HB 617-FN – AS INTRODUCED
2009 SESSION
01/10
HOUSE BILL 617-FN
AN ACT permitting private employers and others to join the state health insurance program.
SPONSORS: Rep. Hammond, Hills 3; Rep. Leishman, Hills 3; Rep. Bergin, Hills 6; Rep. Beck, Hills 2
COMMITTEE: Executive Departments and Administration
This bill allows employees of certain private employers to join the state health insurance program.
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Explanation: Matter added to current law appears in bold italics.
Matter removed from current law appears [in brackets and struckthrough.]
Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
09-0425
01/10
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Nine
AN ACT permitting private employers and others to join the state health insurance program.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 Employees of Certain Private Employers. Amend RSA 21-I:26 to read as follows:
21-I:26 Purpose and Policy. This subdivision is to provide permanent group life insurance and group hospitalization, hospital medical care, surgical care and other medical and surgical benefits for New Hampshire state employees and their families, and retired state employees and their spouses. This subdivision also provides the group health benefits to employees of small employers and employees of nonprofit employers; which employees shall share the cost of individual coverage with the state as determined by the commissioner of the department of administrative services. In view of the accepted value of group insurance to the well-being and efficiency of employees on the part of small and large private employers and the other 5 New England states in obtaining benefits of this type of insurance for their employees, the state of New Hampshire implements this subdivision in order that the state shall compare favorably to the standards now commonly accepted by private employers and the state employees in the other 5 New England states by making available to state employees and their families and retired state employees and their spouses permanent group life insurance and group hospitalization, hospital medical care, surgical care and other medical and surgical insurance benefits. In this subdivision:
I. “Nonprofit employer” means a secular or religious organization described in section 501(c) of the Internal Revenue Code of 1986 which is exempt from taxation under Subtitle A of such code.
II. “Small employer” means small employer as defined in RSA 420-G:2, XVI.
2 Certain Employees Added. Amend RSA 21-I:30, I to read as follows:
I. The state shall pay a premium for each state employee and permanent temporary or permanent seasonal employee as defined in RSA 98-A:3 including spouse and minor, fully dependent children, if any, and each retired employee, as defined in paragraph II of this section, and his or her spouse, or retired employee’s beneficiary, only if an option was taken at the time of retirement and the employee is not now living, toward group hospitalization, hospital medical care, surgical care and other medical benefits plan or a self-funded alternative within the limits of the funds appropriated at each legislative session and providing any change in plan or vendor is approved by the fiscal committee of the general court prior to its adoption. Funds appropriated for this purpose shall not be transferred or used for any other purpose. Employees of small employers and employees of nonprofit employers may participate in the group health insurance plans. Such employees shall share the cost of individual coverage with the state as determined by the commissioner of the department of administrative services.
3 Eligibility. Amend RSA 21-I:32 to read as follows:
21-I:32 Eligibility.
I. Only full time state employees shall be authorized to participate, on a voluntary basis, in the permanent group life insurance program. All full time state employees and retired state employees shall be authorized to participate, on a voluntary basis, in the group hospitalization, hospital medical care, surgical care and other medical and surgical benefits program.
II. Notwithstanding paragraph I, employees of small employers and employees of nonprofit employers may participate in the group health insurance plans. Such employees shall share the cost of individual coverage with the state as determined by the commissioner of the department of administrative services.
4 Effective Date. This act shall take effect 60 days after its passage.
LBAO
09-0425
Revised 03/02/09
HB 617 FISCAL NOTE
AN ACT permitting private employers and others to join in the state health insurance program.
FISCAL IMPACT:
The Department of Administrative Services states this bill will increase state revenues and expenditures by an indeterminable amount in FY 2010 and each year thereafter. There will be no fiscal impact on county and local revenues or expenditures.
METHODOLOGY:
This bill allows employees of certain private employers to join the state health insurance program. The Department of Administrative Services states the proposed legislation will increase state revenues by any amounts received as premiums from individuals who choose to participate in the state’s health insurance program. However, the Department is unable to estimate any revenue increases as they can not determine how many private employer’s employees would choose to participate in the program or the amount that would be charged for participation by the Department at this time.
The Department states that state expenditures would increase by an indeterminable amount due to costs associated with the administration of the proposed legislation. The Department states these costs would include the additional personnel costs associated with determining eligibility, collecting premium payments, setting appropriate rates, underwriting, and general administrative costs of implementing the proposed legislation.
The Department also notes that state expenditures would increase as a result of several additional factors if the proposed legislation were enacted. The first of these factors noted by the Department is adverse selection. The Department states adverse selection is a concern because employees seeking coverage would most likely investigate premium rates offered directly from insurance carriers in the small group, group, or individual markets. Accordingly, those employees receiving a lower rate through the state plan would be likely to choose the state plan. The Department therefore assumes that employees selecting the state plan would be more likely to have received higher premium rates directly from insurance carriers due to their own less favorable risk factors such as age or current health status. The second factor the Department states will contribute to an indeterminable increase in state expenditures is that adverse selection will lead to higher cost claimant risks. As a result of higher claimant risk, the Department states the average cost per participant in the state’s health insurance plan would increase.
Lastly, the Department notes that for every individual that joins the state plan, the state assumes additional risk that the claims associated with that individual will exceed the premium collected from that individual. The increase in this risk is compounded by the higher risk nature of the additional participants noted above. In conjunction with this, because the state is self insured, and the state does not currently carry stop loss insurance, the plan’s exposure for claims has no upper limit. The Department states that state expenditures would increase by an indeterminable amount associated with the purchase of stop loss insurance needed to mitigate this risk.
The Insurance Department states this bill will have an indeterminable effect on state revenues and expenditures. The Department notes that the state collects a premium tax on health insurance products sold by insurance companies and that the proposed legislation is unclear as to whether or not that tax would apply to insurance purchased though the state. The Department also states it is not clear what effect the proposed legislation would have on the morbidity pool of the states’ insurance plan or what impact it would have on the small employer insurance market.
The New Hampshire Association of Counties and the New Hampshire Municipal Association state this bill will have no fiscal impact on county and local revenues or expenditures.