HB552 HD1.DOC

SECTION 1. The legislature finds that the Patient Protection and Affordable Care Act of 2010 (Affordable Care Act) has resulted in an estimated 20,000,000 Americans gaining health insurance coverage. The provisions under the Affordable Care Act that have afforded coverage to the uninsured include the medicaid expansion, health insurance marketplace coverage, and changes in private insurance that permit young adults to remain on their parent's health insurance plans and require health insurance plans to cover people with preexisting health conditions. According to a report from the United States Department of Health and Human Services, 6,100,000 uninsured young adults ages nineteen to twenty-five have gained health insurance coverage thanks to the Affordable Care Act. This is especially important as young adults were particularly likely to be uninsured before the law went into effect.

The federal Department of Health and Human Services recently reported that since the enactment of the Affordable Care Act, 54,000 residents of Hawaii have gained health insurance coverage. In addition to residents who would otherwise be uninsured, hundreds of thousands of Hawaii residents with employer, medicaid, individual market, or medicare coverage have also benefited from new protections under the Affordable Care Act. Even with the robust coverage of Hawaii's Prepaid Health Care Act, the benefits of the Affordable Care Act in Hawaii have been widespread. The Act expanded medicaid eligibility and strengthened the program for those already eligible. The State has saved millions in uncompensated care costs and has been able to improve behavioral health outcomes for various beneficiaries. For Hawaii residents, individual market coverage is now dramatically better than before the enactment of the Affordable Care Act.

Unfortunately, the future of the Affordable Care Act is now uncertain. The current presidential administration campaigned on the promise to repeal the Affordable Care Act. Republicans in Congress have also backed the Executive Branch's promise to repeal and replace the Affordable Care Act. On January 12, 2017, Senate Republicans took their first major step toward repealing the Affordable Care Act, when they approved a budget blueprint that would allow Republicans to gut the Affordable Care Act without the threat of a Democratic filibuster.

The repeal of the Affordable Care Act will have widespread ramifications. According to recent data from the Urban Institute, 86,000 fewer people in Hawaii would have health insurance in 2019 if the Affordable Care Act is repealed. States are poised to lose significant federal funds if marketplace subsidies and the medicaid expansion end. For Hawaii, a repeal of the Affordable Care Act means the loss of $47,000,000 in federal marketplace spending in 2019 and a loss of $532,000,000 between 2019 and 2028. Hawaii would also lose $306,000,000 in federal medicaid funding in 2019 and $3,700,000,000 between 2019 and 2028.

The legislature further finds that repealing the Affordable Care Act would destabilize the individual insurance market due to a combination of several factors including the pending loss of subsidies, elimination of the requirement to buy health insurance, and the requirement that insurers sell to all purchasers. Such factors will likely cause individual insurance prices to rise and may cause healthier individuals to drop health insurance coverage.

The Urban Institute estimates that repealing the Affordable Care Act without an adequate replacement plan that ensures affordable coverage would take health insurance coverage away from 29,800,000 people nationwide by 2019, more than doubling the total number of uninsured to 58,700,000.

As of February 2017, there is not yet a firm plan or agreement regarding the future of the Affordable Care Act. However, the Executive Branch has demanded that Congress immediately repeal and replace the Act. The legislature concludes that due to the uncertainty over the Affordable Care Act, it is important to preserve certain important aspects of the Act for residents in Hawaii.

Accordingly, the purpose of this Act is to ensure that certain benefits under the Affordable Care Act, which may not otherwise be available under the State's Prepaid Health Care Act, remain available under Hawaii law, including:

(1) Preserving the individual mandate that requires taxpayers to have qualified health insurance coverage throughout the year or pay a penalty;

(2) Ensuring all health insurers, mutual benefit societies, and health maintenance organizations in the State, including health benefits plans under chapter 87A, Hawaii Revised Statutes, include essential health care benefits, plus additional contraception and breastfeeding coverage benefits;

(3) Extending dependent coverage for adult children until the children turn twenty-six years of age;

(4) Prohibiting health insurance entities from imposing a preexisting condition exclusion; and

(5) Prohibiting health insurance entities from using an individual's gender to determine premiums or contributions.

