1.1 	A bill for an act
1.2 	relating to insurance; creating a statewide health
1.3 	insurance pool for school district employees;
1.4 	appropriating money; amending Minnesota Statutes 2004,
1.5 	sections 62E.02, subdivision 23; 62E.10, subdivision
1.6 	1; 62E.11, subdivision 5; 297I.05, subdivision 5;
1.7 	proposing coding for new law in Minnesota Statutes,
1.8 	chapter 62A.
1.9 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.10 	Section 1. [62A.662] SCHOOL EMPLOYEE INSURANCE PLAN.
1.11 		Subdivision 1.Definitions. For purposes of this section:
1.12 	(1) "eligible employee" means a person who is insurance
1.13 	eligible under a collective bargaining agreement or under the
1.14 	personnel policy of an eligible employer; and 
1.15 	(2) "eligible employer" means a school district as defined
1.16 	in section 120A.05; a service cooperative as defined in section
1.17 	123A.21; an intermediate district as defined in section 136D.01;
1.18 	a cooperative center for vocational education as defined in
1.19 	section 123A.22; a regional management information center as
1.20 	defined in section 123A.23; an education unit organized under
1.21 	section 471.59; or a charter school organized under section
1.22 	124D.10.
1.23 		Subd. 2.Creation of board. (a) The Minnesota School
1.24 	Employee Insurance Board is created as a public corporation
1.25 	subject to the provisions of chapter 317A, except as otherwise
1.26 	provided in this section.  As provided in section 15.082, the
1.27 	state is not liable for obligations of this public corporation.
2.1 	(b) The board shall create and administer the Minnesota
2.2 	School Employee Insurance Pool as described in this section.
2.3 	(c) If the board does not offer coverage by December 15,
2.4 	2008, the board expires and this section expires on that date.
2.5 		Subd. 3.Board of directors. (a) The School Employee
2.6 	Insurance Board consists of:
2.7 	(1) seven members representing exclusive representatives of
2.8 	eligible employees, appointed by exclusive representatives, as
2.9 	provided in paragraph (b); and 
2.10 	(2) seven members, appointed by the Minnesota School Boards
2.11 	Association, to represent the interest of eligible employers.
2.12 	(b) The seven members of the board who represent statewide
2.13 	affiliates of exclusive representatives of eligible employees
2.14 	are appointed as follows:  four members appointed by Education
2.15 	Minnesota and one member each appointed by the Service Employees
2.16 	International Union, the Minnesota School Employees Association,
2.17 	and American Federation of State, County, and Municipal
2.18 	Employees.
2.19 	(c) Appointing authorities must make their initial
2.20 	appointments no later than August 1, 2005, by filing a notice of
2.21 	the appointment with the commissioner of commerce.  Notices of
2.22 	subsequent appointments must be filed with the board.  An entity
2.23 	entitled to appoint a board member may replace the board member
2.24 	at any time.
2.25 	(d) Board members are eligible for compensation and expense
2.26 	reimbursement under section 15.0575, subdivision 3.
2.27 	(e) The board must arrange for one or more methods of
2.28 	dispute resolution so as to minimize the possibility of
2.29 	deadlocks.
2.30 	(f) The board shall establish governance requirements,
2.31 	including staggered terms, term limits, quorum, a plan of
2.32 	operation, and audit provisions.
2.33 		Subd. 4.Design and nature of plan. (a) Health coverage
2.34 	offered through the Minnesota School Employee Insurance Pool
2.35 	shall be made available by the board to all eligible employees
2.36 	of eligible employers, as defined in subdivision 1.
3.1 	(b) The board must offer more than one health plan and may
3.2 	establish more than one tier of premium rates for any specific
3.3 	plan.  Plans and premium rates may vary across geographic
3.4 	regions established by the board.  The health plans must comply
3.5 	with chapters 62A, 62J, 62M, and 62Q, and must provide the
3.6 	optimal combination of coverage, cost, choice, and stability in
3.7 	the judgment of the board.  All health plans offered must be
3.8 	approved by the commissioner of commerce.
3.9 	(c) The board must include claims reserves, stabilization
3.10 	reserves, reinsurance, and other features that, in the judgment
3.11 	of the board, will result in long-term stability and solvency of
3.12 	the health plans offered.
3.13 	(d) The board may determine whether the health plans should
3.14 	be fully insured through a health carrier licensed in this
3.15 	state, self-insured, or a combination of those two alternatives.
3.16 	(e) The health plans must include disease management and
3.17 	consumer education, including wellness programs and measures
3.18 	encouraging the wise use of health coverage, to the extent
3.19 	determined to be appropriate by the board.  The health plans
3.20 	must use the quality and performance measurements established
3.21 	for use by the state for its employee and public assistance
3.22 	programs.
3.23 	(f) The board must confer with the service cooperatives and
3.24 	make a recommendation to the legislature on how health insurance
3.25 	reserves currently held by the service cooperatives will be
3.26 	dispensed.
3.27 	(g) Upon request of the board, health plans that are
3.28 	providing or have provided coverage to employees of eligible
3.29 	employers within two years prior to the effective date of this
3.30 	section, shall provide to the board at no charge nonidentifiable
3.31 	aggregate claims data for that coverage.  The information must
3.32 	include data relating to employee group benefit sets,
3.33 	demographics, and claims experience.  Notwithstanding section
3.34 	13.203, Minnesota service cooperatives must also comply with
3.35 	this paragraph.
3.36 		Subd. 5.Mcha membership and assessments. The board is a
4.1 	contributing member of the Minnesota Comprehensive Health
4.2 	Association and must pay assessments made by the association on
4.3 	its premium revenues, as provided in section 62E.11, subdivision
4.4 	5, paragraph (b).
4.5 		Subd. 6.Premium tax obligations. The board must pay
4.6 	taxes on premiums as provided in section 297I.05, subdivision 5,
4.7 	paragraph (c).
4.8 		Subd. 7.Report. The board shall report to the
4.9 	legislature by January 15, 2007, on a final design for the pool
4.10 	that complies with subdivision 4 and on governance requirements
4.11 	for the board, including staggered terms, term limits, quorum,
4.12 	and a plan of operation and audit provisions.  The report must
4.13 	include any legislative changes necessary to ensure conformance
4.14 	with chapters 62A, 62J, 62M, and 62Q.
4.15 		Subd. 8.Periodic evaluation. (a) Beginning January 15,
4.16 	2008, and for the next two years, the board must submit an
4.17 	annual report to the commissioner of commerce and the
4.18 	legislature, in compliance with sections 3.195 and 3.197,
4.19 	summarizing and evaluating the performance of the pool during
4.20 	the previous year of operation.
4.21 	(b) Beginning in 2011 and in each odd-numbered year
4.22 	thereafter, the board must submit to the legislature a biennial
4.23 	report summarizing and evaluating the performance of the pool
4.24 	during the preceding two fiscal years.

