May 7, 2003, Introduced by Senators PATTERSON and HAMMERSTROM and referred to the Committee on Health Policy.
A bill to amend 1956 PA 218, entitled
"The insurance code of 1956,"
by amending section 3406q (MCL 500.3406q), as added by 2002 PA
538, and by adding chapter 37.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
1 Sec. 3406q. (1) An expense-incurred hospital, medical, or
2 surgical policy or certificate delivered, issued for delivery, or
3 renewed in this state that provides pharmaceutical coverage and a
4 health maintenance organization contract that provides
5 pharmaceutical coverage shall provide coverage for an off-label
6 use of a federal food and drug administration approved drug and
7 the reasonable cost of supplies medically necessary to administer
8 the drug.
9 (2) Coverage for a drug under subsection (1) applies if all
10 of the following conditions are met:
1 (a) The drug is approved by the federal food and drug
2 administration.
3 (b) The drug is prescribed by an allopathic or osteopathic
4 physician for the treatment of either of the following:
5 (i) A life-threatening condition so long as the drug is
6 medically necessary to treat that condition and the drug is on
7 the plan formulary or accessible through the health plan's
8 formulary procedures.
9 (ii) A chronic and seriously debilitating condition so long
10 as the drug is medically necessary to treat that condition and
11 the drug is on the plan formulary or accessible through the
12 health plan's formulary procedures.
13 (c) The drug has been recognized for treatment for the
14 condition for which it is prescribed by 1 of the following:
15 (i) The American medical association drug evaluations.
16 (ii) The American hospital formulary service drug
17 information.
18 (iii) The United States pharmacopoeia dispensing information,
19 volume 1, "drug information for the health care professional".
20 (iv) Two articles from major peer-reviewed medical journals
21 that present data supporting the proposed off-label use or uses
22 as generally safe and effective unless there is clear and
23 convincing contradictory evidence presented in a major
24 peer-reviewed medical journal.
25 (3) Upon request, the prescribing allopathic or osteopathic
26 physician shall supply to the insurer or health maintenance
27 organization documentation supporting compliance with
1 subsection (2).
2 (4) This section does not prohibit the use of a copayment,
3 deductible, sanction, or a mechanism for appropriately
4 controlling the utilization of a drug that is prescribed for a
5 use different from the use for which the drug has been approved
6 by the food and drug administration. This may include prior
7 approval or a drug utilization review program. Any copayment,
8 deductible, sanction, prior approval, drug utilization review
9 program, or mechanism described in this subsection shall not be
10 more restrictive than for prescription coverage generally.
11 (5) As used in this section:
12 (a) "Chronic and seriously debilitating" means a disease or
13 condition that requires ongoing treatment to maintain remission
14 or prevent deterioration and that causes significant long-term
15 morbidity.
16 (b) "Life-threatening" means a disease or condition where the
17 likelihood of death is high unless the course of the disease is
18 interrupted or that has a potentially fatal outcome where the end
19 point of clinical intervention is survival.
20 (c) "Off-label" means the use of a drug for clinical
21 indications other than those stated in the labeling approved by
22 the federal food and drug administration.
23 CHAPTER 37
24 SMALL EMPLOYER GROUP HEALTH COVERAGE
25 Sec. 3701. As used in this chapter:
26 (a) "Actuarial certification" means a written statement by a
27 member of the American academy of actuaries or another individual
1 acceptable to the commissioner that a small employer carrier is
2 in compliance with the provisions of section 3705, based upon the
3 person's examination, including a review of the appropriate
4 records and the actuarial assumptions and methods used by the
5 carrier in establishing premium rates for applicable health
6 benefit plans.
7 (b) "Affiliation period" means a period of time required by a
8 small employer carrier that must expire before health coverage
9 becomes effective.
10 (c) "Carrier" means a person that provides health benefits,
11 coverage, or insurance in this state. For the purposes of this
12 chapter, carrier includes a health insurance company authorized
13 to do business in this state, a nonprofit health care
14 corporation, a health maintenance organization, a multiple
15 employer welfare arrangement, or any other person providing a
16 plan of health benefits, coverage, or insurance subject to state
17 insurance regulation.
