This Fiscal Note is not an official copy and should not be quoted or cited.
Fiscal Note - SB 0767 - Revises Small Employer Health Insurance Availability Act
L.R. NO. 2960-01
BILL NO. SB 767
SUBJECT: Health, Insurance-Medical, Insurance
TYPE: Original
DATE: February 2, 1996
FISCAL SUMMARY
ESTIMATED NET EFFECT ON STATE FUNDS
FUND AFFECTED FY 1997 FY 1998 FY 1999
Insurance
Dedicated ($17,252) ($32,685) ($46,150)
Total Estimated
Net Effect on All
State Funds ($17,252) ($32,685) ($46,150)
ESTIMATED NET EFFECT ON FEDERAL FUNDS
FUND AFFECTED FY 1997 FY 1998 FY 1999
None
Total Estimated
Net Effect on All
Federal Funds $0 $0 $0
ESTIMATED NET EFFECT ON LOCAL FUNDS
FUND AFFECTED FY 1997 FY 1998 FY 1999
Local Government $0 $0 $0
FISCAL ANALYSIS
ASSUMPTION
Officials from the Department of Revenue (DOR), Department of Health (DOH),
Department of Highway and Transportation (DHT), Office of Administration
(OA), Department of Health (DOH), Department of Conservation (MDC), and the
Department of Corrections (DOC) stated that passage of this legislation would
have no fiscal impact on their agencies.
Officials of the Department of Insurance (DOI) assume the costs of
implementing this proposal would be paid from the Insurance Dedicated Fund.
DOI assumes an additional 2 FTE, plus related expense and equipment, would be
required to implement the additional duties outlined in this proposal. One
Insurance Product Analyst II ($22,692) would review all form filings for
compliance to the Small Employer and Individual Health Insurance Availability
Act (Act) and assist in monitoring each insurers community rating system.
One Clerk Typist III ($17,040) would receive and log filings fees, form
filings, amendments, endorsements, etc. relating to small employer and
individual health insurance policies. Expenses would include rental space
for 2 FTE and office expenses ($5,311). Equipment would include office
furniture and personal computers for 2 FTE ($14,164).
DOI estimates this proposal would generate income in the form of a $50 filing
fee for each insurer for the five types of health insurance policies for
individuals. DOI anticipates 162 insurance companies would have two policy
form filings each in FY 97 ($16,200) and three policy form filings each in FY
98 ($24,300). DOI anticipates that amendments and changes in policy forms
would generate $12,200 in filings fees in FY 99.
DOI assumes that the Health Benefit Committee (Committee) would not require
additional staff or expense and equipment. If the Committee would determine
additional staff and expense and equipment are necessary, there may be
additional costs not reflected in this fiscal note.
Oversight assumes that until the Directors of the Department of Insurance and
Department of Revenue develop a plan for presentation to the General Assembly
by January 1, 1997, which would permit health care services to be purchased
using medical savings accounts or other such plan with tax incentives, any
anticipated revenue increases or decreases in future fiscal years is not
determinable.
Officials from the Consolidated Health Care Plan, Department of Social
Services, and Department of Public Safety did not respond to our fiscal
impact request.
FISCAL IMPACT - State Government FY 1997 FY 1998 FY 1999
(10 Mo.)
INSURANCE DEDICATED FUND
Income - Department of Insurance
Filing fees $16,200 $24,300 $12,200
Cost - Department of Insurance
Personal service (2 FTE) ($19,375) ($41,743) ($42,787)
Fringe benefits (5,956) (12,832) (13,153)
Expense and equipment (8,121) (2,410) (2,410)
Total Costs - Department of Insurance ($33,452) ($56,985) ($58,350)
ESTIMATED NET EFFECT ON
INSURANCE DEDICATED FUND ($17,252) ($32,685) ($46,150)
FISCAL IMPACT - Local Government FY 1997 FY 1998 FY 1999
(10 Mo.)
0 0 0
DESCRIPTION
This act amends certain categories of health insurance policies offered in
Missouri:
THE SMALL EMPLOYER AND INDIVIDUAL HEALTH INSURANCE
AVAILABILITY ACT - The statutes creating the Missouri Health Insurance Pool
for high-risk persons are repealed. Many of the statutes establishing the
Small Employer Program are repealed or expanded to also include health
insurance policies for individuals. Changes include: (1) expanding the
definition of the "Carrier" to include all entities providing a plan of
health insurance or health benefits in the state of Missouri; (2) defining
Community rate" as the rate charged by a carrier for the same coverage to all
individuals of the same or similar age, family size and geographic location;
(3) defining an "Eligible Employee" as a person who works on a year round
basis; and (4) establishing the size of a "Small Employer" subject to this
act at more than three and not more than five hundred employees. The State
of Missouri is divided into three (3) initial "communities" for community
rating purposes. The St. Louis Metropolitan Statistical Area and the Kansas
City Metropolitan Statistical Area and the rest of the State of Missouri.