SECTION 2. Chapter 235, Hawaii Revised Statutes, is amended by adding two new sections to be appropriately designated and to read as follows:

"§235-A Minimum essential coverage. (a) Except as provided in subsection (g), for each month beginning after December 31, 2017, an individual shall ensure that the individual, and any dependent of the individual, is covered with minimum essential coverage for the month.

(b) If a taxpayer, or a dependent for whom the taxpayer is liable, fails to meet the requirement of subsection (a) for one or more months, then a penalty shall be imposed on the taxpayer in an amount determined pursuant to subsection (c); provided that:

(1) Any penalty imposed by this section with respect to any month shall be included with a taxpayer's return under section 235-92 for the taxable year which includes that month; and

(2) If a penalty is imposed for any month on an individual and the individual:

(A) Is a dependent of another taxpayer for the other taxpayer's taxable year, the other taxpayer shall be liable for the penalty; or

(B) Files a joint return for the taxable year, the individual and the spouse of the individual shall be jointly liable for such penalty.

(c) The amount of the penalty imposed by this section on any taxpayer for any taxable year pursuant to subsection (b) shall be equal to the sum of the monthly penalty amounts determined under subsection (d) for months in the taxable year during which the taxpayer or the taxpayer's dependent fails to meet the requirements of subsection (a).

(d) The monthly penalty amount with respect to any taxpayer for any month during which any failure described pursuant to subsection (b) occurred is an amount equal to one-twelfth of the greater of the following amounts:

(1) A flat rate of $695; or

(2) 2.5 per cent of the excess of the taxpayer's household income for the taxable year over the taxpayer's applicable filing threshold for the taxable year.

(e) If an individual has not attained the age of eighteen as of the beginning of a month, the monthly penalty with respect to such individual shall be equal to one-half of the amount described in subsection (d).

(f) For every calendar year beginning after December 31, 2018, the amount under subsection (d)(1) shall be $695, increased by an amount equal to $695 multiplied by the cost of living adjustment determined pursuant to title 26 United States Code section 1(f)(3).

(g) Any individual who is not an applicable individual as defined in section 5000A(d) of the Internal Revenue Code of 1986, as amended, or who is exempt from penalties pursuant to section 5000A(e) of the Internal Revenue Code of 1986, as amended, as those provisions existed on January 1, 2017, shall be exempt from the requirements imposed by subsection (a).

(h) For purposes of this section:

"Household income" means, with respect to any taxpayer for any taxable year, an amount equal to the sum of the adjusted gross income, as determined under this chapter, of the taxpayer plus the aggregate adjusted gross income, as determined under this chapter, of all individuals for whom the taxpayer is allowed a deduction under section 151 (relating to allowance of deduction for personal exemptions) of the Internal Revenue Code of 1986, as amended, for the taxable year and who were required to file a tax return under section 235-92.

"Minimum essential coverage" means the same as in section 5000A(f) of the Internal Revenue Code of 1986, as amended, and title 26 Code of Federal Regulations section 1.5000A-2, as of January 1, 2017.

§235-B Minimum essential coverage confirmation report. (a) The director of taxation shall require every insurer that issues a policy, plan, contract, or agreement that provides minimum essential coverage to any individual residing in the State to report the provision of coverage on a form and in a manner determined by the director by rule pursuant to chapter 91. Coverage confirmation reports issued pursuant to this section shall be provided to the director of taxation and to the individual covered by the policy, plan, contract or agreement.

(b) Each coverage confirmation report issued pursuant to this section shall contain, at minimum:

(1) The name, date of birth, and last four digits of the social security number of each individual, including all dependents, covered by the minimum essential coverage;

(2) The policy number and start and end dates of the minimum essential coverage applicable to each individual named;

(3) The monthly premium amount paid for minimum essential coverage for each individual named; and

(4) The premium supplementation amounts, if any, paid to the insurer for providing minimal essential coverage to the named individuals pursuant to part of chapter 371."

