SB118: repealing certain provisions of law regarding small group health insurance.

SB 118-FN – AS INTRODUCED

2005 SESSION

05-0303

01/09

SENATE BILL 118-FN

AN ACT repealing certain provisions of law regarding small group health insurance.

SPONSORS: Sen. Hassan, Dist 23; Sen. Gallus, Dist 1; Sen. Burling, Dist 5; Sen. Fuller Clark, Dist 24; Sen. Estabrook, Dist 21; Rep. Marshall Quandt, Rock 13; Rep. Norelli, Rock 16; Rep. C. Hamm, Merr 4

COMMITTEE: Banks and Insurance

ANALYSIS

This bill repeals certain provisions of 2003, 188 (SB 110), which revised the laws relative to small group health insurance. This bill changes the definition of small group employers to employers with 1-100 employees.

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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

05-0303

01/09

STATE OF NEW HAMPSHIRE

In the Year of Our Lord Two Thousand Five

AN ACT repealing certain provisions of law regarding small group health insurance.

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

1 Definition; “Large Employer.” Amend RSA 420-G:2, XII(a) to read as follows:

XII.(a) “Large employer” means an employer that employed on average at least [51] 101 persons, on business days, during the previous calendar year.

2 Definition; “Small Employer.” Amend RSA 420-G:2, XVI(a) to read as follows:

XVI.(a) “Small employer” means a business or organization which employed on average, one and up to [50] 100 employees, including owners and self-employed persons, on business days during the previous calendar year. A small employer is subject to this chapter whether or not it becomes part of an association, multi-employer plan, trust, or any other entity cited in RSA 420-G:3 provided it meets this definition.

3 Premium Rates for Small Employers. Amend RSA 420-G:4 to read as follows:

420-G:4 Premium Rates.

I. Health carriers providing health coverage to individuals and small employers under this chapter shall be subject to the following:

(a) All premiums charged shall be guaranteed for at least 12 months, unless otherwise allowed by the commissioner.

(b) Base rate shall be established by each health carrier for all of its health coverages offered to individuals and, separately, for all of its health coverages offered to small employers.

(c) Health carriers shall calculate health coverage plan rates for each of the coverages or health benefit plans written by that carrier. Variations in health coverage plan rates shall be solely attributable to variations in expected utilization or cost due to differences in coverage design and/or the provider contracts or other provider costs associated with specific coverages and shall not reflect differences due to the nature of the groups or eligible persons assumed to select particular health coverages.

(d) In establishing the premium charged, health carriers providing coverage to individuals shall calculate a rate that is derived from the health coverage plan rate through the application of rating factors that the carrier chooses to utilize for age, health status, and tobacco use. Such factors may be utilized only in accordance with the following limitations:

(1) The maximum premium differential for age as determined by ratio shall be 4 to 1. The limitation shall not apply for determining rates for an attained age of less than 19.

(2) The maximum differential due to health status shall be 1.5 to 1 and the maximum differential rate due to tobacco use shall be 1.5 to 1. Rate limitations based on health status do not apply to rate variations based on an insured’s status as a tobacco user.

(3) Permissible rating characteristics shall not include changes in health status after issue.

(e) In establishing the premium charged, health carriers providing coverage to small employers shall calculate a rate that is derived from the health coverage plan rate through the application of rating factors that the carrier chooses to utilize for age[,] and group size[, industry classification, geographic location, and health status]. Such factors may be utilized only in accordance with the following limitations:

(1) Carriers may use the attained age of covered persons as a rating factor. However, the maximum premium differential for age as determined by ratio shall be [4] 3 to 1 beginning with age 19, except for groups of one, which shall have a maximum premium differential for age of 4 to 1.

(2) Carriers modifying such average premium for age may do so only by using the following age brackets:

0 - 18

19 - 24

25 - 29

30 - 34

35 - 39

40 - 44

45 - 49

50 - 54

55 - 59

60 - 64

65 +

(3) Carriers may use group size as a rating factor. However, the highest factor based on group size shall not exceed the lowest factor based on group size by more than 20 percent[; provided that for groups of one, an additional 10 percent rating factor shall be allowed from the highest factor].

[(4) Carriers may use the small employer group’s industry classification as a rating factor. However, the highest factor based on industry classification shall not exceed the lowest factor based on industry classification by more than 20 percent.

