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H0505aa,aaS.....................................................by BUSINESS
HEALTH BENEFIT PLANS - Amends existing law to revise sunset provisions
applicable to index rate bands for health benefit plans; and to provide
that the director shall review certain provisions of law following receipt
of data from health care insurers for calendar year 2004 and shall submit a
report to certain legislative committees regarding retention of index rate
bands.
01/30 House intro - 1st rdg - to printing
01/31 Rpt prt - to Bus
02/20 Rpt out - to Gen Ord
02/25 Rpt out amen - to engros
02/26 Rpt engros - 1st rdg - to 2nd rdg as amen
02/27 2nd rdg - to 3rd rdg as amen
03/04 3rd rdg as amen - PASSED - 67-1-2
AYES -- Aikele, Barraclough, Barrett, Bedke, Bell, Bieter, Black,
Block, Boe, Bolz, Bradford, Callister, Campbell, Clark, Collins,
Crow, Cuddy, Deal, Denney, Ellis, Ellsworth, Eskridge, Field(13),
Field(20), Gagner, Gould, Hadley, Hammond, Henbest, Higgins,
Hornbeck, Jaquet, Jones, Kellogg(Duncan), Kendell, Kunz, Lake,
Langford, Loertscher, Mader, Martinez, McKague, Meyer, Montgomery,
Mortensen, Moyle, Pearce, Pischner, Pomeroy, Raybould, Ridinger,
Robison, Sali, Schaefer, Sellman, Shepherd, Smith(33), Smith(23),
Smylie, Stevenson, Stone, Tilman, Trail, Wheeler, Wood, Young, Mr.
Speaker
NAYS -- Bruneel
Absent and excused -- Harwood, Roberts
Floor Sponsor - Henbest
Title apvd - to Senate
03/05 Senate intro - 1st rdg - to Com/HuRes
03/11 Rpt out - to 14th Ord
Rpt out amen - to 1st rdg as amen
03/12 1st rdg - to 2nd rdg as amen
03/13 2nd rdg - to 3rd rdg as amen
Rls susp - PASSED - 35-0-0
AYES -- Andreason, Boatright, Branch(Bartlett), Brandt, Bunderson,
Burtenshaw, Cameron, Darrington, Davis, Deide, Dunklin, Frasure,
Geddes, Goedde, Hawkins, Hill, Ingram, Ipsen, Keough, King-Barrutia,
Little, Lodge, Marley, Noh, Richardson, Risch, Sandy, Schroeder,
Sims, Sorensen, Stegner, Stennett, Thorne, Wheeler, Williams
NAYS -- None
Absent and excused -- None
Floor Sponsor - Stegner
Title apvd - to House
03/14 House concurred in Senate amens - to engros
03/15 Rpt engros - 1st rdg - to 2nd rdg as amen
Rls susp - PASSED - 67-0-3
AYES -- Aikele, 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, Montgomery,
Moyle, Pearce, Pischner, Pomeroy, Raybould, Ridinger, Roberts,
Robison, Sali, Schaefer, Sellman, Shepherd, Smith(33), Smylie,
Stevenson, Stone, Tilman, Trail, Wheeler, Wood, Young, Mr. Speaker
NAYS -- None
Absent and excused -- Meyer, Mortensen, Smith(23)
Floor Sponsor - Henbest
Title apvd - to enrol
03/15 Rpt enrol - Sp signed - Pres signed
03/15 To Governor
03/19 Governor signed
Session Law Chapter 99
Effective: 07/01/02
|||| LEGISLATURE OF THE STATE OF IDAHO ||||
Fifty-sixth Legislature Second Regular Session - 2002
IN THE HOUSE OF REPRESENTATIVES
HOUSE BILL NO. 505, As Amended, As Amended in the Senate
BY BUSINESS COMMITTEE
1 AN ACT
2 RELATING TO HEALTH INSURANCE; AMENDING SECTIONS 41-4706 AND 41-5206, IDAHO
3 CODE, TO REVISE SUNSET PROVISIONS APPLICABLE TO INDEX RATE BANDS FOR
4 HEALTH BENEFIT PLANS AND TO PROVIDE THAT THE DIRECTOR SHALL REVIEW CERTAIN
5 PROVISIONS OF LAW FOLLOWING THE RECEIPT OF DATA FROM HEALTH CARE INSURERS
6 FOR CALENDAR YEAR 2004 AND SHALL SUBMIT TO CERTAIN COMMITTEES OF THE LEG-
7 ISLATURE A REPORT REGARDING RETENTION OF THE INDEX RATE BANDS.
8 Be It Enacted by the Legislature of the State of Idaho:
9 SECTION 1. That Section 41-4706, Idaho Code, be, and the same is hereby
10 amended to read as follows:
11 41-4706. RESTRICTIONS RELATING TO PREMIUM RATES. (1) Premium rates for
12 health benefit plans subject to the provisions of this chapter shall be sub-
13 ject to the following provisions:
14 (a) The index rate for a rating period for any class of business shall
15 not exceed the index rate for any other class of business by more than
16 twenty percent (20%).