SECTION 3. Chapter 371, Hawaii Revised Statutes, is amended by adding a new part to be appropriately designated and to read as follows:

"Part Minimum essential coverage premium supplementation

§371- Establishment of minimum essential coverage premium supplementation trust fund. There is established in the treasury of the State, separate and apart from all public moneys or funds of the State, a trust fund for minimum essential coverage premium supplementation which shall be administered exclusively for the purposes of this chapter. All minimum essential coverage premium supplementations payable under this part shall be paid from the fund. The fund shall consist of:

(1) All money appropriated by the State for the purposes of premium supplementation under this part; and

(2) All fines and penalties collected pursuant to section 235-A.

§371- Management of the fund. The director of finance shall be the treasurer and custodian of the minimum essential coverage premium supplementation fund and shall administer the fund in accordance with the directions of the director of labor and industrial relations. All moneys in the fund shall be held in trust for the purposes of this part only and shall not be expended, released, or appropriated or otherwise disposed of for any other purpose. Moneys in the fund may be deposited in any depositary bank in which general funds of the State may be deposited but such moneys shall not be commingled with other state funds and shall be maintained in separate accounts on the books of the depositary bank. Such moneys shall be secured by the depositary bank to the same extent and in the same manner as required by the general depositary law of the State; and collateral pledged for this purpose shall be kept separate and distinct from any other collateral pledged to secure other funds of the State. The director of finance shall be liable for the performance of the director of finance's duties under this section as provided in chapter 37.

§371- Disbursements from the fund. Expenditures of moneys in the minimum essential coverage premium supplementation fund shall not be subject to any provisions of law requiring specific appropriations or other formal release by the state officers of money in their custody. All payments from the fund shall be made upon warrants drawn upon the director of finance by the comptroller of the State supported by vouchers approved by the director.

§371- Entitlement to premium supplementation. (a) An insurer that provides minimum essential coverage pursuant to section 235-A and provides minimum essential confirmation reports in compliance with section 235-B shall be entitled to premium supplementation from the fund if the cost to the insurer of providing such coverage under any individual policy, plan, contract, or agreement exceeds per cent of the total premium amount paid to the insurer by the covered individual.

(b) The amount of the supplementation for each individual minimal essential coverage policy, plan, contract, or agreement shall be the amount by which the cost of providing minimal essential coverage exceeds the total premium amount paid to the insurer.

§371- Claim of premium supplementation. An insurer entitled to premium supplementation under this part shall file a claim therefor in the manner provided by the director by rule. The insurer shall have the burden of demonstrating the insurer's entitlement."

SECTION 4. Chapter 431, Hawaii Revised Statutes, is amended by adding four new sections to article 10A to be appropriately designated and to read as follows:

"§431:10A- Essential health care benefits. (a) Every policy of accident and health or sickness insurance issued or renewed in this State shall include at least the following essential health care benefits:

(1) Ambulatory patient services;

(2) Emergency services;

(3) Hospitalization benefits;

(4) Pregnancy, maternity, and newborn care;

(5) Mental health and substance use disorder services, including behavioral health treatment, mental and behavioral health inpatient services, and substance use disorder treatment;

(6) Rehabilitative services and devices;

(7) Laboratory services;

(8) Preventive and wellness services and chronic disease management; and

(9) Pediatric services, excluding oral and vision care.

(b) Policies of accident and health or sickness insurance delivered or issued for delivery in this State shall also include the following additional benefits:

(1) Contraceptive coverage, including contraceptive methods and counseling, as prescribed by a health care provider; and

(2) Breastfeeding coverage, including breastfeeding support, counseling, and equipment for the duration of breastfeeding;

provided that a health insurer shall not impose any cost-sharing requirements, including copayments, coinsurance, or deductibles, on a policyholder or individual with respect to the benefits covered under this subsection.

(c) This section shall not apply to policies that provide coverage for specified diseases or other limited benefit coverage, as provided pursuant to section 431:10A-102.5.

§431:10A- Extension of dependent coverage. A group accident and health or sickness insurance policy and a health insurer offering group or individual accident and health or sickness insurance coverage that provide coverage of dependent children shall continue to make such coverage available for an adult child until the child turns twenty-six years of age. Nothing in this section shall require a policy or health insurer to make coverage available for a child of a child receiving dependent coverage.

§431:10A- Prohibition of preexisting condition exclusions. (a) An accident and health or sickness insurance policy issued or renewed in this State shall not impose any preexisting condition exclusion.