(5) Carriers may use the small employer group’s geographic location as a rating factor. However, the highest factor based on geographic location shall not exceed the lowest factor based on geographic location by more than 15 percent.

(6) Carriers may use the health status of the small employer group as a rating factor. However, the application of a health status factor shall be subject to the following limitations:

(A) The health status factor may reflect health status of covered persons, the small employer’s claim experience, or the duration of coverage since health statements were last provided.

(B) Variations from the arithmetic average of the highest rate charged to the lowest rate charged shall not exceed 25 percent.

(C) Upon the renewal of a small employer policy, any increase in the premium rate that is solely attributable to changes in the health status factor from the prior year shall be no more than 15 percent.]

[(7)] (4) Upon the renewal of a small employer policy, a carrier is prohibited from increasing the premium rate by more than [25] 15 percent of the rate that was charged in the preceding year. 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. All other changes in rating methodology shall be included in the 15 percent limitation on premium rate increases.

(f) Each rating factor that a carrier chooses to utilize shall be reflective of claim cost variations that correlate with that factor independently of claim cost variations that correlate with [any of] the other allowable factors.

(g) The same rating methodology shall apply to newly covered individuals and to individuals renewing at each annual renewal date, or to new small employers and small employers renewing at each annual renewal date or anniversary date. Except as provided in RSA 420-G:4-a, rating methodology shall not be construed to include health carrier incentives to individual subscribers or members to participate in wellness and fitness programs provided such incentives are approved by the insurance department.

(h) The commissioner shall not approve any filing if such filing is excessive, inadequate, or contrary to the intent of this chapter.

II.(a) Health carriers providing health coverage to large employers may not require any person, as a condition of receiving health coverage or continued health coverage, to pay a premium or contribution that is greater than that of similarly situated persons based on any health status related factor of that person or that person’s dependents.

(b) Nothing in subparagraph (a) shall be construed to restrict the amount that a health carrier may charge a large employer, nor to prevent a health carrier from establishing premium discounts or rebates or modifying copayments or deductibles in return for adherence to programs of health promotion and disease prevention.

[III. A health carrier, when determining the premium charged to a large employer group that employs from 51 to 100 employees, shall calculate the rate using a weighted average calculation consisting of the group’s experience and the carrier’s large employer group pool experience. The weight used for the group’s experience shall be no more than 25 percent and the weight used for the experience of the carrier’s large employer group pool shall be a minimum of 75 percent.]

4 Medical Underwriting. Amend RSA 420-G:5 to read as follows:

420-G:5 Medical Underwriting.

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. The commissioner may allow [group] individual carriers to use standardized health statements.

II. A health carrier shall not use medical underwriting questionnaires or health statements for any small employer, employees, or dependents eligible for enrollment.

[II.] III. Health carriers providing health coverage for individuals may refuse to write or issue coverage to an individual because of his or her health status. Regardless of claim experience, health status, or medical history, health carriers providing health coverage for small employers shall not refuse to write or issue any of their available coverages or health benefit plans to any small employer group that elects to be covered under that plan and agrees to make premium payments and meet the other requirements of the plan.

[III.] IV. Health carriers providing health coverage for small employer groups shall not knowingly provide health coverage to groups where the employer has discriminated based on health status or claims history against any employee or potential employee or his or her dependents with respect to participation in an employer-sponsored health benefit plan.

[IV.] V. Health carriers shall not offer riders or endorsements to exclude certain illnesses or health conditions in order to avoid the purpose of this chapter.

[V.] VI. Individual health insurance carriers shall be responsible for ascertaining the eligibility of any individual applicant or insured for high risk pool coverage. If a carrier determines that an individual meets any of the eligibility criteria set forth in RSA 404-G:5-e, the carrier shall give the individual written notice, with the declination of coverage, the coverage offering or upon a rate increase at renewal. The notice shall include information about available benefits and exclusions of high risk pool coverage and the name, address, and telephone number of the pool administrator or the administrator’s designee.

[VI.] VII. It shall constitute an unfair trade practice under RSA 417 for an insurer, insurance producer, or third party administrator to refer an individual employee to the pool, or arrange for an individual employee to apply to the pool, for the purpose of separating that employee from group health insurance coverage provided in connection with the employee’s employment.

[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.]