18 (d) "COBRA" means the consolidated omnibus budget
19 reconciliation act of 1985, Public Law 99-272, 100 Stat. 82.
20 (e) "Creditable coverage" means, with respect to an
21 individual, health benefits, coverage, or insurance provided
22 under any of the following:
23 (i) A group health plan.
24 (ii) A health benefit plan.
25 (iii) Part A or part B of title XVIII of the social security
26 act, chapter 531, 49 Stat. 620, 42 U.S.C. 1395c to 1395i and
27 1395i-2 to 1395i-5, and 42 U.S.C. 1395j to 1395t, 1395u to 1395w,
1 and 1395w-2 to 1395w-4.
2 (iv) Title XIX of the social security act, chapter 531, 49
3 Stat. 620, 42 U.S.C. 1396 to 1396r-6 and 1396r-8 to 1396v, other
4 than coverage consisting solely of benefits under section 1929 of
5 title XIX of the social security act, 42 U.S.C. 1396t.
6 (v) Chapter 55 of title 10 of the United States Code, 10
7 U.S.C. 1071 to 1110. For purposes of chapter 55 of title 10 of
8 the United States Code, 10 U.S.C. 1071 to 1110, "uniformed
9 services" means the armed forces and the commissioned corps of
10 the national oceanic and atmospheric administration and of the
11 public health service.
12 (vi) A medical care program of the Indian health service or
13 of a tribal organization.
14 (vii) A state health benefits risk pool.
15 (viii) A health plan offered under the employees health
16 benefits program, chapter 89 of title 5 of the United States
17 Code, 5 U.S.C. 8901 to 8914.
18 (ix) A public health plan, which for purposes of this chapter
19 means a plan established or maintained by a state, county, or
20 other political subdivision of a state that provides health
21 insurance coverage to individuals enrolled in the plan.
22 (x) A health benefit plan under section 5(e) of title I of
23 the peace corps act, Public Law 87-293, 22 U.S.C. 2504.
24 (f) "Eligible employee" means an employee who works on a
25 full-time basis with a normal workweek of 30 or more hours.
26 Eligible employee includes an employee who works on a full-time
27 basis with a normal workweek of 17.5 to 30 hours, if an employer
1 so chooses and if this eligibility criterion is applied uniformly
2 among all of the employer's employees and without regard to
3 health status-related factors.
4 (g) "Geographic area" means an area in this state that
5 includes not less than 1 entire county, established by a carrier
6 pursuant to section 3705 and used for adjusting rates for a
7 health benefit plan subject to this chapter. In addition, if the
8 geographic area includes 1 entire county and additional counties
9 or portions of counties, the counties or portions of counties
10 must be contiguous with at least 1 other county or portion of
11 another county in that geographic area.
12 (h) "Group health plan" means an employee welfare benefit
13 plan as defined in section 3(1) of subtitle A of title I of the
14 employee retirement income security act of 1974, Public Law
15 93-406, 29 U.S.C. 1002, to the extent that the plan provides
16 medical care, including items and services paid for as medical
17 care to employees or their dependents as defined under the terms
18 of the plan directly or through insurance, reimbursement, or
19 otherwise. As used in this chapter, all of the following apply
20 to the term group health plan:
21 (i) Any plan, fund, or program that would not be, but for
22 section 2721(e) of subpart 4 of part A of title XXVII of the
23 public health service act, chapter 373, 110 Stat. 1967, 42
24 U.S.C. 300gg-21, an employee welfare benefit plan and that is
25 established or maintained by a partnership, to the extent that
26 the plan, fund, or program provides medical care, including items
27 and services paid for as medical care, to present or former
1 partners in the partnership, or to their dependents, as defined
2 under the terms of the plan, fund, or program, directly or
3 through insurance, reimbursement or otherwise, shall be treated,
4 subject to subparagraph (ii), as an employee welfare benefit plan
5 that is a group health plan.
6 (ii) The term "employer" also includes the partnership in
7 relation to any partner.
