SB419: (New Title) relative to the use of standardized health statements and relative to renewals of certain policies.

SB 419 - AS AMENDED BY THE SENATE

03/11/04 0818s

03/11/04 0821s

2004 SESSION

04-3065

01/09

SENATE BILL 419

AN ACT relative to the use of standardized health statements and relative to renewals of certain policies.

SPONSORS: Sen. Flanders, Dist 7; Rep. Hunt, Ches 28

COMMITTEE: Insurance

AMENDED ANALYSIS

This bill clarifies when standardized health statements are to be used for medical underwriting.

This bill also clarifies premium rates for renewals of small employer policies.

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Explanation: Matter added to current law appears in bold italics.

Matter removed from current law appears [in brackets and struckthrough.]

Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

03/11/04 0818s

03/11/04 0821s

04-3065

01/09

STATE OF NEW HAMPSHIRE

In the Year of Our Lord Two Thousand Four

AN ACT relative to the use of standardized health statements and relative to renewals of certain policies.

Be it Enacted by the Senate and House of Representatives in General Court convened:

1 Medical Underwriting; Standardized Health Statements. Amend RSA 420-G:5, I to read as follows:

I. Health carriers providing health coverage for individuals or small employer groups may perform medical underwriting, including the use of health statements or screenings or the use of prior claims history, to the extent necessary to establish or modify premium rates as provided in RSA 420-G:4. [Such underwriting shall be limited to the use of a standardized health statement for use in adjustments to rating pursuant to RSA 420-G:4.] The commissioner [shall, by rule, require] may allow group carriers to use standardized health statements.

2 New Paragraph; Medical Underwriting; Standardized Health Statements. Amend RSA 420-G:5 by inserting after paragraph VI the following new paragraph:

VII. Health carriers and health insurance producers shall ensure that persons seeking coverage through a small employer group who are required to complete a health statement have an option to convey the required information directly to the carrier or the producer through a secure means and bypassing the employer.

3 Maximum Small Group Renewal Increases. Amend RSA 420-G:4, I(e)(7) to read as follows:

(7) Upon the renewal of a small employer policy, a carrier is prohibited from increasing the total premium rate by more than 25 percent of the rate that was charged in the preceding year including utilization trend or, if the policy has been in force for longer than one year, by more than 50 percent of the rate including utilization trend that was charged by that carrier in the year prior to the year immediately preceding renewal. [Such rate increase limitation shall not include any premium rate increase that is based on a carrier's annual cost and utilization trends or changes in the rating factor for attained age of covered persons.]

4 Repeal. RSA 420-G:4, I(e)(7), relative to premium rate, is repealed.

5 Effective Date.

I. Section 4 of this act shall take effect January 1, 2006.

II. The remainder of this act shall take effect upon its passage.

LBAO

04-3065

4/19/04

SB 419 FISCAL NOTE

AN ACT relative to the use of standardized health statements and relative to renewals of certain policies.

FISCAL IMPACT:

The Insurance Department has determined this bill, as amended by Senate (Amendment #2004-0821s), will have an indeterminable impact on state revenue and county and local expenditures in FY 2004 through FY 2007. There will be no fiscal impact on state expenditures or county and local revenue.

METHODOLOGY:

The Department assumes this bill requires carriers to cap renewal rates to their group policyholders. This bill does not effect or limit the premium rates charged by carriers to new groups. The Department summarized the fiscal impact by stating the following:

· For the State, this bill may affect the premium tax revenue to the extent there is a change in the market revenues generated.

· For other municipalities, this bill may affect their health plan costs, to the extent they purchase insurance in the small group market.

The Department is unable to ascertain how carriers will react to this bill. The greater the carrier's market share, the more burdened the carrier will be. If the carrier is to generate the same amount of revenue from its block, then the carrier will either increase rates to the groups not subject to the cap or subsidize the block with funds from other sources. If the carrier chooses to increase rates to groups not subject to the cap, then the carrier may find its' block deteriorate due to anti-selection. However, generally, the total revenue being generated through the market should be about the same. That is, there would be no impact on premium taxes. If the carrier chooses to subsidize the block with funds from other sources, there may be a decrease in market generated revenues. That is, there would be a modest impact on premium taxes.