Bill Text: NJ A4299 | 2010-2011 | Regular Session | Introduced
Bill Title: Requires hearing and approval of premium changes for individual and small employer health benefits plans; expands jurisdiction of Division of Rate Counsel.
Spectrum: Partisan Bill (Democrat 3-0)
Status: (Introduced - Dead) 2011-11-21 - Introduced, Referred to Assembly Financial Institutions and Insurance Committee [A4299 Detail]
Download: New_Jersey-2010-A4299-Introduced.html
Sponsored by:
Assemblywoman VALERIE VAINIERI HUTTLE
District 37 (Bergen)
Assemblywoman LINDA STENDER
District 22 (Middlesex, Somerset and Union)
Assemblyman DANIEL R. BENSON
District 14 (Mercer and Middlesex)
SYNOPSIS
Requires hearing and approval of premium changes for individual and small employer health benefits plans; expands jurisdiction of Division of Rate Counsel.
CURRENT VERSION OF TEXT
As introduced.
An Act concerning premium rates for certain health benefits plans, expanding the jurisdiction of the Division of Rate Counsel, amending and supplementing P.L.1992, c.161 and P.L.1992, c.162, and amending P.L. 2005, c.155.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. Section 8 of P.L.1992, c.161 (C.17B:27A-9) is amended to read as follows:
8. a. (Deleted by amendment, P.L.2008, c.38).
b. The board shall make application on behalf of all carriers for any other subsidies, discounts, or funds that may be provided for under State or federal law or regulation. A carrier may include subsidies or funds granted to the board to reduce its premium rates for individual health benefits plans subject to this act.
c. A carrier shall not issue individual health benefits plans on a new contract or policy form pursuant to this act [until an informational filing of] unless a full schedule of rates which applies to the contract or policy form has been filed with the commissioner for the commissioner's prior approval, in a manner and within a time period to be prescribed by the commissioner by regulation. The carrier shall provide a copy of the proposed full schedule of rates to the Division of Rate Counsel at the same time it is filed with the commissioner. The commissioner shall provide a copy of the [informational] approved filing to the Attorney General, the Division of Rate Counsel and the board.
d. A carrier desiring to increase or decrease premiums for any contract or policy form may [implement that increase or decrease upon making an informational filing with the commissioner of] file that increase or decrease, along with the actuarial assumptions and methods used by the carrier in establishing that increase or decrease, with the commissioner for the commissioner's prior approval, in a manner and within a time period to be prescribed by the commissioner by regulation. The expense of the commissioner's review of any increase request shall be borne by the carrier and that expense shall not be passed onto policy or contract holders. [The] Subject to the requirements of subsection g. of this section, the commissioner [may] shall disapprove any [informational] filing on a finding that it is incomplete and not in substantial compliance with P.L.1992, c.161 (C.17B:27A-2 et al.), or that the rates are inadequate [or] , unfairly discriminatory, or excessive.
e. (1) Rates shall be
formulated on contracts or policies required pursuant to section 3 of this act
so that the anticipated
minimum loss ratio for a contract or policy form shall not be less than 80% of
the premium. The carrier shall submit with its rate filing supporting data, as
determined by the commissioner, and a certification by a member of the American
Academy of Actuaries, or other individuals in a format acceptable to the
commissioner, that the carrier is in compliance with the provisions of this
subsection.
(2) Each calendar year, a carrier shall return, in the form of aggregate benefits for all of the policy or contract forms offered by the carrier pursuant to subsection a. of section 3 of P.L.1992, c.161 (C.17:B:27A-4), at least 80% of the aggregate premiums collected for all of the policy or contract forms during that calendar year. Carriers shall annually report, no later than August 1 of each year, the loss ratio calculated pursuant to this section for all of the policy or contract forms for the previous calendar year. In each case in which the loss ratio fails to comply with the 80% loss ratio requirement, the carrier shall issue a dividend or credit against future premiums for all policy or contract holders, as applicable, in an amount sufficient to assure that the aggregate benefits paid in the previous calendar year plus the amount of the dividends and credits equal 80% of the aggregate premiums collected for the policy or contract forms in the previous calendar year. All dividends and credits shall be distributed by December 31 of the year following the calendar year in which the loss ratio requirements were not satisfied. The annual report required by this subsection shall include a carrier's calculation of the dividends and credits applicable to all policy or contract forms, as well as an explanation of the carrier'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 commissioner by regulation. Those regulations shall include provisions for the distribution of a dividend or credit in the event of cancellation or termination by a policyholder.