8 (iii) The term "participant" also includes an individual who
9 is, or may become, eligible to receive a benefit under the plan,
10 or the individual's beneficiary who is, or may become, eligible
11 to receive a benefit under the plan. For a group health plan
12 maintained by a partnership, the individual is a partner in
13 relation to the partnership and for a group health plan
14 maintained by a self-employed individual, under which 1 or more
15 employees are participants, the individual is the self-employed
16 individual.
17 (i) "Health benefit plan" or "plan" means an expense-incurred
18 hospital, medical, or surgical policy or certificate, nonprofit
19 health care corporation certificate, or health maintenance
20 organization contract. Health benefit plan does not include
21 accident-only, credit, dental, or disability income insurance;
22 coverage issued as a supplement to liability insurance; worker's
23 compensation or similar insurance; or automobile medical-payment
24 insurance.
25 (j) "Index rate" means the arithmetic average during a rating
26 period of the lowest premium rate and the highest premium rate
27 charged for each health benefit plan offered by each small
1 employer carrier to small employers or sole proprietors in a
2 geographic area.
3 (k) "Nonprofit health care corporation" means a nonprofit
4 health care corporation operating pursuant to the nonprofit
5 health care corporation reform act, 1980 PA 350, MCL 550.1101 to
6 550.1704.
7 (l) "Premium" means all money paid by a small employer, a
8 sole proprietor, eligible employees, or eligible persons as a
9 condition of receiving coverage from a small employer carrier,
10 including any fees or other contributions associated with the
11 health benefit plan.
12 (m) "Rating period" means the calendar period for which
13 premium rates established by a small employer carrier are assumed
14 to be in effect, as determined by the small employer carrier.
15 (n) "Small employer" means any person, firm, corporation,
16 partnership, limited liability company, or association actively
17 engaged in business who, on at least 50% of its working days
18 during the preceding calendar year, employed at least 2 but not
19 more than 50 eligible employees. In determining the number of
20 eligible employees, companies that are affiliated companies or
21 that are eligible to file a combined tax return for state
22 taxation purposes shall be considered 1 employer.
23 (o) "Small employer carrier" means either of the following:
24 (i) A carrier that offers health benefit plans covering the
25 employees of a small employer.
26 (ii) A carrier under section 3703(3).
27 (p) "Sole proprietor" means an individual who is a sole
1 proprietor or sole shareholder in a trade or business through
2 which he or she earns at least 50% of his or her taxable income
3 and for which he or she has filed the appropriate internal
4 revenue service form 1040, schedule C or F, for the previous
5 taxable year; who is a resident of this state; and who is
6 actively employed in the operation of the business, working at
7 least 30 hours per week in at least 40 weeks out of the calendar
8 year.
9 (q) "Waiting period" means, with respect to a health benefit
10 plan and an individual who is a potential enrollee in the plan,
11 the period that must pass with respect to the individual before
12 the individual is eligible to be covered for benefits under the
13 terms of the plan. For purposes of calculating periods of
14 creditable coverage under this chapter, a waiting period shall
15 not be considered a gap in coverage.
16 Sec. 3703. (1) This chapter applies to any health benefit
17 plan that provides coverage to 2 or more employees of a small
18 employer.
19 (2) This chapter does not apply to individual health
20 insurance policies that are subject to policy form and premium
21 rate approval by the commissioner.
22 (3) A nonprofit health care corporation shall provide upon
23 request a health benefit plan to a sole proprietor. This chapter
24 does apply to a nonprofit health care corporation providing a
25 health benefit plan to a sole proprietor and to any other small
26 employer carrier that elects to provide a health benefit plan to
27 a sole proprietor.
1 Sec. 3705. (1) For adjusting rates for health benefit plans
2 subject to this chapter, a carrier may establish up to 10
3 geographic areas in this state. A nonprofit health care
4 corporation shall establish geographic areas that cover all
5 counties in this state.
6 (2) Premium rates for a health benefit plan under this
7 chapter are subject to the following:
8 (a) For a nonprofit health care corporation and a health
9 maintenance organization, only industry and age may be used for
10 determining the premium rates within a geographic area for a
11 small employer or sole proprietor. For all other carriers,
12 industry, age, and health status may be used for determining the
13 premium rates within a geographic area for a small employer or
14 sole proprietor.
