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History
- Referred to insurance
Companion bill
The same bill in the other chamber. A bill becomes law when one version passes both houses and the governor signs it, so either number can carry it.
Creates the health insurance guaranty fund
In Assembly Committee · Insurance · Sponsor Richard Gottfried
Full text
The text isn't available here yet. Check nysenate.gov.
Sponsor's memo
Title of bill
An act to amend the insurance law and the state finance law, in relation to creating the health insurance guaranty fund
Purpose
This legislation would enact the New York health insurance consumer protection security fund to protect consumers and providers from the failure of a health insurer to perform its contractual obligations due to financial impairment or insolvency.
Summary of specific provisions
This bill establishes the New York health insurance consumer protection security fund. In the event of an insolvency or failure by a health insurance company, the fund would reimburse providers for uncompensated care delivered to its enrollees. The fund would be financed by a one-time, temporary assessment on remaining health insurers-not a permanent tax.
Other provisions of note:
*Prohibits insurers from passing on assessments to policyholders.
*Assessment on remaining insurers would be based on premiums received during the previous calendar year.
*Allows the Department of Financial Services superintendent to adjust or suspend the assessment based on a health insurer's financial situation.
Justification
Consumers and providers were severely harmed by the failure of Health Republic Insurance of New York (HRINY). The company owes hospitals and doctors across the state hundreds of millions of dollars and its demise left consumers worried about their access to care as they scrambled for new coverage.
While the Department of Financial Services has expressed hope that "modest payments" could resume, there is no information on how much money, if any, remains available within HRINY to reimburse providers for outstanding claims. This is not the first time that a New York health insurer has failed-the last major one was Wellcare in 1998-and likely won't be the last.
New York has no system of protection for consumers and providers when a health insurance plan becomes insolvent. This bill seeks to remedy that situation by creating a health insurance guaranty fund-a basic consumer protection enjoyed by every other state in the nation, along with Washington, DC and Puerto Rico. The fund would be financed by a one-time, temporary assessment-levied only in the event of a health plan's insolvency-on other insurers.
Had such a health insurance guaranty fund existed, it could have minimized the confusion caused by HRINY's failure and promoted confidence in a shaken health insurance marketplace: the fund would enable consumers of a bankrupt insurer to continue to receive care from their own doctors and hospitals by guaranteeing that providers would be paid for care provided.
A health insurance guaranty fund would neither create a new permanent tax nor require an investment by the State. It would not affect consumer premiums either: though insurers would pay a temporary assessment in the event of an insolvency, this would be offset by new customers (and new premiums) from failed competitors. The bill also prohibits insurers from passing on assessments to policyholders.
Fortunately, insurer failures are rare, but when they do occur we need a statutory framework with protections that allow consumers to transition smoothly to other coverage and ensure they have continued access to health services through stable provider networks. New York has a property and casualty insurance guaranty fund. It should extend the same protection to health insurance policy holders.
Prior legislative history
Similar legislation (S.6594/A.8368-A of 1999/2000) was referred to the Senate Insurance Committee and ordered to third reading in the Assembly. S.6166/A.8828 of 1999/2000 included a health guaranty fund and passed the Assembly in 1999.
Fiscal implications
None.
Effective date
Immediately.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.