HS HCS HB 718, 225, 876 & 838 -- HEALTH INSURANCE (Harlan)

This substitute makes several changes to health insurance law.
In its major provisions, the substitute:

(1)  Allows self-employed taxpayers to deduct the amount paid
for health insurance for the taxpayer, his or her spouse, and
dependents to the extent that the costs are included in the
taxpayer's federal adjusted gross income.  The substitute also
allows an individual income tax deduction for insurance premiums
and out-of-pocket medical costs paid by a taxpayer up to $2,000
per tax year for a married couple and $1,000 for a single person
and head of household.  The deductible amount is only to the
extent that the costs are included in a taxpayer's federal
adjusted gross income.  Out-of-pocket medical costs are those
deductions allowed for health costs as a federal itemized
deduction.  This deduction will expire on December 31, 2004;

(2)  Establishes the Advisory Commission on Health Insurance
Mandates to be composed of the director of the Department of
Insurance, the chairperson of the Insurance Committee of the
House of Representatives, one member of the minority party of
the House of Representatives, the chairperson of the Insurance
and Housing Committee of the Senate, and one member of the
minority party of the Senate.  The commission is charged with
studying the costs and benefits of each health insurance benefit
or offer mandated by Missouri law.  The commission must report
by January 1, 2000, the results of its study to the Governor,
the Speaker of the House of Representatives, and the President
Pro Tem of the Senate;

(3)  Allows individuals to be eligible for coverage through the
Missouri Health Insurance Pool (also referred to as the "high
risk pool") if they have been refused coverage, offered coverage
at a rate exceeding 135% of the standard rate, or had coverage
for not less than 12 months.  The rate for coverage under the
pool is $135% of the standard rate for individuals who had
continuous coverage through a date not less than 63 days prior
to the effective date of pool coverage or who enroll during the
open enrollment period.  The rate for other eligible individuals
is 200% of the standard rate;

(4)  Modifies the Small Employer Health Insurance Availability
Act so that it complies with the federal Health Insurance
Portability and Accountability Act of 1996 (P.L. 104-191).  A
small employer employs 2 to 50 employees under the substitute's
revised provisions.  Small employer plans are allowed to apply
preexisting condition exclusions during the first 12 months of
coverage but are required to waive the exclusions for the period
of time that an individual has coverage continuous to a date not
less than 63 days prior to obtaining the new coverage.  The
exclusion must also be waived if the individual's prior coverage
is for a period of 12 of the most recent 18 months.  Insurers
may discontinue offering a plan under certain conditions.  No
preexisting condition exclusions are allowed relating to
pregnancy or a condition for which medical advice was received
during a period when the person had qualifying coverage.  The
substitute also removes from the act language that requires a
husband and wife working for the same small employer to be
considered one eligible employee;

(5)  Requires the Department of Insurance to administer a grant
program to assist in the establishment of health insurance
purchasing cooperatives.  Each grant is limited to $25,000.
Funds for the grants must be appropriated from general revenue
and the total amount of grants may not exceed $400,000; and

(6)  Prohibits insurance companies from requiring the purchase
of life insurance as a condition of purchasing health insurance.

The substitute also includes several provisions with an
effective date of July 1, 2000.  Those provisions:

(1)  Require insurers to issue individual policies of health
insurance without medical underwriting if the applicant had
prior creditable coverage which was terminated within 63 days
prior to the application, the period of creditable coverage is
not less than 12  months, and the individual has exhausted any
COBRA coverage.  An insurer is not required to issue individual
health benefit coverage without medical underwriting when such
plans constitute 2% or more of that insurer's earned premium on
an annual basis from individual health plans.  The substitute
also includes several rating restrictions for individual health
insurance policies;

(2)  Establish an individual health benefit reinsurance
association and require all entities providing health insurance
or health benefits subject to state insurance regulation to be
members of the association.  Those entities that provide plans
only for Medicaid recipients are exempted from membership.  The
association's board is responsible for developing a plan to
provide for the sharing of losses related to individuals
enrolled in health plans without medical underwriting.  Board
members are immune from civil liability for performing duties
required by the substitute's provisions;

(3)  Allow entities issuing individual health insurance policies
to apply preexisting condition exclusions during the first 12
months of coverage but are required to waive the exclusions for
the period of time that an individual has coverage continuous to
a date not less than 63 days prior to obtaining new coverage; and

(4)  Require health insurers to follow certain procedures if
they close a block of business.