(b) For purposes of this section, a "preexisting condition exclusion" means a limitation or exclusion of benefits, including a denial of coverage, based on the fact that any condition was present before the effective date of coverage, or if coverage is denied the date of the denial, under a group or individual accident and health or sickness insurance policy, whether or not any medical advice, diagnosis, care, or treatment was recommended or received before that day.

The term "preexisting condition exclusion" includes any limitation or exclusion of benefits, including a denial of coverage, applicable to an individual as a result of information relating to an individual's health status before the individual's effective date of coverage, or if coverage is denied the date of the denial, under a group or individual accident and health or sickness insurance policy, including but not limited to a limitation or exclusion for a condition identified as a result of a pre-enrollment questionnaire or physical examination, or a review of medical records relating to the pre-enrollment period.

§431:10A- Prohibited discrimination in premiums or contributions. A group accident and health or sickness insurance policy and a health insurer offering group or individual accident and health or sickness insurance coverage issued or renewed in this State shall not require an individual, as a condition of enrollment or continued enrollment under the policy, to pay a premium or contribution based on the individual's gender that is greater than the premium or contribution for a similarly situated individual of the opposite gender who is covered under the same policy."

SECTION 5. Chapter 432, Hawaii Revised Statutes, is amended by adding four new sections to article 1 to be appropriately designated and to read as follows:

"§432:1- Essential health care benefits. (a) Every hospital or medical service plan contract issued or renewed in this State shall include at least the following essential health care benefits:

(1) Ambulatory patient services;

(2) Emergency services;

(3) Hospitalization benefits;

(4) Pregnancy, maternity, and newborn care;

(5) Mental health and substance use disorder services, including behavioral health treatment, mental and behavioral health inpatient services, and substance use disorder treatment;

(6) Rehabilitative services and devices;

(7) Laboratory services;

(8) Preventive and wellness services and chronic disease management; and

(9) Pediatric services, excluding oral and vision care.

(b) Hospital or medical service plan contracts delivered or issued for delivery in this State shall also include the following additional benefits:

(1) Contraceptive coverage, including contraceptive methods and counseling, as prescribed by a health care provider; and

(2) Breastfeeding coverage, including breastfeeding support, counseling, and equipment for the duration of breastfeeding;

provided that a mutual benefit society shall not impose any cost-sharing requirements, including copayments, coinsurance, or deductibles, on a member or subscriber with respect to the benefits covered under this subsection.

(c) This section shall not apply to policies that provide coverage for specified diseases or other limited benefit coverage, as provided pursuant to section 431:10A-102.5.

§432:1- Extension of dependent coverage. A group hospital or medical service plan contract and a mutual benefit society offering group or individual hospital and medical service plan contracts that provide coverage of dependent children shall continue to make such coverage available for an adult child until the child turns twenty-six years of age. Nothing in this section shall require a plan contract to make coverage available for a child of a child receiving dependent coverage.

§432:1- Prohibition of preexisting condition exclusions. (a) A hospital or medical service plan contract issued or renewed in this State shall not impose any preexisting condition exclusion.

(b) For purposes of this section, a "preexisting condition exclusion" means a limitation or exclusion of benefits, including a denial of coverage, based on the fact that any condition was present before the effective date of coverage, or if coverage is denied the date of the denial, under a group or individual hospital and medical service plan contract, whether or not any medical advice, diagnosis, care, or treatment was recommended or received before that day.

The term "preexisting condition exclusion" includes any limitation or exclusion of benefits, including a denial of coverage, applicable to an individual as a result of information relating to an individual's health status before the individual's effective date of coverage, or if coverage is denied the date of the denial, under a group or individual hospital or medical service plan contract, including but not limited to a limitation or exclusion for a condition identified as a result of a pre-enrollment questionnaire or physical examination or a review of medical records relating to the pre-enrollment period.

§432:1- Prohibited discrimination in premiums or contributions. A group hospital or medical service plan contract and a mutual benefit society offering group or individual hospital or medical service plan contracts issued or renewed in this State shall not require an individual, as a condition of enrollment or continued enrollment under the plan contract, to pay a premium or contribution based on the individual's gender that is greater than the premium or contribution for a similarly situated individual of the opposite gender who is covered under the same plan contract."