17 (b) For a class of business, the premium rates charged during a rating
18 period to small employers with similar case characteristics for the same
19 or similar coverage, or the rates that could be charged to such employers
20 under the rating system for that class of business, shall not vary from
21 the index rate by more than fifty percent (50%) of the index rate. The
22 provisions of this subsection (1)(b) shall apply until July 1, 20024, with
23 respect to all health benefit plans offered to small employers other than
24 the small employer basic, standard and catastrophic plans. The director
25 shall review the provisions of this subsection following the receipt of
26 data from health care insurers for calendar year 2004 and shall submit to
27 the house business committee and the senate commerce and human resources
28 committee a report regarding retention of the index rate bands.
29 (c) The percentage increase in the premium rate charged to a small
30 employer for a new rating period may not exceed the sum of the following:
31 (i) The percentage change in the new business premium rate measured
32 from the first day of the prior rating period to the first day of the
33 new rating period. In the case of a health benefit plan into which
34 the small employer carrier is no longer enrolling new small employ-
35 ers, the small employer carrier shall use the percentage change in
36 the base premium rate, provided that such change does not exceed, on
37 a percentage basis, the change in the new business premium rate for
38 the most similar health benefit plan into which the small employer
39 carrier is actively enrolling new small employers;
40 (ii) Any adjustment, not to exceed fifteen percent (15%) annually
41 and adjusted pro rata for rating periods of less than one (1) year,
42 due to the claim experience, health status or duration of coverage of
43 the employees or dependents of the small employer as determined from
2
1 the small employer carrier's rate manual for the class of business;
2 and
3 (iii) Any adjustment due to change in coverage or change in the case
4 characteristics of the small employer as determined from the small
5 employer carrier's rate manual for the class of business.
6 (d) Adjustments in rates for claim experience, health status and duration
7 of coverage shall not be charged to individual employees or dependents.
8 Any such adjustment shall be applied uniformly to the rates charged for
9 all employees and dependents of the small employer.
10 (e) Premium rates for health benefit plans shall comply with the require-
11 ments of this section notwithstanding any assessments paid or payable by
12 small employer carriers pursuant to section 41-4711, Idaho Code, or chap-
13 ter 55, title 41, Idaho Code.
14 (f) (i) Small employer carriers shall apply rating factors, including
15 case characteristics, consistently with respect to all small employ-
16 ers in a class of business. Rating factors shall produce premiums for
17 identical groups which differ only by the amounts attributable to
18 plan design and do not reflect differences due to the nature of the
19 groups assumed to select particular health benefit plans; and
20 (ii) A small employer carrier shall treat all health benefit plans
21 issued or renewed in the same calendar month as having the same rat-
22 ing period.
23 (g) For the purposes of this subsection, a health benefit plan that uti-
24 lizes a restricted provider network shall not be considered similar cover-
25 age to a health benefit plan that does not utilize such a network, pro-
26 vided that utilization of the restricted provider network results in sub-
27 stantial differences in claims costs.
28 (h) The small employer carrier shall not use case characteristics, other
29 than age, individual tobacco use, geography, as defined by rule of the
30 director, or gender, without prior approval of the director.
31 (i) A small employer carrier may utilize age as a case characteristic in
32 establishing premium rates, provided that the same rating factor shall be
33 applied to all dependents under twenty-three (23) years of age, and the
34 same rating factor may be applied on an annual basis as to individuals or
35 nondependents twenty (20) years of age or older.
36 (j) The director may establish rules to implement the provisions of this
37 section and to assure that rating practices used by small employer carri-
38 ers are consistent with the purposes of this chapter, including rules
39 that:
40 (i) Assure that differences in rates charged for health benefit
41 plans by small employer carriers are reasonable and reflect objective
42 differences in plan design, not including differences due to the
43 nature of the groups assumed to select particular health benefit
44 plans;
45 (ii) Prescribe the manner in which case characteristics may be used
46 by small employer carriers; and
47 (iii) Prescribe the manner in which a small employer carrier is to
48 demonstrate compliance with the provisions of this section, including
49 requirements that a small employer carrier provide the director with
50 actuarial certification as to such compliance.
