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H0211...........................................................by BUSINESS
HEALTH BENEFIT PLANS - Amends existing law relating to health benefit plans
to provide rating factors for health benefit plans for small employers and
individuals.
02/10 House intro - 1st rdg - to printing
02/11 Rpt prt - hld at desk
02/16 Ref'd to Health/Wel
03/03 Rpt out - rec d/p - to 2nd rdg
03/04 2nd rdg - to 3rd rdg
03/08 3rd rdg - PASSED - 58-7-5
AYES -- Alltus, Barraclough(Barraclough), Barrett, Bell, Black, Boe,
Bruneel, Callister, Campbell, Clark, Deal, Denney, Ellsworth,
Field(13), Field(20), Geddes, Hadley, Hammond, Hansen(23),
Hansen(29), Hornbeck, Jaquet, Jones, Judd, Kellogg, Kempton, Kendell,
Kunz, Lake, Limbaugh, Linford, Loertscher, Mader, Meyer, Montgomery,
Mortensen, Moyle, Pischner, Pomeroy, Reynolds, Ridinger, Ringo,
Robison, Sali, Schaefer, Sellman, Smith, Smylie, Stevenson, Stone,
Taylor, Tilman, Trail, Watson, Wheeler, Williams, Wood, Zimmermann
NAYS -- Bieter, Chase, Cuddy, Gagner, Henbest, Marley, Stoicheff
Absent and excused -- Crow, Gould, McKague, Tippets, Mr Speaker
Floor Sponsor - Denney, Black
Title apvd - to Senate
03/09 Senate intro - 1st rdg - to Com/HuRes
03/12 Rpt out - rec d/p - to 2nd rdg
03/15 2nd rdg - to 3rd rdg
03/16 3rd rdg - PASSED - 34-0-1
AYES--Andreason, Boatright, Branch, Bunderson, Burtenshaw, Cameron,
Crow, Danielson, Darrington, Davis, Deide, Dunklin, Frasure, Geddes,
Hawkins, Ingram, Ipsen, Keough, King, Lee, McLaughlin, Noh,
Richardson, Riggs, Risch, Sandy, Schroeder, Sorensen, Stegner,
Stennett, Thorne, Twiggs, Wheeler, Whitworth
NAYS--None
Absent and excused--Parry
Floor Sponsor - Ipsen
Title apvd - to House
03/17 To enrol
03/18 Rpt enrol - Sp signed - Pres signed
03/19 To Governor
03/29 Governor VETOED
H0211|||| LEGISLATURE OF THE STATE OF IDAHO |||| Fifty-fifth Legislature First Regular Session - 1999IN THE HOUSE OF REPRESENTATIVES HOUSE BILL NO. 211 BY BUSINESS COMMITTEE 1 AN ACT 2 RELATING TO HEALTH BENEFIT PLANS; AMENDING SECTION 41-4706, IDAHO CODE, TO 3 PROVIDE FOR RATING FACTORS FOR HEALTH BENEFIT PLANS FOR SMALL EMPLOYERS 4 AND TO MAKE A TECHNICAL CORRECTION; AND AMENDING SECTION 41-5206, IDAHO 5 CODE, TO PROVIDE FOR RATING FACTORS FOR HEALTH BENEFIT PLANS FOR INDIVIDU- 6 ALS. 7 Be It Enacted by the Legislature of the State of Idaho: 8 SECTION 1. That Section 41-4706, Idaho Code, be, and the same is hereby 9 amended to read as follows: 10 41-4706. RESTRICTIONS RELATING TO PREMIUM RATES. (1) Premium rates for 11 health benefit plans subject to the provisions of this chapter shall be sub- 12 ject to theprovisions of thefollowing provisions: 13 (a) The index rate for a rating period for any class of business shall 14 not exceed the index rate for any other class of business by more than 15 twenty percent (20%). 16 (b) For a class of business, the premium rates charged during a rating 17 period to small employers with similar case characteristics for the same 18 or similar coverage, or the rates that could be charged to such employers 19 under the rating system for that class of business, shall not vary from 20 the index rate by more than twenty-five percent (25%) of the index rate. 21 (c) The percentage increase in the premium rate charged to a small 22 employer for a new rating period may not exceed the sum of the following: 23 (i) The percentage change in the new business premium rate measured 24 from the first day of the prior rating period to the first day of the 25 new rating period. In the case of a health benefit plan into which 26 the small employer carrier is no longer enrolling new small employ- 27 ers, the small employer carrier shall use the percentage change in 28 the base premium rate, provided that such change does not exceed, on 29 a percentage basis, the change in the new business premium rate for 30 the most similar health benefit plan into which the small employer 31 carrier is actively enrolling new small employers; 32 (ii) Any adjustment, not to exceed fifteen percent (15%) annually 33 and adjusted pro rata for rating periods of less than one (1) year, 34 due to the claim experience, health status or duration of coverage of 35 the employees or dependents of the small employer as determined from 36 the small employer carrier's rate manual for the class of business; 37 and 38 (iii) Any adjustment due to change in coverage or change in the case 39 characteristics of the small employer as determined from the small 40 employer carrier's rate manual for the class of business. 41 (d) Adjustments in rates for claim experience, health status and duration 42 of coverage shall not be charged to individual employees or dependents. 43 Any such adjustment shall be applied uniformly to the rates charged for 2 1 all employees and dependents of the small employer. 