Fiscal Note - SB 0453 - Mandates Health Insurance Availability and Renewability For Groups and Some Individuals (Federal Compliance)
L.R. NO. 1605-02
BILL NO. SB 453
SUBJECT: Health Care; Insurance - Medical; Department of Insurance;
Federal - State
TYPE: Original
DATE: March 24, 1997
FISCAL SUMMARY
ESTIMATED NET EFFECT ON STATE FUNDS
FUND AFFECTED FY 1998 FY 1999 FY 2000
General Revenue $0 to $3,706,845 $0 to $3,706,845 $0 to $3,706,845
Conservation ($60,000) ($60,000) $0
Insurance
Dedicated $0 to $11,750 $0 $0
Highway $0 to ($100,000) $0 to ($100,000) $0 to ($100,000)
Total Estimated
Net Effect on All ($160,000) to ($160,000) to ($100,000) to
State Funds $3,646,845 $3,646,745 $3,706,845
ESTIMATED NET EFFECT ON FEDERAL FUNDS
FUND AFFECTED FY 1998 FY 1999 FY 2000
None
Total Estimated
Net Effect on All
Federal Funds $0 $0 $0
ESTIMATED NET EFFECT ON LOCAL FUNDS
FUND AFFECTED FY 1998 FY 1999 FY 2000
Local Government $0 $0 $0
FISCAL ANALYSIS
ASSUMPTION
Officials from the Department of Social Services, the Department of Public
Safety - Missouri State Highway Patrol, the Department of Health, the Office
of Administration, and the Department of Corrections assume this proposal
would not fiscally impact their agencies.
Officials from the Department of Transportation (DHT) state the fiscal impact
on DHT cannot be determined without first knowing the actuarial effect of
this proposal. DHT states the proposal will no longer allow DHT's medical
plan to apply waivers on maternity for subscribers or their spouse who are
coming into their plan by a statement of health. DHT states that based on
figures provided by Blue Cross/Blue Shield, in the last three years, eight
was the highest number of pregnancy waivers applied. With an average cost of
$5,000 per maternity admission, the fiscal impact would be $40,000. DHT
states it does not take away from their medical plan the statement of health
procedures, but it would limit the preexisting conditions or denying of
coverage if the subscriber and/or dependents had creditable medical coverage
prior to enrollment in DHT's medical plan. DHT assumes that seventy-five
percent of the subscribers enrolling by the statement of health process would
have had creditable medical coverage prior to enrollment in DHT's medical
plan. DHT states the average cost per participant is $1,060 with an average
of seventy-five participants denied per year, resulting in an additional
impact of $60,000. DHT states the estimated fiscal impact to the Highway and
Patrol Medical Plan would be $100,000 for the subscribers who otherwise would
have been denied coverage. DHT states that it is unknown whether the Plan or
the individual would incur this additional cost.
Officials from the Department of Conservation (MDC) assumes an initial fiscal
impact on MDC funds of $60,000 for each of the first two years. MDC also
assumes no fiscal impact after the first two years.
Officials from the Department of Insurance (INS) reports that 271 insurers
had experience with accident and health insurance in calendar year 1995. Of
these, 37 insurers report zero for the number of insureds. INS assumes that
the remaining 234 insurers may file new policy forms to comply with the
provisions of this proposal. INS notes that several policies already comply
with some/all of the provisions in this proposal. INS further states that
policy form filings are to be accompanied with a filing fee of $50. Based on
the estimated range of new policy filings, $0 to $11,750 in new revenue would
be generated for the Insurance Dedicated Fund in the first fiscal year only.
Department of Mental Health (DMH) officials state that without knowing the
specific ramifications of the numerous references to the federal Health
Insurance Portability and Accountability Act of 1996 (Act), DMH is making
many assumptions regarding the fiscal impact.
However, DMH understands that the Act allows for insurance parity between
medical and mental health benefits for persons in large group plans. DMH
states that in February, 1997, they billed insurance for 390 clients
receiving services from DMH facilities. During FY97 (July thru January), DMH
has collected $998,524 for insurance. DMH states this is approximately
$4,400 per client received for insurance ($998,524/3907 months x 12 months).
On March 14, 1997, 2,463 of DMH's 78,823 clients had an insurance indicator.
If DMH could bill even half of these 2,463 (because of the large group plan
clause) clients to insurance at $4,400 per year, this would be $5,418,600 or
an increase of $3,706,845 (they would have collected $998,524/7x12 =
$1,711,755). Some of these clients are receiving services at providers,
which would result in a reduction of expenditures by DMH (or DMH could serve
more clients). Other clients are in facilities which would result in an
increase in revenue. DMH states they were not able to distinguish between
the two. DMH states this would be the best case scenario. Therefore, DMH
estimates fiscal impact would likely range from $0 to $3,706,845 which is an
unknown combination of increase in revenues and decrease in expenditures.