51 (2) A small employer carrier shall not transfer a small employer involun-
52 tarily into or out of a class of business. A small employer carrier shall not
53 offer to transfer a small employer into or out of a class of business unless
54 such offer is made to transfer all small employers in the class of business
55 without regard to case characteristics, claim experience, health status or
3
1 duration of coverage since issue.
2 (3) The director may suspend for a specified period the application of
3 subsection (1)(a) of this section as to the premium rates applicable to one
4 (1) or more small employers included within a class of business of a small
5 employer carrier for one (1) or more rating periods upon a filing by the small
6 employer carrier and a finding by the director either that the suspension is
7 reasonable in light of the financial condition of the small employer carrier
8 or that the suspension would enhance the efficiency and fairness of the
9 marketplace for small employer health insurance.
10 (4) In connection with the offering for sale of any health benefit plan
11 to a small employer, a small employer carrier shall make a reasonable disclo-
12 sure, as part of its solicitation and sales materials, of all of the follow-
13 ing:
14 (a) The extent to which premium rates for a specified small employer are
15 established or adjusted based upon the actual or expected variation in
16 claims costs or actual or expected variation in health status of the
17 employees of the small employer and their dependents;
18 (b) The provisions of the health benefit plan concerning the small
19 employer carrier's right to change premium rates and the factors, other
20 than claim experience, that affect changes in premium rates;
21 (c) The provisions relating to renewability of policies and contracts;
22 and
23 (d) The provisions relating to any preexisting condition provision.
24 (5) (a) Each small employer carrier shall maintain at its principal place
25 of business a complete and detailed description of its rating practices
26 and renewal underwriting practices, including information and documenta-
27 tion that demonstrate that its rating methods and practices are based upon
28 commonly accepted actuarial assumptions and are in accordance with sound
29 actuarial principles.
30 (b) Each small employer carrier shall file with the director annually on
31 or before March 15, an actuarial certification certifying that the carrier
32 is in compliance with the provisions of this chapter and that the rating
33 methods of the small employer carrier are actuarially sound. Such certifi-
34 cation shall be in a form and manner, and shall contain such information,
35 as specified by the director. A copy of the certification shall be
36 retained by the small employer carrier at its principal place of business.
37 (c) A small employer carrier shall make the information and documentation
38 described in subsection (4)(a) of this section available to the director
39 upon request. Except in cases of violations of the provisions of this
40 chapter, the information shall be considered proprietary and trade secret
41 information and shall not be subject to disclosure by the director to per-
42 sons outside of the department except as agreed to by the small employer
43 carrier or as ordered by a court of competent jurisdiction.
44 SECTION 2. That Section 41-5206, Idaho Code, be, and the same is hereby
45 amended to read as follows:
46 41-5206. RESTRICTIONS RELATING TO PREMIUM RATES. (1) Premium rates for
47 health benefit plans subject to the provisions of this chapter shall be sub-
48 ject to the following provisions:
49 (a) The premium rates charged during a rating period to individuals with
50 similar case characteristics for the same or similar coverage, or the
51 rates that could be charged to such individuals under the rating system,
52 shall not vary from the index rate by more than fifty percent (50%) of the
53 index rate. The provisions of this subsection (1)(a) shall apply until
4
1 July 1, 20024, with respect to all health benefit plans offered to indi-
2 viduals other than the individual basic, standard, catastrophic A and cat-
3 astrophic B plans. The director shall review the provisions of this sub-
4 section following the receipt of data from health care insurers for calen-
5 dar year 2004 and shall submit to the house business committee and the
6 senate commerce and human resources committee a report regarding retention
7 of the index rate bands.
8 (b) The percentage increase in the premium rate charged to an individual
9 for a new rating period may not exceed the sum of the following:
10 (i) The percentage change in the new business premium rate measured
11 from the first day of the prior rating period to the first day of the
12 new rating period. In the case of a health benefit plan into which
13 the individual carrier is no longer enrolling new individuals, the
14 individual carrier shall use the percentage change in the base pre-
15 mium rate, provided that such change does not exceed, on a percentage
16 basis, the change in the new business premium rate for the most simi-
17 lar health benefit plan into which the individual carrier is actively
18 enrolling new individuals.
