HF 2216

1st Engrossment - 87th Legislature (2011 - 2012) Posted on 04/02/2012 04:21pm

A bill for an act
relating to insurance; the Minnesota Comprehensive Health Association;
permitting flexibility in premium rate-setting process; amending Minnesota
Statutes 2010, sections 62E.08, subdivisions 1, 3; 62E.091.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2010, section 62E.08, subdivision 1, is amended to read:

Subdivision 1.

Establishment.

The association shall establish the following
maximum premiums to be charged for membership in the comprehensive health insurance
plan:

(a) the premium for the number one qualified plan shall range from a minimum of
101 percent to a maximum of 125 percent of the weighted average of rates charged by
those insurers and health maintenance organizations with individuals enrolled in:

(1) $1,000 annual deductible individual plans of insurance in force in Minnesota;

(2) individual health maintenance organization contracts of coverage with a $1,000
annual deductible which are in force in Minnesota; and

(3) other plans of coverage similar to plans offered by the association based on
generally accepted actuarial principles;

(b) the premium for the number two qualified plan shall range from a minimum of
101 percent to a maximum of 125 percent of the weighted average of rates charged by
those insurers and health maintenance organizations with individuals enrolled in:

(1) $500 annual deductible individual plans of insurance in force in Minnesota;

(2) individual health maintenance organization contracts of coverage with a $500
annual deductible which are in force in Minnesota; and

(3) other plans of coverage similar to plans offered by the association based on
generally accepted actuarial principles;

(c) the premiums for the plans with a $2,000, $5,000, or $10,000 annual deductible
shall range from a minimum of 101 percent to a maximum of 125 percent of the weighted
average of rates charged by those insurers and health maintenance organizations with
individuals enrolled in:

(1) $2,000, $5,000, or $10,000 annual deductible individual plans, respectively, in
force in Minnesota; and

(2) individual health maintenance organization contracts of coverage with a $2,000,
$5,000, or $10,000 annual deductible, respectively, which are in force in Minnesota; or

(3) other plans of coverage similar to plans offered by the association based on
generally accepted actuarial principles;

(d) the premium for each type of Medicare supplement plan required to be offered
by the association pursuant to section 62E.12 shall deleted text begin range from a minimum of 101 percent
to a maximum of 125 percent of deleted text end new text begin be determined by calculating and applying new text end the weighted
average of deleted text begin rates charged by those insurers and deleted text end new text begin the rate increases approved for the period
for which the association premiums are to be effective for the three insurers or new text end health
maintenance organizations with new text begin the most new text end individuals enrolled in:

(1) Medicare supplement plans in force in Minnesota;

(2) health maintenance organization Medicare supplement contracts of coverage
which are in force in Minnesota; deleted text begin and deleted text end new text begin or
new text end

(3) other plans of coverage similar to plans offered by the association based on
generally accepted actuarial principles; and

(e) the charge for health maintenance organization coverage shall be based on
generally accepted actuarial principles.

The list of insurers and health maintenance organizations whose rates are used to
establish the premium for coverage offered by the association pursuant to paragraphs (a)
to (d) shall be established by the commissioner on the basis of information which shall be
provided to the association by all insurers and health maintenance organizations annually
at the commissioner's request. This information shall include the number of individuals
covered by each type of plan or contract specified in paragraphs (a) to (d) that is sold,
issued, and renewed by the insurers and health maintenance organizations, including those
plans or contracts available only on a renewal basis. The information shall also include
the rates charged for each type of plan or contract.

In establishing premiums pursuant to this section, the association shall utilize
generally accepted actuarial principles, provided that the association shall not discriminate
in charging premiums based upon sex. In order to compute a weighted average for each
type of plan or contract specified under paragraphs (a) to (d), the association shall, using
the information collected pursuant to this subdivision, list insurers and health maintenance
organizations in rank order of the total number of individuals covered by each insurer or
health maintenance organization. The association shall then compute a weighted average
of the rates charged for coverage by all the insurers and health maintenance organizations
by:

(1) multiplying the numbers of individuals covered by each insurer or health
maintenance organization by the rates charged for coverage;

(2) separately summing both the number of individuals covered by all the insurers
and health maintenance organizations and all the products computed under clause (1); and

(3) dividing the total of the products computed under clause (1) by the total number
of individuals covered.