f. (Deleted by amendment, P.L.2008, c.38).
g. (1) The commissioner, jointly with the Division of Rate Counsel, shall hold a public hearing on any request by a carrier to increase premiums for any contract or policy form pursuant to subsection d. of this section. The purpose of the hearing shall be to receive oral comments and written testimony from any interested persons in order to assist the commissioner in making a decision to approve, disapprove, or modify the request for an increase. Copies of written testimony submitted shall be made available, upon request, to the public and to the carrier.
(2) The commissioner shall provide notice of the public hearing to the carrier and to the public not less than 30 days prior to the hearing, in a manner to be determined by the commissioner.
(3) For a premium increase request that would affect contract or policy holders on a Statewide basis, there shall be at least one public hearing each in the northern, central, and southern regions of the State, at a place and time that is convenient to the public, as determined by the commissioner. For a premium increase request that would affect contract or policy holders in one or more of the northern, central, or southern regions of the State, there shall be at least one public hearing in each of the affected regions, at a place and time that is convenient to the public, as determined by the commissioner.
(4) Not later than 30 days after the public hearing, or the completion of all public hearings if more than one hearing is held, the commissioner shall issue a written decision approving, disapproving, or modifying the premium increase request. The decision shall specify all factors used to reach the decision.
(cf: P.L. 2008, c.38, s.16)
2. (New section) a. As to each proposed premium increase requested by a carrier for any contract or policy form pursuant to subsection d. of section 8 of P.L.1992, c.161 (C.17B:27A-9), the commissioner shall provide the following information on the department's website:
(1) A summary of the carrier's request to increase the premiums, including the carrier's primary reason for requesting the increase and instructions on how to submit comments to the department, not later than 30 days prior to the first public hearing to be held pursuant to subsection g. of section 8 of P.L.1992, c.161 (C.17B:27A-9); and
(2) The decision approving, disapproving, or modifying the premium increase request, and an explanation of the factors considered by the commissioner in making the decision, not later than 30 days after all public hearings are completed pursuant to subsection g. of section 8 of P.L.1992, c.161 (C.17B:27A-9).
b. As to all carriers participating in the New Jersey Individual Health Coverage Program pursuant to P.L.1992, c.161 (C.17B:27A-2 et seq.), the commissioner, in consultation with the New Jersey Individual Health Coverage Program board, shall maintain the following information on the department's website:
(1) An explanation of how health insurance premiums are reported and calculated by each carrier for each contract or policy form offered and how the department verifies that information; and
(2) The results of any available surveys, including performance measurement and cost comparison surveys, relating to any participating individual health benefits carrier or to the individual health insurance market in New Jersey more generally, as determined to be appropriate by the commissioner.
c. As to each carrier participating in the New Jersey Individual Health Coverage Program pursuant to P.L.1992, c.161 (C.17B:27A-2 et seq.), the commissioner, in consultation with the New Jersey Individual Health Coverage Program board, shall maintain the following information on the department's website, based on information which shall be supplied by each carrier to the commissioner on an annual basis:
(1) All historical experience data on premium rates, including annual percentage changes, as to each plan offered by the carrier;
(2) The cumulative amounts of insurance producer fees associated with each contract or policy form offered by the carrier;
(3) The amounts of any funds held by the carrier in reserve and a description of the investments in which reserves are held; and
(4) A description of all other business activities, aside from the business of health insurance, in which the carrier is engaged, and the effect of those business activities on the carrier's overall financial position.
3. Section 9 of P.L.1991, c.162 (C.17B:27A-25) is amended to read as follows:
9. a. (1) (Deleted by amendment, P.L.1997, c.146).
(2) (Deleted by amendment, P.L.1997, c.146).
