Bill Text: IL HB3236 | 2011-2012 | 97th General Assembly | Amended

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Bill Title: Amends the Co-operative Act. Provides that health benefit purchasing cooperatives may be organized by one or more persons in geographic areas designated by the Director of the Department of Insurance. Provides guidance for the design of a health benefit purchasing cooperative. Provides guidance for establishing member criteria and requires a cooperative to file the criteria and other reports with the Director of the Department of Insurance. Provides that each health benefit purchasing cooperative shall be organized on a membership basis with no capital stock. Provides that the contract between the health benefit purchasing cooperative and an insurer shall be for a term of 3 years. Effective immediately.

Spectrum: Moderate Partisan Bill (Democrat 68-12)

Status: (Failed) 2013-01-08 - Session Sine Die [HB3236 Detail]

Download: Illinois-2011-HB3236-Amended.html

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Rep. Karen May

Filed: 3/9/2011

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AMENDMENT TO HOUSE BILL 3236
AMENDMENT NO. ______. Amend House Bill 3236 by replacing
everything after the enacting clause with the following:
"Section 5. The Illinois Insurance Code is amended by
adding Section 44.1 as follows:
(215 ILCS 5/44.1 new)
Sec. 44.1. Health care cooperatives.
(a) In addition to all other provisions of this Article not
in conflict with this Section, a company seeking to organize
under this Article as a health care cooperative shall meet all
of the following requirements:
(1) The company shall comply with all provisions
applicable to domestic mutual insurance companies under
this Code.
(2) The articles of incorporation of the company shall
demonstrate that the company is to be organized as a

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nonprofit member corporation and that the governance of the
company shall be subject to a majority vote of all members.
(3) The activities of the company shall be limited to
the issuance of health care plans in the individual and
small group markets.
(4) Either the articles of incorporation or the bylaws
of the company shall incorporate ethics and conflict of
interest standards and the governance requirements set
forth in Section 1322(c)(3)(C) of the federal Patient
Protection and Affordable Care Act.
(5) The company or a related entity or any predecessor
of either shall not have been a health insurance issuer on
July 16, 2009.
(6) The company shall not be sponsored by a State or
local government, any political subdivision thereof, or
any instrumentality of such government or political
subdivision.
(7) Excess surplus shall be used to lower premiums, to
improve benefits, or for other programs intended to improve
the quality of health care delivered to its members.
(8) No representative of a federal, State, or local
government, or any political instrumentality thereof, and
no representative of a company described in paragraph (5)
of subsection (a) of this Section may serve on the board of
directors of the company.
(b) Notwithstanding Section 37 of this Article, the

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corporate name of any organization seeking to organize under
this Article as a health care cooperative need not contain the
word "Mutual" but shall contain the phrase "Health Care
Cooperative". The corporate name shall not be the same as, or
deceptively similar to, the name of any domestic organization
or of any foreign or alien organization authorized to transact
business in this State.
(c) A company seeking to be organized as a health care
cooperative shall submit an application to the Director
according to procedures and meeting such requirements as the
Director shall adopt by rule. No company shall transact any
business of insurance until it has received a certificate of
authority as set forth in Section 51 of this Article.
Section 10. The Co-operative Act is amended by changing
Section 22 and by adding Section 30 as follows:
(805 ILCS 310/22) (from Ch. 32, par. 326)
Sec. 22. No corporation or association hereafter organized
or doing business for profit in this State shall be entitled to
use the term "Co-operative" as a part of its corporate or other
business name or title unless it has complied with the
provisions of this Act, except (1) a corporation organized
under the Business Corporation Act of 1983 for the purpose of
ownership or administration of residential property on a
cooperative basis, or (2) a cooperative corporation organized

