HBA-NRS H.B. 949 77(R)    BILL ANALYSIS


Office of House Bill AnalysisH.B. 949
By: Averitt
Insurance
2/19/2001
Introduced



BACKGROUND AND PURPOSE 

Currently, the Texas Administrative Code states that if a small employer
carrier varies the rates of small employer plans based on group size, the
highest rate factor is prohibited from exceeding the lowest rate factor by
more than 20 percent. However, this rule is difficult to enforce. The
Insurance Code contains no enabling statute for this rule and some small
employer carriers are using certain risk characteristics as the basis for
varying small employer premiums by a substantial premium percent. House
Bill 949 codifies the 20 percent rating corridor rule, requires premium
rates to be developed for small employer groups, and permits adjustment to
the base premium rate to reflect a group's risk characteristics. 

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. 

ANALYSIS

House Bill 949 amends the Insurance Code to prohibit a small employer
carrier from directly or indirectly using the group size or the trade or
occupation of the employees of a small employer or the industry or type of
business of the small employer as a criteria for establishing a separate
class of business. Furthermore, the bill requires premium rates to be
developed for each small employer group and sets forth a two-step process
for doing so. The bill requires the risk load assessed to a particular
group to reflect the risk characteristics of the group. The bill authorizes
a small employer carrier to use the group size of a small employer as a
case characteristic in establishing premium rates for the group and
prohibits the highest rate factor associated with a group size
classification from exceeding the lowest rate factor associated with a
group size classification by more than 20 percent.  

EFFECTIVE DATE

September 1, 2001, and applies only to premium rates applicable to a small
employer health benefit plan that is delivered, issued for delivery, or
renewed on or after January 1, 2002.