19 (ii) Any adjustment, not to exceed fifteen percent (15%) annually
20 and adjusted pro rata for rating periods of less than one (1) year,
21 due to the claim experience, health status or duration of coverage of
22 the individual or dependents as determined from the individual
23 carrier's rate manual; and
24 (iii) Any adjustment due to change in coverage or change in the case
25 characteristics of the individual as determined from the individual
26 carrier's rate manual.
27 (c) Premium rates for health benefit plans shall comply with the require-
28 ments of this section notwithstanding any assessments paid or payable by
29 carriers pursuant to section 41-4711, Idaho Code, or chapter 55, title 41,
30 Idaho Code.
31 (d) (i) Individual carriers shall apply rating factors, including case
32 characteristics, consistently with respect to all individuals. Rating
33 factors shall produce premiums for identical individuals which differ
34 only by the amounts attributable to plan design and do not reflect
35 differences due to the nature of the individuals assumed to select
36 particular health benefit plans; and
37 (ii) An individual carrier shall treat all health benefit plans
38 issued or renewed in the same calendar month as having the same rat-
39 ing period.
40 (e) For purposes of this subsection, a health benefit plan that utilizes
41 a restricted provider network shall not be considered similar coverage to
42 a health benefit plan that does not utilize such a network, provided that
43 utilization of the restricted provider network results in substantial dif-
44 ferences in claims costs.
45 (f) The individual carrier shall not use case characteristics, other than
46 age, individual tobacco use, geography as defined by rule of the director,
47 or gender, without prior approval of the director.
48 (g) An individual carrier may utilize age as a case characteristic in
49 establishing premium rates, provided that the same rating factor shall be
50 applied to all dependents under twenty-three (23) years of age, and the
51 same rating factor may be applied on an annual basis as to individuals or
52 nondependents twenty (20) years of age or older.
53 (h) The director may establish rules to implement the provisions of this
54 section and to assure that rating practices used by individual carriers
55 are consistent with the purposes of this chapter, including rules that:
5
1 (i) Assure that differences in rates charged for health benefit
2 plans by individual carriers are reasonable and reflect objective
3 differences in plan design, not including differences due to the
4 nature of the individuals assumed to select particular health benefit
5 plans;
6 (ii) Prescribe the manner in which case characteristics may be used
7 by individual carriers; and
8 (iii) Prescribe the manner in which an individual carrier is to
9 demonstrate compliance with the provisions of this section, including
10 requirements that an individual carrier provide the director with
11 actuarial certification as to such compliance.
12 (2) The director may suspend for a specified period the application of
13 subsection (1)(a) of this section as to the premium rates applicable to one
14 (1) or more individuals for one (1) or more rating periods upon a filing by
15 the individual carrier and a finding by the director either that the suspen-
16 sion is reasonable in light of the financial condition of the individual car-
17 rier or that the suspension would enhance the efficiency and fairness of the
18 marketplace for individual health insurance.
19 (3) In connection with the offering for sale of any health benefit plan
20 to an individual, an individual carrier shall make a reasonable disclosure,
21 as part of its solicitation and sales materials, of all of the following:
22 (a) The extent to which premium rates for an individual are established
23 or adjusted based upon the actual or expected variation in claims costs or
24 actual or expected variation in health status of the individual and his
25 dependents;
26 (b) The provisions of the health benefit plan concerning the individual
27 carrier's right to change premium rates and the factors, other than claim
28 experience, that affect changes in premium rates;
29 (c) The provisions relating to renewability of policies and contracts;
30 and
31 (d) The provisions relating to any preexisting condition provision.
32 (4) (a) Each individual carrier shall maintain at its principal place of
33 business a complete and detailed description of its rating practices and
34 renewal underwriting practices, including information and documentation
35 that demonstrate that its rating methods and practices are based upon com-
36 monly accepted actuarial assumptions and are in accordance with sound
37 actuarial principles.
38 (b) Each individual carrier shall file with the director annually on or
39 before September 15, an actuarial certification certifying that the car-
40 rier is in compliance with the provisions of this chapter and that the
41 rating methods of the individual carrier are actuarially sound. Such cer-
42 tification shall be in a form and manner, and shall contain such informa-
43 tion, as specified by the director. A copy of the certification shall be
44 retained by the individual carrier at its principal place of business.
