Bill Text: TX SB1171 | 2017-2018 | 85th Legislature | Comm Sub
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Relating to the suspension and reactivation of the operation of the Texas Health Reinsurance System.
Spectrum: Partisan Bill (Republican 2-0)
Status: (Passed) 2017-05-23 - Effective immediately [SB1171 Detail]
Download: Texas-2017-SB1171-Comm_Sub.html
Bill Title: Relating to the suspension and reactivation of the operation of the Texas Health Reinsurance System.
Spectrum: Partisan Bill (Republican 2-0)
Status: (Passed) 2017-05-23 - Effective immediately [SB1171 Detail]
Download: Texas-2017-SB1171-Comm_Sub.html
By: Estes | S.B. No. 1171 | |
(In the Senate - Filed March 1, 2017; March 9, 2017, read | ||
first time and referred to Committee on Business & Commerce; | ||
April 3, 2017, reported favorably by the following vote: Yeas 8, | ||
Nays 0; April 3, 2017, sent to printer.) | ||
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relating to the suspension and reactivation of the operation of the | ||
Texas Health Reinsurance System. | ||
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: | ||
SECTION 1. Section 1501.302, Insurance Code, is amended to | ||
read as follows: | ||
Sec. 1501.302. TEXAS HEALTH REINSURANCE SYSTEM. (a) The | ||
Texas Health Reinsurance System is a nonprofit entity administered | ||
by a board of directors and subject to the supervision and control | ||
of the commissioner. | ||
(b) The system may operate only during the period an order | ||
authorizing operation of the system under Section 1501.3021 is in | ||
effect. The system may not operate after the effective date of an | ||
order of suspension of operation of the system under Section | ||
1501.3022 until a subsequent order authorizing the operation of the | ||
system under Section 1501.3021, if any, is effective. | ||
SECTION 2. Subchapter G, Chapter 1501, Insurance Code, is | ||
amended by adding Sections 1501.3021 and 1501.3022 to read as | ||
follows: | ||
Sec. 1501.3021. AUTHORIZATION OF OPERATION. (a) The | ||
commissioner shall hold a hearing if: | ||
(1) the commissioner believes small employer health | ||
benefit plan issuers in this state are threatened with the | ||
inability to secure reinsurance coverage in the open market; or | ||
(2) the commissioner receives a petition requesting | ||
the hearing from an association of health benefit plan issuers in | ||
this state or a group of at least 15 small employer health benefit | ||
plan issuers operating in this state. | ||
(b) If, after a hearing under Subsection (a), the | ||
commissioner finds that the operation of the system is in the public | ||
interest, the commissioner by order shall: | ||
(1) authorize the operation of the system; | ||
(2) appoint a board of directors under Section | ||
1501.303; and | ||
(3) direct the board to develop a plan of operation | ||
under Section 1501.306 to ensure the system is fully implemented on | ||
a date specified in the order that is not later than the 60th day | ||
after the effective date of the order. | ||
(c) Sections 1501.307-1501.326 apply to the operation of | ||
the system after the date the system is implemented as described by | ||
Subsection (b)(3). | ||
Sec. 1501.3022. SUSPENSION OF OPERATION. (a) The | ||
commissioner shall hold a hearing if the system is operating or is | ||
authorized to operate and: | ||
(1) the commissioner believes small employer health | ||
benefit plan issuers in this state are not threatened with the | ||
inability to secure reinsurance coverage in the open market; or | ||
(2) the commissioner receives a petition requesting | ||
the hearing from an association of health benefit plan issuers in | ||
this state or a group of at least 15 small employer health benefit | ||
plan issuers operating in this state. | ||
(b) If, after a hearing under Subsection (a), the | ||
commissioner finds that suspension of the operation of the system | ||
is in the public interest, the commissioner by order shall direct | ||
the board to submit to the commissioner for approval, not later than | ||
the 60th day after the date of the order, a plan of suspension of | ||
operation of the system. | ||
(c) A plan of suspension under Subsection (b) must: | ||
(1) specify the date after which a health benefit plan | ||
issuer that is a risk-assuming health benefit plan issuer on the | ||
effective date of the plan of suspension may not: | ||
(A) become a reinsured health benefit plan issuer | ||
under Sections 1501.310, 1501.311, and 1501.312; and | ||
(B) reinsure with the system a small employer | ||
