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and Fiscal Analysis
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Tom Bottern
State of Minnesota
S.F. No. 3601 - Health Reform
Author: Senator Jim Abeler
Prepared By: Christopher B. Stang, Senate Counsel (651/296-0539)
Date: March 23, 2018


Article 1

Health Insurance Reform

Section 1 sets aggregate maximum stop loss attachment points for groups between 50 and 100.

Section 2 establishes premium rate bands for groups between 50 and 100. Limits renewal premium increases to 15 percent annually, plus inflationary trend.

Section 3 prohibits a health carrier offering individual health plans from renewing an individual health plan pool issued before January 1, 2019.

Section 4 establishes premium rate bands in the individual market.

Section 5 allows a preexisting condition limitation on individual health insurance policies during the first 12 months of coverage if the individual was diagnosed or treated for the condition in the six months before applying for coverage. Provides that for an individual who has not maintained continuous coverage (63 days or less between coverages), a new preexisting condition limitation can be implemented. Provides that individual coverage be made available as soon as an individual leaves a group plan without regard to coverage available through COBRA.

Section 6 prohibits an insurer from canceling a health insurance policy if the insured reasonably gave the insurer notice of a preexisting condition.

Section 7 allows a health carrier to terminate coverage of an insured for nonpayment of premiums 30 days from when the premium was due. An insurer is not responsible for claims incurred during the 30 day grace period.

Section 8 includes small employers who have at least 75 percent of employees enrolled in a qualified health plan in this section requiring guaranteed issue in the small group market.

Section 9 allows a preexisting condition limitation for small group health plans during the first 12 months of coverage if the employee was diagnosed or treated for the condition in the six months before applying for coverage. Requires a health carrier to credit the time an employee was previously covered by qualifying coverage.

Section 10 allows health carriers to base small group health plan premium rates 25 percent above and 25 percent below standard rates based on health status, claims experience, industry of the employer, and duration of coverage.

Section 11 provides that small group health plan premium rates may be based on benefit design of the health plan, age, health factor and claims experience, but not geographic rating area.

Section 12 allows a health plan company to offer, sell, or issue individual health plans that contain a preexisting condition limitation or exclusion as provided under section 5 of the bill.

Section 13 requires all health plans to be made available in compliance with federal open enrollment requirements. Requires individual health plans to be available for purchase at any time.

Section 14 eliminates certain certification and insurance producer requirements relating to MNsure.

Section 15 allows a subtraction from state taxable income of amounts paid for medical care.

Section 16 repeals specified health insurance regulatory statutes.

Section 17 provides for effective dates.

Article 2

Health Risk Pool Program

Section 1 gives the legislative auditor audit authority over the Minnesota Health Risk Pool Association.

Section 2 provides that certain data maintained by the Minnesota Health Risk Pool Association is classified.

Section 3 provides that this chapter may be cited as the “Minnesota Health Risk Pool Association Act.”

Section 4 provides definitions for chapter 62W, including “eligible individual,” “health risk pool program,” and “member.”

Section 5 allows the commissioner of commerce to formulate general policies to advance the purposes of this chapter, supervise the creation of the association, appoint advisory committees, conduct audits, contract with government units to coordinate the program with other programs, contract with health carriers for administrative services, and use rulemaking authority in connection with this chapter.

Section 6 

Subd. 1 requires the association to submit information to the commissioner regarding the risk pool payments to be made the following year.

 Subd. 2 allows the commissioner to modify the association’s anticipated risk pool payment schedule in accordance with certain criteria.

Section 7 

Subd. 1 establishes the Minnesota Health Risk pool Association and provides that membership in the association consists of all health carriers in the individual market. Exempts the association from all state taxes, including those relating to health insurance.

Subd. 2 establishes a board of directors of 11 members. Creates the requirements to be a director, how members can vote for directors, and what the commissioner must consider when appointing directors.

Subd. 3 requires all health carriers offering individual health plans to maintain membership in the association as a condition of participating in the individual market.

