1.1 	A bill for an act
1.2 	relating to health; changing the governance structure of the Minnesota 
1.3 	Comprehensive Health Association; providing a health insurance exemption 
1.4 	from the insurance premiums tax; repealing the assessment for the Minnesota 
1.5 	Comprehensive Health Association; appropriating money; amending Minnesota 
1.6 	Statutes 2004, sections 62A.02, by adding a subdivision; 62E.02, subdivision 23; 
1.7 	62E.091; 62E.10, subdivisions 1, 2, 3, 6, 7; 62E.11, subdivisions 9, 10; 62E.13, 
1.8 	subdivision 3a, by adding a subdivision; 62E.14, subdivisions 1, 6; Minnesota 
1.9 	Statutes 2005 Supplement, section 62E.13, subdivision 2; repealing Minnesota 
1.10 	Statutes 2004, sections 62E.11, subdivisions 5, 6, 13; 62E.13, subdivision 1.
1.11 	 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.12 	Section 1. Minnesota Statutes 2004, section 62A.02, is amended by adding a 
1.13 	subdivision to read:
1.14 		Subd. 8.Effects on premium rates of certain law changes. In approving premium 
1.15 	rates under this section and sections 62A.021; 62A.65, subdivision 3; and 62L.08, 
1.16 	subdivision 8, the commissioners of commerce and health shall ensure that the provisions 
1.17 	of this act eliminating the Comprehensive Health Association assessment are reflected 
1.18 	in the premium rates charged by health plan companies. 

1.19 	EFFECTIVE DATE. This section is effective for coverage issued on or after 
1.20 	January 1, 2007. 

1.21 	Sec. 2. Minnesota Statutes 2004, section 62E.02, subdivision 23, is amended to read:
1.22 		 Subd. 23.Contributing member Health plan company.  "Contributing member 
1.23 	Health plan company" means those companies regulated under chapter 62A and offering, 
1.24 	selling, issuing, or renewing policies or contracts of accident and health insurance; 
1.25 	health maintenance organizations regulated under chapter 62D; nonprofit health service 
2.1 	plan corporations regulated under chapter 62C; community integrated service networks 
2.2 	regulated under chapter 62N; fraternal benefit societies regulated under chapter 64B; the 
2.3 	Minnesota employees insurance program established in section 43A.317, effective July 
2.4 	1, 1993; and joint self-insurance plans regulated under chapter 62H. For the purposes 
2.5 	of determining liability of contributing members pursuant to section 62E.11 payments 
2.6 	received from or on behalf of Minnesota residents for coverage by a health maintenance 
2.7 	organization or community integrated service network shall be considered to be accident 
2.8 	and health insurance premiums. 

2.9 	EFFECTIVE DATE. This section is effective January 1, 2007. 

2.10 	Sec. 3. Minnesota Statutes 2004, section 62E.091, is amended to read:
2.11 	62E.091 APPROVAL OF STATE PLAN PREMIUMS.
2.12 	 The association shall submit to the commissioner any premiums it proposes to 
2.13 	become effective for coverage under the comprehensive health insurance plan, pursuant 
2.14 	to section 62E.08, subdivision 3.  No later than 45 days before the effective date for 
2.15 	premiums specified in section 62E.08, subdivision 3, the commissioner shall approve, 
2.16 	modify, or reject the proposed premiums on the basis of the following criteria:
2.17 	 (a) whether the association has complied with the provisions of section 62E.11, 
2.18 	subdivision 11;
2.19 	 (b) whether the association has submitted the proposed premiums in a manner which 
2.20 	provides sufficient time for individuals covered under the comprehensive insurance plan 
2.21 	to receive notice of any premium increase no less than 30 days prior to the effective 
2.22 	date of the increase;
2.23 	 (c) the degree to which the association's computations and conclusions are consistent 
2.24 	with section 62E.08;
2.25 	 (d) the degree to which any sample used to compute a weighted average by the 
2.26 	association pursuant to section 62E.08 reasonably reflects circumstances existing in the 
2.27 	private marketplace for individual coverage;
2.28 	 (e) the degree to which a weighted average computed pursuant to section 62E.08 
2.29 	that uses information pertaining to individual coverage available only on a renewal basis 
2.30 	reflects the circumstances existing in the private marketplace for individual coverage;
2.31 	 (f) a comparison of the proposed increases with increases in the cost of medical care 
2.32 	and increases experienced in the private marketplace for individual coverage;
2.33 	 (g) the financial consequences to enrollees of the proposed increase;
3.1 	 (h) the actuarially projected effect of the proposed increase upon both total 
3.2 	enrollment in, and the nature of the risks assumed by, the comprehensive health insurance 
3.3 	plan; and 
3.4 	 (i) the relative solvency of the contributing members; and 
3.5 	(j) other factors deemed relevant by the commissioner.
3.6 	 In no case, however, may the commissioner approve premiums for those plans of 
3.7 	coverage described in section 62E.08, subdivision 1, paragraphs (a) to (d), that are lower 
3.8 	than 101 percent or greater than 125 percent of the weighted averages computed by the 
3.9 	association pursuant to section 62E.08.  The commissioner shall support a decision to 
3.10 	approve, modify, or reject any premium proposed by the association with written findings 
3.11 	and conclusions addressing each criterion specified in this section.  If the commissioner 
3.12 	does not approve, modify, or reject the premiums proposed by the association sooner than 
3.13 	45 days before the effective date for premiums specified in section 62E.08, subdivision 3, 
3.14 	the premiums proposed by the association under this section become effective.

