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Minnesota Legislature

Office of the Revisor of Statutes

SF 2747

2nd Engrossment - 85th Legislature (2007 - 2008) Posted on 12/15/2009 12:00am

KEY: stricken = removed, old language.
underscored = added, new language.

Current Version - 2nd Engrossment

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A bill for an act
relating to insurance; creating statewide health insurance pool for school district
employees; appropriating money; amending Minnesota Statutes 2006, sections
3.971, subdivision 6; 13.203; 62E.02, subdivision 23; 62E.10, subdivision 1;
62E.11, subdivision 5; 297I.05, subdivision 5; proposing coding for new law
in Minnesota Statutes, chapter 62A.

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

Section 1.

Minnesota Statutes 2006, section 3.971, subdivision 6, is amended to read:


Subd. 6.

Financial audits.

The legislative auditor shall audit the financial
statements of the state of Minnesota required by section 16A.50 and, as resources permit,
shall audit Minnesota State Colleges and Universities, the University of Minnesota,
state agencies, departments, boards, commissions, courts, and other state organizations
subject to audit by the legislative auditor, including the State Agricultural Society,
Agricultural Utilization Research Institute, Minnesota Technology, Inc., new text beginthe Minnesota
School Employee Insurance Pool,
new text endMinnesota Historical Society, Labor Interpretive
Center, Minnesota Partnership for Action Against Tobacco, Metropolitan Sports Facilities
Commission, Metropolitan Airports Commission, and Metropolitan Mosquito Control
District. Financial audits must be conducted according to generally accepted government
auditing standards. The legislative auditor shall see that all provisions of law respecting
the appropriate and economic use of public funds are complied with and may, as part of a
financial audit or separately, investigate allegations of noncompliance by employees
of departments and agencies of the state government and the other organizations listed
in this subdivision.

Sec. 2.

Minnesota Statutes 2006, section 13.203, is amended to read:


13.203 SERVICE COOPERATIVE new text beginAND SCHOOL EMPLOYEE
INSURANCE BOARD
new text endCLAIMS DATA.

new text begin (a) new text endClaims experience and all related information received from carriers and claims
administrators participating in a group health or dental plan, including any long-term
disability plan, offered through the Minnesota service cooperatives to Minnesota school
districts and other political subdivisionsnew text begin or by the Minnesota School Employee Insurance
Pool created under section 62A.662
new text end, and survey information collected from employees
and employers participating in these plans and programsdeleted text begin, except when the executive
director of a Minnesota service cooperative determines that release of the data will not be
detrimental to the plan or program,
deleted text end are classified as nonpublic data deleted text beginnot on individualsdeleted text end.

new text begin (b) Data that are classified as nonpublic data under paragraph (a) may be disclosed
if the executive director of a Minnesota service cooperative or the Minnesota School
Employee Insurance Pool determines that release of the data will not be detrimental to
the plan or program.
new text end

Sec. 3.

new text begin [62A.662] SCHOOL EMPLOYEE INSURANCE PLAN.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin For purposes of this section:
new text end

new text begin (1) "board" or "board of directors" means the board of directors of the Minnesota
School Employee Insurance Pool;
new text end

new text begin (2) "eligible employee" means an individual who is insurance eligible under a
collective bargaining agreement or under the personnel policy of an eligible employer;
new text end

new text begin (3) "eligible employer" means a school district as defined in section 120A.05, a
service cooperative as defined in section 123A.21, an intermediate district as defined
in section 136D.01, a cooperative center for vocational education as defined in section
123A.22, a regional management information center as defined in section 123A.23, an
education unit organized under section 471.59, or a charter school organized under section
124D.10;
new text end

new text begin (4) "health plan" means a health plan as defined in section 62A.011;
new text end

new text begin (5) "pool" or "Minnesota School Employee Insurance Pool" means the Minnesota
School Employee Insurance Pool, a public corporation; and
new text end

new text begin (6) "self-insured health benefit plan" means self-insured health care coverage that is
offered by the Minnesota School Employee Insurance Pool under this section.
new text end