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under the General Not For Profit Corporation Act of 1986 or its
predecessor or successor statutes, or (3) a domestic mutual
insurance company licensed as a health care cooperative by the
Director of Insurance under Article III of the Illinois
Insurance Code. Any corporation or association violating the
provision of this Section may be enjoined from doing business
under such name at the instance of any shareholder of any
association or corporation organized under this Act.
(Source: P.A. 95-368, eff. 8-23-07.)
(805 ILCS 310/30 new)
Sec. 30. Health benefit purchasing cooperative.
(a) Notwithstanding any other provisions of this Act,
health benefit purchasing cooperatives may be organized by one
or more persons under this Section in each of the geographic
areas identified in subsection (l) of this Section.
(b) The purpose of a health benefit purchasing cooperative
is to provide health care benefits for the individuals
specified in subsection (i) of this Section, under a single
group health care policy or plan through a contract between the
health benefit purchasing cooperative and an insurer
authorized to do health insurance business in this State.
(c) A health benefit purchasing cooperative shall be
designed so that all of the following are accomplished:
(1) The members become better informed about health
care trends and cost increases.

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(2) All members receive their health care benefits
under the group health care policy or plan negotiated under
subsection (i) of this Section.
(3) The members are actively engaged in designing
health care benefit options that are offered by the insurer
and that meet the needs of their community.
(4) The health insurance risk of all of the members is
pooled.
(5) The members actively participate in health
improvement decisions for their community.
(d) The articles of a health benefit purchasing cooperative
shall set forth the name and address of at least one
incorporator who will act as the temporary board.
(e) Each health benefit purchasing cooperative shall be
organized on a membership basis with no capital stock.
(f) Subject to subsection (g) of this Section, any person
that does business in, is located in, has a principal office
in, or resides in the geographic area in which a health benefit
purchasing cooperative is organized, that meets the membership
criteria established by the health benefit purchasing
cooperative in its bylaws, and that pays the membership fee may
be a member of the health benefit purchasing cooperative.
(g) A health benefit cooperative may limit membership of
self-employed individuals through its membership criteria, but
such criteria must be applied in the same manner to all
self-employed individuals.

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(h) Each health benefit purchasing cooperative shall file
its membership criteria, as well as any amendments to the
criteria, with the Director.
(i) The health care benefits offered by a health benefit
purchasing cooperative shall be negotiated between the health
benefit purchasing cooperative and the insurer and shall be
offered in a single group health care policy or plan. The
insurer must offer coverage under the group health care policy
or plan to all of the following:
(1) An individual who is a member, officer, or eligible
employee of a member of the health benefit purchasing
cooperative.
(2) A self-employed individual who is a member of the
health benefit purchasing cooperative.
(3) A dependent of an individual under subdivisions
(i)(1) and (2) who receives coverage.
(j) The contract between the health benefit purchasing
cooperative and an insurer shall be for a term of 3 years. Upon
enrollment in the insurer's group health care policy or plan,
each member shall pay to the health benefit purchasing
cooperative an amount determined by the health benefit
purchasing cooperative that is not less than the member's
applicable premium for the 36th month of coverage under the
contract. If a member withdraws from the health benefit
purchasing cooperative before the end of the contract term, the
health benefit purchasing cooperative may retain, as a penalty,

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an amount specified by the health benefit purchasing
cooperative that is not less than the premium that the member
paid for the 36th month of coverage.
(k) Each health benefit purchasing cooperative shall
submit to the Director all of the following:
(1) Annually, no later than September 30, a report on
the progress of the health benefit purchasing arrangement
described in this Section and, to the extent possible, any
significant findings in the criteria under subdivision
(k)(2) of this Section.
(2) Within one year after the end of the term of the
contract under subsection (j) of this Section, a final
report that details significant findings from the project
and that includes, at a minimum, to the extent available,
information on all of the following:
(A) The extent to which the health benefit
purchasing arrangement had an impact on the number of
uninsured in the geographic area in which it operated.
(B) The effect on health care coverage premiums for
groups in the geographic area in which the health
benefit purchasing arrangement operated, including
groups other than the health benefit purchasing
cooperative.
(C) The degree to which health care consumers were
involved in the development and implementation of the
health benefit purchasing arrangement.

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(l) The Director shall designate, by order, the geographic
areas of the State in which health benefit purchasing
cooperatives may be organized. A geographic area may overlap
with one or more other geographic areas.
(m) As used in this Section, "Director" means the Director
of the Department of Insurance.
Section 99. Effective date. This Act takes effect upon
becoming law.".