3.15 	EFFECTIVE DATE. This section is effective January 1, 2007. 

3.16 	Sec. 4. Minnesota Statutes 2004, section 62E.10, subdivision 1, is amended to read:
3.17 		 Subdivision 1.Creation; tax exemption.  There is established a Comprehensive 
3.18 	Health Association to promote the public health and welfare of the state of Minnesota with 
3.19 	membership consisting of all insurers; self-insurers; fraternals; joint self-insurance plans 
3.20 	regulated under chapter 62H; the Minnesota employees insurance program established 
3.21 	in section 43A.317, effective July 1, 1993; health maintenance organizations; and 
3.22 	community integrated service networks licensed or authorized to do business in this state. 
3.23 	The association shall have no members. The Comprehensive Health Association is 
3.24 	exempt from the taxes imposed under chapter 297I and any other laws of this state and all 
3.25 	property owned by the association is exempt from taxation.

3.26 	EFFECTIVE DATE. This section is effective January 1, 2007. 

3.27 	Sec. 5. Minnesota Statutes 2004, section 62E.10, subdivision 2, is amended to read:
3.28 		 Subd. 2.Board of directors; organization.  The board of directors of the 
3.29 	association shall be made up of eleven members as follows:  six directors selected by 
3.30 	contributing members, subject to approval by the commissioner, one of which must be a 
3.31 	health actuary; five public directors 11 individuals selected by the commissioner, at least 
3.32 	two of whom must be plan enrollees, two of whom must be representatives of employers 
3.33 	whose accident and health insurance premiums are part of the association's assessment 
4.1 	base, and one of whom must be a licensed insurance agent.  At least two of the public 
4.2 	directors must reside outside of the seven county metropolitan area. In determining voting 
4.3 	rights at members' meetings, each member shall be entitled to vote in person or proxy.  The 
4.4 	vote shall be a weighted vote based upon the member's cost of self-insurance, accident 
4.5 	and health insurance premium, subscriber contract charges, health maintenance contract 
4.6 	payment, or community integrated service network payment derived from or on behalf of 
4.7 	Minnesota residents in the previous calendar year, as determined by the commissioner.  In 
4.8 	approving directors of the board, the commissioner shall consider, among other things, 
4.9 	whether all types of members are fairly represented.  Directors selected by contributing 
4.10 	members may be reimbursed from the money of the association for expenses incurred by 
4.11 	them as directors, but shall not otherwise be compensated by the association for their 
4.12 	services.  The costs of conducting meetings of the association and its board of directors 
4.13 	shall be borne by members of the association. 

4.14 	EFFECTIVE DATE. This section is effective January 1, 2007. 

4.15 	Sec. 6. Minnesota Statutes 2004, section 62E.10, subdivision 3, is amended to read:
4.16 		 Subd. 3.Mandatory membership Organizational documents. All members shall 
4.17 	maintain their membership in the association as a condition of doing accident and health 
4.18 	insurance, self-insurance, health maintenance organization, or community integrated 
4.19 	service network business in this state.  The association shall submit its articles, bylaws, 
4.20 	and operating rules to the commissioner for approval; provided that the adoption and 
4.21 	amendment of articles, bylaws, and operating rules by the association and the their 
4.22 	approval by the commissioner thereof shall be is exempt from the provisions of  sections 
4.23 	14.001 to 14.69.

4.24 	EFFECTIVE DATE. This section is effective January 1, 2007.

4.25 	Sec. 7. Minnesota Statutes 2004, section 62E.10, subdivision 6, is amended to read:
4.26 		 Subd. 6.Antitrust exemption.  In the performance of their duties as members 
4.27 	directors of the association, the members directors and their employers shall be exempt 
4.28 	from the provisions of sections 325D.49 to 325D.66.

