2002 Legislation
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SENATE BILL NO. 1506 – Small employer hlth reinsrnc/newbrn


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Daily Data Tracking History

S1506......................................................by STATE AFFAIRS
SMALL EMPLOYER HEALTH REINSURANCE - Amends existing law relating to the
small employer health reinsurance program to clarify that newborn
dependents are not eligible for reinsurance unless a parent is already
03/05    Senate intro - 1st rdg - to printing
03/06    Rpt prt - to Com/HuRes
03/08    Rpt out - rec d/p - to 2nd rdg
03/11    2nd rdg - to 3rd rdg
    Rls susp - PASSED - 30-0-5
      AYES -- Andreason, Brandt, Bunderson, Burtenshaw, Cameron,
      Darrington, Davis, Deide, Frasure, Geddes, Goedde, Hawkins, Hill,
      Keough, King-Barrutia, Little, Lodge, Marley, Noh, Richardson, Risch,
      Sandy, Schroeder, Sims, Sorensen, Stegner, Stennett, Thorne, Wheeler,
      NAYS -- None
      Absent and excused -- Boatright, Branch(Bartlett), Dunklin, Ingram,
    Floor Sponsor - Cameron
    Title apvd - to House
03/12    House intro - 1st rdg - to Bus
03/14    Rpt out - rec d/p - to 2nd rdg
03/15    2nd rdg - to 3rd rdg
    Rls susp - PASSED - 69-0-1
      AYES -- Barraclough, Barrett, Bedke, Bell, Bieter, Black, Block, Boe,
      Bolz, Bradford, Bruneel, Callister, Campbell, Clark, Collins, Crow,
      Cuddy, Deal, Denney, Ellis, Ellsworth, Eskridge, Field(13),
      Field(20), Gagner, Gould, Hadley, Hammond, Harwood, Henbest, Higgins,
      Hornbeck, Jaquet, Jones, Kellogg, Kendell, Kunz, Lake, Langford,
      Loertscher, Mader, Martinez, McKague, Meyer, Montgomery, Mortensen,
      Moyle, Pearce, Pischner, Pomeroy, Raybould, Ridinger, Roberts,
      Robison, Sali, Schaefer, Sellman, Shepherd, Smith(33), Smith(23),
      Smylie, Stevenson, Stone, Tilman, Trail, Wheeler, Wood, Young, Mr.
      NAYS -- None
      Absent and excused -- Aikele
    Floor Sponsor - Deal
    Title apvd - to Senate
03/15    To enrol
03/18    Rpt enrol - Pres signed - Sp signed
03/18    To Governor
03/21    Governor signed
         Session Law Chapter 197
         Effective: 07/01/00

