1.1                          A bill for an act 
  1.2             relating to health; crediting tobacco settlement 
  1.3             revenues to the health care access fund; modifying 
  1.4             provider premium tax; requiring pass-through of 
  1.5             savings; eliminating the MinnesotaCare provider taxes 
  1.6             on a contingent basis; amending Minnesota Statutes 
  1.7             1998, sections 60A.15, subdivision 1; and 292.52, by 
  1.8             adding a subdivision; Minnesota Statutes 1999 
  1.9             Supplement, section 295.52, subdivision 7; proposing 
  1.10            coding for new law in Minnesota Statutes, chapters 
  1.11            16A; and 62Q. 
  1.12  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.13     Section 1.  [16A.725] [TOBACCO SETTLEMENT REVENUES.] 
  1.14     Subdivision 1.  [ONE-TIME PAYMENTS.] The commissioner shall 
  1.15  credit to the health care access fund the tobacco settlement 
  1.16  payments received by the state on January 2, 2002, and January 
  1.17  2, 2003, as a result of the settlement of the lawsuit styled as 
  1.18  State v. Philip Morris Inc., No. C1-94-8565 (Minnesota District 
  1.19  Court, Second Judicial District). 
  1.20     Subd. 2.  [ONGOING PAYMENTS.] Beginning with the payment 
  1.21  due December 31, 1999, the commissioner shall credit to the 
  1.22  health care access fund all ongoing payments due December 31 of 
  1.23  each year that are received by the state as a result of the 
  1.24  settlement of the lawsuit styled as State v. Philip Morris Inc., 
  1.25  No. C1-94-8565 (Minnesota District Court, Second Judicial 
  1.26  District). 
  1.27     Sec. 2.  Minnesota Statutes 1998, section 60A.15, 
  1.28  subdivision 1, is amended to read: 
  2.1      Subdivision 1.  [DOMESTIC AND FOREIGN COMPANIES.] (a) On or 
  2.2   before April 1, June 1, and December 1 of each year, every 
  2.3   domestic and foreign company, including town and farmers' mutual 
  2.4   insurance companies, domestic mutual insurance companies, marine 
  2.5   insurance companies, health maintenance organizations, community 
  2.6   integrated service networks, and nonprofit health service plan 
  2.7   corporations, shall pay to the commissioner of revenue 
  2.8   installments equal to one-third of the insurer's total estimated 
  2.9   tax for the current year.  Except as provided in paragraphs (d), 
  2.10  (e), (h), and (i), installments must be based on a sum equal to 
  2.11  two percent of the premiums described in paragraph (b). 
  2.12     (b) Installments under paragraph (a), (d), or (e) are 
  2.13  percentages of gross premiums less return premiums on all direct 
  2.14  business received by the insurer in this state, or by its agents 
  2.15  for it, in cash or otherwise, during such year. 
  2.16     (c) Failure of a company to make payments of at least 
  2.17  one-third of either (1) the total tax paid during the previous 
  2.18  calendar year or (2) 80 percent of the actual tax for the 
  2.19  current calendar year shall subject the company to the penalty 
  2.20  and interest provided in this section, unless the total tax for 
  2.21  the current tax year is $500 or less. 
  2.22     (d) For health maintenance organizations, nonprofit health 
  2.23  service plan corporations, and community integrated service 
  2.24  networks, the installments must be based on an amount determined 
  2.25  under paragraph (h) ~~or~~, (i), or (k). 
  2.26     (e) For purposes of computing installments for town and 
  2.27  farmers' mutual insurance companies and for mutual property 
  2.28  casualty companies with total assets on December 31, 1989, of 
  2.29  $1,600,000,000 or less, the following rates apply: 
  2.30     (1) for all life insurance, two percent; 
  2.31     (2) for town and farmers' mutual insurance companies and 
  2.32  for mutual property and casualty companies with total assets of 
  2.33  $5,000,000 or less, on all other coverages, one percent; and 
  2.34     (3) for mutual property and casualty companies with total 
  2.35  assets on December 31, 1989, of $1,600,000,000 or less, on all 
  2.36  other coverages, 1.26 percent. 
  3.1      (f) If the aggregate amount of premium tax payments under 
  3.2   this section and the fire marshal tax payments under section 
  3.3   299F.21 made during a calendar year is equal to or exceeds 
  3.4   $120,000, all tax payments in the subsequent calendar year must 
  3.5   be paid by means of a funds transfer as defined in section 
  3.6   336.4A-104, paragraph (a).  The funds transfer payment date, as 
  3.7   defined in section 336.4A-401, must be on or before the date the 
  3.8   payment is due.  If the date the payment is due is not a funds 
  3.9   transfer business day, as defined in section 336.4A-105, 
  3.10  paragraph (a), clause (4), the payment date must be on or before 
  3.11  the funds transfer business day next following the date the 
  3.12  payment is due.  