4.29 	EFFECTIVE DATE. This section is effective January 1, 2007.

4.30 	Sec. 8. Minnesota Statutes 2004, section 62E.10, subdivision 7, is amended to read:
4.31 		 Subd. 7.General powers.  The association may:
4.32 	 (a) Exercise the powers granted to insurers under the laws of this state;
5.1 	 (b) Sue or be sued;
5.2 	 (c) Enter into contracts with insurers, similar associations in other states, or with 
5.3 	other persons for the performance of administrative functions including the functions 
5.4 	provided for in clauses (e) and (f); and 
5.5 	 (d) Establish administrative and accounting procedures for the operation of the 
5.6 	association;.
5.7 	(e) Provide for the reinsuring of risks incurred as a result of issuing the coverages 
5.8 	required by sections 62E.04 and 62E.16 by members of the association.  Each member 
5.9 	which elects to reinsure its required risks shall determine the categories of coverage it 
5.10 	elects to reinsure in the association.  The categories of coverage are: 
5.11 	(1) individual qualified plans, excluding group conversions; 
5.12 	(2) group conversions; 
5.13 	(3) group qualified plans with fewer than 50 employees or members; and 
5.14 	(4) major medical coverage. 
5.15 	A separate election may be made for each category of coverage.  If a member elects 
5.16 	to reinsure the risks of a category of coverage, it must reinsure the risk of the coverage 
5.17 	of every life covered under every policy issued in that category.  A member electing to 
5.18 	reinsure risks of a category of coverage shall enter into a contract with the association 
5.19 	establishing a reinsurance plan for the risks.  This contract may include provision for 
5.20 	the pooling of members' risks reinsured through the association and it may provide for 
5.21 	assessment of each member reinsuring risks for losses and operating and administrative 
5.22 	expenses incurred, or estimated to be incurred in the operation of the reinsurance plan. 
5.23 	This reinsurance plan shall be approved by the commissioner before it is effective. 
5.24 	Members electing to administer the risks which are reinsured in the association shall 
5.25 	comply with the benefit determination guidelines and accounting procedures established 
5.26 	by the association.  The fee charged by the association for the reinsurance of risks shall 
5.27 	not be less than 110 percent of the total anticipated expenses incurred by the association 
5.28 	for the reinsurance; and 
5.29 	(f) Provide for the administration by the association of policies which are reinsured 
5.30 	pursuant to clause (e).  Each member electing to reinsure one or more categories of 
5.31 	coverage in the association may elect to have the association administer the categories of 
5.32 	coverage on the member's behalf.  If a member elects to have the association administer 
5.33 	the categories of coverage, it must do so for every life covered under every policy issued 
5.34 	in that category.  The fee for the administration shall not be less than 110 percent of the 
5.35 	total anticipated expenses incurred by the association for the administration. 

5.36 	EFFECTIVE DATE. This section is effective January 1, 2007. 

6.1 	Sec. 9. Minnesota Statutes 2004, section 62E.11, subdivision 9, is amended to read:
6.2 		 Subd. 9.Special assessment upon termination of individual health coverage.
 6.3 	 Each contributing member health plan company that terminates individual health coverage 
6.4 	for reasons other than (a) nonpayment of premium; (b) failure to make co-payments; 
6.5 	(c) enrollee moving out of the area served; or (d) a materially false statement or 
6.6 	misrepresentation by the enrollee in the application for membership; and does not provide 
6.7 	or arrange for replacement coverage that meets the requirements of section 62D.121; shall 
6.8 	pay a special assessment to the state plan based upon the number of terminated individuals 
6.9 	who join the comprehensive health insurance plan as authorized under section 62E.14, 
6.10 	subdivisions 1, paragraph (d), and 6.  Such a contributing member health plan company 
6.11 	shall pay the association an amount equal to the average cost of an enrollee in the state 
6.12 	plan in the year in which the member health plan company terminated enrollees multiplied 
6.13 	by the total number of terminated enrollees who enroll in the state plan.
6.14 	 The average cost of an enrollee in the state comprehensive health insurance plan 
6.15 	shall be determined by dividing the state plan's total annual losses by the total number of 
6.16 	enrollees from that year. This cost will be assessed to the contributing member who has 
6.17 	terminated health coverage before the association makes the annual determination of each 
6.18 	contributing member's liability as required under this section. 
6.19 	 In the event that the contributing member health plan company is terminating health 
6.20 	coverage because of a loss of health care providers, the commissioner may review whether 
6.21 	or not the special assessment established under this subdivision will have an adverse 
6.22 	impact on the contributing member health plan company or its enrollees or insureds, 
6.23 	including but not limited to causing the contributing member health plan company  to 
6.24 	fall below statutory net worth requirements.  If the commissioner determines that the 
6.25 	special assessment would have an adverse impact on the contributing member health 
6.26 	plan company  or its enrollees or insureds, the commissioner may adjust the amount of 
6.27 	the special assessment, or establish alternative payment arrangements to the state plan.  
6.28 	For health maintenance organizations regulated under chapter 62D, the commissioner of 
6.29 	health shall make the determination regarding any adjustment in the special assessment 
6.30 	and shall transmit that determination to the commissioner of commerce.

