Print Friendly HOUSE BILL NO. 521
– Health insurance premium increases
HOUSE BILL NO. 521
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INSURANCE - Adds to and repeals existing law relating to insurance to
require all insurance policies providing health insurance coverage or
benefits under certain Idaho Code chapters to state residents shall provide
a clause limiting premium increases; and to allow for a greater increase by
the director of the Department of Insurance upon certain circumstances
02/12 House intro - 1st rdg - to printing
02/13 Rpt prt - to Bus
]]]] LEGISLATURE OF THE STATE OF IDAHO ]]]]
Fifty-ninth Legislature Second Regular Session - 2008
IN THE HOUSE OF REPRESENTATIVES
HOUSE BILL NO. 521
BY BUSINESS COMMITTEE
1 AN ACT
2 RELATING TO INSURANCE; AMENDING SECTION 18, TITLE 41, IDAHO CODE, BY THE ADDI-
3 TION OF A NEW SECTION 41-1848, IDAHO CODE, TO REQUIRE ALL INSURANCE POLI-
4 CIES PROVIDING HEALTH INSURANCE COVERAGE OR BENEFITS UNDER CERTAIN IDAHO
5 CODE CHAPTERS TO STATE RESIDENTS SHALL PROVIDE A CLAUSE LIMITING PREMIUM
6 INCREASES AND TO ALLOW FOR A GREATER INCREASE TO BE APPROVED BY THE DIREC-
7 TOR OF THE DEPARTMENT OF INSURANCE UPON CERTAIN CIRCUMSTANCES OCCURRING;
8 REPEALING SECTION 41-5206, IDAHO CODE, RELATING TO RESTRICTIONS RELATING
9 TO PREMIUM RATES; AND AMENDING SECTIONS 41-5203, 41-5207 AND 41-5506,
10 IDAHO CODE, TO PROVIDE CORRECT CODE REFERENCES.
11 Be It Enacted by the Legislature of the State of Idaho:
12 SECTION 1. That Chapter 18, Title 41, Idaho Code, be, and the same is
13 hereby amended by the addition thereto of a NEW SECTION, to be known and des-
14 ignated as Section 41-1848, Idaho Code, and to read as follows:
15 41-1848. HEALTH INSURANCE PREMIUM INCREASES. (1) All insurance policies
16 providing health insurance coverage under chapters 21, 22, 34, 39, 41, 47 and
17 52, title 41, Idaho Code, and under chapter 40, title 41, Idaho Code, to the
18 extent not preempted by federal law, that are delivered, issued for delivery,
19 continued or renewed on or after July 1, 2008, and providing coverage to any
20 resident of this state, shall provide a provision in the policy that the maxi-
21 mum amount of a premium increase to a policyholder shall be no more than the
22 rate of medical inflation for the western United States calculated by the
23 United States department of labor in determining the consumer price index.
24 (2) An issuer of an insurance policy enumerated in subsection (1) may
25 petition the director of the department of insurance for an increase in pre-
26 miums in excess of that provided in subsection (1) of this section. The
27 insurer shall provide such information and such actuarial data as the director
28 may require to support the insurer's petition. An insurer may offer in support
29 of any petition:
30 (a) The experience or judgment of the insurer or rating organization;
31 (b) The experience of other insurers or rating organizations;
32 (c) Any other factors that the insurer or rating organization deems rele-
33 vant; or
34 (d) Claims experience, health status or duration of coverage of insureds
35 as determined from the carrier's rate manual.
36 A filing and information shall be open to public inspection after it is filed
37 with the director.
38 (3) The director shall have the power, upon a hearing, to investigate all
39 premiums proposed to be set above the maximum provided in subsection (1) of
40 this section or the entire schedule or schedules of premiums set by an insurer
41 enumerated in subsection (1) of this section and shall have the power to
42 approve, modify, increase or deny the petition for a premium increase in
43 excess of the amount enumerated in subsection (1) of this section. The direc-
1 tor has the authority to conduct the hearing as a contested case under the
2 administrative procedure act. Any premium approved by the director shall be
3 just, reasonable or sufficient and the director shall fix the same by order.
