Assembly Bill A10605

2009-2010 Legislative Session

Limits superintendent of insurance from allowing increases above five percent for certain hospital service corporations; repealer

download bill text pdf

Archive: Last Bill Status - In Assembly Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

Please enter your contact information

First Name

Last Name

Email Address

A valid email address is required.

Home address is used to determine the senate district in which you reside. Your support or opposition to this bill is then shared immediately with the senator who represents you.

Optional services from the NY State Senate:

Create an account. An account allows you to officially support or oppose key legislation, sign petitions with a single click, and follow issues, committees, and bills that matter to you. When you create an account, you agree to this platform's terms of participation.

Include a custom message for your Senator? (Optional)

Enter a message to your senator. Many New Yorkers use this to share the reasoning behind their support or opposition to the bill. Others might share a personal anecdote about how the bill would affect them or people they care about.

Actions

View Actions

Date of Action	Assembly Actions - Lowercase Senate Actions - UPPERCASE
May 18, 2010	held for consideration in insurance
Apr 08, 2010	referred to insurance

2009-A10605 (ACTIVE) - Details

Current Committee:: Assembly Insurance
Law Section:: Insurance Law
Laws Affected:: Amd §§3231 & 4308; rpld §4308 sub§ (j), Ins L

2009-A10605 (ACTIVE) - Summary

Limits superintendent of insurance from allowing rate increases above five percent for certain hospital service corporations; excludes medicare supplement insurance from the rate-setting provisions of this section; repeals provisions relating to minimum loss ratio.

2009-A10605 (ACTIVE) - Sponsor Memo

                                BILL NUMBER:A10605

TITLE OF BILL:  An act to amend the insurance law, in relation to review
of  health  plan  rate  increases  applications  and  to  repeal certain
provisions of such law relating thereto

PURPOSE: To require the state  Insurance  Department  (SID)  to  conduct
public  hearings  and  review proposed individual, Medicare supplemental
and small group health insurance premium increases submitted  by  Health
Maintenance Organizations (HMOs), non-profit and commercial insurers.

SUMMARY OF PROVISIONS:  Section one amends section 3231 of the insurance
law to require commercial insurers to seek the prior approval of the SID
for rate increase applications unless: 1) the insurer submits an actuar-
ial certification that it will payout 85 cents for each dollar of premi-
um for small group policies and 90 cents for individual policies; and 2)
the  rate  of  increase  does not exceed five percent in a year. The SID
would also be required to hold  public  hearings  on  such  applications
prior to ruling on the increase request.

Section two amends subsections (g) and (h) of section 4308 of the insur-
ance  law  to establish the same loss ratio requirements as section 3231
and to provide that health insurance premium increases  sought  by  HMOs
and  non-profit  insurers  for individual and small group customers will
require the prior approval of the SID if  the  aggregate  rate  increase
exceeds  five  percent  during  any  continuous 12-month period. The SID

would be required to conduct public hearings on such applications.

Section three amends section 4308 (i) of the Insurance  Law  to  clarify
that  Medicare supplemental rate increase requests will also be governed
by the provisions of subsection (g) of section  4308  of  the  Insurance
Law,  requiring minimum loss ratios and prior approval of rate increases
in excess of five percent.

Section four repeals subsection G) of section 4308.

Section five sets out the effective date.

JUSTIFICATION: Prior to 1996, the SID conducted public hearings  on  all
rate  increase  requests  submitted  by non-profit insurers and HMOs. In
1996, HMOs and non-profit insurers were allowed to increase rates up  to
10% automatically, so long as certain minimum loss ratios were met. With
the  failure  of  the  Pataki  Administration and the Senate to join the
Assembly in extending these provisions, this law expired on December 31,
1999. As a result, HMO's and non-profit  insurers  may  "file  and  use"
increased rates of any magnitude without approval by the SID.

After years of relatively flat premiums for individuals and small groups
in  the  mid-1990's, recent /premium increases have been dramatic. Indi-
vidual purchasers, senior citizens and small businesses are all  reeling
from  years  of double-digit premium increases ranging from ten to 150%.

Some individuals are now incredibly paying well over $3,000 per month in
premiums for their family's health insurance.