45 (c) An individual carrier shall make the information and documentation
46 described in subsection (4)(a) of this section available to the director
47 upon request. Except in cases of violations of the provisions of this
48 chapter, the information shall be considered proprietary and trade secret
49 information and shall not be subject to disclosure by the director to per-
50 sons outside of the department except as agreed to by the individual car-
51 rier or as ordered by a court of competent jurisdiction.
|||| LEGISLATURE OF THE STATE OF IDAHO ||||
Fifty-sixth Legislature Second Regular Session - 2002
Moved by Deal
Seconded by Henbest
IN THE HOUSE OF REPRESENTATIVES
HOUSE AMENDMENT TO H.B. NO. 505
1 AMENDMENT TO SECTION 1
2 On page 1 of the printed bill, in line 21, following "plans." insert: "The
3 director shall review the provisions of this subsection following the receipt
4 of data from health care insurers for calendar year 2004 and shall submit to
5 the house business committee and the senate commerce and human resources com-
6 mittee a report regarding retention of the index rate bands.".
7 AMENDMENT TO SECTION 2
8 On page 3, in line 49, following "plans." insert: "The director shall
9 review the provisions of this subsection following the receipt of data from
10 health care insurers for calendar year 2004 and shall submit to the house
11 business committee and the senate commerce and human resources committee a
12 report regarding retention of the index rate bands.".
13 CORRECTION TO TITLE
14 On page 1, in line 4, following "PLANS" insert: "AND TO PROVIDE THAT THE
15 DIRECTOR SHALL REVIEW CERTAIN PROVISIONS OF LAW FOLLOWING THE RECEIPT OF DATA
16 FROM HEALTH CARE INSURERS FOR CALENDAR YEAR 2004 AND SHALL SUBMIT TO CERTAIN
17 COMMITTEES OF THE LEGISLATURE A REPORT REGARDING RETENTION OF THE INDEX RATE
18 BANDS".
Moved by Stegner
Seconded by Cameron
IN THE SENATE
SENATE AMENDMENTS TO H.B. NO. 505, As Amended
19 AMENDMENTS TO SECTION 1
20 On page 1 of the engrossed bill, in line 21, delete "The", delete lines
21 22 through 24 and insert: "The provisions of this subsection (1)(b) shall
22 apply until July 1, 20024, with respect to all health benefit plans offered to
23 small employers other than the small employer basic, standard and catastrophic
24 plans. The director".
25 AMENDMENTS TO SECTION 2
26 On page 3, delete line 53, on page 4, delete lines 1 through 3 and insert:
27 "index rate. The provisions of this subsection (1)(a) shall apply until July
28 1, 20024, with respect to all health benefit plans offered to individuals
29 other than the individual basic, standard, catastrophic A and catastrophic B
30 plans. The director shall review the provisions of this subsec-".
31 CORRECTION TO TITLE
32 On page 1, in line 3, delete "REMOVE" and insert: "REVISE".
|||| LEGISLATURE OF THE STATE OF IDAHO ||||
Fifty-sixth Legislature Second Regular Session - 2002
IN THE HOUSE OF REPRESENTATIVES
HOUSE BILL NO. 505, As Amended, As Amended in the Senate
BY BUSINESS COMMITTEE
1 AN ACT
2 RELATING TO HEALTH INSURANCE; AMENDING SECTIONS 41-4706 AND 41-5206, IDAHO
3 CODE, TO REVISE SUNSET PROVISIONS APPLICABLE TO INDEX RATE BANDS FOR
4 HEALTH BENEFIT PLANS AND TO PROVIDE THAT THE DIRECTOR SHALL REVIEW CERTAIN
5 PROVISIONS OF LAW FOLLOWING THE RECEIPT OF DATA FROM HEALTH CARE INSURERS
6 FOR CALENDAR YEAR 2004 AND SHALL SUBMIT TO CERTAIN COMMITTEES OF THE LEG-
7 ISLATURE A REPORT REGARDING RETENTION OF THE INDEX RATE BANDS.
8 Be It Enacted by the Legislature of the State of Idaho:
9 SECTION 1. That Section 41-4706, Idaho Code, be, and the same is hereby
10 amended to read as follows:
11 41-4706. RESTRICTIONS RELATING TO PREMIUM RATES. (1) Premium rates for
12 health benefit plans subject to the provisions of this chapter shall be sub-
13 ject to the following provisions:
14 (a) The index rate for a rating period for any class of business shall
15 not exceed the index rate for any other class of business by more than
16 twenty percent (20%).