new text begin Subd. 2. new text end

new text begin Creation of pool. new text end

new text begin (a) The Minnesota School Employee Insurance Pool is
created as a public corporation that is governed by and subject to the provisions of chapter
317A, except as otherwise provided in this section. As provided in section 15.082, the
state is not liable for obligations of this public corporation.
new text end

new text begin (b) The pool shall create and administer the Minnesota School Employee Insurance
Plan as described in this section.
new text end

new text begin (c) Insurance plans and offerings must be effective no later than July 1, 2010.
new text end

new text begin (d) If the pool does not offer coverage by December 15, 2011, the pool expires and
this section expires on that date.
new text end

new text begin Subd. 3. new text end

new text begin Board of directors. new text end

new text begin (a) The Minnesota School Employee Insurance Pool
shall be governed by a board of directors that consists of:
new text end

new text begin (1) seven members representing statewide affiliates of exclusive representatives of
eligible employees, appointed by exclusive representatives, as provided in paragraph
(b); and
new text end

new text begin (2) seven members representing eligible employers, appointed by the Minnesota
School Boards Association.
new text end

new text begin (b) The seven members of the board who represent statewide affiliates of exclusive
representatives of eligible employees are appointed as follows: four members appointed
by Education Minnesota and one member each appointed by the Service Employees
International Union, the Minnesota School Employees Association, and the American
Federation of State, County, and Municipal Employees.
new text end

new text begin (c) Appointing authorities must make their initial appointments no later than August
1, 2008, by filing a notice of the appointment with the commissioner of commerce.
Notices of subsequent appointments must be filed with the board. An entity entitled to
appoint a board member may replace the board member at any time.
new text end

new text begin (d) Board members are eligible for compensation and expense reimbursement from
the pool under section 15.0575, subdivision 3.
new text end

new text begin (e) The board must arrange for one or more methods of dispute resolution so as
to minimize the likelihood of deadlocks.
new text end

new text begin (f) The board shall establish governance requirements, which may include staggered
terms, term limits, quorum, a plan of operation, and audit provisions. The pool is subject
to financial audit by the legislative auditor under section 3.971, subdivision 6.
new text end

new text begin Subd. 4. new text end

new text begin Design and nature of plan. new text end

new text begin (a) Health coverage offered through the
Minnesota School Employee Insurance Pool shall be made available by the pool to all
eligible employees of eligible employers, as defined in subdivision 1.
new text end

new text begin (b) If an eligible employer provides health coverage or money to purchase health
coverage to eligible employees, the coverage must be provided or purchased only through
the health plans or self-insured health benefit plans offered by the pool.
new text end

new text begin (c) Nothing in this section affects the right of each eligible employer to determine,
through collective bargaining under the Public Employment Labor Relations Act:
new text end

new text begin (1) the employer's eligibility requirements regarding the terms and conditions under
which employees, dependents, retirees, and other persons are eligible for health coverage
through the employer;
new text end

new text begin (2) how much of the premium charged for the health coverage will be paid by the
employer and how much will be paid by the eligible person; and
new text end

new text begin (3) which health plans or self-insured health benefit plans offered by the pool will be
made available by the eligible employer.
new text end

new text begin (d) The pool must initially offer at least six health plans or self-insured health benefit
plans. One plan must provide coverage without a deductible and without other enrollee
cost-sharing other than reasonable co-payments for nonpreventive care. One plan must be
a high-deductible health plan that qualifies under federal law for use with a health savings
account. The other four plans must have levels of enrollee cost-sharing that are between
the two plans just described. The pool may establish more than one tier of premium
rates for any specific plan. Plans and premium rates may vary across geographic regions
established by the pool. The pool must comply with chapters 60A, 62A, 62E, 62J, 62M,
62Q, 70A, 72A, and 72C, and must provide the optimal combination of coverage, cost,
choice, and stability in the judgment of the pool. Any health plan or self-insured health
benefit plan offered must be approved by the commissioner of commerce. The pool shall
investigate the feasibility of offering coverage through more than one health plan company
or other network of health care providers.
new text end

