HBA-ATS H.B. 1431 76(R)BILL ANALYSIS Office of House Bill AnalysisH.B. 1431 By: Averitt Insurance 6/2/1999 Enrolled BACKGROUND AND PURPOSE Created in 1989, the Texas Health Insurance Risk Pool (pool) became operational when the Texas Legislature provided start-up funding in 1997. The legislature provided the start-up funding to ensure that Texas complied with a federal law that reformed the marketplace for health insurance. Commonly called HIPAA (the Health Insurance Portability and Accountability Act), the federal legislation limits the imposition of preexisting condition requirements in any group health plan or group health insurance, and requires every health insurance issuer offering individual health insurance coverage in a state to accept every eligible individual wanting to purchase such coverage without imposing such requirements. The law required the states to conform to the minimum federal standards or to develop an acceptable alternative mechanism. Those alternatives included the following: providing guaranteed individual health insurance (with no rate constraints by law); enacting or modifying laws to implement a health insurance risk pool according to the new law (with rates capped at a maximum of 200 percent of average); or enacting another type of risk-spreading mechanism. Texas chose to implement the health risk insurance pool it had created in 1989. The purpose of the pool is to provide uninsurable individuals access to health insurance for medical conditions or diagnoses that result in ineligibility for private insurance coverage. The pool funds itself by charging premiums for the policies that it issues. If claims and expenses for the pool's operation exceed collected premiums, state law authorizes the board of directors of the pool to collect additional funds by charging an assessment to licensed insurers providing health insurance coverage in this state. It has been anticipated that assessments will be required each year. H.B. 1431 authorizes the commissioner of insurance (commissioner) to approve the payment for administrative costs and fees an amount higher than 12.5 percent (not to exceed 15 percent) of the gross premium receipts of the pool to administer the pool if the commissioner determines that the higher amount is necessary. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. SECTION BY SECTION ANALYSIS SECTION 1. Amends Section 7(f), Article 3.77, Insurance Code, to authorize the commissioner of insurance (commissioner) to approve the payment for administrative costs and fees an amount higher than 12.5 percent of the gross premium receipts of the Texas Health Insurance Risk Pool (pool) for the calendar year, rather than the preceding calendar year, to administer the pool if the commissioner determines that the higher amount is necessary. Provides that the new amount is not to exceed 15 percent. Makes a conforming change. SECTION 2. Provides that this Act applies to payments for the 1999 calendar year or a subsequent year. SECTION 3. Emergency clause. Effective date: upon passage.