17 (b) For a class of business, the premium rates charged during a rating
18 period to small employers with similar case characteristics for the same
19 or similar coverage, or the rates that could be charged to such employers
20 under the rating system for that class of business, shall not vary from
21 the index rate by more than fifty percent (50%) of the index rate. The
22 provisions of this subsection (1)(b) shall apply until July 1, 20024, with
23 respect to all health benefit plans offered to small employers other than
24 the small employer basic, standard and catastrophic plans. The director
25 shall review the provisions of this subsection following the receipt of
26 data from health care insurers for calendar year 2004 and shall submit to
27 the house business committee and the senate commerce and human resources
28 committee a report regarding retention of the index rate bands.
29 (c) The percentage increase in the premium rate charged to a small
30 employer for a new rating period may not exceed the sum of the following:
31 (i) The percentage change in the new business premium rate measured
32 from the first day of the prior rating period to the first day of the
33 new rating period. In the case of a health benefit plan into which
34 the small employer carrier is no longer enrolling new small employ-
35 ers, the small employer carrier shall use the percentage change in
36 the base premium rate, provided that such change does not exceed, on
37 a percentage basis, the change in the new business premium rate for
38 the most similar health benefit plan into which the small employer
39 carrier is actively enrolling new small employers;
40 (ii) Any adjustment, not to exceed fifteen percent (15%) annually
41 and adjusted pro rata for rating periods of less than one (1) year,
42 due to the claim experience, health status or duration of coverage of
43 the employees or dependents of the small employer as determined from
2
1 the small employer carrier's rate manual for the class of business;
2 and
3 (iii) Any adjustment due to change in coverage or change in the case
4 characteristics of the small employer as determined from the small
5 employer carrier's rate manual for the class of business.
6 (d) Adjustments in rates for claim experience, health status and duration
7 of coverage shall not be charged to individual employees or dependents.
8 Any such adjustment shall be applied uniformly to the rates charged for
9 all employees and dependents of the small employer.
10 (e) Premium rates for health benefit plans shall comply with the require-
11 ments of this section notwithstanding any assessments paid or payable by
12 small employer carriers pursuant to section 41-4711, Idaho Code, or chap-
13 ter 55, title 41, Idaho Code.
14 (f) (i) Small employer carriers shall apply rating factors, including
15 case characteristics, consistently with respect to all small employ-
16 ers in a class of business. Rating factors shall produce premiums for
17 identical groups which differ only by the amounts attributable to
18 plan design and do not reflect differences due to the nature of the
19 groups assumed to select particular health benefit plans; and
20 (ii) A small employer carrier shall treat all health benefit plans
21 issued or renewed in the same calendar month as having the same rat-
22 ing period.
23 (g) For the purposes of this subsection, a health benefit plan that uti-
24 lizes a restricted provider network shall not be considered similar cover-
25 age to a health benefit plan that does not utilize such a network, pro-
26 vided that utilization of the restricted provider network results in sub-
27 stantial differences in claims costs.
28 (h) The small employer carrier shall not use case characteristics, other
29 than age, individual tobacco use, geography, as defined by rule of the
30 director, or gender, without prior approval of the director.
31 (i) A small employer carrier may utilize age as a case characteristic in
32 establishing premium rates, provided that the same rating factor shall be
33 applied to all dependents under twenty-three (23) years of age, and the
34 same rating factor may be applied on an annual basis as to individuals or
35 nondependents twenty (20) years of age or older.
36 (j) The director may establish rules to implement the provisions of this
37 section and to assure that rating practices used by small employer carri-
38 ers are consistent with the purposes of this chapter, including rules
39 that:
40 (i) Assure that differences in rates charged for health benefit
41 plans by small employer carriers are reasonable and reflect objective
42 differences in plan design, not including differences due to the
43 nature of the groups assumed to select particular health benefit
44 plans;
45 (ii) Prescribe the manner in which case characteristics may be used
46 by small employer carriers; and
47 (iii) Prescribe the manner in which a small employer carrier is to
48 demonstrate compliance with the provisions of this section, including
49 requirements that a small employer carrier provide the director with
50 actuarial certification as to such compliance.
51 (2) A small employer carrier shall not transfer a small employer involun-
52 tarily into or out of a class of business. A small employer carrier shall not
53 offer to transfer a small employer into or out of a class of business unless
54 such offer is made to transfer all small employers in the class of business
55 without regard to case characteristics, claim experience, health status or
3
1 duration of coverage since issue.
