SB 1037: Health care coverage: rate review.

Official summary

Legislative Counsel’s Digest (official, as of the latest version). Written by nonpartisan legislative staff; reproduced verbatim.

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 violation of the act by a health care service plan a misdemeanor. Existing law provides for the regulation of health insurers by the Department of Insurance. Existing law defines “unreasonable rate increase,” for these purposes, to have the same meaning as in the federal Patient Protection and Affordable Care Act, which is that an unreasonable rate increase exists when the federal Centers for Medicare and Medicaid Services makes a determination that a rate increase is excessive, unjustified, or unfairly discriminatory, among other things.

This bill would instead define “unreasonable rate increase,” for the above-described purposes, to mean a rate increase that the Director of the Department of Managed Health Care or the Insurance Commissioner, as applicable, determines is excessive, unjustified, unfairly discriminatory, or otherwise unreasonable.

Existing law requires a health care service plan or health insurer to submit rates to their regulating entity for review and to demonstrate the impact of any changes in the rate of growth of health care costs resulting from health care cost targets.

This bill would instead require a health care service plan or health insurer to demonstrate the impact of health care cost targets and to demonstrate whether a health care service plan’s or health insurer’s annual rate growth exceeds or will exceed the cost target for the rating period. The bill would require, if a health care service plan’s or health insurer’s rate growth is expected to exceed the cost target for a rating period, the health care service plan or health insurer to include specified information in its rate filing, including, among other things, a detailed list of any proactive steps it is taking, or plans to take, for annual rate growth to meet the cost targets. Because a willful violation of these provisions by a health care service plan would be a crime, the bill would impose a state-mandated local program.

Existing law requires the director or the commissioner, as applicable, in determining if a rate is unreasonable or not justified for purposes of the above-described review, to consider the impact on changes in health care costs as a result of the health care cost targets described above.

This bill would delete those provisions and instead require the Department of Managed Health Care and the Department of Insurance to report on if rates, by plan or policy and in aggregate, meet the affordability standard, as defined, for an individual, a couple, and a family of four. The bill would require the report to include the annual change in premiums and cost sharing for the prior 5 years. The bill would, as part of the existing rate submission process, require a health care service plan or health insurer to provide information on premiums, deductibles, cost sharing, and any other factors specified by the department as necessary to complete the reports.

Sponsors

Sponsors by party (alphabetical): Democratic 1

“Support” is shown only as formal sponsorship recorded by the legislature. Roll-call votes are available on the official bill page.

Recent official actions

1. September 27, 2026In Senate. Consideration of Governor's veto pending.
2. September 27, 2026In Senate. Consideration of Governor's veto pending.
3. September 27, 2026Vetoed by the Governor.
4. September 27, 2026Vetoed by the Governor.
5. August 30, 2026Enrolled and presented to the Governor at 6 p.m.
6. August 30, 2026Enrolled and presented to the Governor at 6 p.m.
7. August 25, 2026Assembly amendments concurred in. (Ayes 30. Noes 10. Page 5794.) Ordered to engrossing and enrolling.
8. August 25, 2026Assembly amendments concurred in. (Ayes 30. Noes 10.) Ordered to engrossing and enrolling.
9. August 24, 2026In Senate. Concurrence in Assembly amendments pending.
10. August 24, 2026In Senate. Concurrence in Assembly amendments pending.
11. August 24, 2026Read third time. Passed. (Ayes 59. Noes 15. Page 6392.) Ordered to the Senate.
12. August 24, 2026Read third time. Passed. (Ayes 59. Noes 15. Page 6392.) Ordered to the Senate.