5 Qualified Association Trust. Amend RSA 420-G:10, I to read as follows:

I. A qualified association trust or other entity, as defined in RSA 420-G:2, XV, shall:

(a) Comply with the rating restrictions outlined in RSA 420-G:4 for all small employer members with [50] 100 or fewer employees based upon the association’s group experience[, except that no rating factor shall be utilized without the express written consent of the association].

(b) Offer all eligible members, as defined under the applicable trust or other documents, coverage and rates on a guaranteed issue and renewable basis.

(c) Comply with the [regulations] prohibitions concerning medical underwriting contained in RSA 420-G:5.

(d) Comply with the preexisting conditions provision of RSA 420-G:7.

6 Health Plan Loss Information. Amend RSA 420-G:12-a, I and II to read as follows:

I. To ensure maximum competition in the purchase of group health insurance, all [large] employers that have at least 50 employees, shall be entitled to receive their specific health plan loss information upon request and without charge. No contract between any health carrier, third-party administrator, employer group, or pool of employers shall abridge this right in any manner.

II. Upon written request from any [large] employer that is entitled to receive specific health plan loss information, every health carrier, third-party administrator, pooled risk management program under RSA 5-B or any other type of multiple employer health plan shall provide that employer’s loss information within 30 calendar days of receipt of the request. The loss information shall include all physician, hospital, prescription drug, and other covered medical claims specific to the employer’s group plan incurred for the 12-month period paid through the 14 months [which] that end within the 60-day period prior to the date of the request. An employer shall not be entitled by this section to more than 2 loss information requests in any 12-month period; however, nothing shall prohibit a carrier from fulfilling more frequent requests on a mutually agreed-upon basis.

7 Requested Information. Amend RSA 420-G:14-a to read as follows:

420-G:14-a Requested Information.

I. As authorized in accordance with RSA 420-G:14, the commissioner may request the submission of such information by carriers as is necessary to better understand [the coverage history and choices of participants in the] group and nongroup [market] markets. The commissioner shall make every attempt to ensure the reasonableness of such request, both in terms of scope and timeframe, and to limit this request to information the commissioner deems necessary to better understand the dynamics of the group and nongroup health insurance [market and to assess the appropriateness of alternative sources of funding for the nongroup subsidy] markets.

[II. The commissioner shall request and health carriers shall supply information no later than April 1 of each year sufficient to report on the distribution of rating factors being applied to small employers. The commissioner’s report shall summarize the rating factors utilized by health carriers in the preceding calendar year.]

[III.] II. The commissioner shall request and health carriers shall supply information no later than April 1 of each year sufficient to report on the types of health coverage being purchased by individuals and employers by geographic area. The report shall include specific details regarding the type of coverage, including, but not limited to, co-pays, out-of-pocket maximums, network restrictions, and deductibles.

[IV.] III. The commissioner shall file the required reports by July 1 of each year with the senate president, the speaker of the house, the chairperson of the house commerce committee, and the chairperson of the senate insurance committee.

8 Data collection; Rulemaking; Reference Change. Amend RSA 126:27, VII to read as follows:

VII. The types of data which shall be reported under RSA 420-G:4[, V].

9 High Risk Pool; Reference Change. Amend RSA 404-G:5-e, I(f) to read as follows:

(f) The individual has received an offer of coverage from a carrier of individual health insurance that contains a rider or endorsement excluding coverage for a specified condition pursuant to RSA 420-G:5, [II] III.

10 Repeal. RSA 420-G:14-c, relative to a legislative oversight committee, is hereby repealed.

11 Effective Date. This act shall take effect 60 days after its passage.

LBAO

05-0303

Revised 2/9/05

SB 118 FISCAL NOTE

AN ACT repealing certain provisions of law regarding small group health insurance.

FISCAL IMPACT:

The Insurance Department has determined this bill may have an indeterminable fiscal impact on county and local expenditures in FY 2005 and each year thereafter. There will be no fiscal impact on state expenditures or state, county, and local revenue.

METHODOLOGY:

The Department states this bill affects how insurance carriers price small employer group health insurance. The state is not a small group health insurance purchaser, and therefore, the cost of any purchased state coverage would not be affected. The Department states local and county governments that meet the definition of small employer groups, and that purchase fully insured products, would be affected by the new rating rules. The Department states some small groups will see their rates go up, while others will see their rates go down.