Bill Text

  ||||              LEGISLATURE OF THE STATE OF IDAHO             ||||
 Fifty-sixth Legislature                  Second Regular Session - 2002
                                       IN THE SENATE
                                    SENATE BILL NO. 1506
                                 BY STATE AFFAIRS COMMITTEE
  1                                        AN ACT
  6    Be It Enacted by the Legislature of the State of Idaho:
  7        SECTION  1.  That  Section 41-4711, Idaho Code, be, and the same is hereby
  8    amended to read as follows:
  9        41-4711.  SMALL EMPLOYER CARRIER REINSURANCE  PROGRAM.  (1)  A  reinsuring
 10    carrier shall be subject to the provisions of this section.
 11        (2)  There is hereby created an independent public body corporate and pol-
 12    itic  to  be known as the Idaho small employer health reinsurance program. The
 13    program will perform an essential governmental function  in  the  exercise  of
 14    powers  conferred upon it in this act and any assessments imposed or collected
 15    pursuant to the operation of the program shall at all times be free from taxa-
 16    tion of every kind.
 17        (3)  The program shall operate subject to the supervision and  control  of
 18    the board established in section 41-5502, Idaho Code.
 19        (4)  Each  small  employer  carrier  shall make a filing with the director
 20    containing the carrier's earned health insurance premium derived  from  health
 21    benefit  plans  delivered  or  issued  for delivery to small employers in this
 22    state in the previous calendar year.
 23        (5)  The board shall submit to the director a plan of operation and there-
 24    after any amendments thereto necessary or suitable to assure the fair, reason-
 25    able and equitable administration of the  program.  The  director  may,  after
 26    notice  and  hearing, approve the plan of operation if the director determines
 27    it to be suitable to assure the fair, reasonable and equitable  administration
 28    of  the  program, and to provide for the sharing of program gains or losses on
 29    an equitable and proportionate basis in accordance with the provisions of this
 30    section. The plan of operation shall become effective upon written approval by
 31    the director.
 32        (6)  If the board fails to submit a suitable plan of operation, the direc-
 33    tor shall, after notice and hearing, adopt and promulgate a temporary plan  of
 34    operation.  The  director shall approve the plan of operation submitted by the
 35    board, or adopt a temporary plan of operation if the board fails to  submit  a
 36    suitable  plan. The director shall amend or rescind any plan adopted under the
 37    provisions of this subsection at the time a plan of operation is submitted  by
 38    the board and approved by the director.
 39        (7)  The plan of operation shall:
 40        (a)  Establish  procedures  for  handling and accounting of program assets
 41        and moneys and for an annual fiscal reporting to the director;
 42        (b)  Establish procedures for selecting an administrator, which  shall  be
 43        properly  licensed  in this state, and setting forth the powers and duties
  1        of the administrator;
  2        (c)  Establish procedures for reinsuring risks in accordance with the pro-
  3        visions of this section;
  4        (d)  Establish procedures for collecting assessments from reinsuring  car-
  5        riers  to fund claims and administrative expenses incurred or estimated to
  6        be incurred by the program; and
  7        (e)  Provide for any additional matters necessary for  the  implementation
  8        and administration of the program.
  9        (8)  The program shall have the general powers and authority granted under
 10    the laws of this state to insurance companies and health maintenance organiza-
 11    tions  licensed to transact business, except the power to issue health benefit
 12    plans directly to either groups or individuals. In addition thereto, the  pro-
 13    gram shall have the specific authority to:
 14        (a)  Enter into contracts as are necessary or proper to carry out the pro-
 15        visions  and  purposes  of this chapter, including the authority, with the
 16        approval of the director, to enter into contracts with similar programs of
 17        other states for the joint performance of common functions or with persons
 18        or other organizations for the performance of administrative functions;
 19        (b)  Sue or be sued, including  taking  any  legal  actions  necessary  or
 20        proper  to  recover  any  assessments  and penalties for, on behalf of, or
 21        against the program or any reinsuring carriers;
 22        (c)  Take any legal action necessary to  avoid  the  payment  of  improper
 23        claims against the program;
 24        (d)  Define the health benefit plans, which plans shall allow coordination
 25        of benefits, for which reinsurance will be provided, and to issue reinsur-
 26        ance policies, in accordance with the requirements of this chapter;
 27        (e)  Establish rules, conditions and procedures for reinsuring risks under
 28        the program, including board discretion to operate separate small employer
 29        and individual reinsurance pools;
 30        (f)  Establish actuarial functions as appropriate for the operation of the
 31        program;
 32        (g)  Assess  carriers in accordance with the provisions of subsection (12)
 33        of this section, and to make advance interim assessments  of  carriers  as
 34        may  be  reasonable and necessary for organizational and interim operating
 35        expenses. Any interim assessments shall be credited as offsets against any
 36        regular assessments due following the close of the fiscal year;
 37        (h)  Appoint appropriate legal, actuarial and other committees  as  neces-
 38        sary to provide technical assistance in the operation of the program, pol-
 39        icy and other contract design, and any other function within the authority
 40        of the program;