(3) (a) For all policies or contracts providing health benefits plans for small employers issued pursuant to section 3 of P.L.1992, c.162 (C.17B:27A-19), and including policies or contracts offered by a carrier to a small employer who is a member of a Small Employer Purchasing Alliance pursuant to the provisions of P.L.2001, c.225 (C.17B:27A-25.1 et al.) the premium rate charged by a carrier to the highest rated small group purchasing a small employer health benefits plan issued pursuant to section 3 of P.L.1992, c.162 (C.17B:27A-19) shall not be greater than 200% of the premium rate charged for the lowest rated small group purchasing that same health benefits plan; provided, however, that the only factors upon which the rate differential may be based are age, gender and geography. Such factors shall be applied in a manner consistent with regulations adopted by the commissioner. For the purposes of this paragraph (3), policies or contracts offered by a carrier to a small employer who is a member of a Small Employer Purchasing Alliance shall be rated separately from the carrier's other small employer health benefits policies or contracts.
(b) A health benefits plan issued pursuant to subsection j. of section 3 of P.L.1992, c.162 (C.17B:27A-19) shall be rated in accordance with the provisions of section 7 of P.L.1995, c.340 (C.17B:27A-19.3), for the purposes of meeting the requirements of this paragraph.
(4) (Deleted by amendment, P.L.1994, c.11).
(5) Any policy or contract issued after January 1, 1994 to a small employer who was not previously covered by a health benefits plan issued by the issuing small employer carrier [,] shall be subject to the same premium rate restrictions as provided in paragraph (3) of this subsection, which rate restrictions shall be effective on the date the policy or contract is issued.
(6) The board shall establish, pursuant to section 17 of P.L.1993, c.162 (C.17B:27A-51):
(a) up to six geographic territories, none of which is smaller than a county; and
(b) age classifications which, at a minimum, shall be in five-year increments.
b. (Deleted by amendment, P.L.1993, c.162).
c. (Deleted by amendment, P.L.1995, c.298).
d. Notwithstanding any other provision of law to the contrary, this act shall apply to a carrier which provides a health benefits plan to one or more small employers through a policy issued to an association or trust of employers.
A carrier which provides a health benefits plan to one or more small employers through a policy issued to an association or trust of employers after the effective date of P.L.1992, c.162 (C.17B:27A-17 et seq.), shall be required to offer small employer health benefits plans to non-association or trust employers in the same manner as any other small employer carrier is required pursuant to P.L.1992, c.162 (C.17B:27A-17 et seq.).
e. Nothing contained herein shall prohibit the use of premium rate structures to establish different premium rates for individuals and family units.
f. No insurance contract or policy subject to this act, including a contract or policy entered into with a small employer who is a member of a Small Employer Purchasing Alliance pursuant to the provisions of P.L.2001, c.225 (C.17B:27A-25.1 et al.), may be entered into unless [and until] the carrier has [made an informational filing] filed with the commissioner [of] for the commissioner's prior approval, in a manner and within a time period to be prescribed by the commissioner by regulation, a schedule of premiums, not to exceed 12 months in duration, to be paid pursuant to such contract or policy, of the carrier's rating plan and classification system in connection with such contract or policy, and of the actuarial assumptions and methods used by the carrier in establishing premium rates for such contract or policy. The carrier shall provide a copy of the proposed schedule of premiums to the Division of Rate Counsel at the same time it is filed with the commissioner. The commissioner shall provide a copy of the approved filing to the Attorney General, the Division of Rate Counsel and the board.
g. (1) [Beginning January 1, 1995, a] A carrier desiring to increase or decrease premiums for any policy form or benefit rider offered pursuant to subsection i. of section 3 of P.L.1992, c.162 (C.17B:27A-19) subject to this act may [implement such] file that increase or decrease [upon making an informational filing] with the commissioner [of such increase or decrease], along with the actuarial assumptions and methods used by the carrier in establishing such increase or decrease, for the commissioner's prior approval, in a manner and within a time period to be prescribed by the commissioner by regulation, provided that the anticipated minimum loss ratio for all policy forms shall not be less than 80% of the premium therefor as provided in paragraph (2) of this subsection. The expense of the commissioner's review of any increase request shall be borne by the carrier and shall not be passed onto small employers. [The] Subject to the requirements of subsection l. of this section, the commissioner [may] shall disapprove any [informational] filing on a finding that it is incomplete and not in substantial compliance with P.L.1992, c.162 (C.17B:27A-17 et seq.), or that the rates are inadequate [or], unfairly discriminatory, or excessive. [Until December 31, 1996, the informational filing shall also include the carrier's rating plan and classification system in connection with such increase or decrease.]