Without  adequate  regulatory  review,  health  plan  profits  have been
increasing exponentially. An analysis of data provided  by  insurers  to
the  SID  revealed that HMO profits increased by 93 percent between 2001
and 2005, generating industry-wide profits  of  more  than  $6  billion,
while enrollment fell by 14% in that time span. In 2005, health plans in
New  York  had $5 billion more in reserves than is statutorily required,
of which approximately $700 million was used to pay dividends to  share-
holders. And while HMOs often claim that the rising premiums reflect the
increased  costs for medical services such as prescription drugs and the
use of specialty providers, the percent of funds  used  by  insurers  on
medical expenditures has actually dropped.

As  the  state seeks to control rising health care premiums, this legis-
lation would restore SID authority to review rates increases  in  excess
of  five percent for individuals and small groups, providing immediately
relief and  recourse  for  small  businesses.  Health  plans  should  be
required to justify every penny of their rate increase requests, and the
knowledge  that  their increases are being scrutinized may enhance their
cost control efforts. Prior approval of rates is among the most basic of
consumer protections. Prior to 2000, the SID used their  prior  approval
authority  on countless occasions.  Sometimes rate increase applications
were granted, but many times they were reduced or rejected  outright  to
the  benefit  of  consumers.   And in other areas where SID continues to
have the authority to intervene, the result has  been  palpable  relief.
For  example,  in  2004,  the  SID  used its authority to review workers
compensation rates, an action which saved businesses millions of dollars
in premiums when the SID rejected a proposed increase of 29%.

It is also important to keep in mind that this legislation would restore
for individuals and small businesses the same cost-containment  measures
on  which  New York State currently relies to restrain the growth of the
premiums it pays. The Family Health Plus, Child Health Plus and Medicaid
Managed Care programs all require participating health plans to  justify
their  rates  before  raising  them.  So  does the New York State Health
Insurance Plan covering state workers. Individuals and small  businesses
struggling   to   maintain  their  health  insurance  deserve  the  same
protections.

The restoration of the  public  hearing  requirement  included  in  this
legislation is also important. It provides the opportunity for consumers
to both challenge the assumptions on which rate increases are based, and
to  educate policymakers and regulators on the impact of rate increases.
Several important health insurance reforms over the past few  years-such
as  the  1995  Point-of-Service  Law and the HCRA 2000 direct pay market
subsidy-came about in part because of  input  received  from  rate  hike
hearings.  This  bill  would  restore the public hearing requirement for
rate increases in excess of 5%.

Finally, it is important to require that all health plans are playing by
the same rules. This legislation eliminates discrepancies in the regula-
tory treatment of commercial and non-profit health plans and HMOs.

PRIOR LEGISLATIVE HISTORY:
1998: A.9634 - Passed Assembly
1999: A.1504 - Passed Assembly
2000: A.1504-A - Passed Assembly
2001: A.1084 - Passed Assembly
2002: A.1084-A - Passed Assembly
2003: A.6852 - Passed Assembly
2004: A.6852-A - Passed Assembly
2005: A.2518 - Passed Assembly
2006: A.2518-B - Passed Assembly
2007-2008: A7485/S2740 - Passed Assembly

FISCAL IMPLICATIONS: None.

EFFECTIVE DATE: This act shall take effect January 1, 2011.

2009-A10605 (ACTIVE) - Bill Text download pdf

                            
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  10605

                          I N  A S S E M B L Y

                              April 8, 2010
                               ___________

Introduced by M. of A. CASTELLI -- read once and referred to the Commit-
  tee on Insurance

AN  ACT to amend the insurance law, in relation to review of health plan
  rate increases applications and to repeal certain provisions  of  such
  law relating thereto

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. Paragraph 2 of subsection (e) of section 3231 of the insur-
ance law, as added by chapter 501 of the laws of 1992  and  subparagraph
(B) as amended by chapter 237 of the laws of 2009, is amended to read as
follows:
  (2)  (A)  Beginning October first, nineteen hundred ninety-four, as an
alternate procedure  to  the  requirements  of  paragraph  one  of  this
subsection, an insurer desiring to increase or decrease premiums for any
policy  form subject to this section may instead submit a rate filing or
application to the superintendent and such application or  filing  shall
be deemed approved, provided that (i) the anticipated minimum loss ratio
for  a  policy  form  shall  not be less than [seventy-five] EIGHTY-FIVE
percent of the premium FOR A SMALL GROUP HEALTH  INSURANCE  POLICY  FORM
AND  NINETY  PERCENT  FOR  AN  INDIVIDUAL  HEALTH INSURANCE POLICY FORM,
INCLUDING MEDICARE SUPPLEMENTAL INSURANCE, (II) ANY RATE INCREASE  BEING
SOUGHT  FOR  A  POLICY FORM IN A FILING OR AN APPLICATION, TOGETHER WITH
ANY OTHER RATE INCREASES IMPOSED ON SUCH POLICY FORM,  WOULD  NOT  CAUSE
THE  AGGREGATE RATE INCREASE FOR SUCH POLICY FORM TO EXCEED FIVE PERCENT
DURING ANY TWELVE MONTH PERIOD, and [(ii)] (III) the insurer submits, as
part of such filing, a certification by a member of the American Academy
of Actuaries or other individual acceptable to the  superintendent  that
the  insurer  is  in  compliance  with the provisions of this paragraph,
based upon that person's examination, including a review of  the  appro-
priate  records and of the actuarial assumptions and methods used by the
insurer in establishing premium rates for policy forms subject  to  this
section.
  (B) Each calendar year, an insurer shall return, in the form of aggre-
gate  benefits  for  each  policy  form  filed pursuant to the alternate

