SB 0797 - Fiscal Note

Fiscal Note - SB 0797 - No Preexisting Conditions For Group Health Benefit Plans

L.R. NO.  2688-01
BILL NO.  SB 797
SUBJECT:  Insurance-Medical, Health, Consumer
TYPE:     Original
DATE:     February 12, 1996



                              FISCAL SUMMARY
                    ESTIMATED NET EFFECT ON STATE FUNDS


FUND AFFECTED              FY 1997             FY 1998           FY 1999
General Revenue         ($170,625)          ($341,250)        ($361,725)

Insurance
Dedicated                  $21,000                  $0                $0


Conservation
Commission               ($30,000)           ($60,000)         ($60,000)

Total Estimated
Net Effect on All
State Funds             ($179,625)          ($401,250)        ($421,725)


                   ESTIMATED NET EFFECT ON FEDERAL FUNDS


FUND AFFECTED              FY 1997             FY 1998           FY 1999
None

Total Estimated
Net Effect on All
Federal Funds                   $0                  $0                $0



                    ESTIMATED NET EFFECT ON LOCAL FUNDS


FUND AFFECTED              FY 1997             FY 1998           FY 1999
Local Government                $0                  $0                $0

                              FISCAL ANALYSIS

ASSUMPTION

Officials from the Consolidated Health Care Plan (HCP) stated that this
proposal will affect  only the indemnity plan offered by HCP as the contracts
with Health Maintenance Organizations do not include a pre-existing condition
limitation. The Plan's actuary, The Segal Company, provided a range of impact
using industry standards that reflected an increase of 1.5-2% in premiums due
to elimination of the pre-existing condition limitation.  The estimated cost
using a 1.75% premium increase to HCP in fiscal year 1998 would be $341,250.

Officials from the Department of Insurance (INS) stated that there are
approximately 140 group health plan insurers.  The INS estimates an average
of three marketable products per insurer (ie  HMO\PPO\POS \ indemnity \
limited indemnity and so forth).  Each insurer will have to file policy forms
for each product to meet the new statutory minimums in this proposal.  Each
policy form filed with the INS will be accompanied with a $50 filing fee.
Projected one-time policy form filing fees are $21,000.

The additional policy forms would have to be reviewed by existing staff and
overtime hours paid accordingly.  If each policy form analysis took one hour
to complete, approximately 420 overtime hours would be required.  An
Insurance Product Analyst II's hourly rate after probation would be $11.13
per hour.  At an overtime rate of time and a half, overtime would cost $16.70
per hour.  The aggregate review and analysis of 420 policy form filings would
cost $7,014.

Oversight assumes the passage of this proposal would not increase cost to
INS; however,  revenue of $21,000 in the first fiscal year only would be
realized. In addition, passage of  more than one similar proposal could
require the INS to request increased appropriations to cover cumulative
administrative costs.

Officials from the Department of Highway and Transportation (DHT) stated the
proposal would have a moderate but indeterminable fiscal impact on the
Highway and Patrol Medical Plan.

Officials from the Department of Conservation (MDC) anticipated that
insurance premium rates would increase 2% due to this proposal. This would
cost the MDC $60,000 annually.

Officials from the Department of Corrections (DOC), Office of Administration
(OA),  Department of Health (DOH)  stated that passage of this legislation
would have no fiscal impact on their agency.

Officials from the Department of Public Safety (DPS) and the Department of
Social Services (DOS) did not respond to our fiscal impact request.


FISCAL IMPACT-State Government       FY 1997      FY 1998     FY 1999
                                 (10 Months)

GENERAL REVENUE FUND

Cost - Consolidated Health Care Plan

Increased health care cost        ($170,625)   ($341,250)  ($361,725)

Estimated Net Effect on General
Revenue Fund                      ($170,625)   ($341,250)  ($361,725)

INSURANCE DEDICATED FUND

Income - Department of Insurance

Policy Filing Fees                   $21,000           $0          $0

Estimated Net Effect on  Insurance
Dedicated Fund                       $21,000           $0          $0

CONSERVATION COMMISSION
FUND

Cost - Department of Conservation

Increased health care cost         ($30,000)    ($60,000)   ($60,000)

Estimated Net Effect on Conservation
Commission Fund                    ($30,000)    ($60,000)   ($60,000)


FISCAL IMPACT  - Local Government    FY 1997      FY 1998     FY 1999
                                    (10 Mo.)
                                          $0           $0          $0

DESCRIPTION

This act prohibits group health benefits plans from using preexisting
condition provisions after January 1, 1997 for:  (1) individuals who applied
for coverage when first eligible for such coverage; and (2) for individuals
who were previously covered by a group health benefit plan, within 30 days
prior to the individual's application for coverage with a 2nd group health
benefit plan, until such time as the individual becomes covered under the 2nd
group health benefit plan.    This act also prohibits group health benefit
plans from imposing a waiting period applicable to a preexisting condition to
particular services provided that the qualifying previous  coverage was
continuous to a date not more than 30 days prior to the effective date of the
new coverage.

This legislation is not federally mandated, would not duplicate any other
program and would not require additional capital improvements or rental
space.

SOURCES OF INFORMATION

Department of Insurance
Department of Corrections
Department of Conservation
Department of Health
Office of Administration
Department of Highway and Transportation
Consolidated Health Care Plan


Not Responding:  Department of Public Safety, Department of Social Services