FISCAL NOTE:  Estimated Net Decrease to General Revenue of
$1,012,064 to $13,832,864 in FY 2000, $152,585,231 to
$195,970,191 in FY 2001, $156,237,570 to $200,222,530 in FY
2002.  Estimated Net Cost to Conservation Commission Fund is
Unknown in FY 2000, FY 2001, and FY 2002.  Estimated Net
Decrease to County Foreign Insurance Fund of $623,233 to
$13,444,033 in FY 2000, $124,647 to $2,716,174 in FY 2001, and
$0 in FY 2002.

HCS HB 718, 225, 876 & 838 -- HEALTH INSURANCE

SPONSOR:  Harlan

COMMITTEE ACTION:  Voted "do pass" by the Committee on Critical
Issues by a vote of 24 to 0.

This substitute allows taxpayers to deduct the amount paid for
health insurance for the taxpayer, his or her spouse, and
dependents if the taxpayer is self-employed and if the taxpayer
is not eligible to participate in a health plan subsidized by
the employer of the taxpayer or the taxpayer's spouse.  The
substitute also establishes the Advisory Commission on Health
Insurance Mandates to be composed of the director of the
Department of Insurance, the chairperson of the Insurance
Committee of the House of Representatives, one member of the
minority party of the House of Representatives, the chairperson
of the Insurance and Housing Committee of the Senate, and one
member of the minority party of the Senate.  The commission is
charged with studying the costs and benefits of each health
insurance benefit or offer mandated by Missouri law.  The
commission must report by January 1, 2000, the results of its
study to the Governor, the Speaker of the House of
Representatives, and the President Pro Tem of the Senate.  In
addition, the substitute:

(1)  Modifies the Small Employer Health Insurance Availability
Act so that it complies with the federal Health Insurance
Portability and Accountability Act of 1996.  A small employer
employs 2 to 50 employees under the substitute's revised
provisions.  Small employer plans are allowed to apply
preexisting condition exclusions during the first 12 months of
coverage but are required to waive the exclusions for the period
of time that an individual has coverage continuous to a date not
less than 63 days prior to obtaining the new coverage.  The
exclusion must also be waived if the individual's prior coverage
is for a period of 12 of the most recent 18 months (Sections
379.930-379.952);

(2)  Allows individuals to be eligible for coverage through the
Missouri Health Insurance Pool if they have been refused
coverage, offered coverage at a rate exceeding 135% of the
standard rate, or had coverage for not less than 12 of the 18
months preceding the date of application for coverage (Section
376.966).  The rate for coverage under the pool is 135% of the
standard rate for individuals who had continuous coverage
through a date not less than 63 days prior to the effective date
of pool coverage, who had coverage for 12 of the 18 months
preceding application for coverage, or who enroll during the
open enrollment period (Section 376.986).  The rate for other
eligible individuals is 200% of the standard rate.  The
substitute also revises provisions relating to the pool's
preexisting condition exclusions (Section 376.986);

(3)  Requires insurers to issue individual policies of health
insurance without medical underwriting if the applicant had
prior creditable coverage which was terminated within 63 days
prior to the application or the period of creditable coverage is
not less than 12 of the most recent 18 months.  An insurer is
not required to issue individual health benefit coverage without
medical underwriting when such plans constitute 2% or more of
that insurer's earned premium on an annual basis from individual
health plans (Section 376.771);

(4)  Establishes rating restrictions for individual health
insurance policies (Section 376.771);

(5)  Establishes an individual health benefit reinsurance
association and requires all entities providing health insurance
or health benefits subject to state insurance regulation to be
members of the association.  The association's board is composed
of 7 members from each of the 4 largest domestic carriers of
individual health insurance in the state and the 3 largest
health insurance carriers in the state.  The board is
responsible for developing a plan to provide for the sharing of
losses related to individuals enrolled in health plans without
medical underwriting (Section 376.772);

(6)  Allows entities issuing health insurance policies to apply
preexisting condition exclusions during the first 12 months of
coverage but are required to waive the exclusions for the period
of time that an individual has coverage continuous to a date not
less than 63 days prior to obtaining new coverage.  The
exclusion must also be waived if the individual's prior coverage
is for a period of 12 of the most recent 18 months (Section
376.775); and

(7)  Requires the Department of Insurance to administer a grant
program to assist in the establishment of health insurance
purchasing cooperatives.  Funds for the grants must be
appropriated from general revenue and the total amount of grants
may not exceed $400,000 (Section 1).