6.31 	EFFECTIVE DATE. This section is effective January 1, 2007.

6.32 	Sec. 10. Minnesota Statutes 2004, section 62E.11, subdivision 10, is amended to read:
6.33 		 Subd. 10.Termination of individual plan without replacement coverage.  Any 
6.34 	contributing members health plan companies who have terminated individual health plans 
6.35 	and do not provide or arrange for replacement coverage that meets the requirements of 
7.1 	section 62D.121, and whose former insureds or enrollees enroll in the state comprehensive 
7.2 	health insurance plan with a waiver of the preexisting conditions pursuant to section 
7.3 	62E.14, subdivisions 1, paragraph (d), and 6, will be liable for the costs of any preexisting 
7.4 	conditions of their former enrollees or insureds treated during the first six months of 
7.5 	coverage under the state plan. The liability for preexisting conditions will be assessed 
7.6 	before the association makes the annual determination of each contributing member's 
7.7 	liability as required under this section. 

7.8 	EFFECTIVE DATE. This section is effective January 1, 2007. 

7.9 	Sec. 11. Minnesota Statutes 2005 Supplement, section 62E.13, subdivision 2, is 
7.10 	amended to read:
7.11 		Subd. 2.Selection of writing carrier. The association may select policies and 
7.12 	contracts, or parts thereof, submitted by a member or members of the association, or by 
7.13 	the association or others, to develop specifications for bids from any entity which wishes 
7.14 	to be selected as a writing carrier to administer the state plan. The selection of the writing 
7.15 	carrier shall be based upon criteria established by the board of directors of the association 
7.16 	and approved by the commissioner. The criteria shall outline specific qualifications 
7.17 	that an entity must satisfy in order to be selected and, at a minimum, shall include the 
7.18 	entity's proven ability to handle large group accident and health insurance cases, efficient 
7.19 	claim paying capacity, and the estimate of total charges for administering the plan. The 
7.20 	association may select separate writing carriers for the two types of qualified plans and the 
7.21 	$2,000, $5,000, and $10,000 deductible plans, the Medicare supplement plans, and the 
7.22 	health maintenance organization contract.

7.23 	EFFECTIVE DATE. This section is effective January 1, 2007.

7.24 	Sec. 12. Minnesota Statutes 2004, section 62E.13, subdivision 3a, is amended to read:
7.25 		Subd. 3a.Extension of writing carrier contract. Subject to the approval of the 
7.26 	commissioner, and subject to the consent of the writing carrier, the association may 
7.27 	extend the effective writing carrier contract for a period not to exceed three years, if the 
7.28 	association and the commissioner determine that it would be in the best interest of the 
7.29 	association's enrollees and contributing members of the state. This subdivision applies 
7.30 	notwithstanding anything to the contrary in subdivisions 2 and 3.

7.31 	EFFECTIVE DATE. This section is effective January 1, 2007.

8.1 	Sec. 13. Minnesota Statutes 2004, section 62E.13, is amended by adding a subdivision 
8.2 	to read:
8.3 		Subd. 12.Appropriation. (a) An amount sufficient to offset any deficit of the 
8.4 	association for the fiscal year is appropriated from the health care access account to the 
8.5 	commissioner of commerce for payment to the association. 
8.6 	(b) Beginning for the 2008-2009 fiscal biennium, the commissioner of commerce 
8.7 	shall include estimates of the cost of the Minnesota Comprehensive Health Association 
8.8 	deficits in its submissions under section 16A.10, and the governor shall include 
8.9 	recommendations on it in the governor's budget submission to the legislature under 
8.10 	section 16A.11.

