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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
H0212|||| LEGISLATURE OF THE STATE OF IDAHO |||| Fifty-fifth Legislature First Regular Session - 1999IN 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 thantwenty-fivefifty 20 percent (25 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 thantwenty-five10 fifty percent (25 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
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