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S1472.......................................by COMMERCE AND HUMAN RESOURCES
HEALTH INSURANCE - Amends existing law to provide that, in establishing
premium rates, small employer and individual health insurance carriers may
apply a rating factor for age on an annual basis as to individuals or
nondependents twenty years of age or older.
02/18 Senate intro - 1st rdg - to printing
02/21 Rpt prt - to Com/HuRes
03/03 Rpt out - rec d/p - to 2nd rdg
03/06 2nd rdg - to 3rd rdg
03/09 3rd rdg - PASSED - 31-0-4
AYES--Andreason, Boatright, Bunderson, Burtenshaw, Cameron, Crow,
Danielson, Darrington, Davis, Deide, Dunklin, Frasure, Geddes,
Ingram, Ipsen, Keough, Lee, Noh, Parry, Richardson, Riggs, Risch,
Sandy, Schroeder, Sorensen, Stegner, Thorne, Walton/Branch, Wheeler,
Whitworth, Williams
NAYS--None
Absent and excused--Hawkins, King-Barrutia, McLaughlin, Stennett
Floor Sponsor - Stegner
Title apvd - to House
03/10 House intro - 1st rdg - to Bus
03/24 Rpt out - rec d/p - to 2nd rdg
03/27 2nd rdg - to 3rd rdg
04/03 3rd rdg - PASSED - 61-6-3
AYES -- Alltus, Barraclough(Barraclough), Barrett, Bell, Black, Boe,
Bruneel, Callister, Campbell, Chase, Cheirrett, Cuddy, Deal, Denney,
Ellsworth, Field(13), Field(20), Gagner, Geddes, Gould, Hadley,
Hammond, Hansen(23), Hansen(29), Henbest, Jaquet, Jones, Judd,
Kellogg, Kempton, Kendell, Kunz, Lake, Linford,
Loertscher(Loertscher), Marley, McKague, Meyer, Montgomery,
Mortensen, Moss, Moyle, Pearce, Pischner, Pomeroy, Reynolds,
Ridinger, Sali, Schaefer, Sellman, Shepherd, Smylie, Stevenson,
Stone, Taylor, Tilman, Trail, Wheeler, Wood, Zimmermann, Mr Speaker
NAYS -- Bieter, Hornbeck, Ringo, Robison, Smith, Stoicheff
Absent and excused -- Clark, Crow, Mader,
Floor Sponsor - Alltus
Title apvd - to Senate
04/04 To enrol - rpt enrol - Pres signed
04/05 Sp signed
04/06 To Governor
04/17 Governor signed
Session Law Chapter 415
Effective: 07/01/00
S1472
|||| LEGISLATURE OF THE STATE OF IDAHO ||||
Fifty-fifth Legislature Second Regular Session - 2000
IN THE SENATE
SENATE BILL NO. 1472
BY COMMERCE AND HUMAN RESOURCES COMMITTEE
1 AN ACT
2 RELATING TO HEALTH BENEFIT PLANS; AMENDING SECTION 41-4706, IDAHO CODE, TO
3 PROVIDE FOR THE APPLICATION OF AGE AS A RATING FACTOR ON AN ANNUAL BASIS
4 IN SETTING PREMIUM RATES FOR HEALTH BENEFIT PLANS FOR SMALL EMPLOYERS AND
5 TO MAKE A TECHNICAL CORRECTION; AMENDING SECTION 41-5206, IDAHO CODE, TO
6 PROVIDE FOR THE APPLICATION OF AGE AS A RATING FACTOR ON AN ANNUAL BASIS
7 IN SETTING PREMIUM RATES FOR HEALTH BENEFIT PLANS FOR INDIVIDUALS AND TO
8 MAKE A TECHNICAL CORRECTION.
9 Be It Enacted by the Legislature of the State of Idaho:
10 SECTION 1. That Section 41-4706, Idaho Code, be, and the same is hereby
11 amended to read as follows:
12 41-4706. RESTRICTIONS RELATING TO PREMIUM RATES. (1) Premium rates for
13 health benefit plans subject to the provisions of this chapter shall be sub-
14 ject to the provisions of the following provisions:
15 (a) The index rate for a rating period for any class of business shall
16 not exceed the index rate for any other class of business by more than
17 twenty percent (20%).
18 (b) For a class of business, the premium rates charged during a rating
19 period to small employers with similar case characteristics for the same
20 or similar coverage, or the rates that could be charged to such employers
21 under the rating system for that class of business, shall not vary from
22 the index rate by more than twenty-five percent (25%) of the index rate.