(2) Each calendar year, a carrier shall return, in the form of aggregate benefits for all of the standard policy forms offered by the carrier pursuant to subsection a. of section 3 of P.L.1992, c.162 (C.17B:27A-19), at least 80% of the aggregate premiums collected for all of the standard policy forms, other than alliance policy forms, and at least 80% of the aggregate premiums collected for all of the non-standard policy forms during that calendar year. A carrier shall return at least 80% of the premiums collected for all of the alliances during that calendar year, which loss ratio may be calculated in the aggregate for all of the alliances or separately for each alliance. Carriers shall annually report, no later than August 1st of each year, the loss ratio calculated pursuant to this section for all of the standard, other than alliance policy forms, non-standard policy forms and alliance policy forms for the previous calendar year, provided that a carrier may annually report the loss ratio calculated pursuant to this section for all of the alliances in the aggregate or separately for each alliance. In each case where the loss ratio fails to substantially comply with the 80% loss ratio requirement, the carrier shall issue a dividend or credit against future premiums for all policyholders with the standard, other than alliance policy forms, nonstandard policy forms or alliance policy forms, as applicable, 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 80% of the aggregate premiums collected for the respective policy forms in the previous calendar year. All dividends and credits must be distributed by December 31 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 a carrier's calculation of the dividends and credits applicable to standard, other than alliance policy forms, non-standard policy forms and alliance policy forms, as well as an explanation of the carrier'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 commissioner by regulation. Such regulations shall include provisions for the distribution of a dividend or credit in the event of cancellation or termination by a policyholder. For purposes of this paragraph, "alliance policy forms" means policies purchased by small employers who are members of Small Employer Purchasing Alliances.
(3) The loss ratio of a health benefits plan issued pursuant to subsection j. of section 3 of P.L.1992, c.162 (C.17B:27A-19) shall be calculated in accordance with the provisions of section 7 of P.L.1995, c.340 (C.17B:27A-19.3), for the purposes of meeting the requirements of this subsection.
h. (Deleted by amendment, P.L.1993, c.162).
i. The provisions of this act shall apply to health benefits plans which are delivered, issued for delivery, renewed or continued on or after January 1, 1994.
j. (Deleted by amendment, P.L.1995, c.340).
k. A carrier who negotiates a reduced premium rate with a Small Employer Purchasing Alliance for members of that alliance shall provide a reduction in the premium rate filed in accordance with paragraph (3) of subsection a. of this section, expressed as a percentage, which reduction shall be based on volume or other efficiencies or economies of scale and shall not be based on health status-related factors.
l. (1) The commissioner, jointly with the Division of Rate Counsel, shall hold a public hearing on any request by a carrier to increase premiums for any contract or policy form pursuant to subsection g. of this section. The purpose of the hearing shall be to receive oral comments and written testimony from any interested persons in order to assist the commissioner in making a decision to approve, disapprove, or modify the request for an increase. Copies of written testimony submitted shall be made available, upon request, to the public and to the carrier.
(2) The commissioner shall provide notice of the public hearing to the carrier and to the public not less than 30 days prior to the hearing, in a manner to be determined by the commissioner.
(3) For a premium increase request that would affect small employers on a Statewide basis, there shall be at least one public hearing each in the northern, central, and southern regions of the State, at a place and time that is convenient to the public, as determined by the commissioner. For a premium increase request that would affect small employers in one or more of the northern, central, or southern regions of the State, there shall be at least one public hearing in each of the affected regions, at a place and time that is convenient to the public, as determined by the commissioner.
(4) Not later than 30 days after the public hearing, or the completion of all public hearings if more than one hearing is held, the commissioner shall issue a written decision approving, disapproving, or modifying the premium increase request. The decision shall specify all factors used to reach the decision.