15 (b) Except as provided in subdivision (e), for a geographic
16 area, the premium rates charged for a health benefit plan during
17 a rating period to small employers or sole proprietors located in
18 that geographic area shall not vary from the index rate for that
19 health benefit plan by more than 50% of the index rate.
20 (c) For a sole proprietor, a small employer carrier may
21 charge an additional premium of up to 25% above the premium rate
22 in subdivision (b) or (e).
23 (d) Except as provided in subdivision (e), the percentage
24 increase in the premium rate charged to a small employer or sole
25 proprietor in a geographic area for a new rating period shall not
26 exceed the sum of the annual percentage adjustment in the
27 geographic area's index rate for the health benefit plan plus an
1 adjustment pursuant to subdivision (a), not to exceed 15%
2 annually and adjusted pro rata for rating periods of less than 1
3 year. This subdivision does not prohibit an adjustment due to
4 change in coverage.
5 (e) For a health benefit plan issued before the effective
6 date of this chapter, the premium rate for the plan subject to
7 the following until the next renewal period following January 1,
8 2006 instead of subdivision (b):
9 (i) For a renewal occurring on or after January 1, 2004 and
10 through December 31, 2005, the premium rates charged by a
11 nonprofit health care corporation or a health maintenance
12 organization for a geographic area for a health benefit plan to
13 small employers or sole proprietors located in that geographic
14 area shall not vary from the index rate for that health benefit
15 plan by more than 15% of the index rate and the premium rates
16 charged by all other small employer carriers for a health benefit
17 plan to small employers or sole proprietors located in that
18 geographic area shall not vary from the index rate for that
19 health benefit plan by more than 80% of the index rate.
20 (ii) For a renewal occurring on or after January 1, 2005 and
21 through December 31, 2006, the premium rates charged by a
22 nonprofit health care corporation or a health maintenance
23 organization for a geographic area for a health benefit plan to
24 small employers or sole proprietors located in that geographic
25 area shall not vary from the index rate for that health benefit
26 plan by more than 30% of the index rate and the premium rates
27 charged by all other small employer carriers for a health benefit
1 plan to small employers or sole proprietors located in that
2 geographic area shall not vary from the index rate for that
3 health benefit plan by more than 65% of the index rate.
4 (3) Beginning 1 year after the effective date of this
5 chapter, if a small employer or sole proprietor had been
6 self-insured for health benefits immediately preceding
7 application for a health benefit plan subject to this chapter, a
8 carrier may charge an additional premium of up to 33% above the
9 premium rate in subsection (2)(b) or (e) for no more than 2
10 years.
11 (4) Health benefit plan options, number of family members
12 covered, and medicare eligibility may be used in establishing a
13 small employer's or sole proprietor's premium.
14 (5) A small employer carrier shall apply all rating factors
15 consistently with respect to all small employers and sole
16 proprietors in a geographic area. Except as provided in
17 subsection (4), a small employer carrier shall bill a small
18 employer group only with a composite rate and shall not bill so
19 that 1 or more employees in a small employer group are charged a
20 higher premium than another employee in that small employer
21 group.
22 Sec. 3706. (1) A small employer carrier may apply an open
23 enrollment period for sole proprietors. If a small employer
24 carrier applies an open enrollment period for sole proprietors,
25 the open enrollment period shall be offered at least annually and
26 shall be at least 1 month long.
27 (2) A small employer carrier is not required to offer or
1 provide to a sole proprietor all health benefit plans available
2 to small employers who are not sole proprietors.
3 (3) A small employer carrier may exclude or limit coverage
4 for a sole proprietor for a condition only if the exclusion or
5 limitation relates to a condition for which medical advice,
6 diagnosis, care, or treatment was recommended or received within
7 6 months before enrollment and the exclusion or limitation does
8 not extend for more than 6 months after the effective date of the
9 health benefit plan.
