SENATE BILL REPORT
SB 5773
BYSenators Moore, McDermott, Williams, Rinehart and Talmadge
Adopting the prohibition of discrimination in the provision of insurance act.
Senate Committee on Financial Institutions & Insurance
Senate Hearing Date(s):February 27, 1987; January 28, 1988
Senate Staff:Walt Corneille (786-7416)
AS OF JANUARY 27, 1988
BACKGROUND:
The insurance code prohibits life and disability insurers from unfairly discriminating in the terms, conditions, rates, premiums, benefits, or any other rights or privileges under a policy. Life insurers are authorized specifically to discriminate between individuals having unequal expectations of life. Another provision authorizes fair discrimination on the basis of sex, marital status, or the presence of any sensory, mental, or physical handicap when a bona fide statistical difference in risk or exposure has been substantiated by any insurer for any type of insurance coverage. Different statutory provisions govern discrimination by health care service contractors and health maintenance organizations.
Health care service contractors may not discriminate on the basis of race, religion, national origin, or the presence of any sensory, mental, or physical handicap. However, health care service contractors may deny or otherwise limit coverage to any person when the person because of a medical condition does not meet the essential eligibility requirements established by the contractor.
Health maintenance organizations may not deny coverage on the basis of the presence of any sensory, mental, or physical handicap unless the person, because of a medical condition, does not meet the essential eligibility requirements established by the health maintenance organization.
In addition to the insurance code provisions, the "law against discrimination" in general prohibits insurers from discriminating on the basis of sex, marital status, race, creed, color, national origin, or the presence of any sensory, mental, or physical handicap; but, the law does not prohibit discrimination that is permitted under specific provisions of the insurance code.
Finally, the Insurance Commissioner recently adopted rules imposing limitations on the use of AIDS tests for underwriting purposes.
SUMMARY:
No life or disability insurer, or health care service contractor or health maintenance organization may cancel, or refuse to issue or renew coverage because a person has tested positive to any test to screen for the presence of any probable causative agent of AIDS, ARC, or the HTLV-III infection as those terms are defined.
They may use age, marital status, geographic area of residence, occupation, sex, sexual orientation, or any similar factor or combination of factors for the purpose of seeking to predict whether any individual may in the future develop AIDS or ARC.
No health policy, contract, or agreement may contain exclusions, reductions, deductibles, coinsurance provisions, or other limitation on coverage for AIDS, ARC, HTLV-III infection, or for any illness or disease arising from these unless the provisions apply to all benefits under the policy, contract, or agreement.
No life insurance policy may contain any exclusion, reduction, or other limitation of benefits related to AIDS, ARC, HTLV-III infection, or any disease arising from these, as a cause of death.
No insurer or health maintenance organization may require for a period of five years any individual to take an AIDS test, may require or request any individual to disclose whether such a test has been taken, or may consider in the determination of rates or premiums whether such a test has been taken.
After five years, an insurer or health maintenance organization may apply to the Commissioner to increase any rate based upon a positive test for AIDS but the test used must be approved by the state Board of Health and the Commissioner must review the proposed rate.
Insurers may use the fact of an AIDS diagnosis in underwriting and may require a new applicant to take a test that is prohibited under this act if the test is administered by a physician as required element of diagnoses of AIDS and the physician determines that the test is medically necessary.
No insurer or health maintenance organization may require an individual to take a test permitted by this act unless the insurer agrees not to disclose the fact of testing or the test results to any person except as required by law and the individual provides his or her informed consent.
No insurer or health maintenance organization may contest the validity of a policy, contract, or agreement for reasons related to AIDS unless the insured knowingly failed or refused to disclose that the insured had AIDS.
Appropriation: none
Revenue: none
Fiscal Note: none requested
Effective Date:July 1, 1987