new text begin (e) The pool must include claims reserves, stabilization reserves, reinsurance, and
other features that, in the judgment of the pool, will result in long-term stability and
solvency of the health plans and self-insured health benefit plans offered.
new text end

new text begin (f) The pool may determine whether the plans should be fully insured through a
health carrier licensed in this state, self-insured, or a combination of those two alternatives.
If at any time any plan offered by the pool is not fully insured, the pool and the self-insured
health benefit plan are subject to section 471.617, and any rules adopted under that section,
including Minnesota Rules, chapter 2785. The pool must not offer a self-insured plan
within its first two years of operation and may do so thereafter only if the self-insured plan
has been approved as financially solvent by the commissioner of commerce.
new text end

new text begin (g) Any health plan or self-insured health benefit plan must include disease
management and consumer education, including wellness programs and measures
encouraging the wise use of health coverage, to the extent determined to be appropriate by
the pool.
new text end

new text begin (h) Upon request by the pool, entities that are providing or have provided coverage
to employees of eligible employers within two years before the effective date of this
section, shall provide to the pool at no charge nonidentifiable aggregate claims data for
that coverage. The information must include data relating to employee group benefit sets,
demographics, and claims experience. Notwithstanding section 13.203, Minnesota service
cooperatives must also comply with this paragraph.
new text end

new text begin (i) Effective July 1, 2010, a contract entered into between an eligible employer and an
eligible employee or the exclusive representative of an eligible employee may not contain
provisions that establish cash payment in lieu of health coverage to an eligible employee,
unless the employee has been receiving a cash-in-lieu payment on or before June 30, 2010.
Nothing in this section prevents an eligible employee who otherwise qualifies for payment
of cash in lieu of insurance on June 30, 2009, from continuing to receive such a payment.
new text end

new text begin (j) All premiums paid for health coverage provided by the pool must be used by the
pool solely for the cost of the operation of the pool and the benefit of eligible employees
and eligible employers in connection with the health coverage offered by the pool.
new text end

new text begin (k) The pool and the commissioner of finance may enter into an agreement whereby
the pool's health plans would be based upon the plan offered by the commissioner under
section 43A.23, included within its contracts, or administered by the commissioner.
If such an agreement is entered into, persons covered through the pool must be rated
separately for premium purposes from other persons covered under section 43A.23. Such
an agreement may contain provisions that vary from those of paragraph (d) to conform to
the terms of the plan under section 43A.23.
new text end

new text begin Subd. 5. new text end

new text begin MCHA membership and assessments. new text end

new text begin The pool is a contributing member
of the Minnesota Comprehensive Health Association and must pay assessments made by
the association on its premium revenues, as provided in section 62E.11, subdivision 5,
paragraph (b).
new text end

new text begin Subd. 6. new text end

new text begin Report. new text end

new text begin The pool shall report to the legislature and to the commissioner
of commerce by January 15, 2010, on a final design for the pool that complies with
subdivision 4 and on governance requirements for the board, which may include staggered
terms, term limits, quorum, a plan of operation, and audit provisions. The report must
include any legislative changes necessary to ensure conformance with chapters 60A, 62A,
62E, 62J, 62M, 62Q, 70A, 72A, and 72C.
new text end

new text begin Subd. 7. new text end

new text begin Periodic evaluation. new text end

new text begin (a) Beginning December 15, 2010, and for the next
two years, the pool must submit an annual report to the commissioner of commerce and
the legislature, in compliance with sections 3.195 and 3.197, summarizing and evaluating
the performance of the pool during the previous fiscal year of operation.
new text end

new text begin (b) Beginning in 2013 and in each odd-numbered year thereafter, the pool must
submit to the legislature a biennial report summarizing and evaluating the performance of
the pool during the preceding two fiscal years.
new text end