  3.13     (g) Premiums under medical assistance, general assistance 
  3.14  medical care, the MinnesotaCare program, and the Minnesota 
  3.15  comprehensive health insurance plan and all payments, revenues, 
  3.16  and reimbursements received from the federal government for 
  3.17  Medicare-related coverage as defined in section 62A.31, 
  3.18  subdivision 3, paragraph (e), are not subject to tax under this 
  3.19  section. 
  3.20     (h) For calendar years 1997, 1998, and 1999, the 
  3.21  installments for health maintenance organizations, community 
  3.22  integrated service networks, and nonprofit health service plan 
  3.23  corporations must be based on an amount equal to one percent of 
  3.24  premiums described under paragraph (b).  Health maintenance 
  3.25  organizations, community integrated service networks, and 
  3.26  nonprofit health service plan corporations that have met the 
  3.27  cost containment goals established under section 62J.04 in the 
  3.28  individual and small employer market for calendar year 1996 are 
  3.29  exempt from payment of the tax imposed under this section for 
  3.30  premiums paid after March 30, 1997, and before April 1, 1998.  
  3.31  Health maintenance organizations, community integrated service 
  3.32  networks, and nonprofit health service plan corporations that 
  3.33  have met the cost containment goals established under section 
  3.34  62J.04 in the individual and small employer market for calendar 
  3.35  year 1997 are exempt from payment of the tax imposed under this 
  3.36  section for premiums paid after March 30, 1998, and before April 
  4.1   1, 1999.  Health maintenance organizations, community integrated 
  4.2   service networks, and nonprofit health service plan corporations 
  4.3   that have met the cost containment goals established under 
  4.4   section 62J.04 in the individual and small employer market for 
  4.5   calendar year 1998 are exempt from payment of the tax imposed 
  4.6   under this section for premiums paid after March 30, 1999, and 
  4.7   before January 1, 2000.  
  4.8      (i) For calendar ~~years after 1999~~ year 2000, the 
  4.9   commissioner of finance shall determine the balance of the 
  4.10  health care access fund on September 1 of each year beginning 
  4.11  September 1, 1999.  If the commissioner determines that there is 
  4.12  no structural deficit for the next fiscal year, no tax shall be 
  4.13  imposed under paragraph (d) for the following calendar year.  If 
  4.14  the commissioner determines that there will be a structural 
  4.15  deficit in the fund for the following fiscal year, then the 
  4.16  commissioner, in consultation with the commissioner of revenue, 
  4.17  shall determine the amount needed to eliminate the structural 
  4.18  deficit and a tax shall be imposed under paragraph (d) for the 
  4.19  following calendar year.  The commissioner shall determine the 
  4.20  rate of the tax as either one-quarter of one percent, one-half 
  4.21  of one percent, three-quarters of one percent, or one percent of 
  4.22  premiums described in paragraph (b), whichever is the lowest of 
  4.23  those rates that the commissioner determines will produce 
  4.24  sufficient revenue to eliminate the projected structural 
  4.25  deficit.  The commissioner of finance shall publish in the State 
  4.26  Register by October 1 of each year the amount of tax to be 
  4.27  imposed for the following calendar year.  In determining the 
  4.28  structural balance of the health care access fund for fiscal 
  4.29  years 2000 and 2001, the commissioner shall disregard the 
  4.30  transfer amount from the health care access fund to the general 
  4.31  fund for expenditures associated with the services provided to 
  4.32  pregnant women and children under the age of two enrolled in the 
  4.33  MinnesotaCare program.  
  4.34     (j) In approving the premium rates as required in sections 
  4.35  62L.08, subdivision 8, and 62A.65, subdivision 3, the 
  4.36  commissioners of health and commerce shall ensure that any 
  5.1   exemption from the tax as described in paragraphs (h) and (i) is 
  5.2   reflected in the premium rate. 
  5.3      (k) The commissioner of finance shall establish premium tax 
  5.4   rates under paragraph (d) for calendar years beginning on or 
  5.5   after January 1, 2001, based upon determinations made by the 
  5.6   commissioner regarding the structural balance of the health care 
  5.7   access fund.  The commissioner of finance shall, on September 1 
  5.8   of each year, beginning September 1, 2000, determine the 
  5.9   structural balance of the health care access fund for the fiscal 
  5.10  year that begins the following July 1.  If the commissioner 
  5.11  determines on September 1 that there is no structural deficit 
  5.12  for the following fiscal year, no tax shall be imposed under 
  5.13  paragraph (d) for the calendar year that begins immediately 
  5.14  following that September 1.  If the commissioner determines on 
  5.15  September 1 that there will be a structural deficit in the fund 
  5.16  for the following fiscal year, then the commissioner, in 
  5.17  consultation with the commissioner of revenue, shall determine 
  5.18  the amount needed to eliminate the structural deficit and a tax 
  5.19  shall be imposed under paragraph (d) for the calendar year that 
  5.20  begins immediately following that September 1.  The commissioner 
  5.21  shall determine the rate of the tax as either one-quarter of one 
  5.22  percent, one-half of one percent, three-quarters of one percent, 
  5.23  or one percent of the premiums described in paragraph (b), 
  5.24  whichever is the lowest of those rates that the commissioner 
  5.25  determines will produce sufficient revenue to eliminate the 
  5.26  projected structural deficit.  The commissioner of finance shall 
  5.27  publish in the State Register by October 1 of each year, 
  5.28  beginning October 1, 2000, the amount of tax to be imposed for 
  5.29  the following calendar year.  In determining the structural 
  5.30  balance of the health care access fund under this paragraph, the 
  5.31  commissioner of finance shall not count revenues resulting from 
  5.32  any increase in taxes under section 295.52. 
