Bill Text: IL HB1465 | 2021-2022 | 102nd General Assembly | Engrossed

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Bill Title: Creates the Health Insurance Coverage Premium Misalignment Study Act. Sets forth provisions concerning the purpose of the Act and findings. Provides that the Department of Insurance shall oversee a study to explore rate setting approaches that may yield a misalignment of premiums across different tiers of coverage in Illinois' individual health insurance market. Provides that the study shall produce cost estimates for Illinois residents addressing metal-level premium misalignment policy along with the impact of the policy on health insurance affordability and access and the uninsured rates for low-income and middle-income residents, with break-out data by geography, race, ethnicity, and income level. Provides that the study shall evaluate how premium realignment if implemented would affect costs and outcomes for Illinoisans. Provides that the Department shall develop and submit, no later than January 1, 2024, a report to the General Assembly and the Governor concerning the design, costs, benefits, and implementation of premium realignment to increase affordability and access to health care coverage that leverages existing State infrastructure. Amends the Illinois Insurance Code and the Health Maintenance Organization Act. Provides that all individual and small group accident and health policies written in compliance with the Patient Protection and Affordable Care Act must file rates with the Department for approval. Provides that rate increases found to be unreasonable rate increases in relation to benefits under the policy provided shall be disapproved. Requires the Department to provide a report to the General Assembly after January 1, 2023 regarding both on and off exchange individual and small group rates in the Illinois market. Requires that the Department approve or deny rate increases within 60 calendar days after the rate increase is filed with the Department and that a rate increase that is not approved or denied by the Department on the 61st calendar day shall be automatically approved. Provides that no less than 30 days after the federal Centers for Medicare and Medicaid Services has certified the plans described for the upcoming plan year, the Department shall publish on its website a report explaining the rates for the subsequent calendar year's certified policies.

Spectrum: Partisan Bill (Democrat 38-0)

Status: (Engrossed - Dead) 2022-04-05 - Referred to Assignments [HB1465 Detail]

Download: Illinois-2021-HB1465-Engrossed.html

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AN ACT concerning regulation.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 1. Short title. This Act may be cited as the Health
Insurance Coverage Premium Misalignment Study Act.
Section 5. Purpose. This Act is intended to enable the
State to study possible misalignment in the Illinois health
insurance marketplace that would produce increased premium or
cost sharing for some consumers and drive some consumers into
lower value qualified health plans or out of the marketplace
altogether.
Section 10. Findings. The General Assembly finds that:
(1) Section 1402 of the Patient Protection and Affordable
Care Act requires health insurance issuers to provide
cost-sharing reductions to low-income marketplace consumers
below the 250% federal poverty level who choose a silver level
plan; it also requires the United States Department of Health
and Human Services to reimburse issuers for cost-sharing
reductions. Cost-sharing reductions are important because they
help low-income marketplace consumers afford out-of-pocket
costs, including deductibles and copayments, and therefore
keep them in the marketplace.

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(2) On October 12, 2017, the federal government, through
executive action, announced that it would be discontinuing
cost-sharing reduction payments to issuers in the Patient
Protection and Affordable Care Act marketplace. Illinois, like
the majority of other states, took action to mitigate the
losses that Illinois issuers would endure without the federal
cost-sharing reduction payments by adopting a practice called
"silver loading" or "cost-sharing reduction uncertainty cost"
beginning in the 2018 plan year. Silver loading allows issuers
to increase their silver plan baseline premiums to make up the
costs lost from the missing federal cost-sharing reduction
payments. Most of these premium increases are offset by higher
advanced premium tax credits from the federal government.
(3) However, due to silver loading and resulting pricing
of silver plans in the Illinois marketplace, it appears that
the current metal-level premiums in the Illinois marketplace
are misaligned and do not reflect coverage generosity of the
plans. The fact that silver plans are now overpriced for
enrollees ineligible for generous cost-sharing reductions has
driven some of those enrollees into non-silver (mostly bronze)
plans with levels of cost sharing that are a worse match for
their needs. In other words, Illinois marketplace consumers
could be currently paying more than they should for low value
plans and less than they should for high value plans.
Section 15. Premium misalignment study.

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(a) The Department of Insurance shall oversee a study to
explore rate setting approaches that may yield a misalignment
of premiums across different tiers of coverage in Illinois'
individual health insurance market. The study shall examine
these approaches with a view to attempts to make coverage more
affordable for low-income and middle-income residents. The
study shall follow the best practices of other states targeted
at addressing metal-level premium misalignment and include an
Illinois-specific analysis of:
(1) the number of consumers who are eligible for a
premium subsidy under the Patient Protection and
Affordable Care Act (Pub. L. 111-148) and the relative
affordability of the plans;
(2) if the plan is in the silver level, as described by
42 U.S.C. 18022(d), the relation of the premium amount
compared to premiums charged for qualified health plans
offering different levels of coverage, taking into account
any funding or lack of funding for cost-sharing reductions
and the covered benefits for each level of coverage; and
(3) whether the plan issuer utilized the induced
demand factors developed by the Centers for Medicare and
Medicaid Services for the risk adjustment program
established under 42 U.S.C. 18063 for the level of
coverage offered by the plan or any State-specific induced
demand factors established by Department rules.
(b) The study shall produce cost estimates for Illinois