new text begin Subd. 8. new text end

new text begin Actuarial study; MCHA and tax effects. new text end

new text begin (a) The pool shall have a study
prepared by a qualified actuary that estimates for the first two fiscal years of operation of
the pool:
new text end

new text begin (1) the rate of assessment for losses of the comprehensive health insurance plan
under section 62E.11, subdivision 5, to be paid by the pool that would provide amounts
equal to the assessments that would have been paid by providers of coverage to eligible
employers if the pool had not been established; and
new text end

new text begin (2) the rate of tax under section 297I.05, subdivision 5, paragraph (b), that would
provide amounts equal to the premiums tax that would have been paid by providers of
coverage to eligible employers if the pool had not been established. This estimate must
include the separate amounts of the tax that would have been paid under: (i) section
297I.05, subdivisions 1 to 4; and (ii) section 297I.05, subdivision 5.
new text end

new text begin (b) The pool shall provide the study to the commissioners of commerce and revenue
by January 1, 2009.
new text end

new text begin (c) After review of the study and after making any necessary modifications or
adjustments, the commissioner of commerce shall certify the rate under section 62E.11,
subdivision 5, paragraph (b), clause (2), and shall notify the pool and the association of
the rate by March 1, 2009. The rate certified applies until modified by legislation enacted
into law.
new text end

new text begin (d) After review of the study and after making any necessary modifications or
adjustments, the commissioner of revenue shall certify the rate of tax under section
297I.05, subdivision 5, paragraph (b), by March 1, 2009. The rate certified applies until
modified by legislation enacted into law.
new text end

new text begin Subd. 9. new text end

new text begin Applicability of data practices laws. new text end

new text begin The pool and its board are
government entities that are subject to chapter 13.
new text end

Sec. 4.

Minnesota Statutes 2006, section 62E.02, subdivision 23, is amended to read:


Subd. 23.

Contributing member.

"Contributing member" means those companies
regulated under chapter 62A and offering, selling, issuing, or renewing policies or
contracts of accident and health insurance; health maintenance organizations regulated
under chapter 62D; nonprofit health service plan corporations regulated under chapter
62C; community integrated service networks regulated under chapter 62N; fraternal
benefit societies regulated under chapter 64B; the Minnesota employees insurance
program established in section 43A.317, effective July 1, 1993; deleted text beginanddeleted text end joint self-insurance
plans regulated under chapter 62Hnew text begin; and the Minnesota School Employee Insurance Pool
created under section 62A.662
new text end. For the purposes of determining liability of contributing
members pursuant to section 62E.11 payments received from or on behalf of Minnesota
residents for coverage by a health maintenance organization deleted text beginordeleted text endnew text begin, anew text end community integrated
service networknew text begin, or the Minnesota School Employee Insurance Poolnew text end shall be considered to
be accident and health insurance premiums.

Sec. 5.

Minnesota Statutes 2006, section 62E.10, subdivision 1, is amended to read:


Subdivision 1.

Creation; tax exemption.

There is established a Comprehensive
Health Association to promote the public health and welfare of the state of Minnesota with
membership consisting of all insurers; self-insurers; fraternals; joint self-insurance plans
regulated under chapter 62H; the Minnesota employees insurance program established
in section 43A.317, effective July 1, 1993; new text beginthe Minnesota School Employee Insurance
Pool created under section 62A.662;
new text endhealth maintenance organizations; and community
integrated service networks licensed or authorized to do business in this state. The
Comprehensive Health Association is exempt from the taxes imposed under chapter
297I and any other laws of this state and all property owned by the association is exempt
from taxation.

Sec. 6.

Minnesota Statutes 2006, section 62E.11, subdivision 5, is amended to read:


Subd. 5.