2 (e) Premium rates for health benefit plans shall comply with the require- 3 ments of this section notwithstanding any assessments paid or payable by 4 small employer carriers pursuant to section 41-4711, Idaho Code. 5 (f) In the case of health benefit plans delivered or issued for delivery 6 prior to the effective date of this chapter, a premium rate for a rating 7 period may exceed the ranges set forth in subsections (1)(a) and (b) of 8 this section for a period of three (3) years following the effective date 9 of this chapter. In such case, the percentage increase in the premium rate 10 charged to a small employer for a new rating period shall not exceed the 11 sum of the following: 12 (i) The percentage change in the new business premium rate measured 13 from the first day of the prior rating period to the first day of the 14 new rating period. In the case of a health benefit plan into which 15 the small employer carrier is no longer enrolling new small employ- 16 ers, the small employer carrier shall use the percentage change in 17 the base premium rate, provided that such change does not exceed, on 18 a percentage basis, the change in the new business premium rate for 19 the most similar health benefit plan into which the small employer 20 carrier is actively enrolling new small employers; and 21 (ii) Any adjustment due to change in coverage or change in the case 22 characteristics of the small employer as determined from the 23 carrier's rate manual for the class of business. 24 (g) (i) Small employer carriers shall apply rating factors, including 25 case characteristics, consistently with respect to all small employ- 26 ers in a class of business. Rating factors shall produce premiums for 27 identical groups which differ only by the amounts attributable to 28 plan design and do not reflect differences due to the nature of the 29 groups assumed to select particular health benefit plans; and 30 (ii) A small employer carrier shall treat all health benefit plans 31 issued or renewed in the same calendar month as having the same rat- 32 ing period. 33 (h) For the purposes of this subsection, a health benefit plan that uti- 34 lizes a restricted provider network shall not be considered similar cover- 35 age to a health benefit plan that does not utilize such a network, pro- 36 vided that utilization of the restricted provider network results in sub- 37 stantial differences in claims costs. 38 (i) The small employer carrier shall not use case characteristics, other 39 than age, individual tobacco use, geography, as defined by rule of the 40 director, or gender, without prior approval of the director. 41 (j) A small employer carrier may utilize age as a case characteristic in 42 establishing premium rates, provided that the same rating factor shall be 43 applied to all dependents under the age of twenty-three (23), and the same 44 rating factorshallmay be applied on a n 45quinquennialannual basis as to individu- 46 als or nondependents twenty (20) years of age or older. 47 (k) The director may establish rules to implement the provisions of this 48 section and to assure that rating practices used by small employer carri- 49 ers are consistent with the purposes of this chapter, including rules 50 that: 51 (i) Assure that differences in rates charged for health benefit 52 plans by small employer carriers are reasonable and reflect objective 53 differences in plan design, not including differences due to the 54 nature of the groups assumed to select particular health benefit 55 plans; 3 1 (ii) Prescribe the manner in which case characteristics may be used 2 by small employer carriers; and 3 (iii) Prescribe the manner in which a small employer carrier is to 4 demonstrate compliance with the provisions of this section, including 5 requirements that a small employer carrier provide the director with 6 actuarial certification as to such compliance. 7 (2) A small employer carrier shall not transfer a small employer involun- 8 tarily into or out of a class of business. A small employer carrier shall not 9 offer to transfer a small employer into or out of a class of business unless 10 such offer is made to transfer all small employers in the class of business 11 without regard to case characteristics, claim experience, health status or 12 duration of coverage since issue. 13 (3) The director may suspend for a specified period the application of 14 subsection (1)(a) of this section as to the premium rates applicable to one 15 (1) or more small employers included within a class of business of a small 16 employer carrier for one (1) or more rating periods upon a filing by the small 17 employer carrier and a finding by the director either that the suspension is 18 reasonable in light of the financial condition of the small employer carrier 19 or that the suspension would enhance the efficiency and fairness of the 20 marketplace for small employer health insurance. 21 (4) In connection with the offering for sale of any health benefit plan 22 to a small employer, a small employer carrier shall make a reasonable disclo- 23 sure, as part of its solicitation and sales materials, of all of the follow- 24 ing: 25 (a) The extent to which premium rates for a specified small employer are 26 established or adjusted based upon the actual or expected variation in 27 claims costs or actual or expected variation in health status of the 28 employees of the small employer and their dependents; 29 (b) The provisions of the health benefit plan concerning the small 30 employer carrier's right to change premium rates and the factors, other 31 than claim experience, that affect changes in premium rates; 32 (c) The provisions relating to renewability of policies and contracts; 33 and 34 (d) The provisions relating to any preexisting condition provision. 