1.1                          A bill for an act 
  1.2             relating to insurance; regulating health care policy 
  1.3             rates; amending Minnesota Statutes 1996, section 
  1.4             62A.021, subdivision 1. 
  1.5   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.6      Section 1.  Minnesota Statutes 1996, section 62A.021, 
  1.7   subdivision 1, is amended to read: 
  1.8      Subdivision 1.  [LOSS RATIO STANDARDS.] (a) Notwithstanding 
  1.9   section 62A.02, subdivision 3, relating to loss ratios, health 
  1.10  care policies or certificates shall not be delivered or issued 
  1.11  for delivery to an individual or to a small employer as defined 
  1.12  in section 62L.02, unless the policies or certificates can be 
  1.13  expected, as estimated for the entire period for which rates are 
  1.14  computed to provide coverage, to return to Minnesota 
  1.15  policyholders and certificate holders in the form of aggregate 
  1.16  benefits not including anticipated refunds or credits, provided 
  1.17  under the policies or certificates, (1) at least 75 percent of 
  1.18  the aggregate amount of premiums earned in the case of policies 
  1.19  issued in the small employer market, as defined in section 
  1.20  62L.02, subdivision 27, calculated on an aggregate basis; and 
  1.21  (2) at least 65 percent of the aggregate amount of premiums 
  1.22  earned in the case of each policy form or certificate form 
  1.23  issued in the individual market; calculated on the basis of 
  1.24  incurred claims experience or incurred health care expenses 
  1.25  where coverage is provided by a health maintenance organization 
  2.1   on a service rather than reimbursement basis and earned premiums 
  2.2   for the period and according to accepted actuarial principles 
  2.3   and practices.  Assessments by the reinsurance association 
  2.4   created in chapter 62L and any all types of taxes, surcharges, 
  2.5   or assessments created by Laws 1992, chapter 549, or created on 
  2.6   or after April 23, 1992, are included in the calculation of 
  2.7   incurred claims experience or incurred health care expenses.  
  2.8   The applicable percentage for policies and certificates issued 
  2.9   in the small employer market, as defined in section 62L.02, 
  2.10  increases by one percentage point on July 1 of each year, 
  2.11  beginning on July 1, 1994, until an 82 percent loss ratio is 
  2.12  reached on July 1, 2000.  The applicable percentage for policy 
  2.13  forms and certificate forms issued in the individual market 
  2.14  increases by one percentage point on July 1 of each year, 
  2.15  beginning on July 1, 1994, until a 72 percent loss ratio is 
  2.16  reached on July 1, 2000.  A health carrier that enters a market 
  2.17  after July 1, 1993, does not start at the beginning of the 
  2.18  phase-in schedule and must instead comply with the loss ratio 
  2.19  requirements applicable to other health carriers in that market 
  2.20  for each time period.  Premiums earned and claims incurred in 
  2.21  markets other than the small employer and individual markets are 
  2.22  not relevant for purposes of this section. 
  2.23     Notwithstanding section 645.26, any act enacted at the 1992 
  2.24  regular legislative session that amends or repeals section 
  2.25  62A.135 or that otherwise changes the loss ratios provided in 
  2.26  that section is void. 
  2.27     (b) All filings of rates and rating schedules shall 
  2.28  demonstrate that actual expected claims in relation to premiums 
  2.29  comply with the requirements of this section when combined with 
  2.30  actual experience to date.  Filings of rate revisions shall also 
  2.31  demonstrate that the anticipated loss ratio over the entire 
  2.32  future period for which the revised rates are computed to 
  2.33  provide coverage can be expected to meet the appropriate loss 
  2.34  ratio standards, and aggregate loss ratio from inception of the 
  2.35  policy form or certificate form shall equal or exceed the 
  2.36  appropriate loss ratio standards. 
  3.1      (c) A health carrier that issues health care policies and 
  3.2   certificates to individuals or to small employers, as defined in 
  3.3   section 62L.02, in this state shall file annually its rates, 
  3.4   rating schedule, and supporting documentation including ratios 
  3.5   of incurred losses to earned premiums by policy form or 
  3.6   certificate form duration for approval by the commissioner 
  3.7   according to the filing requirements and procedures prescribed 
  3.8   by the commissioner.  The supporting documentation shall also 
  3.9   demonstrate in accordance with actuarial standards of practice 
  3.10  using reasonable assumptions that the appropriate loss ratio 
  3.11  standards can be expected to be met over the entire period for 
  3.12  which rates are computed.  The demonstration shall exclude 
  3.13  active life reserves.  If the data submitted does not confirm 
  3.14  that the health carrier has satisfied the loss ratio 
  3.15  requirements of this section, the commissioner shall notify the 
  3.16  health carrier in writing of the deficiency.  The health carrier 
  3.17  shall have 30 days from the date of the commissioner's notice to 
  3.18  file amended rates that comply with this section.  If the health 
  3.19  carrier fails to file amended rates within the prescribed time, 
  3.20  the commissioner shall order that the health carrier's filed 
  3.21  rates for the nonconforming policy form or certificate form be 
  3.22  reduced to an amount that would have resulted in a loss ratio 
  3.23  that complied with this section had it been in effect for the 
  3.24  reporting period of the supplement.  The health carrier's 
  3.25  failure to file amended rates within the specified time or the 
  3.26  issuance of the commissioner's order amending the rates does not 
  3.27  preclude the health carrier from filing an amendment of its 
  3.28  rates at a later time.  The commissioner shall annually make the 
  3.29  submitted data available to the public at a cost not to exceed 
  3.30  the cost of copying.  The data must be compiled in a form useful 
  3.31  for consumers who wish to compare premium charges and loss 
  3.32  ratios. 
  3.33     (d) Each sale of a policy or certificate that does not 
  3.34  comply with the loss ratio requirements of this section is an 
  3.35  unfair or deceptive act or practice in the business of insurance 
  3.36  and is subject to the penalties in sections 72A.17 to 72A.32. 
  4.1      (e)(1) For purposes of this section, health care policies 
  4.2   issued as a result of solicitations of individuals through the 
  4.3   mail or mass media advertising, including both print and 
  4.4   broadcast advertising, shall be treated as individual policies. 
  4.5      (2) For purposes of this section, (1) (i) "health care 
  4.6   policy" or "health care certificate" is a health plan as defined 
  4.7   in section 62A.011; and (2) (ii) "health carrier" has the 
  4.8   meaning given in section 62A.011 and includes all health 
  4.9   carriers delivering or issuing for delivery health care policies 
  4.10  or certificates in this state or offering these policies or 
  4.11  certificates to residents of this state.  
  4.12     (f) The loss ratio phase in as described in paragraph (a) 
  4.13  does not apply to individual policies and small employer 
  4.14  policies issued by a health plan company that is assessed less 
  4.15  than three percent of the total annual amount assessed by the 
  4.16  Minnesota comprehensive health association.  These policies must 
  4.17  meet 65 percent loss ratio for individual policies and small 
  4.18  employer policies with fewer than ten employees, and a 75 
  4.19  percent loss ratio for all other small employer policies. 
  4.20     Sec. 2.  [EFFECTIVE DATE.] 
  4.21     Section 1 is effective July 1, 1997.