23 (c) The percentage increase in the premium rate charged to a small
24 employer for a new rating period may not exceed the sum of the following:
25 (i) The percentage change in the new business premium rate measured
26 from the first day of the prior rating period to the first day of the
27 new rating period. In the case of a health benefit plan into which
28 the small employer carrier is no longer enrolling new small employ-
29 ers, the small employer carrier shall use the percentage change in
30 the base premium rate, provided that such change does not exceed, on
31 a percentage basis, the change in the new business premium rate for
32 the most similar health benefit plan into which the small employer
33 carrier is actively enrolling new small employers;
34 (ii) Any adjustment, not to exceed fifteen percent (15%) annually
35 and adjusted pro rata for rating periods of less than one (1) year,
36 due to the claim experience, health status or duration of coverage of
37 the employees or dependents of the small employer as determined from
38 the small employer carrier's rate manual for the class of business;
39 and
40 (iii) Any adjustment due to change in coverage or change in the case
41 characteristics of the small employer as determined from the small
42 employer carrier's rate manual for the class of business.
43 (d) Adjustments in rates for claim experience, health status and duration
2
1 of coverage shall not be charged to individual employees or dependents.
2 Any such adjustment shall be applied uniformly to the rates charged for
3 all employees and dependents of the small employer.
4 (e) Premium rates for health benefit plans shall comply with the require-
5 ments of this section notwithstanding any assessments paid or payable by
6 small employer carriers pursuant to section 41-4711, Idaho Code.
7 (f) In the case of health benefit plans delivered or issued for delivery
8 prior to the effective date of this chapter, a premium rate for a rating
9 period may exceed the ranges set forth in subsections (1)(a) and (b) of
10 this section for a period of three (3) years following the effective date
11 of this chapter. In such case, the percentage increase in the premium rate
12 charged to a small employer for a new rating period shall not exceed the
13 sum of the following:
14 (i) The percentage change in the new business premium rate measured
15 from the first day of the prior rating period to the first day of the
16 new rating period. In the case of a health benefit plan into which
17 the small employer carrier is no longer enrolling new small employ-
18 ers, the small employer carrier shall use the percentage change in
19 the base premium rate, provided that such change does not exceed, on
20 a percentage basis, the change in the new business premium rate for
21 the most similar health benefit plan into which the small employer
22 carrier is actively enrolling new small employers; and
23 (ii) Any adjustment due to change in coverage or change in the case
24 characteristics of the small employer as determined from the
25 carrier's rate manual for the class of business.
26 (g) (i) Small employer carriers shall apply rating factors, including
27 case characteristics, consistently with respect to all small employ-
28 ers in a class of business. Rating factors shall produce premiums for
29 identical groups which differ only by the amounts attributable to
30 plan design and do not reflect differences due to the nature of the
31 groups assumed to select particular health benefit plans; and
32 (ii) A small employer carrier shall treat all health benefit plans
33 issued or renewed in the same calendar month as having the same rat-
34 ing period.
35 (h) For the purposes of this subsection, a health benefit plan that uti-
36 lizes a restricted provider network shall not be considered similar cover-
37 age to a health benefit plan that does not utilize such a network, pro-
38 vided that utilization of the restricted provider network results in sub-
39 stantial differences in claims costs.
40 (i) The small employer carrier shall not use case characteristics, other
41 than age, individual tobacco use, geography, as defined by rule of the
42 director, or gender, without prior approval of the director.
43 (j) A small employer carrier may utilize age as a case characteristic in
44 establishing premium rates, provided that the same rating factor shall be
45 applied to all dependents under the age of twenty-three (23) years of age,
46 and the same rating factor shall may be applied on an quinquennial annual
47 basis as to individuals or nondependents twenty (20) years of age or
48 older.
49 (k) The director may establish rules to implement the provisions of this
50 section and to assure that rating practices used by small employer carri-
51 ers are consistent with the purposes of this chapter, including rules
52 that:
53 (i) Assure that differences in rates charged for health benefit
54 plans by small employer carriers are reasonable and reflect objective
55 differences in plan design, not including differences due to the
3
1 nature of the groups assumed to select particular health benefit
2 plans;
3 (ii) Prescribe the manner in which case characteristics may be used
4 by small employer carriers; and
5 (iii) Prescribe the manner in which a small employer carrier is to
6 demonstrate compliance with the provisions of this section, including
7 requirements that a small employer carrier provide the director with
8 actuarial certification as to such compliance.
9 (2) A small employer carrier shall not transfer a small employer involun-
10 tarily into or out of a class of business. A small employer carrier shall not
11 offer to transfer a small employer into or out of a class of business unless
12 such offer is made to transfer all small employers in the class of business
13 without regard to case characteristics, claim experience, health status or
14 duration of coverage since issue.