35 (5) (a) Each small employer carrier shall maintain at its principal place 36 of business a complete and detailed description of its rating practices 37 and renewal underwriting practices, including information and documenta- 38 tion that demonstrate that its rating methods and practices are based upon 39 commonly accepted actuarial assumptions and are in accordance with sound 40 actuarial principles. 41 (b) Each small employer carrier shall file with the director annually on 42 or before March 15, an actuarial certification certifying that the carrier 43 is in compliance with the provisions of this chapter and that the rating 44 methods of the small employer carrier are actuarially sound. Such certifi- 45 cation shall be in a form and manner, and shall contain such information, 46 as specified by the director. A copy of the certification shall be 47 retained by the small employer carrier at its principal place of business. 48 (c) A small employer carrier shall make the information and documentation 49 described in subsection (4)(a) of this section available to the director 50 upon request. Except in cases of violations of the provisions of this 51 chapter, the information shall be considered proprietary and trade secret 52 information and shall not be subject to disclosure by the director to per- 53 sons outside of the department except as agreed to by the small employer 54 carrier or as ordered by a court of competent jurisdiction. 4 1 SECTION 2. That Section 41-5206, Idaho Code, be, and the same is hereby 2 amended to read as follows: 3 41-5206. RESTRICTIONS RELATING TO PREMIUM RATES. (1) Premium rates for 4 health benefit plans subject to the provisions of this chapter shall be sub- 5 ject to the following provisions: 6 (a) The premium rates charged during a rating period to individuals with 7 similar case characteristics for the same or similar coverage, or the 8 rates that could be charged to such individuals under the rating system, 9 shall not vary from the index rate by more than twenty-five percent (25%) 10 of the index rate. 11 (b) The percentage increase in the premium rate charged to an individual 12 for a new rating period may not exceed the sum of the following: 13 (i) The percentage change in the new business premium rate measured 14 from the first day of the prior rating period to the first day of the 15 new rating period. In the case of a health benefit plan into which 16 the individual carrier is no longer enrolling new individuals, the 17 individual carrier shall use the percentage change in the base pre- 18 mium rate, provided that such change does not exceed, on a percentage 19 basis, the change in the new business premium rate for the most simi- 20 lar health benefit plan into which the individual carrier is actively 21 enrolling new individuals. 22 (ii) Any adjustment, not to exceed fifteen percent (15%) annually 23 and adjusted pro rata for rating periods of less than one (1) year, 24 due to the claim experience, health status or duration of coverage of 25 the individual or dependents as determined from the individual 26 carrier's rate manual; and 27 (iii) Any adjustment due to change in coverage or change in the case 28 characteristics of the individual as determined from the individual 29 carrier's rate manual. 30 (c) Premium rates for health benefit plans shall comply with the require- 31 ments of this section notwithstanding any assessments paid or payable by 32 carriers pursuant to section 41-4711, Idaho Code. 33 (d) In the case of health benefit plans delivered or issued for delivery 34 prior to the effective date of this chapter, a premium rate for a rating 35 period may exceed the ranges set forth in subsections (1)(a) and (b) of 36 this section for a period of three (3) years following the effective date 37 of this chapter. In such case, the percentage increase in the premium rate 38 charged to an individual for a new rating period shall not exceed the sum 39 of the following: 40 (i) The percentage change in the new business premium rate measured 41 from the first day of the prior rating period to the first day of the 42 new rating period. In the case of a health benefit plan into which 43 the individual carrier is no longer enrolling new individuals, the 44 individual carrier shall use the percentage change in the base pre- 45 mium rate, provided that such change does not exceed, on a percentage 46 basis, the change in the new business premium rate for the most simi- 47 lar health benefit plan into which the individual carrier is actively 48 enrolling new individuals; and 49 (ii) Any adjustment due to change in coverage or change in the case 50 characteristics of the individual as determined from the carrier's 51 rate manual. 