1999 Legislation
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HOUSE BILL NO. 212 – Health benefit plans, premium rates

HOUSE BILL NO. 212

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Daily Data Tracking History



H0212...........................................................by BUSINESS
HEALTH BENEFIT PLANS - Amends existing law relating to health benefit plans
to increase the percentage of deviation from the index rate permitted when
establishing premium rates.

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 - FAILED - 29-40-1
      AYES -- Alltus, Barrett, Black, Bruneel, Callister, Denney,
      Ellsworth, Field(13), Hadley, Hammond, Hansen(23), Kendell, Kunz,
      Lake, Limbaugh, Loertscher, Mader, Moyle, Pischner, Reynolds, Sali,
      Schaefer, Smylie, Taylor, Tilman, Watson, Wheeler, Williams,
      Zimmermann
      NAYS -- Barraclough(Barraclough), Bell, Bieter, Boe, Campbell, Chase,
      Clark, Crow, Cuddy, Deal, Field(20), Gagner, Geddes, Gould,
      Hansen(29), Henbest, Hornbeck, Jaquet, Jones, Judd, Kellogg, Kempton,
      Linford, Marley, Meyer, Montgomery, Mortensen, Pomeroy, Ridinger,
      Ringo, Robison, Sellman, Smith, Stevenson, Stoicheff, Stone, Tippets,
      Trail, Wood, Mr Speaker
      Absent and excused -- McKague
    Floor Sponsor - Hansen(23), Alltus
    Filed with Chief Clerk

Bill Text


H0212


                                                                        
 ||||              LEGISLATURE OF THE STATE OF IDAHO             ||||
Fifty-fifth Legislature                 First Regular Session - 1999
                                                                        

                             IN THE HOUSE OF REPRESENTATIVES

                                    HOUSE BILL NO. 212

                                  BY BUSINESS COMMITTEE

 1                                        AN ACT
 2    RELATING TO HEALTH BENEFIT PLANS; AMENDING SECTION  41-4706,  IDAHO  CODE,  TO
 3        PROVIDE LIMITATIONS UPON PREMIUM RATES AND TO MAKE A TECHNICAL CORRECTION;
 4        AND  AMENDING  SECTION 41-5206, IDAHO CODE, TO PROVIDE LIMITATIONS ON PRE-
 5        MIUM RATES AND TO MAKE A TECHNICAL CORRECTION.

 6    Be It Enacted by the Legislature of the State of Idaho:

 7        SECTION 1.  That Section 41-4706, Idaho Code, be, and the same  is  hereby
 8    amended to read as follows:

 9        41-4706.  RESTRICTIONS  RELATING  TO  PREMIUM RATES. (1) Premium rates for
10    health benefit plans subject to the provisions of this chapter shall  be  sub-
11    ject to the provisions of the following provisions:
12        (a)  The  index  rate  for a rating period for any class of business shall
13        not exceed the index rate for any other class of  business  by  more  than
14        twenty percent (20%).
15        (b)  For  a  class  of business, the premium rates charged during a rating
16        period to small employers with similar case characteristics for  the  same
17        or  similar coverage, or the rates that could be charged to such employers
18        under the rating system for that class of business, shall  not  vary  from
19        the  index  rate  by more than  twenty-five   fifty 
20        percent ( 2 5 0 %) 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)    years
44        ,  and  the  same  rating  factor shall be applied on a quinquennial
45        basis as to individuals or nondependents  twenty  (20)  years  of  age  or
46        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 
10         fifty  percent ( 2 5 0 %) of  the  index
11        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
54             characteristics, consistently with respect to all individuals. Rating