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.

                                                           LBD16360-01-0

A. 10605                            2

procedure  set  forth  in  this  paragraph   at   least   [seventy-five]
EIGHTY-FIVE  percent  of the aggregate premiums collected for the policy
form during that calendar year FOR A SMALL GROUP HEALTH INSURANCE POLICY
FORM  AND  NINETY  PERCENT FOR AN INDIVIDUAL POLICY FORM. Insurers shall
annually report, no later than May first of each year,  the  loss  ratio
calculated  pursuant to this paragraph for each such policy form for the
previous calendar year. In each case where the loss ratio for  a  policy
form  fails  to  comply  with  the [seventy-five] EIGHTY-FIVE percent OR
NINETY PERCENT loss ratio requirement, the insurer shall issue  a  divi-
dend or credit against future premiums for all policy holders with [that
policy  form]  THOSE POLICY FORMS in an amount sufficient to assure that
the aggregate benefits paid in  the  previous  calendar  year  plus  the
amount   of   the  dividends  and  credits  shall  equal  [seventy-five]
EIGHTY-FIVE percent of the aggregate premiums collected for  the  policy
form  in  the  previous  calendar  year FOR SMALL GROUP HEALTH INSURANCE
POLICY FORMS, OR NINETY PERCENT FOR INDIVIDUAL HEALTH  INSURANCE  POLICY
FORMS  IN  THE  PREVIOUS  CALENDAR YEAR. The dividend or credit shall be
issued to each policy holder who had a policy which was in effect at any
time during the  applicable  year.  The  dividend  or  credit  shall  be
prorated  based  on  the  direct premiums earned for the applicable year
among all policy holders eligible to receive such dividend or credit. An
insurer shall make a reasonable effort to identify the  current  address
of, and issue dividends or credits to, former policy holders entitled to
the  dividend  or credit. An insurer shall, with respect to dividends or
credits to which former policy holders that the  insurer  is  unable  to
identify after a reasonable effort would otherwise be entitled, have the
option,  as  deemed  acceptable  by the superintendent, of prospectively
adjusting premium rates by the amount  of  such  dividends  or  credits,
issuing the amount of such dividends or credits to existing policy hold-
ers,  depositing  the  amount  of  such dividends or credits in the fund
established pursuant to section four thousand three hundred twenty-two-a
of this chapter, or utilizing any other method which offsets the  amount
of  such  dividends  or  credits.    All  dividends  and credits must be
distributed by September thirtieth of the year  following  the  calendar
year in which the loss ratio requirements were not satisfied. The annual
report required by this paragraph shall include an insurer's calculation
of the dividends and credits, as well as an explanation of the insurer's
plan  to  issue  dividends  or  credits. The instructions and format for
calculating and reporting loss ratios and issuing dividends  or  credits
shall be specified by the superintendent by regulation. Such regulations
shall include provisions for the distribution of a dividend or credit in
the event of cancellation or termination by a policy holder.
  S  2. Subsections (g) and (h) of section 4308 of the insurance law, as
added by chapter 504 of the laws of 1995 and paragraph 2  of  subsection
(h)  as  amended by chapter 237 of the laws of 2009, are amended to read
as follows:
  (g)(1) Beginning January first, nineteen  hundred  ninety-six,  as  an
alternate  procedure  to  the  requirements  of  subsection  (c) of this
section, a corporation subject to the provisions of this article  desir-
ing  to  increase  or decrease premiums for any contract subject to this
section may instead submit a rate filing or application  to  the  super-
intendent  and  such  application  or  filing  shall be deemed approved,
provided that (A) the anticipated incurred loss  ratio  for  a  contract
form  shall not be less than [eighty-five] NINETY percent for individual
direct payment contracts or [seventy-five] EIGHTY-FIVE percent for small
group and small group remittance contracts, nor, except in the  case  of