2 (3) The director may suspend for a specified period the application of
3 subsection (1)(a) of this section as to the premium rates applicable to one
4 (1) or more small employers included within a class of business of a small
5 employer carrier for one (1) or more rating periods upon a filing by the small
6 employer carrier and a finding by the director either that the suspension is
7 reasonable in light of the financial condition of the small employer carrier
8 or that the suspension would enhance the efficiency and fairness of the
9 marketplace for small employer health insurance.
10 (4) In connection with the offering for sale of any health benefit plan
11 to a small employer, a small employer carrier shall make a reasonable disclo-
12 sure, as part of its solicitation and sales materials, of all of the follow-
13 ing:
14 (a) The extent to which premium rates for a specified small employer are
15 established or adjusted based upon the actual or expected variation in
16 claims costs or actual or expected variation in health status of the
17 employees of the small employer and their dependents;
18 (b) The provisions of the health benefit plan concerning the small
19 employer carrier's right to change premium rates and the factors, other
20 than claim experience, that affect changes in premium rates;
21 (c) The provisions relating to renewability of policies and contracts;
22 and
23 (d) The provisions relating to any preexisting condition provision.
24 (5) (a) Each small employer carrier shall maintain at its principal place
25 of business a complete and detailed description of its rating practices
26 and renewal underwriting practices, including information and documenta-
27 tion that demonstrate that its rating methods and practices are based upon
28 commonly accepted actuarial assumptions and are in accordance with sound
29 actuarial principles.
30 (b) Each small employer carrier shall file with the director annually on
31 or before March 15, an actuarial certification certifying that the carrier
32 is in compliance with the provisions of this chapter and that the rating
33 methods of the small employer carrier are actuarially sound. Such certifi-
34 cation shall be in a form and manner, and shall contain such information,
35 as specified by the director. A copy of the certification shall be
36 retained by the small employer carrier at its principal place of business.
37 (c) A small employer carrier shall make the information and documentation
38 described in subsection (4)(a) of this section available to the director
39 upon request. Except in cases of violations of the provisions of this
40 chapter, the information shall be considered proprietary and trade secret
41 information and shall not be subject to disclosure by the director to per-
42 sons outside of the department except as agreed to by the small employer
43 carrier or as ordered by a court of competent jurisdiction.
44 SECTION 2. That Section 41-5206, Idaho Code, be, and the same is hereby
45 amended to read as follows:
46 41-5206. RESTRICTIONS RELATING TO PREMIUM RATES. (1) Premium rates for
47 health benefit plans subject to the provisions of this chapter shall be sub-
48 ject to the following provisions:
49 (a) The premium rates charged during a rating period to individuals with
50 similar case characteristics for the same or similar coverage, or the
51 rates that could be charged to such individuals under the rating system,
52 shall not vary from the index rate by more than fifty percent (50%) of the
53 index rate. The provisions of this subsection (1)(a) shall apply until
4
1 July 1, 20024, with respect to all health benefit plans offered to indi-
2 viduals other than the individual basic, standard, catastrophic A and cat-
3 astrophic B plans. The director shall review the provisions of this sub-
4 section following the receipt of data from health care insurers for calen-
5 dar year 2004 and shall submit to the house business committee and the
6 senate commerce and human resources committee a report regarding retention
7 of the index rate bands.
8 (b) The percentage increase in the premium rate charged to an individual
9 for a new rating period may not exceed the sum of the following:
10 (i) The percentage change in the new business premium rate measured
11 from the first day of the prior rating period to the first day of the
12 new rating period. In the case of a health benefit plan into which
13 the individual carrier is no longer enrolling new individuals, the
14 individual carrier shall use the percentage change in the base pre-
15 mium rate, provided that such change does not exceed, on a percentage
16 basis, the change in the new business premium rate for the most simi-
17 lar health benefit plan into which the individual carrier is actively
18 enrolling new individuals.
19 (ii) Any adjustment, not to exceed fifteen percent (15%) annually
20 and adjusted pro rata for rating periods of less than one (1) year,
21 due to the claim experience, health status or duration of coverage of
22 the individual or dependents as determined from the individual
23 carrier's rate manual; and
24 (iii) Any adjustment due to change in coverage or change in the case
25 characteristics of the individual as determined from the individual
26 carrier's rate manual.
