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History
- Referred to insurance
- Referred to insurance
Full text
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Sponsor's memo
Title of bill
An act to amend the insurance law, in relation to the rating of individual and small group health insurance policies and contracts and several stop loss funds, and to amend the public health law, in relation to transferring certain residual funds in the tobacco control and insurance initiatives pool to the stop loss funds for standardized health insurance contracts issued to qualifying small employers and individuals, and to repeal the closing paragraph of subsection (c) of section 3233 of the insurance law relating to convening the technical advisory committee periodically to evaluate the impact of the standardized direct payment enrollee contracts offered pursuant to sections 4321 and 4322 of such law on the individual health insurance market
Purpose
To reform the direct pay or individual health insurance market by: A) placing groups of one into the small group market that now includes groups of 2 to 50, and B) establishing a high risk or high cost medical conditions pool to reimburse insurers and health maintenance organizations for persons covered that face inordinately high medical care costs.
The purpose of this bill is to reform the community rating laws so that future health insurance rate increases can be minimized, to increase access to affordable health insurance and medical care, and to increase consumer choice in the number of products offered to the public to better satisfy individual consumer needs.
Read the full memo (1,218 words)
From a societal perspective, it is important to increase the percentage of persons that have health insurance coverage. This is because it increases an individual's ability to access better medical care at the appropriate time, instead of waiting until a medical condition becomes acute. Postponing routine medical care not only leads to the need for more expensive acute care delivered at hospital emergency rooms at a later date, but the recovery time is generally longer and can lead to other medical complications or other chronic conditions.
Summary of provisions
Section 1: Amends section 3231 of the insurance law to change the community rating laws to include groups of one in the small group health insurance market which now consists of groups of 2 to 50.
Section 2: Amends section 4317 of the insurance law to change the community rating laws to include groups of one in the small group health insurance market which now consists of groups of 2 to 50.
Section 3: Amends section 3233 of the insurance law by adding a new subsection (d). This subsection outlines the procedures by which the superintendent of insurance will need to use to promulgate regulations to implement the new community rating groups for groups of 1 to 50. A technical advisory council will be established to help the superintendent develop new regulations for the small group market.
The committee must develop standards to implement a high risk or high cost medical conditions pool. In addition, the committee must develop programs or methodologies to ensure that appropriate medical care is provided to all persons placed in the high risk or high cost medical conditions pool.
The bill provides for procedures on how regulations shall be adopted and for public hearings so that the public may comment on their promulgation. In addition, the committee shall develop procedures to
ensure that there is an orderly transfer of individuals from the direct pay market to the newly created small group market.
Section 4: Amends section 4301 (j)(4) so that proceeds from the sale of Empire Blue Cross/Blue Shield may be used to support the small group stop loss fund.
Section 5: Amends section 4321-a of the insurance law to authorize the use of funds from the standardized individual enrollee direct payment contracts pool for those individuals that shift to the small group market. Such fund can only be used to provide stop loss coverage for small group policies or contracts issued after January 1, 2008.
Section 6: Amends section 4322-a of the insurance law to authorize the use of funds from the standardized individual enrollee direct payment contracts which provide out-of-plan benefits pool that shift to the small group market. Such fund can only be used to provide stop loss coverage for small group policies or contracts issued after January 1, 2008.
Section 7: Amends section 4327 of the insurance law to establish the stop loss fund for the small group market so that the high risk pools established pursuant to section 3233 can be funded. This section establishes criteria to establish the fund in accordance with section 3233.
Section 8: Amends section 2807-v (4) of the Public Health Law so that residual funds from the tobacco settlement funds may be used to fund the small group stop loss high risk medical condition pool.
Section 9: Effective date.
Existing law
Under current law, there are two separate health insurance markets for individuals and for small groups that consist of groups of 2 to 50. This bill merges these two groups.
Justification
The individual, direct pay health insurance market is broken. It is in a death spiral because the pool of individuals that subscribe to direct pay products is getting smaller and smaller due to the increasing cost of these products. Consequently, the only individuals that remain in the direct pay market tend to be medically fragile or ill persons that demand or potentially demand a lot of expensive health care. This, in turn, further increases the pressure to increase the cost of these products because of the higher medical costs associated with those persons left in the direct pay market.
This bill merges the individual direct pay market with the small group market to arrive at a more representative mix of healthy and potentially unhealthy persons. This measure will group ill and healthy individuals together to get a better average of costs so that more people will be able to afford to purchase health insurance.
To help reduce the increasing costs faced by insurers that are required to reimburse for serious or chronic medical conditions, this bill establishes a high risk medical conditions pool that will be funded by Empire Blue Cross/Blue Shield settlement funds, tobacco settlement funds and other existing pools of money that were dedicated to help keep the cost of health insurance reasonable for individuals in both the direct pay market and the small group market.
This is a study bill that is being introduced to foster discussion among health insurers, health care providers, consumers, insurance regulators and others interested in health care financing public policy on how best to reform the community rating system so that all persons will have better access to affordable and quality health care. It is the sponsor's hope to receive public comments on this bill so that amendments can be made to facilitate the merger of the direct pay market and small group market. Further, that such a merger shall be done in a manner that stabilizes insurance rate increases, increases access to affordable health insurance products, and increases consumer choice in the products offered and the premium rates charged.
Legislative history
S.5036 of 2003/2004, S.76 of 2005/2006, S.200 of 2007/2008
Fiscal implications
To be determined.
Local fiscal implications
None.
Effective date
Immediate, except that the new community rates for the small group market shall become effective on January 1, 2010.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.