Subd. 4 requires the association to submit its articles, bylaws, and operating rules to the commissioner for approval.

Subd. 5 requires all meetings of the board and committees to comply with open meeting law.

Subd. 6 provides that the association and board are subject to chapter 13 and classifies data the board receives from a member about an individual as private.

Subd. 7 allows a decision of the board to be appealed to the commissioner within 30 days after the decision was made. Provides that chapter 14 governs judicial review of a determination of an appeal to the commissioner. Allows a decision of the board to be judicially reviewed instead of appealed to the commissioner.

Subd. 8 provides that the members are exempt from sections 325D.49 to 325D.66 when in performance of their duties as members of the association.

Subd. 9 allows the association to exercise powers granted to insurers under state law, sue or be sued, establish administrative and accounting procedures for its operation, and enter into certain contracts.

Subd. 10 exempts the association from the Administrative Procedure Act. Allows the association to adopt rules using the expedited rulemaking process, if they wish to make rules.


Section 7

Subd. 1 requires the association to accept a transfer from a member to the program of the risk and associated cost of an individual that has received a diagnosis of one of the conditions in paragraph (b).

Subd. 2 requires the association to reimburse members on a quarterly basis for claims paid on behalf of an eligible individual whose risk and cost has been transferred to the program. Limits risk pool payments for any one individual to $5 million over their lifetime.

Subd. 3 requires the association, in consultation with the commissioners of health and commerce, to create a plan of operation to administer the program. Requires the plan of operation to include certain items.

Subd. 4 requires the association to apply premiums it receives from members to payment of transferred risks.

Section 9

Subd. 1 requires members to transfer the risk and associated cost of an eligible individual’s health coverage to the program. Makes the risk pool effective as of the effective date of the health plan and until the person ceases coverage with the member.

Subd. 2 provides that a member can receive risk pool payments from the program for an eligible individual they insure if certain reporting and verification requirements are met. Requires a member to transfer all premium payments and pharmacy rebates received to the association if the risk and cost associated with the eligible individual has been transferred to the program.

Subd. 3 requires members to comply with the plan of operation, administer health plans in accordance with the health plan terms, not vary premiums based on whether an eligible individual’s risk and cost has been transferred to the program, keep the risk and cost with the program for the benefit year, and submit claims within 12 months of their occurrence for payment.

Section 10

Subd. 1 provides requirements the association must meet relating to accounting, payment of claims, risk pool payment calculation, auditing of members, and auditing of the association.

Subd. 2 requires the association to create an annual settle-up process to adjust risk pool payments to reflect the crediting of premiums paid, adjustments necessary due to funding of the risk pool program, and commercial or federal payments made to a member. Provides a system for the commissioner to review federal risk adjustment transfers.

Section 11

Subd. 1 provides definitions for this section including “accident and health insurance policy” and “market member.”

Subd. 2 requires the association to annually determine a market member’s financial liability for support of the risk pool program based on the amount of the accident and health insurance policy the market member provides.

Section 12 creates a risk pool association account in the special revenue fund of the state treasury. Provides a tiered funding mechanism for the program.

Section 13 and 14 requires taxes on gross premiums of certain entities to be deposited in the risk pool association fund.

Section 15 transfers money from the health care access fund to the association account.

Section 14 provides for effective dates.

Article 3

United Personal Health Premium Account

Section 1 provides definitions for purposes of this new chapter.

Section 2 requires registration with the commissioner to administer a unified personal health premium account (UPHPA). Those eligible for registration are listed.

Section 3 provides requirements for administration of UPHPA.

Section 4 requires the commissioner of human services to enter into agreements under which UPHPA administrators may receive public funds for use as subsidies for premiums.

Section 5 gives specified MinnesotaCare enrollees defined contribution to purchase a health plan. The commissioner administers the contributions.

Section 6 makes the article effective the day following final enactment.

Article 4

Federal Waiver

Requires the commissioner of commerce to apply for a state innovation waiver to implement any sections of this act that may need a waiver.

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