A. 10605                            3

individual  direct  payment  contracts with a loss ratio of greater than
one hundred five percent during nineteen hundred ninety-four, shall  the
loss ratio for any direct payment, group or group remittance contract be
more  than  one  hundred five percent of the anticipated earned premium,
and (B) the corporation submits, as part of such filing, a certification
by a member of the American Academy of  Actuaries  or  other  individual
acceptable  to the superintendent that that corporation is in compliance
with the provisions of this subsection, based upon that  person's  exam-
ination,  including a review of the appropriate records and of the actu-
arial assumptions and methods used by the  corporation  in  establishing
premium  rates  for  contracts  subject to this section. For purposes of
this section, a small group is any group whose contract  is  subject  to
the  requirements of section forty-three hundred seventeen of this arti-
cle.
  (2) [Prior to January first, two thousand, no] NO rate  [increase  or]
decrease  may be deemed approved under this subsection if that [increase
or] decrease, together with any  other  rate  [increases  or]  decreases
imposed  on  the  same  contract  form,  would  cause the aggregate rate
[increase or] decrease for that contract  form  to  exceed  ten  percent
during  any  continuous  twelve  month period.   NO RATE INCREASE MAY BE
DEEMED APPROVED UNDER THIS SUBSECTION IF THAT  INCREASE,  TOGETHER  WITH
ANY  OTHER RATE INCREASES IMPOSED ON THE SAME CONTRACT FORM, WOULD CAUSE
THE AGGREGATE RATE INCREASE  FOR  THAT  CONTRACT  FORM  TO  EXCEED  FIVE
PERCENT  DURING ANY CONTINUOUS TWELVE MONTH PERIOD. No rate increase may
be imposed unless at least thirty days advance written  notice  of  such
increase has been provided to each contract holder and subscriber.
  (h)(1)  Each calendar year, a corporation subject to the provisions of
this article shall return, in the form of  aggregate  benefits  incurred
for  each  contract  form  filed pursuant to the alternate procedure set
forth in subsection (g) of this section, at least  [eighty-five]  NINETY
percent for individual direct payment contracts or [seventy-five] EIGHT-
Y-FIVE  percent  for  small  group and small group remittance contracts,
but, except in the case of individual direct payment  contracts  with  a
loss  ratio of greater than one hundred five percent in nineteen hundred
ninety-four, for any direct payment, group or group remittance contract,
not in excess of one hundred five  percent  of  the  aggregate  premiums
earned  for  the  contract form during that calendar year.  Corporations
subject to the provisions of this  article  shall  annually  report,  no
later than May first of each year, the loss ratio calculated pursuant to
this  subsection  for  each such contract form for the previous calendar
year.
  (2) In each case where the loss ratio for a  contract  form  fails  to
comply with the [eighty-five] NINETY percent minimum loss ratio require-
ment  for  individual  direct  payment  contracts, or the [seventy-five]
EIGHTY-FIVE percent minimum loss ratio requirement for small  group  and
small  group remittance contracts, as set forth in paragraph one of this
subsection, the corporation shall issue a  dividend  or  credit  against
future  premiums  for all contract holders with that contract form in an
amount sufficient to assure that the aggregate benefits incurred in  the
previous  calendar  year  plus  the  amount of the dividends and credits
shall equal no less than [eighty-five]  NINETY  percent  for  individual
direct  payment  contracts,  or  [seventy-five]  EIGHTY-FIVE percent for
small group and small  group  remittance  contracts,  of  the  aggregate
premiums earned for the contract form in the previous calendar year. The
dividend or credit shall be issued to each contract holder or subscriber
who  had a contract that was in effect at any time during the applicable