4 SECTION 2. That Section 41-5206, Idaho Code, be and the same is hereby
6 SECTION 3. That Section 41-5203, Idaho Code, be, and the same is hereby
7 amended to read as follows:
8 41-5203. DEFINITIONS. As used in this chapter:
9 (1) "Actuarial certification" means a written statement by a member of
10 the American academy of actuaries or other individual acceptable to the direc-
11 tor that an individual carrier is in compliance with the provisions of section
12 41- 52061848, Idaho Code, based upon the person's examination and including a
13 review of the appropriate records and the actuarial assumptions and methods
14 used by the individual carrier in establishing premium rates for applicable
15 health benefit plans.
16 (2) "Affiliate" or "affiliated" means any entity or person who directly
17 or indirectly through one (1) or more intermediaries, controls or is con-
18 trolled by, or is under common control with, a specified entity or person.
19 (3) "Agent" means a producer as defined in section 41-1003(8), Idaho
21 (4) "Base premium rate" means, as to a rating period, the lowest premium
22 rate charged or that could have been charged under a rating system by the
23 individual carrier to individuals with similar case characteristics for health
24 benefit plans with the same or similar coverage.
25 (5) "Carrier" means any entity that provides health insurance in this
26 state. For purposes of this chapter, carrier includes an insurance company, a
27 hospital or professional service corporation, a fraternal benefit society, a
28 health maintenance organization, any entity providing health insurance cover-
29 age or benefits to residents of this state as certificate holders under a
30 group policy issued or delivered outside of this state, and any other entity
31 providing a plan of health insurance or health benefits subject to state
32 insurance regulation.
33 (6) "Case characteristics" means demographic or other objective charac-
34 teristics of an individual that are considered by the individual carrier in
35 the determination of premium rates for the individual, provided that claim
36 experience, health status and duration of coverage shall not be case charac-
37 teristics for the purposes of this chapter.
38 (7) "Control" shall be defined in the same manner as in section
39 41-3801(2), Idaho Code.
40 (8) "Dependent" means a spouse, an unmarried child under the age of
41 twenty-one (21) years, an unmarried child who is a full-time student under the
42 age of twenty-five (25) years and who is financially dependent upon the par-
43 ent, and an unmarried child of any age who is medically certified as disabled
44 and dependent upon the parent.
45 (9) "Director" means the director of the department of insurance of the
46 state of Idaho.
47 (10) "Eligible individual" means an Idaho resident individual or dependent
48 of an Idaho resident:
49 (a) Who is under the age of sixty-five (65) years, is not eligible for
50 coverage under a group health plan, part A or part B of title XVIII of the
51 social security act (medicare), or a state plan under title XIX (medicaid)
52 or any successor program, and who does not have other health insurance
1 coverage; or
2 (b) Who is a federally eligible individual (one who meets the eligibility
3 criteria set forth in the federal health insurance portability and
4 accountability act of 1996 Public Law 104-191, Sec. 2741(b)(HIPAA)).
5 An "eligible individual" can be the dependent of an eligible employee, which
6 eligible employee is receiving health insurance benefits subject to the regu-
7 lation of title 41, Idaho Code.
8 (11) "Established geographic service area" means a geographic area, as
9 approved by the director and based on the carrier's certificate of authority
10 to transact insurance in this state, within which the carrier is authorized to
11 provide coverage.
12 (12) "Health benefit plan" means any hospital or medical policy or certif-
13 icate, any subscriber contract provided by a hospital or professional service
14 corporation, or health maintenance organization subscriber contract. Health
15 benefit plan does not include policies or certificates of insurance for spe-
16 cific disease, hospital confinement indemnity, accident-only, credit, dental,
17 vision, medicare supplement, long-term care, or disability income insurance,
18 student health benefits only, coverage issued as a supplement to liability
19 insurance, worker's compensation or similar insurance, automobile medical pay-
20 ment insurance, or nonrenewable short-term coverage issued for a period of
21 twelve (12) months or less.
22 (13) "Index rate" means, as to a rating period for individuals with simi-
23 lar case characteristics, the arithmetic average of the applicable base pre-
24 mium rate and the corresponding highest premium rate.
25 (14) "Individual basic health benefit plan" means a lower cost health ben-
26 efit plan developed pursuant to chapter 55, title 41, Idaho Code.
