Senate Bill S7333

2011-2012 Legislative Session

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

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Archive: Last Bill Status - In Senate Committee Insurance 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

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Date of Action	Assembly Actions - Lowercase Senate Actions - UPPERCASE
May 02, 2012	referred to insurance

2011-S7333 (ACTIVE) - Details

Current Committee:: Senate Insurance
Law Section:: Insurance Law
Laws Affected:: Add §3231-a, Ins L

2011-S7333 (ACTIVE) - Summary

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

2011-S7333 (ACTIVE) - Sponsor Memo

                                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.

2011-S7333 (ACTIVE) - Bill Text download pdf

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

                                  7333

                            I N  S E N A T E

                               May 2, 2012
                               ___________

Introduced  by  Sen.  SEWARD -- read twice and ordered printed, and when
  printed to be committed to the Committee on Insurance

AN ACT to amend the insurance law, in relation to requiring  the  super-
  intendent  of  financial  services to fairly calculate compliance with
  minimum loss ratios in the Healthy New York insurance program

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

  Section 1. The insurance law is amended by adding a new section 3231-a
to read as follows:
  S  3231-A.  HEALTHY  NEW YORK POLICY BLENDED RATE. (A) CONSISTENT WITH
SECTIONS FOUR THOUSAND THREE HUNDRED TWENTY-SIX AND FOUR THOUSAND  THREE
HUNDRED  TWENTY-SEVEN  OF  THIS  CHAPTER AND DEPARTMENT REGULATIONS, THE
SUPERINTENDENT SHALL APPROVE A SINGLE, BLENDED PREMIUM RATE FOR  HEALTHY
NEW  YORK POLICIES THAT IS APPLICABLE TO BOTH SMALL GROUP AND INDIVIDUAL
PURCHASERS. IN ADDITION TO PROVIDING SUCH INFORMATION AS MAY BE REQUIRED
TO ALLOW THE DEPARTMENT TO APPROVE A BLENDED  RATE,  THE  SUPERINTENDENT
SHALL REQUIRE INSURERS OFFERING HEALTHY NEW YORK POLICIES TO ALSO SUBMIT
SUCH  INFORMATION AS MAY BE REQUIRED TO DETERMINE SEPARATE PREMIUM RATES
FOR EACH OF THE SMALL GROUP AND INDIVIDUAL RISK POOLS THAT  ARE  INSURED
UNDER THE BLENDED RATE.
  (B)(1)  IN  THE  EVENT THAT THE SEPARATE RATES DIFFER FROM THE BLENDED
RATE, THE DEPARTMENT SHALL IDENTIFY THE PREMIUM RATE THAT IS LOWER  THAN
THE  BLENDED  RATE,  WHICH  SHALL  BE  KNOWN AS THE SUPPORTING RATE. THE
PREMIUM RATE THAT IS GREATER THAN THE BLENDED RATE SHALL BE KNOWN AS THE
NON-SUPPORTING RATE.
  (2) THE DEPARTMENT SHALL SUBTRACT THE SUPPORTING RATE FROM THE BLENDED
RATE TO DETERMINE THE DIFFERENCE, WHICH SHALL BE KNOWN  AS  THE  PREMIUM
SUPPORT FACTOR.
  (3)  THE  DEPARTMENT  SHALL MULTIPLY THE PREMIUM SUPPORT FACTOR BY THE
TOTAL NUMBER OF CONTRACTS IN THE SUPPORTING RATE RISK POOL, THE  PRODUCT
OF  WHICH  SHALL BE DEEMED AN ASSESSMENT FOR REPORTING PURPOSES UNDER US
45 CFR 158.162(B)(1) AND SHALL BE DEEMED AN ASSESSMENT FOR MEDICAL  LOSS
RATIO CALCULATIONS UNDER US 45 CFR 158.221(C).

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD15690-02-2

S. 7333                             2

  (C)  THE  DEPARTMENT SHALL ALSO MULTIPLY THE PREMIUM SUPPORT FACTOR BY
THE TOTAL NUMBER OF CONTRACTS IN THE NON-SUPPORTING RATE RISK POOL,  THE
PRODUCT OF WHICH SHALL BE DEEMED EARNED PREMIUM, REFLECTED AS AN ADJUST-
MENT  TO  THE NON-SUPPORTING RATE'S EARNED PREMIUM AMOUNT, AS DEFINED IN
US  45  CFR  158.130(B)(3)  AND  REPORTED  AS PART OF MEDICAL LOSS RATIO
CALCULATIONS UNDER US 45 CFR 158.221(C).
  (D) APPLICATION OF THIS SECTION AND  CLASSIFICATION  OF  ANY  PART  OF
PREMIUM  RATES  AS  AN ASSESSMENT OR EARNED PREMIUMS ARE FOR PURPOSES OF
MEDICAL LOSS RATIO CALCULATIONS ONLY.
  S 2. This act shall take effect on the ninetieth day  after  it  shall
have become a law.

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Senate Bill S7333

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Archive: Last Bill Status - In Senate Committee Insurance Committee

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2011-S7333 (ACTIVE) - Details

2011-S7333 (ACTIVE) - Summary

2011-S7333 (ACTIVE) - Sponsor Memo

2011-S7333 (ACTIVE) - Bill Text download pdf

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Sponsored By

James L. Seward

Archive: Last Bill Status - In Senate Committee Insurance Committee

Actions

2011-S7333 (ACTIVE) - Details

2011-S7333 (ACTIVE) - Summary

2011-S7333 (ACTIVE) - Sponsor Memo

2011-S7333 (ACTIVE) - Bill Text download pdf

Comments