BILL REQ. #:  S-3968.1 

Read first time 01/23/12.   Referred to Committee on Health & Long-Term Care.

     AN ACT Relating to expanding opportunities for the purchase of health care coverage outside of state-governed health care coverage programs; adding new sections to chapter 48.05 RCW; and creating a new section.

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

NEW SECTION.  Sec. 1   (1) The legislature recognizes the need for individuals and small employers to have multiple options for health insurance coverage to meet their personal and financial needs. Washington currently has a limited market within which consumers are unable to find true choice among health plans and health insurers. The ability to choose among competitive health plans and insurers will be essential to ensuring individuals and small employers have access to affordable, quality coverage.
     (2) The federal patient protection and affordable care act provides certain consistencies that make it easier and more desirable to develop new options for consumers.
     (3) As the state moves forward to develop the federally required state-based health exchange, small employers and individuals unable to take advantage of tax credits and subsidies are still in need of affordable coverage and should not be ignored during this time of implementation. Providing additional options for these purchasers is essential to ensuring they are able to maintain coverage and are receiving true value from the coverage they choose.
     (4) The legislature therefore intends to expand affordable coverage to individuals and small employers that will improve the variety of health plan designs and price points, as well as increase the number of insurers competing for consumer dollars within our state.

NEW SECTION.  Sec. 2   (1) By January 2014, the insurance commissioner shall identify at least five states within which eighty-five percent of those state's insurance laws governing reserves, network adequacy, complaint resolution, consumer protection, and marketing standards either meet or exceed standards established by the national association of insurance commissioners, and that have no more than two of the same health insurers or their affiliate lines of business providing coverage in that state's small group and individual markets that are also providing coverage in Washington's small group and individual markets, and are interested in joining in a licensing reciprocal agreement that allows for the sale of private market health plans among the consortium states. The commissioner shall approve for sale in Washington the private market individual and small group policies that have been approved for issuance in the participating reciprocity states, so long as the policies comply with the federal employee health benefit plan design. Such policies are prohibited from being sold in the state-based exchange in accordance with section 6 of this act.
     (2) A policy approved and issued pursuant to this section must be treated as if it were issued by an insurer domiciled in Washington, regardless of the insurer's domiciliary state.

NEW SECTION.  Sec. 3   (1) Any insurer selling an insurance policy pursuant to this section, and any plan approved under this section, must satisfy actuarial standards and insurer solvency requirements in accordance with the national association of insurance commissioners and adopted in the reciprocal state or as otherwise prescribed by similar rule adopted in the reciprocal state so long as any such rule is not inconsistent with the national association of insurance commissioners standards.
     (2) The commissioner has the authority to determine whether an insurer satisfies the standards required by this section and may not approve a policy or plan that he or she finds not in compliance with this section. The commissioner has the authority to determine whether the policies sold pursuant to this section continue to satisfy the requirements of this section in the same manner as he or she does with a policy issued by an insurer domiciled in the state. The commissioner has the authority to suspend or revoke new sales of out-of-state policies if the laws and rules of those states are determined to egregiously harm Washington residents. Upon such suspension or revocation, the issuers of the out-of-state policies are required to notify in writing all affected Washington policyholders.

NEW SECTION.  Sec. 4   (1) Each written application for participation in an out-of-state health benefit plan under this section or plan issued pursuant to this chapter must contain the following language in boldface type at the beginning of the document:
     "This policy is primarily governed by the laws of (insert state where the master policy is filed); therefore, all of the rating laws applicable to policies filed in this state may not apply to this policy, which may result in increases in your premium at renewal that would be different than increases experienced by residents purchasing coverage from insurers domiciled in the state of Washington. For information concerning individual or small group health coverage under a Washington approved policy, please consult your insurance agent or the office of the insurance commissioner."
     (2) Each out-of-state health benefit policy issued pursuant to this chapter must contain the following language in boldface type at the beginning of the document:
     "The benefits of this policy providing your coverage are governed by the laws of a state OTHER than Washington. While this health benefit plan includes the federally required essential health benefits, it may provide fewer health benefits than those normally included as a state-mandated health benefit in Washington state. Please consult your insurance agent to determine which state mandated health benefits are excluded under this policy."

NEW SECTION.  Sec. 5   The commissioner shall cooperate with other insurance commissioners in creating a consortium of like-states. The consortium shall establish rules of reciprocity for the approval of comprehensive private market individual and small group health plans in the participating states. At a minimum, the rules of approval for reciprocity must include the terms and conditions to protect Washington residents similar to the following:
     (1) An issuer, with respect to a particular insurer, may only designate one state as its primary state with respect to all such coverage it offers. Such an issuer may not change the designated primary state with respect to individual or small group health coverage within three years of selecting its state of designation;
     (2) In the case of an insurer that is selling a policy in, or to a resident of, a secondary state, the issuer must be considered as being licensed and approved to do business in the secondary state;
     (3) The covered laws of the primary state apply to individual and small group coverage offered by a health insurer domiciled in the primary state and all policies sold by that insurer in any secondary state; and
     (4) Insurers participating in the sale of health plans in secondary states are subject to payment on a nondiscriminatory basis of applicable premium and other taxes, including high risk pool assessments and other assessments which are levied on insurers in the participant states. The assessments must be based on the number of lives covered in the secondary state in which the assessment applies.

NEW SECTION.  Sec. 6   By January 2017, the commissioner shall present to the legislature a plan to either establish a separate compact that will allow for more enhanced opportunities for Washington to collaborate with states on the sale of health care coverage; or to convert the existing reciprocal agreement into a more expansive compact. After such a compact is in place, the state may consider options for allowing carriers not fully admitted in the state of Washington to participate in Washington's state-based health exchange. Before the existence of a governing compact, insurers participating in reciprocal agreements with participating states are prohibited from selling policies through Washington's state-based exchange until such time as that insurer becomes a fully admitted carrier in Washington.

NEW SECTION.  Sec. 7   Sections 2 through 6 of this act are each added to chapter 48.05 RCW.