 41        (i)  Borrow  money  to  effect  the  purposes of the program. Any notes or
 42        other evidence of indebtedness of the program  not  in  default  shall  be
 43        legal investments for carriers and may be carried as admitted assets.
 44        (9)  A reinsuring carrier may reinsure with the program as provided for in
 45    this subsection:
 46        (a)  With  respect  to  a  small  employer basic, standard or catastrophic
 47        health benefit plan, the program shall reinsure the level of coverage pro-
 48        vided and, with respect to other plans, the program shall reinsure  up  to
 49        the level of coverage provided in a small employer basic, standard or cat-
 50        astrophic health benefit plan.
 51        (b)  A small employer carrier may reinsure an entire employer group within
 52        sixty (60) days of the commencement of the group's coverage under a health
 53        benefit plan.
 54        (c)  A reinsuring small employer carrier may reinsure an eligible employee
 55        or dependent within a period of sixty (60) days following the commencement
  1        of  the  coverage  with  the  small employer. A newly eligible employee or
  2        dependent of the reinsured small employer may be  reinsured  within  sixty
  3        (60)  days  of  the  commencement  of  his coverage. Newborn dependents of
  4        insureds are not eligible for reinsurance unless a parent is already rein-
  5        sured.
  6        (d)  (i)   The program shall  not  reimburse  a  reinsuring  carrier  with
  7        respect  to the claims of a reinsured employee or dependent until the car-
  8        rier has incurred an initial level of claims for such employee or  depend-
  9        ent of five thousand dollars ($5,000) in a calendar year for benefits cov-
 10        ered  by the program. In addition, the reinsuring carrier shall be respon-
 11        sible for ten percent (10%) of the next fifty thousand  dollars  ($50,000)
 12        of  benefit payments during a calendar year and the program shall reinsure
 13        the remainder.
 14             (ii)  The board annually may adjust the initial level of  claims  and
 15             the  maximum limit to be retained by the carrier to reflect increases
 16             in costs and utilization within the standard market for health  bene-
 17             fit plans within the state. The adjustment shall not be less than the
 18             annual  change  in the medical component of the "Consumer Price Index
 19             for All Urban Consumers" of the department of labor, bureau of  labor
 20             statistics,  unless  the  board  proposes and the director approves a
 21             lower adjustment factor.
 22        (e)  A reinsuring carrier may terminate reinsurance with the  program  for
 23        one  (1)  or more of the reinsured employees or dependents on any anniver-
 24        sary of the health benefit plan.
 25        (f)  A reinsuring carrier shall apply all managed care and claims handling
 26        techniques, including utilization review, individual case management, pre-
 27        ferred provider provisions, and other managed care provisions  or  methods
 28        of operation consistently with respect to reinsured and nonreinsured busi-
 29        ness.
 30        (10) (a) The  board,  as  part of the plan of operation, shall establish a
 31        methodology for determining premium rates to be charged by the program for
 32        reinsuring small employers pursuant to this section. The methodology shall
 33        include a system for classification of small employers that  reflects  the
 34        types  of case characteristics commonly used by small employer carriers in
 35        the state. The methodology shall provide for the development of base rein-
 36        surance premium rates, subject to the approval of the director, and  shall
 37        be  set  at  levels which reasonably approximate gross premiums charged to
 38        small employers by small employer carriers for health benefit  plans  with
 39        benefits  similar to the standard health benefit plan, adjusted to reflect
 40        retention levels required under the provisions of this chapter.
 41        (b)  Premiums for the program shall be as established by the board.
 42        (c)  The board periodically shall review the methodology established under
 43        the provisions of paragraph (10)(a) of this section, including the  system
 44        of  classification  and  any  rating factors, to assure that it reasonably
 45        reflects the claims experience of  the  program.  The  board  may  propose
 46        changes  to  the methodology which shall be subject to the approval of the
 47        director.
 48        (d)  The board may consider adjustments to the premium  rates  charged  by
 49        the  program  to reflect the use of effective cost containment and managed
 50        care arrangements.
 51        (11) If a health benefit plan for a small employer  is  entirely  or  par-
 52    tially  reinsured  with the program, the premium charged to the small employer
 53    for any rating period for the coverage  issued  shall  meet  the  requirements
 54    relating to premium rates set forth in section 41-4706, Idaho Code.
 55        (12) (a) Prior  to  March  1  of  each year, the board shall determine and
  1        report to the director the program net  loss  for  the  previous  calendar
  2        year, including administrative  expenses and incurred losses for the year,
  3        taking  into  account  investment  income  and other appropriate gains and
  4        losses.
  5        (b)  Any net loss for the year shall be recouped by assessments of  carri-
  6        ers.
  7        (c)  (i)   For  the  assessment  of March 1, 1995, and prior to March 1 of
  8             each succeeding year, the board shall determine  and  file  with  the
  9             director  an  estimate  of  the assessments needed to fund the losses
 10             incurred by the program in the previous calendar year.
 11             (ii)  The individual assessments shall be determined  by  multiplying
