) Consumer coverage.

(2) The board shall report to the appropriate committees of the legislature by December 1, 1996.

Sec. 7. RCW 48.18.100 and 1989 c 25 s 1 are each amended to read as follows:

(1) No insurance policy form other than surety bond forms, disability insurance forms, or application form where written application is required and is to be attached to the policy, or printed life or disability rider or endorsement form shall be issued, delivered, or used unless it has been filed with and approved by the commissioner. This section shall not apply to policies, riders or endorsements of unique character designed for and used with relation to insurance upon a particular subject.

(2) Every such filing containing a certification, in a form approved by the commissioner, by either the chief executive officer of the insurer or by an actuary who is a member of the American Academy of Actuaries, attesting that the filing complies with Title 48 RCW and Title 284 of the Washington Administrative Code, may be used by such insurer immediately after filing with the commissioner. The commissioner may order an insurer to cease using a certified form upon the grounds set forth in RCW 48.18.110. This subsection shall not apply to certain types of policy forms designated by the commissioner by rule.

(3) Every disability insurance policy form shall be filed with the insurance commissioner prior to being issued, delivered, or used in this state. The commissioner may, after holding a hearing, disapprove a form for reasons set forth in RCW 48.18.110.

(4) Every filing that does not contain a certification pursuant to subsection (2) of this section shall be made not less than thirty days in advance of any such issuance, delivery, or use. At the expiration of such thirty days the form so filed shall be deemed approved unless prior thereto it has been affirmatively approved or disapproved by order of the commissioner. The commissioner may extend by not more than an additional fifteen days the period within which he may so affirmatively approve or disapprove any such form, by giving notice of such extension before expiration of the initial thirty-day period. At the expiration of any such period as so extended, and in the absence of such prior affirmative approval or disapproval, any such form shall be deemed approved. The commissioner may withdraw any such approval at any time for cause. By approval of any such form for immediate use, the commissioner may waive any unexpired portion of such initial thirty-day waiting period.

((~~(4)~~)) (5) The commissioner's order disapproving any such form or withdrawing a previous approval shall state the grounds therefor.

((~~(5)~~)) (6) No such form shall knowingly be so issued or delivered as to which the commissioner's approval does not then exist.

((~~(6)~~)) (7) The commissioner may, by order, exempt from the requirements of this section for so long as he deems proper, any insurance document or form or type thereof as specified in such order, to which in his opinion this section may not practicably be applied, or the filing and approval of which are, in his opinion, not desirable or necessary for the protection of the public.

((~~(7)~~)) (8) Every member or subscriber to a rating organization shall adhere to the form filings made on its behalf by the organization. Deviations from such organization are permitted only when filed with the commissioner in accordance with this chapter.

Sec. 8. RCW 48.43.025 and 1995 c 265 s 6 are each amended to read as follows:

(1) No carrier may reject an individual for health plan coverage based upon preexisting conditions of the individual and no carrier may deny, exclude, or otherwise limit coverage for an individual's preexisting health conditions; except that a carrier may impose a three-month benefit waiting period for preexisting conditions for which medical advice was given, or for which a health care provider recommended or provided treatment within three months before the effective date of coverage. However, if the individual voluntarily terminates coverage within nine months of issuance, the carrier may impose a nine-month benefit waiting period for preexisting conditions.

(2) No carrier may avoid the requirements of this section through the creation of a new rate classification or the modification of an existing rate classification. A new or changed rate classification will be deemed an attempt to avoid the provisions of this section if the new or changed classification would substantially discourage applications for coverage from individuals or groups who are higher than average health risks. These provisions apply only to individuals who are Washington residents.

NEW SECTION. Sec. 9. This act is necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and shall take effect immediately.