27 (c) Premium rates for health benefit plans shall comply with the require-
28 ments of this section notwithstanding any assessments paid or payable by
29 carriers pursuant to section 41-4711, Idaho Code, or chapter 55, title 41,
30 Idaho Code.
31 (d) (i) Individual carriers shall apply rating factors, including case
32 characteristics, consistently with respect to all individuals. Rating
33 factors shall produce premiums for identical individuals which differ
34 only by the amounts attributable to plan design and do not reflect
35 differences due to the nature of the individuals assumed to select
36 particular health benefit plans; and
37 (ii) An individual carrier shall treat all health benefit plans
38 issued or renewed in the same calendar month as having the same rat-
39 ing period.
40 (e) For purposes of this subsection, a health benefit plan that utilizes
41 a restricted provider network shall not be considered similar coverage to
42 a health benefit plan that does not utilize such a network, provided that
43 utilization of the restricted provider network results in substantial dif-
44 ferences in claims costs.
45 (f) The individual carrier shall not use case characteristics, other than
46 age, individual tobacco use, geography as defined by rule of the director,
47 or gender, without prior approval of the director.
48 (g) An individual carrier may utilize age as a case characteristic in
49 establishing premium rates, provided that the same rating factor shall be
50 applied to all dependents under twenty-three (23) years of age, and the
51 same rating factor may be applied on an annual basis as to individuals or
52 nondependents twenty (20) years of age or older.
53 (h) The director may establish rules to implement the provisions of this
54 section and to assure that rating practices used by individual carriers
55 are consistent with the purposes of this chapter, including rules that:
5
1 (i) Assure that differences in rates charged for health benefit
2 plans by individual carriers are reasonable and reflect objective
3 differences in plan design, not including differences due to the
4 nature of the individuals assumed to select particular health benefit
5 plans;
6 (ii) Prescribe the manner in which case characteristics may be used
7 by individual carriers; and
8 (iii) Prescribe the manner in which an individual carrier is to
9 demonstrate compliance with the provisions of this section, including
10 requirements that an individual carrier provide the director with
11 actuarial certification as to such compliance.
12 (2) The director may suspend for a specified period the application of
13 subsection (1)(a) of this section as to the premium rates applicable to one
14 (1) or more individuals for one (1) or more rating periods upon a filing by
15 the individual carrier and a finding by the director either that the suspen-
16 sion is reasonable in light of the financial condition of the individual car-
17 rier or that the suspension would enhance the efficiency and fairness of the
18 marketplace for individual health insurance.
19 (3) In connection with the offering for sale of any health benefit plan
20 to an individual, an individual carrier shall make a reasonable disclosure,
21 as part of its solicitation and sales materials, of all of the following:
22 (a) The extent to which premium rates for an individual are established
23 or adjusted based upon the actual or expected variation in claims costs or
24 actual or expected variation in health status of the individual and his
25 dependents;
26 (b) The provisions of the health benefit plan concerning the individual
27 carrier's right to change premium rates and the factors, other than claim
28 experience, that affect changes in premium rates;
29 (c) The provisions relating to renewability of policies and contracts;
30 and
31 (d) The provisions relating to any preexisting condition provision.
32 (4) (a) Each individual carrier shall maintain at its principal place of
33 business a complete and detailed description of its rating practices and
34 renewal underwriting practices, including information and documentation
35 that demonstrate that its rating methods and practices are based upon com-
36 monly accepted actuarial assumptions and are in accordance with sound
37 actuarial principles.
38 (b) Each individual carrier shall file with the director annually on or
39 before September 15, an actuarial certification certifying that the car-
40 rier is in compliance with the provisions of this chapter and that the
41 rating methods of the individual carrier are actuarially sound. Such cer-
42 tification shall be in a form and manner, and shall contain such informa-
43 tion, as specified by the director. A copy of the certification shall be
44 retained by the individual carrier at its principal place of business.
45 (c) An individual carrier shall make the information and documentation
46 described in subsection (4)(a) of this section available to the director
47 upon request. Except in cases of violations of the provisions of this
48 chapter, the information shall be considered proprietary and trade secret
49 information and shall not be subject to disclosure by the director to per-
50 sons outside of the department except as agreed to by the individual car-
51 rier or as ordered by a court of competent jurisdiction.
STATEMENT OF PURPOSE
RS 11575
The purpose of this legislation is to remove the sunset provision
from section 41-4706 and 41-5206, Idaho Code, relating to health
insurance, which was set to take effect July 1, 2002. This ensures
health benefit plan premium rates charged to small employers will
not vary from the index rate by more that 50 percent of the index
rate.
FISCAL IMPACT
There is no fiscal impact to the general fund.
STATEMENT OF PURPOSE/FISCAL NOTE H 505
Contact
Name: Rep. Henbest
Phone: 332-1132