By: Estes	S.B. No. 1171

	A BILL TO BE ENTITLED
	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.