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residents addressing metal-level premium misalignment policy
as studied in subsection (a) along with the impact of the
policy on health insurance affordability and access and the
uninsured rates for low-income and middle-income residents,
with break-out data by geography, race, ethnicity, and income
level. The study shall evaluate how premium realignment if
implemented would affect costs and outcomes for Illinoisans.
(c) The Department of Insurance shall develop and submit,
no later than January 1, 2024, a report to the General Assembly
and the Governor concerning the design, costs, benefits, and
implementation of premium realignment to increase
affordability and access to health care coverage that
leverages existing State infrastructure.
Section 105. The Illinois Insurance Code is amended by
changing Section 355 as follows:
(215 ILCS 5/355) (from Ch. 73, par. 967)
Sec. 355. Accident and health policies; provisions.
policies-Provisions.)
(a) As used in this Section, "unreasonable rate increase"
means a rate increase that the Director determines to be
excessive, unjustified, or unfairly discriminatory in
accordance with 45 CFR 154.205.
(b) No policy of insurance against loss or damage from the
sickness, or from the bodily injury or death of the insured by

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accident shall be issued or delivered to any person in this
State until a copy of the form thereof and of the
classification of risks and the premium rates pertaining
thereto have been filed with the Director; nor shall it be so
issued or delivered until the Director shall have approved
such policy pursuant to the provisions of Section 143. If the
Director disapproves the policy form he shall make a written
decision stating the respects in which such form does not
comply with the requirements of law and shall deliver a copy
thereof to the company and it shall be unlawful thereafter for
any such company to issue any policy in such form.
(c) All individual and small group accident and health
policies written in compliance with the Patient Protection and
Affordable Care Act must file rates with the Department for
approval. Rate increases found to be unreasonable rate
increases in relation to benefits under the policy provided
shall be disapproved. The Department shall provide a report to
the General Assembly on or after January 1, 2023, regarding
both on and off exchange individual and small group rates in
the Illinois market.
(d) A rate increase filed under this Section must be
approved or denied within 60 calendar days after the date the
rate increase is filed with the Department. Any rate increase
that is not approved or denied by the Department shall
automatically be approved on the 61st calendar day.
(e) No less than 30 days after the federal Centers for

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Medicare and Medicaid Services has certified the policies
described in this Section for the upcoming plan year, the
Department shall publish on its website a report explaining
the rates for the subsequent calendar year's certified
policies.
(Source: P.A. 79-777.)
Section 110. The Health Maintenance Organization Act is
amended by changing Section 4-12 as follows:
(215 ILCS 125/4-12) (from Ch. 111 1/2, par. 1409.5)
Sec. 4-12. Changes in Rate Methodology and Benefits,
Material Modifications. A health maintenance organization
shall file with the Director, prior to use, a notice of any
change in rate methodology, or benefits and of any material
modification of any matter or document furnished pursuant to
Section 2-1, together with such supporting documents as are
necessary to fully explain the change or modification.
(a) Contract modifications described in subsections
(c)(5), (c)(6) and (c)(7) of Section 2-1 shall include all
form agreements between the organization and enrollees,
providers, administrators of services and insurers of health
maintenance organizations.
(b) Material transactions or series of transactions other
than those described in subsection (a) of this Section, the
total annual value of which exceeds the greater of $100,000 or

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5% of net earned subscription revenue for the most current
twelve month period as determined from filed financial
statements.
(c) Any agreement between the organization and an insurer
shall be subject to the provisions of the laws of this State
regarding reinsurance as provided in Article XI of the
Illinois Insurance Code. All reinsurance agreements must be
filed. Approval of the Director is required for all agreements
except the following: individual stop loss, aggregate excess,
hospitalization benefits or out-of-area of the participating
providers unless 20% or more of the organization's total risk
is reinsured, in which case all reinsurance agreements require
approval.
(d) All individual and small group accident and health
policies written in compliance with the Patient Protection and
Affordable Care Act must file rates with the Department for
approval. Rate increases found to be unreasonable rate
increases in relation to benefits under the policy provided
shall be disapproved. The Department shall provide a report to
the General Assembly on or after January 1, 2023, regarding
both on and off exchange individual and small group rates in
the Illinois market.
(e) A rate increase filed under this Section must be
approved or denied within 60 calendar days after the date the
rate increase is filed with the Department. Any rate increase
that is not approved or denied by the Department shall

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automatically be approved on the 61st calendar day.
(f) No less than 30 days after the federal Centers for
Medicare and Medicaid Services has certified the policies
described in this Section for the upcoming plan year, the
Department shall publish on its website a report explaining
the rates for the subsequent calendar year's certified
policies.
(g) As used in this Section, "unreasonable rate increase"
means a rate increase that the Director determines to be
excessive, unjustified, or unfairly discriminatory in
accordance with 45 CFR 154.205.
(Source: P.A. 86-620.)