Relates to requiring the superintendent of financial services to fairly calculate compliance with minimum loss ratios in the Healthy New York insurance program

BILL NUMBER:S7333

Title of bill

An act to amend the insurance law, in relation to requiring the superintendent of financial services to fairly calculate compliance with minimum loss ratios in the Healthy New York insurance program

Purpose

To maintain the existing Healthy New York blended rate for small groups and individuals, while developing an actuarially sound accounting of the small group and individual experience under such policies so they may be fairly tested on meeting their minimum loss ratio requirements.

Summary of provisions

Adds a new section 3231-a to the insurance law to direct the Superintendent of the Department of Financial Services (DFS) to approve a single blended rate for Healthy New York policies, which would apply to both small groups and individuals. In addition to such information as may be required to allow the department to approve a premium rate for such policies, the superintendent shall also require insurers to submit Such information as may be required to permit DFS to determine the actual experience of both small group and individuals insured under such policies for the purposes of determining compliance with the minimum loss ratio requirements.

Justification

Changes in federal law affecting health and insurance policy have created unanticipated consequences in New York's insurance markets. One such unanticipated consequence is in the Healthy New York program. Under existing state policy, both small groups and individual purchasers are able to purchase a Healthy New York policy with a single, blended premium rate. The single rate does not reflect the actual experience of either the small group pool or the individual pool. However, when the medical loss ratio test is applied after the contract period, federal law does not permit testing of the blended rate, but rather requires that the small group experience and individual experience be tested separately. By definition, the small group experience will not meet the medical loss ratio test because it is in effect subsidizing the individual experience, and a premium rebate will be required despite the fact that the insurer has met the medical loss ratio for the combined population. The state must figure out a way to maintain the single, blended rate which benefits purchasers, and provide an actuarially sound accounting for the each pool which allows it to be tested fairly.

Legislative history

New bill.

Fiscal implications

None.

Effective date

90 days after it shall have become a law.