2008 Legislation
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HOUSE BILL NO. 521<br /> – Health insurance premium increases


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Bill Status

H0521...........................................................by BUSINESS
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

Bill Text

  ]]]]              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
  9        TO  PREMIUM  RATES;  AND  AMENDING  SECTIONS 41-5203, 41-5207 AND 41-5506,

 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
  5    repealed.

  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
 20    Code.
 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;
 49        or
 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
  5    Code.
  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-
 36        vidual;
 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-
 24             tions.
 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
  3    arrangements.

Statement of Purpose / Fiscal Impact

                       STATEMENT OF PURPOSE

                             RS 17807

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.   

                           FISCAL NOTE

No impact to the General Fund. 

Name: Rep. Margaret Henbest  
Phone: 332-1235

STATEMENT OF PURPOSE/FISCAL NOTE                         H 521