27 (15) "Individual catastrophic A health benefit plan" means a higher limit
28 health benefit plan developed pursuant to chapter 55, title 41, Idaho Code.
29 (16) "Individual catastrophic B health benefit plan" means a health bene-
30 fit plan with limits higher than an individual catastrophic A health benefit
31 plan developed pursuant to chapter 55, title 41, Idaho Code.
32 (17) "Individual HSA compatible health benefit plan" means a health sav-
33 ings account compatible health benefit plan developed pursuant to section
34 41-5511, Idaho Code.
35 (18) "Individual standard health benefit plan" means a health benefit plan
36 developed pursuant to chapter 55, title 41, Idaho Code.
37 (19) "New business premium rate" means, as to a rating period, the lowest
38 premium rate charged or offered or which could have been charged or offered by
39 the individual carrier to individuals with similar case characteristics for
40 newly issued health benefit plans with the same or similar coverage.
41 (20) "Premium" means all moneys paid by an individual and eligible depend-
42 ents as a condition of receiving coverage from a carrier, including any fees
43 or other contributions associated with the health benefit plan.
44 (21) "Qualifying previous coverage" and "qualifying existing coverage"
45 mean benefits or coverage provided under:
46 (a) Medicare or medicaid, civilian health and medical program for
47 uniformed services (CHAMPUS), the Indian health service program, a state
48 health benefit risk pool, or any other similar publicly sponsored program;
50 (b) Any group or individual health insurance policy or health benefit
51 arrangement whether or not subject to the state insurance laws, including
52 coverage provided by a managed care organization, hospital or professional
53 service corporation, or a fraternal benefit society, that provides bene-
54 fits similar to or exceeding benefits provided under the basic health ben-
55 efit plan.
1 (22) "Rating period" means the calendar period for which premium rates
2 established by a carrier are assumed to be in effect.
3 (23) "Reinsuring carrier" means a carrier participating in the Idaho indi-
4 vidual high risk reinsurance pool established in chapter 55, title 41, Idaho
6 (24) "Restricted network provision" means any provision of a health bene-
7 fit plan that conditions the payment of benefits, in whole or in part, on the
8 use of health care providers that have entered into a contractual arrangement
9 with the carrier to provide health care services to covered individuals.
10 (25) "Risk-assuming carrier" means a carrier whose application is approved
11 by the director pursuant to section 41-5210, Idaho Code.
12 (26) "Individual carrier" means a carrier that offers health benefit plans
13 covering eligible individuals and their dependents.
14 SECTION 4. That Section 41-5207, Idaho Code, be, and the same is hereby
15 amended to read as follows:
16 41-5207. RENEWABILITY OF COVERAGE. (1) A health benefit plan subject to
17 the provisions of this chapter shall be renewable with respect to the individ-
18 ual or dependents, at the option of the individual, except in any of the fol-
19 lowing cases:
20 (a) Nonpayment of the required premiums;
21 (b) Fraud or intentional misrepresentation of material fact by the indi-
22 vidual insured or his representatives. An individual whose coverage is
23 terminated for fraud or misrepresentation shall not be deemed to be an
24 "eligible individual" for a period of twelve (12) months from the effec-
25 tive date of the termination of the individual's coverage and shall not be
26 deemed to have "qualifying previous coverage" under chapter 22, 47 or 52,
27 title 41, Idaho Code;
28 (c) The individual ceases to be an eligible individual as defined in sec-
29 tion 41-5203(10), Idaho Code;
30 (d) In the case of health benefit plans that are made available in the
31 individual market only through one (1) or more associations, as defined in
32 section 41-2202, Idaho Code, the membership of an individual in the asso-
33 ciation, on the basis of which the coverage is provided ceases, but only
34 if the coverage is terminated under this paragraph uniformly without
35 regard to any health status-related factor relating to any covered indi-
37 (e) The individual carrier elects, at the time of coverage renewal, to
38 discontinue offering a particular health benefit plan delivered or issued
39 for delivery to individuals in this state. Unless otherwise authorized in
40 advance by the department of insurance, a carrier may discontinue a prod-
41 uct only after the product has been in use for at least thirty-six (36)
42 consecutive months, provided the carrier may not discontinue more than
43 fifteen percent (15%) of its total number of individuals and dependents in
44 all lines of business regulated by this chapter in a twelve (12) month
45 period. The carrier shall:
46 (i) Provide advance written or electronic notice of its decision
47 under this paragraph to the director;
48 (ii) Provide notice of the discontinuation to all affected individu-
49 als at least ninety (90) calendar days prior to the date the particu-
50 lar health benefit plan will be discontinued by the carrier, provided
51 that notice to the director under the provisions of this paragraph
52 shall be provided at least fourteen (14) calendar days prior to the
53 notice to the affected individuals;
1 (iii) Offer to each affected individual, on a guaranteed issue basis,
2 the option to purchase all other health benefit plans currently being
3 offered by the carrier to individuals in this state;
4 (iv) Act uniformly without regard to any health status-related fac-
5 tor of an affected individual or dependent of an affected individual
6 who may become eligible for the coverage; and
7 (v) Offer the new products at rates that comply with section
8 41- 5206(1)(b)1848, Idaho Code.