                                          5

 1             factors shall produce premiums for identical individuals which differ
 2             only by the amounts attributable to plan design and  do  not  reflect
 3             differences  due  to  the nature of the individuals assumed to select
 4             particular health benefit plans; and
 5             (ii)  An individual carrier shall  treat  all  health  benefit  plans
 6             issued  or renewed in the same calendar month as having the same rat-
 7             ing period.
 8        (f)  For purposes of this subsection, a health benefit plan that  utilizes
 9        a  restricted provider network shall not be considered similar coverage to
10        a health benefit plan that  does not utilize such a network, provided that
11        utilization of the restricted provider network results in substantial dif-
12        ferences in claims costs.
13        (g)  The individual carrier shall not use case characteristics, other than
14        age, individual tobacco use, geography as defined by rule of the director,
15        or gender, without prior approval of the director.
16        (h)  An individual carrier may utilize age as  a  case  characteristic  in
17        establishing  premium rates, provided that the same rating factor shall be
18        applied to all dependents under the age of twenty-three (23)    years
19        ,  and  the  same  rating  factor shall be applied on a quinquennial
20        basis as to individuals or nondependents  twenty  (20)  years  of  age  or
21        older.
22        (i)  The  director may establish rules to implement the provisions of this
23        section and to assure that rating practices used  by  individual  carriers
24        are consistent with the purposes of this chapter, including rules that:
25             (i)   Assure  that  differences  in  rates charged for health benefit
26             plans by individual carriers are  reasonable  and  reflect  objective
27             differences  in  plan  design,  not  including differences due to the
28             nature of the individuals assumed to select particular health benefit
29             plans;
30             (ii)  Prescribe the manner in which case characteristics may be  used
31             by individual carriers; and
32             (iii) Prescribe  the  manner  in  which  an  individual carrier is to
33             demonstrate compliance with the provisions of this section, including
34             requirements that an individual carrier  provide  the  director  with
35             actuarial certification as to such compliance.
36        (2)  The  director  may  suspend for a specified period the application of
37    subsection (1)(a) of this section as to the premium rates  applicable  to  one
38    (1)  or  more  individuals for one (1) or more rating periods upon a filing by
39    the individual carrier and a finding by the director either that  the  suspen-
40    sion  is reasonable in light of the financial condition of the individual car-
41    rier or that the suspension would enhance the efficiency and fairness  of  the
42    marketplace for individual health insurance.
43        (3)  In  connection  with the offering for sale of any health benefit plan
44    to an individual, an individual carrier shall make a reasonable disclosure, as
45    part of its solicitation and sales materials, of all of the following:
46        (a)  The extent to which premium rates for an individual  are  established
47        or adjusted based upon the actual or expected variation in claims costs or
48        actual  or  expected  variation in health status of the individual and his
49        dependents;
50        (b)  The provisions of the health benefit plan concerning  the  individual
51        carrier's  right to change premium rates and the factors, other than claim
52        experience, that affect changes in premium rates;
53        (c)  The provisions  relating to renewability of policies  and  contracts;
54        and
55        (d)  The provisions relating to any preexisting condition provision.


                                          6

 1        (4)  (a) Each  individual carrier shall maintain at its principal place of
 2        business a complete and detailed description of its rating  practices  and
 3        renewal  underwriting  practices,  including information and documentation
 4        that demonstrate that its rating methods and practices are based upon com-
 5        monly accepted actuarial assumptions and  are  in  accordance  with  sound
 6        actuarial principles.
 7        (b)  Each  individual  carrier shall file with the director annually on or
 8        before September 15, an actuarial certification certifying that  the  car-
 9        rier  is  in  compliance  with the provisions of this chapter and that the
10        rating methods of the individual carrier  are actuarially sound. Such cer-
11        tification shall be in a form and manner, and shall contain such  informa-
12        tion,  as  specified by the director. A copy of the certification shall be
13        retained by the individual carrier at its principal place of business.
14        (c)  An individual carrier shall make the  information  and  documentation
15        described  in  subsection (4)(a) of this section available to the director
16        upon request. Except in cases of violations  of  the  provisions  of  this
17        chapter,  the information shall be considered proprietary and trade secret
18        information and shall not be subject to disclosure by the director to per-
19        sons outside of the department except as agreed to by the individual  car-
20        rier or as ordered by a court of competent jurisdiction.

Statement of Purpose / Fiscal Impact


                           STATEMENT OF PURPOSE
                                     
                                                                                                           RS08845
                                                                        
Currently health insurance companies are restricted in the premiums they
can charge for small group and individual health insurance policies by +/-
25% of an index rate. The purpose of this bill is to expand that rating
band to +/- 50% of the index to allow carriers greater flexibility in
rating.







                                                                        FISCAL NOTE

                       None.                                            






                                       CONTACT NAME: Julie Taylor
                                                     331-7357             
               Lyn Darrington                        
                                                     333-7818



                                       STATEMENT OF PURPOSE/ FISCAL NOTE  Bill No.  H 212