This Fiscal Note is not an official copy and should not be quoted or cited.
Fiscal Note - SB 0918 - Alters Health Ins. Plans Legislation
L.R. NO. 3446-01
BILL NO. SB 918
SUBJECT: Insurance-Medical
TYPE: Original
DATE: March 5, 1996
FISCAL SUMMARY
ESTIMATED NET EFFECT ON STATE FUNDS
FUND AFFECTED FY 1997 FY 1998 FY 1999
All State Funds ($170,625) ($341,250) ($361,725)
Conservation
Commission ($15,000) ($30,000) ($30,000)
Insurance
Dedicated $66,250 $0 $0
Total Estimated
Net Effect on All
State Funds ($119,375) ($371,250) ($391,725)
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 Consolidated Health Care Plan (HCP) stated it was not
possible to determine the fiscal impact of modifying the eligibility rules
for dependents but they were able to estimate the fiscal impact of
eliminating preexisting conditions restrictions. The HMOs offered by HCP do
not apply preexisting conditions restrictions but the indemnity plan does
include such restrictions. HCP estimated a premium increase of 1.75% for the
indemnity plan. This increase results in a cost of $341,250 for fiscal year
1998.
Officials from the Department of Conservation (MDC) estimate this proposal
would increase costs to MDC's medical plan by 1% or $30,000 annually.
The Department of Insurance(INS) stated it will need one FTE, an Insurance
Product Analyst II, and related expense to review all new health carrier form
filings caused by changes included in this proposal. This proposal expands
the definition of health carrier by including previously unregulated multiple
employer trusts and associations. INS states that approximately 265 insurers
are currently writing medical plans. The result would be 1,325 new policy
filings needed to comply with this legislation. A policy filing fee of $50
is required and based on 1,325 filings, $66,250 in revenue to the Insurance
Dedicated Fund would be generated in the first fiscal year only.
Oversight assumes the passage of this proposal would not increase cost to
INS; however, revenue of $66,250 in the first fiscal year only would be
realized. In addition, passage of more than one similar proposal could
require the INS to request increased appropriations to cover cumulative
administrative costs.
Officials from the Department of Highway and Transportation (DHT) reported
that their current medical plan does not require a referral from a primary
care physician in order to access dermatological services. Consequently, the
DHT assumes the proposal will have no fiscal impact.
Officials from the Department of Social Services (DOS) stated that Medicaid
currently covers all preexisting conditions and therefore this proposal would
have no fiscal impact on DOS.
Officials from the Department of Corrections (DOC), Department of Health
(DOH), and the Office of Administration (OA) stated that passage of this
legislation would have no fiscal impact on their agency.
Officials from the Department of Public Safety (DPS) did not respond to our
fiscal impact request.
Oversight does not have available information concerning health plans for
local governments. Therefore, no cost are reflected for the fiscal impact
that this proposal may have on local governments.
FISCAL IMPACT-State Government FY 1997 FY 1998 FY 1999
(6 Months)
ALL STATE FUNDS
Cost to Consolidated Health Care Plan
Increased health care cost ($170,625) ($341,250) ($361,725)
Estimated Net Effect on All State
Funds ($170,625) ($341,250) ($361,725)
CONSERVATION COMMISSION
FUND
Cost to Department of Conservation
Increased health care cost ($15,000) ($30,000) ($30,000)
Estimated Net Effect on Conservation
Commission Fund ($15,000) ($30,000) ($30,000)
INSURANCE DEDICATED FUND
Income - Department of Insurance
Policy Filing Fees $66,250 $0 $0
Estimated Net Effect on Insurance $66,250 $0 $0
Dedicated Fund
FISCAL IMPACT - Local Government FY 1997 FY 1998 FY 1999
(10 Mo.)
$0 $0 $0
DESCRIPTION
This act expands the reasons a group health benefit plan may terminate its
policy to include together with nonpayment of required premium provisions,
the provisions of fraud, misrepresentation and failure to cooperate with the
health care provider. These provisions would become effective for policies
to be delivered or issued for delivery on or after January 1, 1997. The act
also prohibits group health benefit plans from using preexisting condition
provisions after January 1, 1997, if such health benefit plan contains: (1) a
provision reserving the right to require a person eligible for coverage to
furnish evidence of individual insurability, unless that person is a late
enrollee; (2) a provision reserving the right to exclude certain industries;
(3) a preexisting condition provision specifying any additional exclusions or
limitations; (4) a preexisting condition provision that does not give credit
for the time the person was under a preexisting condition exclusion or
limitation, for comparable coverage from a previous health carrier; and (5) a
provision excluding or limiting coverage regarding a preexisting condition
for an eligible individual for more than a period of 12 continuous months.
No company will be required to renew coverage under a health benefit plan
when the individual's coverage has been terminated for: (1) nonpayment of the
required premium; (2) fraud or misrepresentation; or (3) repeated misuse of a
provider network provision.
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 Corrections
Department of Conservation
Department of Health
Department of Social Services
Office of Administration
Department of Highway and Transportation
Consolidated Health Care Plan
Not Responding: Department of Public Safety