After July 1, 1996 the new Health Benefit Plan Committee established by
this act may divide the rest of the state of Missouri into up to three more
community rating areas, for a total of five.
Community Rating - Insurers will establish "Community Rates", standard health
insurance premiums based exclusively upon age, family size and geographic
location. After July 1, 1997, all new or renewal individual health insurance
premiums must be based upon the carrier's community rate, which may only be
adjusted based upon age, with a maximum deviation of plus or minus 50%,
family size and geographic location. The community rating for small employer
plans is for the entire group. Health insurance premiums are not adjusted
for individuals within that small employer group. Each carrier must make
reasonable disclosure of the community rating factors used to potential
covered persons.
Health Benefit Plans - After July 1, 1997, every carrier must actively offer
to individuals and small employers one of the five health benefit plans
established by the Health Benefit Plan Committee. One plan of the five must
contain at a minimum, the health maintenance organization benefits contained
in the Missouri Consolidated Plan for state employees. A carrier may issue a
supplemental health policy for benefits not included in one of the five
health benefit plans. No supplemental health policy may duplicate any
benefit of any of the five health benefit plans. If a supplemental policy
is offered or issued, the carrier shall make consumer information in
connection with the policy. A carrier must sell any of the five plans to an
individual who pays the premium and satisfies other enrollment requirements
during the open enrollment period.
Pre-existing Condition Limitations - There are no preexisting condition
limitations for regular enrollees and late enrollee preexisting condition
limitations may not exceed six months. Open Enrollment Periods - In each
community, there will be a common annual open enrollment period of 30 days
for individuals, with a restriction upon the enrollment of persons who have
not resided in the state for at least one year prior to the beginning of the
open enrollment. After a person becomes insured, health care coverage may
only be terminated for nonpayment of premiums, or for fraud or
misrepresentation.
Reinsurance - A Board of Directors similar to that created by Sections
379.942 and 379.943, RSMo, will establish a reinsurance program and devise
methods to examine carrier payments which exceed the statewide average per
insured for that plan, an assessment and reimbursement program for these
carriers and pre-reimbursement efficiency and risk management standards.
Participating reinsuring carriers may receive up to 80% reimbursement for
costs which exceed statewide average costs by at least 20%. The recoupment
of net losses will follow this formula: (a) 1st - the loss will be
apportioned among reinsurance carriers, in a proportional manner; (b) 2nd -
if the net loss is more than 4% of aggregate premiums collected by reinsuring
carriers, a 1% assessment may be made upon all group health premiums
collected, with a potential credit for carriers covering high-risk
individuals.
Each carrier will cover a share of high-risk individuals and small employer
groups in proportion to their market share, the failure to do so may result
in a higher assessment.
The Health Benefit Plan Committee - This act also amends the composition and
duties of the Health Benefit Plan Committee. The Health Benefit Plan
Committee will be composed of 14 members comprised of one representative from
an insurance company, a health services corporation, a physician, a
osteopathic physician, an administrator of a hospital, one independent
insurance agent, two small employers, three consumers, and the Directors of
the Department of Insurance and the Department of Health. These committee
members shall be appointed by the Governor with the advice and consent of the
Senate. On or before March 31, 1997, the Committee shall formulate five
health benefit plans. One of the plans shall provide, at a minimum, the
health maintenance organization benefits prescribed by the Missouri
consolidated plan for state employees and all plans shall provide, at a
minimum, the health benefit plans set forth in Sections 376.810 to 376.814,
RSMo, for mental illness and chemical dependency. One of the plans shall be
a point of service plan. It may require a copayment of up to 20% of the
amount which would have been paid to an in-network provider for an item or
service if the enrollee uses an out-of-network provider.
The Directors of the Department of Insurance and of the Department of Revenue
will develop a plan, to be presented to the General Assembly by January 1,
1997. The plan will permit health care services to be purchased using
medical savings accounts or other such plan with tax incentives.
This legislation is not federally mandated, would not duplicate any other
program and would not require additional capital improvements or rental
space.
SOURCES OF INFORMATION
Department of Insurance
Department of Conservation
Department of Corrections
Department of Health
Department of Revenue
Office of Administration
Department of Highway and Transportation
Not Responding: Consolidated Health Care Plan, Department of Social
Services, Department of Public Safety