(cf: P.L.2008, c.38, s.24)
4. (New section) a. As to each proposed premium increase requested by a carrier for any contract or policy form pursuant to subsection g. of section 9 of P.L.1992, c.162 (C.17B:27A-25), the commissioner shall provide the following information on the department's website:
(1) A summary of the carrier's request to increase the premiums, including the carrier's primary reason for requesting the increase and instructions on how to submit comment to the department, not later than 30 days prior to the first public hearing to be held pursuant to subsection l. of section 9 of P.L.1992, c.162 (C.17B:27A-25); and
(2) The decision approving, disapproving, or modifying the premium increase request, and an explanation of the factors considered by the commissioner in making the decision, not later than 30 days after all public hearings are completed pursuant to subsection l. of section 9 of P.L.1992, c.162 (C.17B:27A-25).
b. As to all carriers participating in the New Jersey Small Employer Health Benefits Program pursuant to P.L.1992, c.162 (C.17B:27A-17 et seq.), the commissioner, in consultation with the New Jersey Small Employer Health Benefits Program board, shall maintain the following information on the department's website:
(1) An explanation of how health insurance premiums are reported and calculated by each carrier as to each contract form or policy offered and how the department verifies that information; and
(2) The results of any available surveys, including performance measurement and cost comparison surveys, relating to any participating small employer carrier or to the small employer health insurance market in New Jersey more generally, as determined to be appropriate by the commissioner.
c. As to each carrier participating in the New Jersey Small Employer Health Benefits Program pursuant to P.L.1992, c.162 (C.17B:27A-17 et seq.), the commissioner, in consultation with the New Jersey Small Employer Health Benefits Program board, shall maintain the following information on the department's website, based on information which shall be supplied by each carrier to the commissioner on an annual basis:
(1) All historical experience data on premium rates, including annual percentage changes, as to each plan offered by the carrier;
(2) The cumulative amounts of insurance producer fees associated with each contract or policy form offered by the carrier;
(3) The amounts of any funds held by the carrier in reserve and a description of the investments in which reserves are held; and
(4) A description of all other business activities, aside from the business of health insurance, in which the carrier is engaged, and the effect of those business activities on the carrier's overall financial position.
5. Section 48 of P.L.2005, c.155 (C.52:27EE-48) is amended to read as follows:
48. Division of Rate Counsel; jurisdiction.
The Division of the Rate Counsel in, but not of, the Department of the Treasury shall have the authority to conduct investigations, initiate studies, conduct research, present comments and testimony before governmental bodies, issue reports, and produce and disseminate consumer guides on any matters that fall within the Rate Counsel's jurisdiction. The Rate Counsel shall also have the authority to represent the public interest as set forth below.
a. Utilities. The Division of Rate Counsel may represent and protect the public interest as defined in section 12 of P.L.2005, c.155 (C.52:27EE-12) in proceedings before and appeals from any State department, commission, authority, council, agency, or board charged with the regulation or control of any business, industry, or utility regarding a requirement that the business, industry, or utility provide a service or regarding the fixing of a rate, toll, fare, or charge for a product or service. The Division of Rate Counsel may initiate any such proceedings when the director determines that a discontinuance or change in a required service or a rate, toll, fare, or charge for a product or service is in the public interest.
b. Insurance[; limited jurisdiction]. The Division of Rate Counsel shall represent and protect the public interest with respect to insurance matters in [significant] proceedings that pertain [solely] to prior approval rate increases for personal lines property casualty coverages, [or] Medicare supplemental coverages, or prior approval rate increases pursuant to section 8 of P.L.1992, c.161 (C.17B:27A-9) or section 9 of P.L.1991, c.162 (C.17B:27A-25). [The Division of Rate Counsel shall have no jurisdiction or authority to participate or intervene in (1) expedited prior approval rate filings made by an insurer or affiliated group of insurers pursuant to section 34 of P.L.1997, c.151 (C.17:29A-46.6) or section 3 of P.L.2001, c.409 (C.17:36-5.35), or (2) prior approval rate filings of seven percent or less, or (3) rule or form filings for any other form of insurance.