SECTION 6. Chapter 432D, Hawaii Revised Statutes, is amended by adding four new sections to be appropriately designated and to read as follows:

"§432D- Essential health care benefits. (a) Every health maintenance organization policy, contract, plan, or agreement issued or renewed in this State shall include at least the following essential health care benefits:

(1) Ambulatory patient services;

(2) Emergency services;

(3) Hospitalization benefits;

(4) Pregnancy, maternity, and newborn care;

(5) Mental health and substance use disorder services, including behavioral health treatment, mental and behavioral health inpatient services, and substance use disorder treatment;

(6) Rehabilitative services and devices;

(7) Laboratory services;

(8) Preventive and wellness services and chronic disease management; and

(9) Pediatric services, excluding oral and vision care.

(b) Every health maintenance organization policy, contract, plan, or agreement delivered or issued for delivery in this State shall also include the following additional benefits:

(1) Contraceptive coverage, including contraceptive methods and counseling, as prescribed by a health care provider; and

(2) Breastfeeding coverage, including breastfeeding support, counseling, and equipment for the duration of breastfeeding;

provided that a health maintenance organization shall not impose any cost-sharing requirements, including copayments, coinsurance, or deductibles, on an enrollee or subscriber with respect to the benefits covered under this subsection.

(c) This section shall not apply to policies that provide coverage for specified diseases or other limited benefit coverage, as provided pursuant to section 431:10A-102.5.

§432D- Extension of dependent coverage. A group contract and a health maintenance organization offering group or individual policies, contracts, plans, or agreements that provide coverage of dependent children shall continue to make such coverage available for an adult child until the child turns twenty-six years of age. Nothing in this section shall require a policy, contract, plan, or agreement to make coverage available for a child of a child receiving dependent coverage.

§432D- Prohibition of preexisting condition exclusions. (a) A health maintenance organization policy, contract, plan, or agreement issued or renewed in this State shall not impose any preexisting condition exclusion.

(b) For purposes of this section, a "preexisting condition exclusion" means a limitation or exclusion of benefits, including a denial of coverage, based on the fact that any condition was present before the effective date of coverage, or if coverage is denied the date of the denial, under a group or individual health maintenance organization policy, contract, plan, or agreement, whether or not any medical advice, diagnosis, care, or treatment was recommended or received before that day.

The term "preexisting condition exclusion" includes any limitation or exclusion of benefits, including a denial of coverage, applicable to an individual as a result of information relating to an individual's health status before the individual's effective date of coverage, or if coverage is denied the date of the denial, under a group or individual health maintenance organization policy, contract, plan, or agreement, such as a condition identified as a result of a pre-enrollment questionnaire or physical examination or a review of medical records relating to the pre-enrollment period.

§432D- Prohibited discrimination in premiums or contributions. A group contract and a health maintenance organization offering group or individual policies, contracts, plans, or agreements issued or renewed in this State shall not require an individual, as a condition of enrollment or continued enrollment under a policy, contract, plan, or agreement, to pay a premium or contribution based on the individual's gender that is greater than the premium or contribution for a similarly situated individual of the opposite gender who is covered under the same policy, contract, plan, or agreement."

SECTION 7. Notwithstanding any other law to the contrary, the requirements for essential health care benefits, extension of dependent coverage, prohibition of preexisting condition exclusions, and prohibition of discrimination in premiums and contributions required under sections 4, 5, and 6 of this Act shall apply to all health benefits plans under chapter 87A, Hawaii Revised Statutes, issued, renewed, modified, altered, or amended on or after the effective date of this Act.

SECTION 8. New statutory material is underscored.

SECTION 9. This Act shall take effect on July 1, 2090; provided that sections 2 through 6 shall take effect upon the repeal of the federal Patient Protection and Affordable Care Act, Public Law No. 111-148, pursuant to an act of Congress and shall apply to all health coverage policies, contracts, plans, and agreements issued on or after that date.

HOUSE OF REPRESENTATIVES	H.B. NO.	552
TWENTY-NINTH LEGISLATURE, 2017		H.D. 1
STATE OF HAWAII