A. 10605                            4

year. The dividend or credit shall  be  prorated  based  on  the  direct
premiums  earned  for  the applicable year among all contract holders or
subscribers eligible to receive such dividend or credit.  A  corporation
shall  make  a reasonable effort to identify the current address of, and
issue dividends or credits to, former contract  holders  or  subscribers
entitled to the dividend or credit. A corporation shall, with respect to
dividends  or  credits  to which former contract holders that the corpo-
ration is unable to identify after a reasonable effort  would  otherwise
be  entitled,  have  the option, as deemed acceptable by the superinten-
dent, of prospectively adjusting premium rates by  the  amount  of  such
dividends or credits, issuing the amount of such dividends or credits to
existing  contract  holders,  depositing the amount of such dividends or
credits in the fund established pursuant to section four thousand  three
hundred  twenty-two-a  of  this  article,  or utilizing any other method
which offsets the amount of such dividends or credits. All dividends and
credits must be distributed by September thirtieth of the year following
the calendar year in which the loss ratio requirements were  not  satis-
fied.  The  annual  report  required by paragraph one of this subsection
shall include a corporation's calculation of the dividends and  credits,
as  well  as an explanation of the corporation's plan to issue dividends
or credits. The instructions and format for  calculating  and  reporting
loss  ratios  and issuing dividends or credits shall be specified by the
superintendent by regulation. Such regulations shall include  provisions
for  the  distribution of a dividend or credit in the event of cancella-
tion or termination by a contract holder or subscriber.
  (3) In each case where the loss ratio for a  contract  form  fails  to
comply  with the one hundred five percent maximum loss ratio requirement
of paragraph one of this subsection, the corporation shall  institute  a
premium  rate increase in an amount sufficient to assure that the aggre-
gate benefits incurred in the previous calendar year shall equal no more
than one hundred five percent of  the  sum  of  the  aggregate  premiums
earned  for  the  contract  form  in  the previous calendar year and the
aggregate premium rate increase. The rate increase shall be  applied  to
each  contract  that  was  in  effect as of December thirty-first of the
applicable year and remains in effect as of the date the  rate  increase
is imposed. All rate increases must be imposed by September thirtieth of
the  year  following  the calendar year in which the loss ratio require-
ments were not satisfied. The annual report required by paragraph one of
this subsection shall include a corporation's calculation of the premium
rate increase, as well as an explanation of the  corporation's  plan  to
implement the rate increase. The instructions and format for calculating
and reporting loss ratios and implementing rate increases shall be spec-
ified by the superintendent by regulation.
  S  3. Subsection (i) of section 4308 of the insurance law, as added by
chapter 504 of the laws of 1995, is amended to read as follows:
  (i) The alternate procedure described in subsections (g)  and  (h)  of
this  section  shall apply to individual direct payment contracts issued
pursuant to sections four thousand three  hundred  twenty-one  and  four
thousand  three  hundred twenty-two of this article on and after January
first, nineteen hundred ninety-seven AND TO INDIVIDUAL OR GROUP POLICIES
OF MEDICARE SUPPLEMENTAL INSURANCE ISSUED BY A  CORPORATION  OR  INSURER
ORGANIZED OR LICENSED PURSUANT TO THIS CHAPTER.
  S 4. Subsection (j) of section 4308 of the insurance law is REPEALED.
  S 5. This act shall take effect January 1, 2011.

Comments

Open Legislation is a forum for New York State legislation. All comments are subject to review and community moderation is encouraged.

Comments deemed off-topic, commercial, campaign-related, self-promotional; or that contain profanity, hate or toxic speech; or that link to sites outside of the nysenate.gov domain are not permitted, and will not be published. Attempts to intimidate and silence contributors or deliberately deceive the public, including excessive or extraneous posting/posts, or coordinated activity, are prohibited and may result in the temporary or permanent banning of the user. Comment moderation is generally performed Monday through Friday. By contributing or voting you agree to the Terms of Participation and verify you are over 13.

Create an account. An account allows you to sign petitions with a single click, officially support or oppose key legislation, and follow issues, committees, and bills that matter to you. When you create an account, you agree to this platform's terms of participation.

Find your Senator and share your views on important issues.

Do you support this bill?

Assembly Bill A10605

Sponsored By

Archive: Last Bill Status - In Assembly Committee

Actions

2009-A10605 (ACTIVE) - Details

2009-A10605 (ACTIVE) - Summary

2009-A10605 (ACTIVE) - Sponsor Memo

2009-A10605 (ACTIVE) - Bill Text download pdf

Comments

Do you support this bill?

Get Status Alerts for 2009-A10605

Assembly Bill A10605

Share this bill

Sponsored By

CASTELLI

Archive: Last Bill Status - In Assembly Committee

Actions

2009-A10605 (ACTIVE) - Details

2009-A10605 (ACTIVE) - Summary

2009-A10605 (ACTIVE) - Sponsor Memo

2009-A10605 (ACTIVE) - Bill Text download pdf

Comments