15 (3) The director may suspend for a specified period the application of
16 subsection (1)(a) of this section as to the premium rates applicable to one
17 (1) or more small employers included within a class of business of a small
18 employer carrier for one (1) or more rating periods upon a filing by the small
19 employer carrier and a finding by the director either that the suspension is
20 reasonable in light of the financial condition of the small employer carrier
21 or that the suspension would enhance the efficiency and fairness of the
22 marketplace for small employer health insurance.
23 (4) In connection with the offering for sale of any health benefit plan
24 to a small employer, a small employer carrier shall make a reasonable disclo-
25 sure, as part of its solicitation and sales materials, of all of the follow-
26 ing:
27 (a) The extent to which premium rates for a specified small employer are
28 established or adjusted based upon the actual or expected variation in
29 claims costs or actual or expected variation in health status of the
30 employees of the small employer and their dependents;
31 (b) The provisions of the health benefit plan concerning the small
32 employer carrier's right to change premium rates and the factors, other
33 than claim experience, that affect changes in premium rates;
34 (c) The provisions relating to renewability of policies and contracts;
35 and
36 (d) The provisions relating to any preexisting condition provision.
37 (5) (a) Each small employer carrier shall maintain at its principal place
38 of business a complete and detailed description of its rating practices
39 and renewal underwriting practices, including information and documenta-
40 tion that demonstrate that its rating methods and practices are based upon
41 commonly accepted actuarial assumptions and are in accordance with sound
42 actuarial principles.
43 (b) Each small employer carrier shall file with the director annually on
44 or before March 15, an actuarial certification certifying that the carrier
45 is in compliance with the provisions of this chapter and that the rating
46 methods of the small employer carrier are actuarially sound. Such certifi-
47 cation shall be in a form and manner, and shall contain such information,
48 as specified by the director. A copy of the certification shall be
49 retained by the small employer carrier at its principal place of business.
50 (c) A small employer carrier shall make the information and documentation
51 described in subsection (4)(a) of this section available to the director
52 upon request. Except in cases of violations of the provisions of this
53 chapter, the information shall be considered proprietary and trade secret
54 information and shall not be subject to disclosure by the director to per-
55 sons outside of the department except as agreed to by the small employer
4
1 carrier or as ordered by a court of competent jurisdiction.
2 SECTION 2. That Section 41-5206, Idaho Code, be, and the same is hereby
3 amended to read as follows:
4 41-5206. RESTRICTIONS RELATING TO PREMIUM RATES. (1) Premium rates for
5 health benefit plans subject to the provisions of this chapter shall be sub-
6 ject to the following provisions:
7 (a) The premium rates charged during a rating period to individuals with
8 similar case characteristics for the same or similar coverage, or the
9 rates that could be charged to such individuals under the rating system,
10 shall not vary from the index rate by more than twenty-five percent (25%)
11 of the index rate.
12 (b) The percentage increase in the premium rate charged to an individual
13 for a new rating period may not exceed the sum of the following:
14 (i) The percentage change in the new business premium rate measured
15 from the first day of the prior rating period to the first day of the
16 new rating period. In the case of a health benefit plan into which
17 the individual carrier is no longer enrolling new individuals, the
18 individual carrier shall use the percentage change in the base pre-
19 mium rate, provided that such change does not exceed, on a percentage
20 basis, the change in the new business premium rate for the most simi-
21 lar health benefit plan into which the individual carrier is actively
22 enrolling new individuals.
23 (ii) Any adjustment, not to exceed fifteen percent (15%) annually
24 and adjusted pro rata for rating periods of less than one (1) year,
25 due to the claim experience, health status or duration of coverage of
26 the individual or dependents as determined from the individual
27 carrier's rate manual; and
28 (iii) Any adjustment due to change in coverage or change in the case
29 characteristics of the individual as determined from the individual
30 carrier's rate manual.
31 (c) Premium rates for health benefit plans shall comply with the require-
32 ments of this section notwithstanding any assessments paid or payable by
33 carriers pursuant to section 41-4711, Idaho Code.
34 (d) In the case of health benefit plans delivered or issued for delivery
35 prior to the effective date of this chapter, a premium rate for a rating
36 period may exceed the ranges set forth in subsections (1)(a) and (b) of
37 this section for a period of three (3) years following the effective date
38 of this chapter. In such case, the percentage increase in the premium rate
39 charged to an individual for a new rating period shall not exceed the sum
40 of the following:
41 (i) The percentage change in the new business premium rate measured
42 from the first day of the prior rating period to the first day of the
43 new rating period. In the case of a health benefit plan into which
44 the individual carrier is no longer enrolling new individuals, the
45 individual carrier shall use the percentage change in the base pre-
46 mium rate, provided that such change does not exceed, on a percentage
47 basis, the change in the new business premium rate for the most simi-
48 lar health benefit plan into which the individual carrier is actively
49 enrolling new individuals; and
50 (ii) Any adjustment due to change in coverage or change in the case
51 characteristics of the individual as determined from the carrier's
52 rate manual.