9 (f) The individual carrier elects to nonrenew all of its health benefit
10 plans delivered or issued for delivery to individuals in this state. In
11 such a case the carrier shall:
12 (i) Provide advance notice of its decision under this paragraph to
13 the director; and
14 (ii) Provide notice of the decision not to renew coverage to all
15 affected individuals and to the director at least one hundred eighty
16 (180) calendar days prior to the nonrenewal of any health benefit
17 plans by the carrier. Notice to the director under the provisions of
18 this paragraph shall be provided at least three (3) working days
19 prior to the notice to the affected individuals; or
20 (g) The director finds that the continuation of the coverage would:
21 (i) Not be in the best interests of the policyholders or certifi-
22 cate holders; or
23 (ii) Impair the carrier's ability to meet its contractual obliga-
25 In such instance, the director shall assist affected individuals in find-
26 ing replacement coverage.
27 (2) An individual carrier that elects not to renew a health benefit plan
28 under the provisions of subsection (1)(f) of this section shall be prohibited
29 from writing new business in the individual market in this state for a period
30 of five (5) years from the date of notice to the director.
31 (3) In the case of an individual carrier doing business in one (1) estab-
32 lished geographic service area of the state, the rules set forth in this sub-
33 section shall apply only to the carrier's operations in that service area.
34 SECTION 5. That Section 41-5506, Idaho Code, be, and the same is hereby
35 amended to read as follows:
36 41-5506. REINSURANCE PREMIUM RATES. (1) The board, as part of the plan of
37 operation, shall establish a methodology for determining premium rates to be
38 charged reinsuring carriers to reinsure individuals under this chapter. The
39 methodology shall include a system for classification of individuals that
40 reflects the types of case characteristics commonly used by individual carri-
41 ers in the state. The methodology shall provide for the development of base
42 reinsurance premium rates, subject to the approval of the director, which
43 shall be set at levels which reasonably approximate gross premiums charged to
44 individuals by individual carriers for health benefit plans with benefits sim-
45 ilar to the standard health benefit plan, adjusted to reflect retention levels
46 required under the provisions of this chapter. Rate adjustments under the pro-
47 visions of this subsection shall not be subject to the provisions of section
48 41- 52061848, Idaho Code.
49 (2) The board periodically shall review the methodology established under
50 the provisions of subsection (1) of this section, including the system of
51 classification and any rating factors, to assure that it reasonably reflects
52 the claims experience of the pool. The board may propose changes to the meth-
53 odology which shall be subject to the approval of the director.
1 (3) The board may consider adjustments to the premium rates charged by
2 the pool to reflect the use of effective cost containment and managed care
STATEMENT OF PURPOSE
This legislation adds a new section concerning health insurance
premium increases to Idaho Code Chapter 18, Title 41. This bill
provides that all insurance policies operating under Idaho Code
and providing coverage to Idaho residents will include a
provision in their policies that keeps the annual maximum amount
of a premium increase to no more than the rate of medical
Insurers of insurance policy may petition the director of the
Department of Insurance to increase their premium above the rate
of medical inflation. The director of the Department of Insurance
will have the power to approve, modify, increase, or deny a
premium rate increase petition.
No impact to the General Fund.
Name: Rep. Margaret Henbest
STATEMENT OF PURPOSE/FISCAL NOTE H 521