4.25 	Sec. 2. Minnesota Statutes 2004, section 62E.02,
4.26 	subdivision 23, is amended to read:
4.27 		Subd. 23.Contributing member.  "Contributing member"
4.28 	means those companies regulated under chapter 62A and offering,
4.29 	selling, issuing, or renewing policies or contracts of accident
4.30 	and health insurance; health maintenance organizations regulated
4.31 	under chapter 62D; nonprofit health service plan corporations
4.32 	regulated under chapter 62C; community integrated service
4.33 	networks regulated under chapter 62N; fraternal benefit
4.34 	societies regulated under chapter 64B; the Minnesota employees
4.35 	insurance program established in section 43A.317, effective July
4.36 	1, 1993; and joint self-insurance plans regulated under chapter
5.1 	62H; and the Minnesota School Employee Insurance Board created
5.2 	under section 62A.662.  For the purposes of determining
5.3 	liability of contributing members pursuant to section 62E.11
5.4 	payments received from or on behalf of Minnesota residents for
5.5 	coverage by a health maintenance organization or , a community
5.6 	integrated service network, or the Minnesota School Employee
5.7 	Insurance Board shall be considered to be accident and health
5.8 	insurance premiums.

5.9 	Sec. 3. Minnesota Statutes 2004, section 62E.10,
5.10 	subdivision 1, is amended to read:
5.11 		Subdivision 1.Creation; tax exemption.  There is
5.12 	established a Comprehensive Health Association to promote the
5.13 	public health and welfare of the state of Minnesota with
5.14 	membership consisting of all insurers; self-insurers;
5.15 	fraternals; joint self-insurance plans regulated under chapter
5.16 	62H; the Minnesota employees insurance program established in
5.17 	section 43A.317, effective July 1, 1993; the Minnesota School
5.18 	Employee Insurance Board created under section 62A.662;health
5.19 	maintenance organizations; and community integrated service
5.20 	networks licensed or authorized to do business in this state.
5.21 	The Comprehensive Health Association is exempt from the taxes
5.22 	imposed under chapter 297I and any other laws of this state and
5.23 	all property owned by the association is exempt from taxation.

