Health care coverage: rate changes.

Existing law, the Knox-Keene Health Care Service Plan Act of 1975, provides for the licensure and regulation of health care service plans by the Department of Managed Health Care and makes a willful violation of the act a crime. Existing law also provides for the regulation of health insurers by the Department of Insurance. Under existing law, no change in premium rates or coverage in a health care service plan contract or a health insurance policy may become effective without prior written notification of the change to the contractholder or policyholder. Existing law prohibits a plan or insurer during the term of a group plan contract or policy from changing the rate of the premium, copayment, coinsurance, or deductible during specified time periods. This bill would prohibit a health care service plan or health insurer from altering the rates, as defined, that apply to individual health care service plan contracts or individual health insurance policies, or altering any benefits included in individual contracts or policies, more than once each calendar year, except as specified. Among those exceptions, the bill would provide that, if a brand name drug becomes available as a generic drug, the application of a lower cost-sharing rate for the generic drug would not constitute an alteration of benefits. The bill's provisions would apply to a new individual plan contract or policy issued to an enrollee or insured who transfers from another plan or policy, as specified, and would prohibit the issuance of new plan contracts or policies more often than annually. Because a willful violation of these requirements by a health care service plan would be a crime, the bill would impose a state-mandated local program. The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement. This bill would provide that no reimbursement is required by this act for a specified reason.