  5.33     Sec. 3.  [62Q.48] [PASS-THROUGH OF SAVINGS TO PURCHASERS.] 
  5.34     Subdivision 1.  [PREMIUMS TO REFLECT SAVINGS.] Health plan 
  5.35  company premium rates must reflect all savings resulting from:  
  5.36     (1) the contingent elimination of the MinnesotaCare 
  6.1   provider taxes under section 295.52, subdivision 8, and the 
  6.2   resulting reduction in the transfer of additional expenses 
  6.3   generated by section 295.52 obligations to third party contracts 
  6.4   under section 295.582; and 
  6.5      (2) the contingent elimination of the tax on nonprofit 
  6.6   health plan company premiums under section 60A.15, subdivision 
  6.7   1, paragraph (k). 
  6.8      Subd. 2.  [DOCUMENTING COMPLIANCE.] Each health plan 
  6.9   company shall annually submit documentation indicating 
  6.10  compliance with subdivision 1 to the appropriate commissioner. 
  6.11     Subd. 3.  [ENFORCEMENT.] If the appropriate commissioner 
  6.12  finds that a health plan company has not complied with 
  6.13  subdivision 1, the commissioner may take enforcement action 
  6.14  against that health plan company.  The commissioner may, by 
  6.15  order, require premium rate reductions, fine or censure the 
  6.16  health plan company, or revoke or suspend the certificate of 
  6.17  authority or license of the health plan company to do business 
  6.18  in this state, if the commissioner finds that the health plan 
  6.19  company has not complied with this section.  The health plan 
  6.20  company may appeal the commissioner's order through a contested 
  6.21  case hearing in accordance with chapter 14. 
  6.22     Sec. 4.  Minnesota Statutes 1999 Supplement, section 
  6.23  295.52, subdivision 7, is amended to read: 
  6.24     Subd. 7.  [TAX REDUCTION.] Notwithstanding subdivisions 1, 
  6.25  1a, 2, 3, and 4, the tax imposed under this section equals for 
  6.26  calendar years 1998, 1999, and 2000, ~~and 2001,~~ 1.5 percent of 
  6.27  the gross revenues received on or after January 1, 1998, and 
  6.28  before January 1, ~~2002~~ 2001. 
  6.29     Sec. 5.  Minnesota Statutes 1998, section 295.52, is 
  6.30  amended by adding a subdivision to read: 
  6.31     Subd. 8.  [CONTINGENT ELIMINATION OF TAX.] The commissioner 
  6.32  shall establish tax rates for calendar years beginning on or 
  6.33  after January 1, 2001, based upon determinations made by the 
  6.34  commissioner of finance regarding the structural balance of the 
  6.35  health care access fund.  The commissioner of finance shall, on 
  6.36  September 1 of each year, beginning September 1, 2000, determine 
  7.1   the structural balance of the health care access fund for the 
  7.2   fiscal year that begins the following July 1.  If the 
  7.3   commissioner of finance determines on September 1 that there is 
  7.4   no structural deficit for the following fiscal year, no taxes 
  7.5   shall be imposed under subdivisions 1, 1a, 2, 3, and 4, for the 
  7.6   calendar year that begins immediately following that September 
  7.7   1.  If the commissioner of finance determines on September 1 
  7.8   that there will be a structural deficit in the fund for the 
  7.9   following fiscal year, then the commissioner, in consultation 
  7.10  with the commissioner of finance, shall determine the amount 
  7.11  needed to eliminate the structural deficit and shall impose 
  7.12  taxes under subdivisions 1, 1a, 2, 3, and 4 for the calendar 
  7.13  year that begins immediately following that September 1.  The 
  7.14  commissioner shall determine the rate of the tax to the nearest 
  7.15  one-quarter of one percent up to two percent, using the lowest 
  7.16  of the rates that the commissioner determines will produce 
  7.17  sufficient revenue to eliminate the projected structural 
  7.18  deficit.  The commissioner shall publish in the State Register 
  7.19  by October 1 of each year, beginning October 1, 2000, the amount 
  7.20  of the tax to be imposed for the following calendar year.  In 
  7.21  determining the structural balance of the health care access 
  7.22  fund under this subdivision, the commissioner of finance shall 
  7.23  count revenues resulting from any increase in the one percent 
  7.24  premium tax under section 60A.15, subdivision 1, paragraphs (d), 
  7.25  (h), (i), and (k).