8.11 	Sec. 14. Minnesota Statutes 2004, section 62E.14, subdivision 1, is amended to read:
8.12 		 Subdivision 1.Application, contents.  The comprehensive health insurance plan 
8.13 	shall be open for enrollment by eligible persons.  An eligible person shall enroll by 
8.14 	submission of an application to the writing carrier.  The application must provide the 
8.15 	following:
8.16 	 (a) name, address, age, list of residences for the immediately preceding six months 
8.17 	and length of time at current residence of the applicant;
8.18 	 (b) name, address, and age of spouse and children if any, if they are to be insured;
8.19 	 (c) evidence of rejection, a requirement of restrictive riders, a rate up, or a 
8.20 	preexisting conditions limitation on a qualified plan, the effect of which is to substantially 
8.21 	reduce coverage from that received by a person considered a standard risk, by at least 
8.22 	one association member health plan company  within six months of the date of the 
8.23 	application, or other eligibility requirements adopted by rule by the commissioner which 
8.24 	are not inconsistent with this chapter and which evidence that a person is unable to 
8.25 	obtain coverage substantially similar to that which may be obtained by a person who is 
8.26 	considered a standard risk;
8.27 	 (d) if the applicant has been terminated from individual health coverage which 
8.28 	does not provide replacement coverage, evidence that no replacement coverage that 
8.29 	meets the requirements of section 62D.121 was offered, and evidence of termination of 
8.30 	individual health coverage by an insurer, nonprofit health service plan corporation, or 
8.31 	health maintenance organization, provided that the contract or policy has been terminated 
8.32 	for reasons other than (1) failure to pay the charge for health care coverage; (2) failure to 
8.33 	make co-payments required by the health care plan; (3) enrollee moving out of the area 
8.34 	served; or (4) a materially false statement or misrepresentation by the enrollee in the 
8.35 	application for the terminated contract or policy; and
9.1 	 (e) a designation of the coverage desired.
9.2 	 An eligible person may not purchase more than one policy from the state plan.  Upon 
9.3 	ceasing to be a resident of Minnesota a person is no longer eligible to purchase or renew 
9.4 	coverage under the state plan, except as required by state or federal law with respect to 
9.5 	renewal of Medicare supplement coverage.

9.6 	EFFECTIVE DATE. This section is effective January 1, 2007. 

9.7 	Sec. 15. Minnesota Statutes 2004, section 62E.14, subdivision 6, is amended to read:
9.8 		 Subd. 6.Termination of individual policy or contract.  A Minnesota resident 
9.9 	who holds an individual health maintenance contract, individual nonprofit health service 
9.10 	corporation contract, or an individual insurance policy previously approved by the 
9.11 	commissioners of health or commerce, may enroll in the comprehensive health insurance 
9.12 	plan with a waiver of the preexisting condition as described in subdivision 3, without 
9.13 	interruption in coverage, provided (1) no replacement coverage that meets the requirements 
9.14 	of section 62D.121 was offered by the contributing member health plan company, and 
9.15 	(2) the policy or contract has been terminated for reasons other than (a) nonpayment of 
9.16 	premium; (b) failure to make co-payments required by the health care plan; (c) moving out 
9.17 	of the area served; or (d) a materially false statement or misrepresentation by the enrollee 
9.18 	in the application for the terminated policy or contract; and, provided further, that the 
9.19 	option to enroll in the plan is exercised by submitting an application that is received by the 
9.20 	writing carrier no later than 90 days after termination of the existing policy or contract.
9.21 	 Coverage allowed under this section is effective when the contract or policy is 
9.22 	terminated and the enrollee has submitted the proper application that is received within the 
9.23 	time period stated in this subdivision and paid the required premium or fee.
9.24 	 Expenses incurred from the preexisting conditions of individuals enrolled in the state 
9.25 	plan under this subdivision must be paid by the contributing member health plan company 
9.26 	 canceling coverage as set forth in section 62E.11, subdivision 10.
9.27 	 The application must include evidence of termination of the existing policy or 
9.28 	certificate as required in subdivision 1.

9.29 	EFFECTIVE DATE. This section is effective January 1, 2007. 

9.30 	Sec. 16. APPROPRIATION.
 9.31 	$....... is appropriated from the health care access fund to the commissioner of 
9.32 	commerce to offset the deficit in the Minnesota Comprehensive Health Association 
9.33 	program for fiscal year 2007.

10.1 	Sec. 17.  REPEALER.
 10.2 	Minnesota Statutes 2004, sections 62E.11, subdivisions 5, 6, and 13; and 62E.13, 
10.3 	subdivision 1, are repealed.

10.4 	EFFECTIVE DATE. This section is effective January 1, 2007.