The association may elect to use a sample of information from the insurers and
health maintenance organizations for purposes of computing a weighted average. In no
case, however, may a sample used by the association to compute a weighted average
include information from fewer than the two insurers or health maintenance organizations
highest in rank order.

new text begin (f) Notwithstanding the provisions of this section, in calculating premiums to be
effective January 1, 2014, and thereafter, the association may utilize rates for individual
plans of insurance, individual health maintenance organization contracts, and other
individual plans of coverage that are similar to plans offered by the association based upon
generally accepted actuarial principles, so long as such plans and contracts have been filed
with the Department of Commerce and are reasonably anticipated to be in force and
individuals are reasonably anticipated to be enrolled in them during the period for which
the association premiums are to be effective, regardless of whether they are in force in
Minnesota or have individuals enrolled in them at the time the association is engaged in
the rate-setting process mandated by this section and section 62E.091. For purposes of
determining a weighted average under paragraph (e), the association shall use generally
accepted actuarial principles to project potential enrollment in plans of coverage for the
period for which the association's premiums will be effective and for which no individuals
have enrolled at the time the association engages in the premium setting process.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 2.

Minnesota Statutes 2010, section 62E.08, subdivision 3, is amended to read:

Subd. 3.

Determination of rates.

Premium rates under this section must be
determined annually. These rates are effective July 1 of each year and must be based on
a survey of approved rates of insurers and health maintenance organizations in effect,
or to be in effect, on April 1 of the same calendar year. These rates may be trended to
deleted text begin July 1 deleted text end new text begin the midpoint of the period for which the premium rates will apply new text end in order to reflect
economic and inflationary changes. new text begin Notwithstanding the provisions of this subdivision,
the association may set rates to be effective for the 18-month period July 1, 2012, through
December 31, 2013. For calendar years beginning January 1, 2014, and thereafter,
premium rates shall be determined annually and effective January 1 of each year. Premium
rates shall be prospective and trended forward to the midpoint of the period for which the
premium rates apply to ensure that the association's rates are based upon individual market
rates for insurers and health maintenance organizations that will be in effect during the
period for which the association's rates will be effective.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 3.

Minnesota Statutes 2010, section 62E.091, is amended to read:

62E.091 APPROVAL OF STATE PLAN PREMIUMS.

The association shall submit to the commissioner any premiums it proposes to
become effective for coverage under the comprehensive health insurance plan, pursuant
to section 62E.08, subdivision 3. No later than 45 days before the effective date for
premiums specified in section 62E.08, subdivision 3, the commissioner shall approve,
modify, or reject the proposed premiums on the basis of the following criteria:

(a) whether the association has complied with the provisions of section 62E.11,
subdivision 11;

(b) whether the association has submitted the proposed premiums in a manner which
provides sufficient time for individuals covered under the comprehensive insurance plan
to receive notice of any premium increase no less than 30 days prior to the effective
date of the increase;

(c) the degree to which the association's computations and conclusions are consistent
with section 62E.08;

(d) the degree to which any sample used to compute a weighted average by the
association pursuant to section 62E.08 reasonably reflects circumstances deleted text begin existing deleted text end new text begin projected
to exist new text end in the private marketplace for individual coverage new text begin through the use of accepted
actuarial principles during the period to which the association's rates will apply new text end ;

(e) the degree to which a weighted average computed pursuant to section 62E.08
that uses information pertaining to individual coverage available only on a renewal basis
reflects the circumstances deleted text begin existing deleted text end new text begin projected to exist through the use of accepted actuarial
principles, new text end in the private marketplace for individual coverage new text begin during the period to which
the association's rates will apply new text end ;

(f) a comparison of the proposed increases with increases in the cost of medical
care and increases deleted text begin experienced deleted text end new text begin projected to occur through the use of accepted actuarial
principles new text end in the private marketplace for individual coverage new text begin during the period to which
the association's rates will apply new text end ;

(g) the financial consequences to enrollees of the proposed increase;

(h) the actuarially projected effect of the proposed increase upon both total
enrollment in, and the nature of the risks assumed by, the comprehensive health insurance
plan;

(i) the relative solvency of the contributing members; and

(j) other factors deemed relevant by the commissioner.

In no case, however, may the commissioner approve premiums for those plans of
coverage described in section 62E.08, subdivision 1, paragraphs (a) to (d), that are lower
than 101 percent or greater than 125 percent of the weighted averages computed by the
association pursuant to section 62E.08. The commissioner shall support a decision to
approve, modify, or reject any premium proposed by the association with written findings
and conclusions addressing each criterion specified in this section. If the commissioner
does not approve, modify, or reject the premiums proposed by the association sooner than
45 days before the effective date for premiums specified in section 62E.08, subdivision 3,
the premiums proposed by the association under this section become effective.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end