DMH states this proposal would also make insurance more accessible to those
persons who do not currently have insurance. If DMH clients who currently do
not have insurance (or Medicare or Medicaid) would opt to purchase this
insurance, DMH could receive some additional insurance revenues. However,
DMH states the actual impact cannot be determined because of such unknown
factors as: 1) number of clients that would opt to purchase this insurance,
and 2) types of services the insurance would cover. Even so, at this time,
DMH does not expect to generate significant revenue because of this because
many clients have Medicare and/or Medicaid or cannot afford insurance.
Officials from the Missouri Consolidated Health Care Plan did not respond to
our fiscal impact request.
FISCAL IMPACT - State Government FY 1998 FY 1999 FY 2000
GENERAL REVENUE FUND
Income - Department of Mental Health
Increase in insurance reimbursements $0 to $0 to $0 to
$3,706,845 $3,706,845 $3,706,845
ESTIMATED NET EFFECT ON
GENERAL REVENUE FUND $0 to $0 to $0 to
$3,706,845 $3,706,845 $3,706,845
CONSERVATION FUND
Costs - Department of Conservation
Increase in health care costs ($60,000) ($60,000) $0
ESTIMATED NET EFFECT ON
CONSERVATION FUND ($60,000) ($60,000) $0
INSURANCE DEDICATED FUND
Income - Department of Insurance
Filings fees $0 to $11,750 $0 $0
ESTIMATED NET EFFECT ON
INSURANCE DEDICATED FUND $0 TO $11,750 $0 $0
HIGHWAY FUND
Cost - Department of Transportation
Fringe benefits $0 to $0 to $0 to
($100,000) ($100,000) ($100,000)
ESTIMATED NET EFFECT ON
HIGHWAY FUND $0 TO $0 TO $0 TO
($100,000) ($100,000) ($100,000)
FISCAL IMPACT - Local Government FY 1998 FY 1999 FY 2000
$0 $0 $0
FISCAL IMPACT - Small Business
Small businesses would be expected to be fiscally impacted to the extent that
they would incur potential savings in health premiums due to the requirements
of this proposal.
DESCRIPTION
This proposal is a compliance bill for the federal Health Insurance
Portability and Accountability Act of 1996. It would require availability
and renewability of health insurance policies for all groups and specified
individuals in the state. The general group insurance statutes of Chapter
376, RSMo, would be revised to assure minimum compliance with the federal
law. The small group statutes of Chapter 379, RSMo, would be rewritten in
particular to comply with the federal law. Small employers would have
between 2 and 50 employees. No health status-related factors would be used
in establishing classes or issuing or renewing coverage. Policies would need
not be renewed if the insurer decides to discontinue a particular type of
plan and follows the notification procedures. Current law generally requires
these policies to be renewed with several exceptions. An insurer that elects
not to offer any small group plans would be prevented from reentering that
market for 5 years. All health benefit plans actively marketed by the
insurer would be made available to small employers, with a minimum of at
least two plans. Current law requires two plans to be offered. All health
benefit plans used by the insurer would be filed with the Director of
Insurance; the director may disapprove them if they violate the law. The
availability requirement would not be applied to bona fide associations and
purchasing alliances. Preexisting condition limits would be reduced by the
period of creditable coverage if such coverage was continuous to within 63
days of the enrollment date of new coverage. Affiliation periods and waiting
periods would be limited. Preexisting conditions would not be imposed for
pregnancy or adoption. Special provisions would be made for network plans.
All eligible individuals under the federal law and all other individual with
creditable coverage of at least 12 months would be covered under this
proposal. Insurers in the individual market would make all individual health
benefit plans available to such individuals, with exceptions. Insurers would
renew all such plans as well, with exceptions. No preexisting condition
exclusions would be allowed. Provisions would be made for policy disclosures
and discrimination, similar to the small group statutes.
The proposal would go into effect on July 1, 1997 or when approved by the
Governor, whichever comes later.
This legislation would not duplicate any other program and would not require
additional capital improvements or rental space. Portions of this
legislation are federally mandated by the Health Insurance Portability and
Accountability Act of 1996.
SOURCES OF INFORMATION
Department of Corrections
Department of Conservation
Office of Administration
Department of Transportation
Department of Public Safety
Missouri State Highway Patrol
Department of Social Services
Department of Mental Health
Department of Health
Department of Insurance
NOT RESPONDING: Missouri Consolidated Health Care Plan
This Fiscal Note is not an official copy and should not be quoted or cited.