5.24 	Sec. 4. Minnesota Statutes 2004, section 62E.11,
5.25 	subdivision 5, is amended to read:
5.26 		Subd. 5.Allocation of losses. (a) Each contributing
5.27 	member of the association shall share the losses due to claims
5.28 	expenses of the comprehensive health insurance plan for plans
5.29 	issued or approved for issuance by the association, and shall
5.30 	share in the operating and administrative expenses incurred or
5.31 	estimated to be incurred by the association incident to the
5.32 	conduct of its affairs.  Claims expenses of the state plan which
5.33 	exceed the premium payments allocated to the payment of benefits
5.34 	shall be the liability of the contributing members.
5.35 	Contributing members shall share in the claims expense of the
5.36 	state plan and operating and administrative expenses of the
6.1 	association in an amount equal to the ratio of the contributing
6.2 	member's total accident and health insurance premium, received
6.3 	from or on behalf of Minnesota residents as divided by the total
6.4 	accident and health insurance premium, received by all
6.5 	contributing members from or on behalf of Minnesota residents,
6.6 	as determined by the commissioner.  Payments made by the state
6.7 	to a contributing member for medical assistance, MinnesotaCare,
6.8 	or general assistance medical care services according to
6.9 	chapters 256, 256B, and 256D shall be excluded when determining
6.10 	a contributing member's total premium.
6.11 	(b) In making the allocation of losses provided in
6.12 	paragraph (a), the association's assessment against the
6.13 	Minnesota School Employee Insurance Board must equal the product
6.14 	of (1) the percentage of premiums assessed against other
6.15 	association members; (2) .3885; and (3) premiums received by the
6.16 	Minnesota School Employee Insurance Board.  For purposes of this
6.17 	calculation, premiums of the board used must be net of rate
6.18 	credits and retroactive rate refunds on the same basis as the
6.19 	premiums of other association members.

6.20 	Sec. 5. Minnesota Statutes 2004, section 297I.05,
6.21 	subdivision 5, is amended to read:
6.22 		Subd. 5.Health maintenance organizations, nonprofit
6.23 	health service plan corporations, and community integrated
6.24 	service networks, and the minnesota school employee insurance
6.25 	board.  (a) Health maintenance organizations, community
6.26 	integrated service networks, and nonprofit health care service
6.27 	plan corporations are exempt from the tax imposed under this
6.28 	section for premiums received in calendar years 2001 to 2003.
6.29 	(b) For calendar years after 2003, a tax is imposed on
6.30 	health maintenance organizations, community integrated service
6.31 	networks, and nonprofit health care service plan corporations.
6.32 	The rate of tax is equal to one percent of gross premiums less
6.33 	return premiums received in the calendar year.
6.34 	(c) A tax is imposed on the Minnesota School Employee
6.35 	Insurance Board under section 62A.662.  The rate of tax is equal
6.36 	to .36 percent of gross premiums less return premiums received
7.1 	in the calendar year.
7.2 	(d) In approving the premium rates as required in sections
7.3 	62L.08, subdivision 8, and 62A.65, subdivision 3, the
7.4 	commissioners of health and commerce shall ensure that any
7.5 	exemption from tax as described in paragraph (a) is reflected in
7.6 	the premium rate.
7.7 	(d) (e) The commissioner shall deposit all revenues,
7.8 	including penalties and interest, collected under this chapter
7.9 	from health maintenance organizations, community integrated
7.10 	service networks, and nonprofit health service plan corporations
7.11 	, and the Minnesota School Employee Insurance Board in the
7.12 	health care access fund.  Refunds of overpayments of tax imposed
7.13 	by this subdivision must be paid from the health care access
7.14 	fund.  There is annually appropriated from the health care
7.15 	access fund to the commissioner the amount necessary to make any
7.16 	refunds of the tax imposed under this subdivision.

7.17 	Sec. 6. APPROPRIATION; LOAN.
 7.18 	$....... is appropriated from the general fund to the
7.19 	commissioner of commerce as a loan for start-up costs to the
7.20 	Minnesota School Employee Insurance Board.  The Minnesota School
7.21 	Employee Insurance Board must repay the loan to the general fund
7.22 	in ten equal installments paid at the end of each fiscal year,
7.23 	beginning with the 2008 fiscal year.