SRC-JEC C.S.H.B. 897 78(R)BILL ANALYSIS


Senate Research CenterC.S.H.B. 897
78R16629 PB-DBy: Woolley (Nelson)
State Affairs
5/19/2003
Committee Report (Substituted)


DIGEST AND PURPOSE 

In 1993, the 73rd Texas Legislature permitted small employers to join
together in private nonprofit health insurance purchasing alliances or
small employer health coalitions.  Some insurers have cancelled policies
with small employer health coalitions because they do not consider a
coalition to be a single employer.  C.S.H.B. 897 clarifies that a small
employer health coalition is a single small employer for all purposes
under the Insurance Code, and modifies other provisions to ensure that
small employers and their employees are not discriminated against based on
health status related factors or other characteristics. 

RULEMAKING AUTHORITY

This bill does not expressly grant any additional rulemaking authority to
a state officer, institution, or agency. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Article 26.02, Insurance Code, by adding Subdivision
(32-a), to define "small employer health coalition." 

SECTION 2.  Amends the heading to Subchapter B, Chapter 26, Insurance
Code, to read as follows: 

SUBCHAPTER B.  COALITIONS AND PURCHASING COOPERATIVES

SECTION 3.  Amends Article 26.15, Insurance Code, by amending Subsection
(b) and adding Subsection (e), as follows: 

(b)  Authorizes a cooperative to contract only with small or large
employer carriers that demonstrate certain characteristics. 

(e)  Prohibits a cooperative from limiting, restricting, or conditioning
an employer's or employee's membership in a cooperative or choice among
benefit plans based on health status related factors, duration of
coverage, or any similar characteristic related to the health status or
experience of a group or of any member of a group. 

SECTION 4.  Amends Article 26.16(b), Insurance Code, to provide that a
small employer health coalition that otherwise meets the description of a
small employer is considered a single small employer for all purposes
under this chapter.  Makes conforming changes. 

SECTION 5.  Amends Articles 26.21(b) and (c), Insurance Code, as follows:

(b)  Removes a provision stating that coverage is available under a small
employer health benefit plan if at least 75 percent of a small employer's
eligible employees elect to be covered. 

(c)  Provides that coverage is available under a small employer health
benefit plan if at least 75  percent of a small employer's eligible
employees, or, if applicable, the lower participation level offered by the
small employer carrier under Subsection (d) of this article, elect to be
covered. Removes an exception related to coverage provided through a
purchasing cooperative. 

SECTION 6.  Amends Article 26.72(a), Insurance Code, to prohibit a small
employer carrier or agent from, directly or indirectly, encouraging or
directing a small employer to become a member or not become a member of a
particular small employer health coalition because of the health status or
claim experience of the eligible employees and dependents of that small
employer. 

SECTION 7.   Effective date:  September 1, 2003.