Allocation of losses.

new text begin(a) new text endEach contributing member of the association shall
share the losses due to claims expenses of the comprehensive health insurance plan for
plans issued or approved for issuance by the association, and shall share in the operating
and administrative expenses incurred or estimated to be incurred by the association
incident to the conduct of its affairs. Claims expenses of the state plan which exceed
the premium payments allocated to the payment of benefits shall be the liability of the
contributing members. Contributing members shall share in the claims expense of the
state plan and operating and administrative expenses of the association in an amount equal
to the ratio of the contributing member's total accident and health insurance premium,
received from or on behalf of Minnesota residents as divided by the total accident and
health insurance premium, received by all contributing members from or on behalf of
Minnesota residents, as determined by the commissioner. Payments made by the state
to a contributing member for medical assistance, MinnesotaCare, or general assistance
medical care services according to chapters 256, 256B, and 256D shall be excluded when
determining a contributing member's total premium.

new text begin (b) In making the allocation of losses provided in paragraph (a), the association's
assessment against the Minnesota School Employee Insurance Pool must equal the
product of: (1) the percentage of premiums assessed against other association members;
(2) the rate certified by the commissioner under section 62A.662, subdivision 9, paragraph
(c); and (3) premiums received by the Minnesota School Employee Insurance Pool. For
purposes of this calculation, premiums of the board used must be net of rate credits and
retroactive rate refunds on the same basis as the premiums of other association members.
new text end

Sec. 7.

Minnesota Statutes 2006, section 297I.05, subdivision 5, is amended to read:


Subd. 5.

Health maintenance organizations, nonprofit health service plan
corporations, deleted text beginanddeleted text end community integrated service networksnew text begin, and the Minnesota
School Employee Insurance Pool
new text end.

(a) A tax is imposed on health maintenance
organizations, community integrated service networks, and nonprofit health care service
plan corporations. The rate of tax is equal to one percent of gross premiums less return
premiums on all direct business received by the organization, network, or corporation or
its agents in Minnesota, in cash or otherwise, in the calendar year.

(b) new text beginA tax is imposed on the Minnesota School Employee Insurance Pool under
section 62A.662, to the extent the pool receives amounts for coverage not otherwise
subject to tax under this section. The rate of tax is equal to the percentage rate certified by
the commissioner under section 62A.662, subdivision 9, paragraph (d), multiplied by the
gross premiums less return premiums received in the calendar year.
new text end

new text begin (c) new text endThe commissioner shall deposit all revenues, including penalties and interest,
collected under this chapter from health maintenance organizations, community integrated
service networks, and nonprofit health service plan corporations in the health care access
fund. Refunds of overpayments of tax imposed by this subdivision must be paid from
the health care access fund. There is annually appropriated from the health care access
fund to the commissioner the amount necessary to make any refunds of the tax imposed
under this subdivision.

new text begin (d) By March 1, 2009, based on the study prepared under section 62A.662,
subdivision 9, paragraph (a), the commissioner shall certify the percentage of all revenues,
including penalties and interest, collected under this chapter from the Minnesota School
Employee Insurance Pool, that are to be deposited in the general fund and the health
care access fund. The commissioner shall deposit the revenues and pay refunds of
overpayments of tax imposed on the Minnesota School Employee Insurance Pool based
on the certified percentage. Amounts are appropriated from the respective funds to the
commissioner to make any refunds of tax imposed under paragraph (b).
new text end

Sec. 8. new text beginINITIAL MEETING.
new text end

new text begin The commissioner of commerce shall convene the first meeting of the board of
directors of the Minnesota School Employee Insurance Pool no later than 30 days after all
board members have been appointed. The board must elect a chair or cochairs from its
membership at its first meeting.
new text end

Sec. 9. new text beginAPPROPRIATION.
new text end

new text begin $4,000,000 is appropriated in fiscal year 2009 from the general fund to the
commissioner of commerce as a loan for start-up costs to the Minnesota School Employee
Insurance Pool. The pool must repay the loan to the general fund in ten equal installments
paid at the end of each fiscal year, beginning with the 2011 fiscal year.
new text end

Sec. 10. new text beginEFFECTIVE DATE.
new text end

new text begin This act is effective July 1, 2008, except that sections 6 and 7, paragraph (b), are
effective July 1, 2010.
new text end