group, or any risk, covered under any small employer health benefit | ||
plan; | ||
(2) specify the date after which a health benefit plan | ||
issuer that is a reinsured health benefit plan issuer on the | ||
effective date of the plan of suspension may not: | ||
(A) reinsure with the system additional small | ||
employer groups in accordance with Section 1501.314; or | ||
(B) cede additional eligible lives to the system | ||
in accordance with Section 1501.314; | ||
(3) provide for: | ||
(A) the filing, receipt, processing, and payment | ||
of all claims against and debts of the system, and extinguishment of | ||
all liabilities of the system, including balances on any lines of | ||
credit that may have been established by or on behalf of the system; | ||
(B) the collection and receipt of all assessments | ||
made with respect to reinsured health benefit plan issuers, | ||
including any deferred assessments and any final assessment made | ||
under Subsection (f); and | ||
(C) a final audit of the system by the state | ||
auditor as provided by Subsection (g); | ||
(4) specify that the transactions required by the plan | ||
of suspension and addressed in Subdivisions (1)-(3) must be closed | ||
not later than the effective date of the suspension of the operation | ||
of the system as specified under Subdivision (5); | ||
(5) state the effective date of the suspension of the | ||
operation of the system; and | ||
(6) provide for the proportionate distribution of any | ||
surplus assets of the system that remain after the date specified | ||
under Subdivision (5). | ||
(d) The effective date of the suspension of the operation of | ||
the system as specified under Subsection (c)(5) may not be later | ||
than the 270th day after the date the commissioner by order approves | ||
the plan of suspension. | ||
(e) If the board fails to submit a suitable plan of | ||
suspension, the commissioner, after notice and hearing, shall adopt | ||
a plan in accordance with Subsection (c). | ||
(f) The board may make a final assessment of the small | ||
employer health benefit plan issuers that, for any portion of the | ||
last year in which the system operated, were reinsured health | ||
benefit plan issuers. An assessment under this subsection may be | ||
made only if the board determines the assessment is necessary to | ||
recover net losses of the system, as provided in Sections | ||
1501.319-1501.326, including administrative expenses for | ||
transactions essential to complete execution of the plan of | ||
suspension, and the cost of the final audit by the state auditor. | ||
(g) The transactions necessary to complete execution of the | ||
plan of suspension are subject to audit by the state auditor under | ||
Chapter 321, Government Code. The state auditor shall report the | ||
cost of the final audit conducted under this section to the board | ||
and the comptroller, and the board shall remit that amount to the | ||
comptroller for deposit to the general revenue fund. | ||
(h) The board serving immediately before the effective date | ||
of the suspension of the operation of the system is discharged on | ||
the effective date of the suspension of the operation of the system | ||
as specified under Subsection (c)(5). | ||
(i) After the effective date of the suspension of the | ||
operation of the system as specified under Subsection (c)(5), the | ||
commissioner shall take any action necessary under Subsection | ||
(c)(6) to distribute the surplus assets of the system until all | ||
remaining assets are distributed. | ||
(j) During a period in which the operation of the system is | ||
suspended, Sections 1501.307-1501.326 have no effect. | ||
SECTION 3. The board of directors of the Texas Health | ||
Reinsurance System serving on the effective date of this Act shall | ||
submit to the commissioner of insurance a plan of suspension of the | ||
operation of the Texas Health Reinsurance System, as described by | ||
Section 1501.3022(c), Insurance Code, as added by this Act, not | ||
later than the 90th day after the effective date of this Act. If the | ||
board fails to timely submit the plan, the commissioner of | ||
insurance shall adopt a plan in accordance with Sections | ||
1501.3022(c)-(i), Insurance Code, as added by this Act. | ||
SECTION 4. This Act takes effect immediately if it receives | ||
a vote of two-thirds of all the members elected to each house, as | ||
provided by Section 39, Article III, Texas Constitution. If this | ||
Act does not receive the vote necessary for immediate effect, this | ||
Act takes effect September 1, 2017. | ||
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