10 (4) A small employer carrier shall not impose a preexisting
11 condition exclusion for a sole proprietor that relates to
12 pregnancy as a preexisting condition or with regard to a child
13 who is covered under any creditable coverage within 30 days of
14 birth, adoption, or placement for adoption, provided that the
15 child does not experience a significant break in coverage and
16 provided that the child was adopted or placed for adoption before
17 attaining 18 years of age. A period of creditable coverage under
18 this subsection shall not be counted for enrollment of an
19 individual under a health benefit plan if, after this period and
20 before the enrollment date, there was a 90-day period during all
21 of which the individual was not covered under any creditable
22 coverage.
23 Sec. 3707. (1) As a condition of transacting business in
24 this state with small employers, every small employer carrier
25 shall offer to small employers all health benefit plans it
26 markets to small employers in this state. A small employer
27 carrier shall be considered to be marketing a health benefit plan
1 if it offers that plan to a small employer not currently
2 receiving a health benefit plan from that small employer
3 carrier. A small employer carrier shall issue any health benefit
4 plan to any small employer that applies for the plan and agrees
5 to make the required premium payments and to satisfy the other
6 reasonable provisions of the health benefit plan not inconsistent
7 with this chapter.
8 (2) Except as otherwise provided in this subsection, a small
9 employer carrier shall not offer or sell to small employers a
10 health benefit plan that contains a waiting period applicable to
11 new enrollees or late enrollees. However, a small employer
12 carrier may offer or sell to small employers other than sole
13 proprietors a health benefit plan that provides for an
14 affiliation period of time that must expire before coverage
15 becomes effective for a new enrollee or a late enrollee if all of
16 the following are met:
17 (a) The affiliation period is applied uniformly to all new
18 and late enrollees and dependents of the new and late enrollees
19 of the small employer and without regard to any health
20 status-related factor.
21 (b) The affiliation period does not exceed 60 days for new
22 enrollees and does not exceed 90 days for late enrollees.
23 (c) The small employer carrier does not charge any premiums
24 for the enrollee during the affiliation period.
25 (d) The coverage issued is not effective for the enrollee
26 during the affiliation period.
27 Sec. 3708. (1) A health benefit plan offered to a small
1 employer by a small employer carrier shall provide for the
2 acceptance of late enrollees subject to this chapter.
3 (2) A small employer carrier shall permit an employee or a
4 dependent of the employee, who is eligible, but not enrolled, to
5 enroll for coverage under the terms of the small employer health
6 benefit plan during a special enrollment period if all of the
7 following apply:
8 (a) The employee or dependent was covered under a group
9 health plan or had coverage under a health benefit plan at the
10 time coverage was previously offered to the employee or
11 dependent.
12 (b) The employee stated in writing at the time coverage was
13 previously offered that coverage under a group health plan or
14 other health benefit plan was the reason for declining
15 enrollment, but only if the small employer or carrier, if
16 applicable, required such a statement at the time coverage was
17 previously offered and provided notice to the employee of the
18 requirement and the consequences of the requirement at that
19 time.
20 (c) The employee's or dependent's coverage described in
21 subdivision (a) was either under a COBRA continuation provision
22 and that coverage has been exhausted or was not under a COBRA
23 continuation provision and that other coverage has been
24 terminated as a result of loss of eligibility for coverage,
25 including because of a legal separation, divorce, death,
26 termination of employment, or reduction in the number of hours of
27 employment or employer contributions toward that other coverage
1 have been terminated. In either case, under the terms of the
2 health benefit plan, the employee must request enrollment not
3 later than 30 days after the date of exhaustion of coverage or
4 termination of coverage or employer contribution. If an employee
5 requests enrollment pursuant to this subdivision, the enrollment
6 is effective not later than the first day of the first calendar
7 month beginning after the date the completed request for
8 enrollment is received.
9 (3) A small employer carrier that makes dependent coverage
10 available under a health benefit plan shall provide for a
11 dependent special enrollment period during which the person may
12 be enrolled under the health benefit plan as a dependent of the
13 individual or, if not otherwise enrolled, the individual may be
14 enrolled under the health benefit plan. For a birth or adoption
15 of a child, the spouse of the individual may be enrolled as a
16 dependent of the individual if the spouse is otherwise eligible
17 for coverage. This subsection applies only if both of the
18 following occur:
19 (a) The individual is a participant under the health benefit
20 plan or has met any affiliation period applicable to becoming a
21 participant under the plan and is eligible to be enrolled under
22 the plan, but for a failure to enroll during a previous
23 enrollment period.