52 (e) (i) Individual carriers shall apply rating factors, including case 53 characteristics, consistently with respect to all individuals. Rating 54 factors shall produce premiums for identical individuals which differ 5 1 only by the amounts attributable to plan design and do not reflect 2 differences due to the nature of the individuals assumed to select 3 particular health benefit plans; and 4 (ii) An individual carrier shall treat all health benefit plans 5 issued or renewed in the same calendar month as having the same rat- 6 ing period. 7 (f) For purposes of this subsection, a health benefit plan that utilizes 8 a restricted provider network shall not be considered similar coverage to 9 a health benefit plan that does not utilize such a network, provided that 10 utilization of the restricted provider network results in substantial dif- 11 ferences in claims costs. 12 (g) The individual carrier shall not use case characteristics, other than 13 age, individual tobacco use, geography as defined by rule of the director, 14 or gender, without prior approval of the director. 15 (h) An individual carrier may utilize age as a case characteristic in 16 establishing premium rates, provided that the same rating factor shall be 17 applied to all dependents under the age of twenty-three (23), and the same 18 rating factorshallmay be applied on a n 19quinquennialannual basis as to individu- 20 als or nondependents twenty (20) years of age or older. 21 (i) The director may establish rules to implement the provisions of this 22 section and to assure that rating practices used by individual carriers 23 are consistent with the purposes of this chapter, including rules that: 24 (i) Assure that differences in rates charged for health benefit 25 plans by individual carriers are reasonable and reflect objective 26 differences in plan design, not including differences due to the 27 nature of the individuals assumed to select particular health benefit 28 plans; 29 (ii) Prescribe the manner in which case characteristics may be used 30 by individual carriers; and 31 (iii) Prescribe the manner in which an individual carrier is to 32 demonstrate compliance with the provisions of this section, including 33 requirements that an individual carrier provide the director with 34 actuarial certification as to such compliance. 35 (2) The director may suspend for a specified period the application of 36 subsection (1)(a) of this section as to the premium rates applicable to one 37 (1) or more individuals for one (1) or more rating periods upon a filing by 38 the individual carrier and a finding by the director either that the suspen- 39 sion is reasonable in light of the financial condition of the individual car- 40 rier or that the suspension would enhance the efficiency and fairness of the 41 marketplace for individual health insurance. 42 (3) In connection with the offering for sale of any health benefit plan 43 to an individual, an individual carrier shall make a reasonable disclosure, as 44 part of its solicitation and sales materials, of all of the following: 45 (a) The extent to which premium rates for an individual are established 46 or adjusted based upon the actual or expected variation in claims costs or 47 actual or expected variation in health status of the individual and his 48 dependents; 49 (b) The provisions of the health benefit plan concerning the individual 50 carrier's right to change premium rates and the factors, other than claim 51 experience, that affect changes in premium rates; 52 (c) The provisions relating to renewability of policies and contracts; 53 and 54 (d) The provisions relating to any preexisting condition provision. 55 (4) (a) Each individual carrier shall maintain at its principal place of 6 1 business a complete and detailed description of its rating practices and 2 renewal underwriting practices, including information and documentation 3 that demonstrate that its rating methods and practices are based upon com- 4 monly accepted actuarial assumptions and are in accordance with sound 5 actuarial principles. 6 (b) Each individual carrier shall file with the director annually on or 7 before September 15, an actuarial certification certifying that the car- 8 rier is in compliance with the provisions of this chapter and that the 9 rating methods of the individual carrier are actuarially sound. Such cer- 10 tification shall be in a form and manner, and shall contain such informa- 11 tion, as specified by the director. A copy of the certification shall be 12 retained by the individual carrier at its principal place of business. 13 (c) An individual carrier shall make the information and documentation 14 described in subsection (4)(a) of this section available to the director 15 upon request. Except in cases of violations of the provisions of this 16 chapter, the information shall be considered proprietary and trade secret 17 information and shall not be subject to disclosure by the director to per- 18 sons outside of the department except as agreed to by the individual car- 19 rier or as ordered by a court of competent jurisdiction.
STATEMENT OF PURPOSE
RS08844
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 older. The
purpose of this bill is to change the five-year rating factor to a
one-year rating factor.
FISCAL NOTE
None
Contact: Julie Taylor
331-7357
Lyn Darrington
333-7818
STATEMENT OF PURPOSE/ FISCAL NOTE BILL NO. H 211