 12             net  losses,  if  net earnings are negative, as defined by subsection
 13             (12)(a) of this section, by a fraction, the numerator of which  shall
 14             be the carrier's total premiums earned in the preceding calendar year
 15             from  all health benefit plans and policies or certificates of insur-
 16             ance for specific disease, and hospital confinement indemnity in this
 17             state as reported in the carrier's annual report pursuant to  subsec-
 18             tion  (16) of this section, and the denominator of which shall be the
 19             total premiums earned in the preceding calendar year from all  health
 20             benefit  plans and policies or certificates of insurance for specific
 21             disease and hospital confinement indemnity in this state.
 22        (d)  If assessments exceed net losses of the program, the excess shall  be
 23        held  at  interest  and  used  by  the board to offset future losses or to
 24        reduce program premiums.  As  used  in  this  paragraph,  "future  losses"
 25        includes reserves for incurred but not reported claims.
 26        (e)  Each  reinsuring  carrier's  proportion  of  the  assessment shall be
 27        determined annually by the board based  on  annual  statements  and  other
 28        reports deemed necessary by the board and filed by the reinsuring carriers
 29        with the board.
 30        (f)  The plan of operation shall provide for the imposition of an interest
 31        penalty for late payment of assessments.
 32        (g)  A  reinsuring carrier may seek from the director a deferment from all
 33        or part of an assessment imposed by the board. The director may defer  all
 34        or  part  of the assessment of a reinsuring carrier if the director deter-
 35        mines that the payment of the assessment would place the  reinsuring  car-
 36        rier  in a financially impaired condition. If all or part of an assessment
 37        against a reinsuring carrier is deferred  the  amount  deferred  shall  be
 38        assessed  against  the other participating carriers in a manner consistent
 39        with the basis for assessment set forth in this subsection. The reinsuring
 40        carrier receiving the deferment shall remain liable to the program for the
 41        amount deferred and shall be prohibited from reinsuring  any  groups  with
 42        the program until such time as it pays the assessments.
 43        (13) (a)  Neither the participation in the program as reinsuring carriers,
 44        the  establishment  of  rates, forms or procedures, nor any other joint or
 45        collective action required under the provisions of this chapter  shall  be
 46        the  basis  of  any  legal action, criminal or civil liability, or penalty
 47        against the program or any of its reinsuring carriers  either  jointly  or
 48        separately.
 49        (b)  Neither  the  board nor its employees shall be liable for any obliga-
 50        tions of the program. No member or employee of the board shall be  liable,
 51        and  no  cause of action of any nature may arise against them, for any act
 52        or omission related to the performance of their powers  and  duties  under
 53        this  chapter,  unless  such act or omission constitutes willful or wanton
 54        misconduct. The board may provide for indemnification of, and legal repre-
 55        sentation for, its members and employees.
  1        (14) The board, as part of the plan of operation, shall develop  standards
  2    setting  forth  the manner and levels of compensation to be paid to agents for
  3    the sale of small  employer basic, standard and  catastrophic  health  benefit
  4    plans. In establishing such standards, the board shall take into consideration
  5    the  need to assure the broad availability of coverages, the objectives of the
  6    program, the time and effort expended in placing the  coverage,  the  need  to
  7    provide ongoing service to the small employer, the levels of compensation cur-
  8    rently used in the industry and the overall costs of coverage to small employ-
  9    ers selecting these plans.
 10        (15) The program shall be exempt from any and all taxes.
 11        (16) Each carrier shall file with the director, in a form and manner to be
 12    prescribed  by the director, an annual report. The report shall state the num-
 13    ber of resident persons insured under the carrier's health benefit plan.
 14        (17) If a reinsuring  small  employer  carrier  attempts  to  reinsure  or
 15    reinsures  an  entire  employer  group,  an  employee,  or a dependent of such
 16    employee that, immediately prior to the commencement of such coverage, it cov-
 17    ered under a health benefit plan, the board shall assess all costs and  losses
 18    incurred  by  the  program  for claims and administrative expenses relating to
 19    such group, employee or dependent of such employee only to the said reinsuring
 20    small employer carrier.
 21        (18)  Subsection (17) of this section shall apply to assessments made  for
 22    the 1994 calendar year and each year thereafter.
 23        SECTION  2.  An  emergency  existing  therefor,  which emergency is hereby
 24    declared to exist, this act shall be in full force and effect on and after its
 25    passage and approval, and retroactively to July 1, 2000.

Statement of Purpose / Fiscal Impact


The purpose of the bill is to restore wording in the Small 
Employer Health Insurance Availability Act that was 
inadvertently repealed as a part of the implementation of the 
Individual High risk Reinsurance Pool in 2000. The restored 
wording provides that newborn dependents of insureds are not 
eligible for reinsurance in the Small Employer Health 
Reinsurance Program unless a parent is already reinsured.

                       FISCAL NOTE

There is no fiscal impact on the state general fund.

CONTACT:   Senator Dean L. Cameron)
           Hyatt Erstad, Ch. Small Employer Health Reinsurance
           Program	343-8899
           Bart W. Hartwood Small Employer Health Reinsurance
           Program	395-8500