53 (e) (i) Individual carriers shall apply rating factors, including case
5
1 characteristics, consistently with respect to all individuals. Rating
2 factors shall produce premiums for identical individuals which differ
3 only by the amounts attributable to plan design and do not reflect
4 differences due to the nature of the individuals assumed to select
5 particular health benefit plans; and
6 (ii) An individual carrier shall treat all health benefit plans
7 issued or renewed in the same calendar month as having the same rat-
8 ing period.
9 (f) For purposes of this subsection, a health benefit plan that utilizes
10 a restricted provider network shall not be considered similar coverage to
11 a health benefit plan that does not utilize such a network, provided that
12 utilization of the restricted provider network results in substantial dif-
13 ferences in claims costs.
14 (g) The individual carrier shall not use case characteristics, other than
15 age, individual tobacco use, geography as defined by rule of the director,
16 or gender, without prior approval of the director.
17 (h) An individual carrier may utilize age as a case characteristic in
18 establishing premium rates, provided that the same rating factor shall be
19 applied to all dependents under the age of twenty-three (23) years of age,
20 and the same rating factor shall may be applied on an quinquennial annual
21 basis as to individuals or nondependents twenty (20) years of age or
22 older.
23 (i) The director may establish rules to implement the provisions of this
24 section and to assure that rating practices used by individual carriers
25 are consistent with the purposes of this chapter, including rules that:
26 (i) Assure that differences in rates charged for health benefit
27 plans by individual carriers are reasonable and reflect objective
28 differences in plan design, not including differences due to the
29 nature of the individuals assumed to select particular health benefit
30 plans;
31 (ii) Prescribe the manner in which case characteristics may be used
32 by individual carriers; and
33 (iii) Prescribe the manner in which an individual carrier is to
34 demonstrate compliance with the provisions of this section, including
35 requirements that an individual carrier provide the director with
36 actuarial certification as to such compliance.
37 (2) The director may suspend for a specified period the application of
38 subsection (1)(a) of this section as to the premium rates applicable to one
39 (1) or more individuals for one (1) or more rating periods upon a filing by
40 the individual carrier and a finding by the director either that the suspen-
41 sion is reasonable in light of the financial condition of the individual car-
42 rier or that the suspension would enhance the efficiency and fairness of the
43 marketplace for individual health insurance.
44 (3) In connection with the offering for sale of any health benefit plan
45 to an individual, an individual carrier shall make a reasonable disclosure, as
46 part of its solicitation and sales materials, of all of the following:
47 (a) The extent to which premium rates for an individual are established
48 or adjusted based upon the actual or expected variation in claims costs or
49 actual or expected variation in health status of the individual and his
50 dependents;
51 (b) The provisions of the health benefit plan concerning the individual
52 carrier's right to change premium rates and the factors, other than claim
53 experience, that affect changes in premium rates;
54 (c) The provisions relating to renewability of policies and contracts;
55 and
6
1 (d) The provisions relating to any preexisting condition provision.
2 (4) (a) Each individual carrier shall maintain at its principal place of
3 business a complete and detailed description of its rating practices and
4 renewal underwriting practices, including information and documentation
5 that demonstrate that its rating methods and practices are based upon
6 commonly accepted actuarial assumptions and are in accordance with sound
7 actuarial principles.
8 (b) Each individual carrier shall file with the director annually on or
9 before September 15, an actuarial certification certifying that the car-
10 rier is in compliance with the provisions of this chapter and that the
11 rating methods of the individual carrier are actuarially sound. Such cer-
12 tification shall be in a form and manner, and shall contain such informa-
13 tion, as specified by the director. A copy of the certification shall be
14 retained by the individual carrier at its principal place of business.
15 (c) An individual carrier shall make the information and documentation
16 described in subsection (4)(a) of this section available to the director
17 upon request. Except in cases of violations of the provisions of this
18 chapter, the information shall be considered proprietary and trade secret
19 information and shall not be subject to disclosure by the director to per-
20 sons outside of the department except as agreed to by the individual car-
21 rier or as ordered by a court of competent jurisdiction.
STATEMENT OF PURPOSE
RS 10124
Idaho health insurance companies which sell small group and individual insurance
policies are allowed to use age as a case characteristic in rating and by law, they
must apply a five-year rating factor to individuals and nondependents twenty
years of age or order. The purpose of this bill is to change the five- year rating
factor to a one-year rating factor.
FISCAL NOTE
None
STATEMENT OF PURPOSE/FISCAL NOTE S 1472