FISCAL NOTE:  Estimated Net Cost to General Revenue of
$1,012,064 to $13,832,864 in FY 2000, $7,338,143 to $22,723,103
in FY 2001, and $7,629,137 to $23,014,097 in FY 2002.  Estimated
Net Cost to Conservation Commission Fund of Unknown in FY 2000,
FY 2001, and FY 2002.  Estimated Net Cost to County Foreign
Insurance Fund of $623,233 to $13,444,033 in FY 2000, $124,647
to $2,716,174 in FY 2001, and $0 in FY 2002.

PROPONENTS:  Supporters say that legislation is needed to
facilitate access to affordable health care insurance.  Many
self-employed individuals and those working for small businesses
are unable to obtain health insurance at affordable rates once
they file claims or develop health risks.  Rates are currently
too high for Missouri's high risk pool.  Additional limits on
the amounts that can be charged for premiums in the high risk
pool would help many uninsured individuals obtain health
coverage.  Self-employed individuals should be able to deduct
from income tax the amount paid for health insurance premiums.
Authorizing a study of the costs and benefits of mandated health
benefits is important because the costs of health care premiums
would be reduced if certain mandated benefits were eliminated.
It is necessary to revise the Small Employer Health Insurance
Availability Act to comply with the federal Health Insurance
Portability and Accountability Act of 1996.

Testifying for the bills were Representatives Harlan, Leake,
Days, Dolan, and Treadway; Tri-Lakes Board of Realtors;
Associated Industries of Missouri; National Federation of
Independent Businesses; Missouri Chamber of Commerce; Missouri
Merchants and Manufacturers Association; Blue Cross/Blue Shield
of Missouri; Health Insurance Association of America; Alliance
Blue Cross/Blue Shield; Missouri State Chiropractors
Association; Missouri Association of Social Welfare; Paraquad;
Governor's Council on Disability; United Healthcare of the
Midwest; Missouri Association of Realtors; Missouri Insurance
Coalition; and Dennis Welch.

OPPONENTS:  Those who oppose the bill say that requiring
insurers to compress rate bands and to guarantee the issue of
policies will increase costs so that many companies will choose
not to participate in the individual market.  That would result
in more people becoming uninsured.

Testifying against the bill (HB 225) concerning aspects relating
to "guarantee issue" and additional limits on rating were Blue
Cross/Blue Shield of Missouri; United Healthcare of Midwest;
Missouri Chamber of Commerce; Health Insurance Association of
America; American Family Insurance; Golden Rule Insurance; and
Missouri Insurance Coalition.

Katharine Hickel Barondeau, Legislative Analyst

HB 718 -- Health Care Insurance

Co-Sponsors:  Harlan, Gaw, Foley, Leake, Ross, Riback Wilson,
Kelly (27), Days, Dolan

This bill allows taxpayers to deduct the amount paid for health
insurance for the taxpayer, his or her spouse, and dependents if
the taxpayer is self-employed and if the taxpayer is not
eligible to participate in a health plan subsidized by the
employer of the taxpayer or the taxpayer's spouse.  The bill
also establishes the Advisory Commission on Health Insurance
Mandates to be composed of the director of the Department of
Insurance, the chairperson of the Insurance Committee of the
House of Representatives, and the chairperson of the Insurance
and Housing Committee of the Senate.  The commission is charged
with studying the costs and benefits of each health insurance
benefit or offer mandated by Missouri law.  The bill also
requires the commission to report by January 1, 2000, the
results of its study to the Governor, the Speaker of the House
of Representatives, and the President Pro Tem of the Senate.