In determining, in his discretion, whether a proceeding is significant, the Director of the Division of Rate Counsel shall consider the following factors:
(1) the overall dollar impact of the requested increase, considering the filer's market share and the magnitude of the requested rate change;
(2) whether the increase, if granted, will increase the filer's rates significantly above market norms;
(3) whether the filer is advancing a significantly different alternate ratemaking methodology to the standard methodology established pursuant to section 8 of P.L.1988, c.119 (C.17:29A-36.2);
(4) whether the insurer is experiencing financial difficulties at its present rate level, as evidenced by the filing of rehabilitation proceedings, recent downgrading by insurance rating services, or significant losses reported on the filer's public financial statement.]
The Director of the Division of Rate Counsel shall, in addition to the powers set forth in this act, have the express authority to [intervene in public hearings pursuant to section 66 of P.L.1998, c.21 (C.17:29A-46.8).] represent and protect the public interest in any such proceedings concerning premium rates for any health benefits plan offered in this State. The director may initiate any such proceedings when the director determines that review by the division of a change in a rate for a product or service is in the public interest.
(cf: P.L.2010, c.34, s.33)
6. This act shall take effect immediately and shall apply to policies or contracts delivered, issued, or renewed on or after that date.
STATEMENT
This bill requires prior approval, by the Commissioner of Banking and Insurance, of any premium rate filings by carriers that offer health benefits plans through the New Jersey Individual Health Coverage (IHC) Program or the New Jersey Small Employers Health (SEH) Benefits Program. The bill also requires the commissioner and the Division of Rate Counsel to jointly hold public hearings regarding a premium increase request, and requires the department's website to provide certain information about requested increases for IHC and SEH plans, and more generally about health insurance rates in these markets.
Additionally, this bill expands the jurisdiction of the Division of Rate Counsel, which is in, but not of, the Department of Treasury, to include authority to initiate and to represent and protect the public interest in proceedings that pertain to changes in rates for any health benefits plans offered in New Jersey.
Currently, New Jersey law allows health insurance carriers participating in the individual and small employer markets to implement their initial rates and rate changes by making only informational filings, but does not require that carriers obtain approval from the commissioner before the rates can be used. In addition to providing the commissioner with prior approval authority, the bill specifies that the commissioner shall disapprove proposed rate changes upon certain findings, including that the proposed rates are unfairly discriminatory or excessive.
This bill requires the commissioner, with respect to every request by a carrier to increase premiums for any contract or policy in the IHC or SEH market, to hold a public hearing on the proposed increase. The purpose of the hearing, to be held jointly with the Division of Rate Counsel, shall be to receive oral comments and written testimony from any interested persons in order to assist the commissioner in making a decision to approve, disapprove, or modify the request for an increase. Copies of written testimony submitted shall be made available, upon request, to the public and to the carrier.
The commissioner shall provide notice of the public hearing to the carrier and to the public not less than 30 days prior to the hearing, in a manner to be determined by the commissioner.
For a premium increase request that would affect any IHC or SEH health benefits plans on a Statewide basis, there shall be at least one public hearing each in the northern, central, and southern regions of the State, at a place and time that is convenient to the public, as determined by the commissioner. For a premium increase request that would affect any IHC or SEH health benefits plan in one or more of the northern, central, or southern regions of the State, there shall be at least one public hearing in each of the affected regions, at a place and time that is convenient to the public, as determined by the commissioner.
Not later than 30 days after the public hearing, or the completion of all public hearings if more than one hearing is held, the commissioner shall issue a written decision approving, disapproving, or modifying the premium increase request. The decision shall specify all factors used to reach the decision.
In addition, the bill requires the commissioner to provide certain information relating to premium rates in the IHC and SEH markets on the department's website, including:
· a summary of a carrier's request to increase premiums;
· the commissioner's decision approving, disapproving, or modifying the request;
· an explanation of how carriers report and calculate health insurance premiums;
· the results of any appropriate cost comparison or performance measurement surveys; and
· based on information to be supplied by carriers, historical expense data on premiums rates, insurance producer fees, carrier's reserves, and a description of all other business activities conducted by a carrier aside from the business of health insurance.