24 (b) The person becomes a dependent of the individual through
25 marriage, birth, or adoption or placement for adoption.
26 (4) The dependent special enrollment period under subsection
27 (3) for individuals shall be a period of not less than 30 days
1 and begins on the later of the date dependent coverage is made
2 available or the date of the marriage, birth, or adoption or
3 placement for adoption. If an individual seeks to enroll a
4 dependent during the first 30 days of the dependent special
5 enrollment period under subsection (3), the coverage of the
6 dependent shall be effective as follows:
7 (a) For marriage, not later than the first day of the first
8 month beginning after the date the completed request for
9 enrollment is received.
10 (b) For a dependent's birth, as of the date of birth.
11 (c) For a dependent's adoption or placement for adoption, the
12 date of the adoption or placement for adoption.
13 Sec. 3709. (1) Except as provided in this section,
14 requirements used by a small employer carrier in determining
15 whether to provide coverage to a small employer shall be applied
16 uniformly among all small employers applying for coverage or
17 receiving coverage from the small employer carrier.
18 (2) A small employer carrier may deny coverage to a small
19 employer of 10 or fewer employees if the small employer fails to
20 enroll with the small employer carrier 100% of its employees
21 seeking health care coverage through the small employer.
22 Sec. 3711. (1) Except as provided in this section, a small
23 employer carrier that offers health coverage in the small
24 employer group market in connection with a health benefit plan
25 shall renew or continue in force that plan at the option of the
26 small employer or sole proprietor.
27 (2) Guaranteed renewal under subsection (1) is not required
1 in cases of: fraud or intentional misrepresentation of the small
2 employer or, for coverage of an insured individual, fraud or
3 misrepresentation by the insured individual or the individual's
4 representative; lack of payment; if the small employer carrier no
5 longer offers that particular type of coverage in the market; or
6 if the sole proprietor or small employer moves outside the
7 geographic area.
8 Sec. 3712. (1) If a small employer carrier decides to
9 discontinue offering all small employer health benefit plans in a
10 geographic area, all of the following apply:
11 (a) The small employer carrier shall provide notice to the
12 commissioner and to each small employer covered by the small
13 employer carrier in the geographic area of the discontinuation at
14 least 180 days prior to the date of the discontinuation of the
15 coverage.
16 (b) All small employer health benefit plans issued or
17 delivered for issuance in the geographic area are discontinued
18 and all current health benefit plans in the geographic area are
19 not renewed.
20 (c) The small employer carrier shall not issue or deliver for
21 issuance any small employer health benefit plans in the
22 geographic area for 5 years beginning on the date the last small
23 employer health benefit plan in the geographic area is not
24 renewed under subdivision (b).
25 (d) The small employer carrier shall not issue or deliver for
26 issuance for 5 years any small employer health benefit plans in
27 an area that was not a geographic area where the small employer
1 carrier was issuing or delivering for issuance small employer
2 health benefit plans on the date notice was given under
3 subdivision (a). The 5-year period under this subdivision begins
4 on the date notice was given under subdivision (a).
5 (2) A nonprofit health care corporation shall not cease to
6 renew all health benefit plans in a geographic area.
7 Sec. 3713. Each small employer carrier shall provide all of
8 the following to a small employer upon request and upon entering
9 into a contract with the small employer:
10 (a) The extent to which premium rates for a specific small
11 employer are established or adjusted due to industry, age, or
12 health status of the employees or dependents of the small
13 employer.
14 (b) The provisions concerning the carrier's right to change
15 premium rates and the factors, including industry, age, or health
16 status, that affect changes in premium rates.
17 (c) The provisions relating to renewability of coverage.
18 Sec. 3715. (1) Each small employer carrier shall maintain
19 at its principal place of business a complete and detailed
20 description of its rating practices and renewal underwriting
21 practices, including information and documentation that
22 demonstrate that its rating methods and practices are based upon
23 commonly accepted actuarial assumptions and are in accordance
24 with sound actuarial principles.
25 (2) Each small employer carrier shall file each March 1 with
26 the commissioner an actuarial certification that the carrier is
27 in compliance with this section and that the rating methods of
1 the carrier are actuarially sound. A copy of the actuarial
2 certification shall be retained by the carrier at its principal
3 place of business.
4 (3) A small employer carrier shall make the information and
5 documentation described in subsection (1) available to the
6 commissioner upon request.
7 (4) This section is in addition to, and not in substitution
8 of, the applicable filing provisions in this act and in the
9 nonprofit health care corporation reform act, 1980 PA 350, MCL
10 550.1101 to 550.1704.
11 Sec. 3717. Upon a filing for suspension by the small
12 employer carrier and a finding by the commissioner that either
13 the suspension is reasonable in light of the financial condition
14 of the carrier or that the suspension would enhance the
15 efficiency and fairness of the marketplace for small employer
16 health insurance, the commissioner may suspend all or any part of
17 section 3705 as to the premium rates applicable to 1 or more
18 small employers for 1 or more rating periods and may suspend
19 section 3712(1)(c) or (d).
20 Sec. 3721. (1) By January 1, 2006 and by each January 1
21 after 2006, the commissioner shall make a determination as to
22 whether a reasonable degree of competition in the small employer
23 carrier health market exists on a statewide basis. If the
24 commissioner determines that a reasonable degree of competition
25 in the small employer carrier health market does not exist on a
26 statewide basis, the commissioner shall hold a public hearing and
27 shall issue a report delineating specific classifications and
1 kinds or types of insurance, if any, where competition does not
2 exist and any suggested statutory or other changes necessary to
3 increase or encourage competition. The report shall be based on
4 relevant economic tests, including, but not limited to, those in
5 subsection (3). The findings in the report shall not be based on
6 any single measure of competition, but appropriate weight shall
7 be given to all measures of competition.
8 (2) If the results of the report issued under subsection (1)
9 are disputed or if the commissioner determines that circumstances
10 that the report was based on have changed, the commissioner shall
11 issue a supplemental report to the report under subsection (1)
12 that includes a certification of whether or not a reasonable
13 degree of competition exists in the small employer carrier health
14 market. The supplemental report and certification shall be
15 issued not later than December 15 immediately following the
16 release of the report under subsection (1) that this report
17 supplements and shall be supported by substantial evidence.
18 (3) All of the following shall be considered by the
19 commissioner for purposes of subsections (1) and (2):
20 (a) The extent to which any carrier controls all or a
21 portion of the small employer carrier health benefit plan
22 market.
23 (b) Whether the total number of carriers writing small
24 employer health benefit plan coverage in this state is sufficient
25 to provide multiple options to small employers.
26 (c) The disparity among small employer health benefit plan
27 rates and classifications to the extent that those
1 classifications result in rate differentials.
2 (d) The availability of small employer health benefit plan
3 coverage to small employers in all geographic areas and all types
4 of business.
5 (e) The overall rate level that is not excessive,
6 inadequate, or unfairly discriminatory.
7 (f) Any other factors the commissioner considers relevant.
8 (4) The reports and certifications required under
9 subsections (1) and (2) shall be forwarded to the governor, the
10 clerk of the house, the secretary of the senate, and all the
11 members of the senate and house of representatives standing
12 committees on insurance and health issues.
13 Sec. 3723. The provisions of this chapter apply to each
14 health benefit plan for a small employer or sole proprietor that
15 is delivered, issued for delivery, renewed, or continued in this
16 state on or after the effective date of this chapter. For
17 purposes of this section, the date a health benefit plan is
18 continued is the first rating period that begins on or after the
19 effective date of this chapter.
20 Enacting section 1. This amendatory act does not take
21 effect unless Senate Bill No. 234 of the 92nd Legislature is
22 enacted into law.
23 Enacting section 2. This amendatory act takes effect
24 January 1, 2004.