HBA-DMH, AMW H.B. 190 77(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 190 By: Burnam Insurance 2/18/2001 Introduced BACKGROUND AND PURPOSE Before a health insurance product is placed on the market, an actuarial analysis, a calculation of the costs associated with the risks of providing a benefit, is performed to set a premium. The premium charged for the product must be related to the cost of the benefit being provided to make the pricing actuarially sound. Presently, in an effort to control costs, some insurers may limit or exclude certain treatments or benefits, however, these limited or excluded treatments and benefits do not always result in lower policy premiums. House Bill 190 requires insurance providers to base policy premiums and coverage on sound actuarial principles, and use appropriate actuarial and loss experience data so that policy premiums accurately reflect coverage. RULEMAKING AUTHORITY It is the opinion of the House Office of Bill Analysis that rulemaking authority is expressly delegated to the commissioner of insurance in SECTION 1 (Section 3, Article 21.52L, Insurance Code) of this bill. ANALYSIS House Bill 190 amends the Insurance Code to prohibit certain exclusions or limitations in health benefit plans. The bill prohibits an issuer of a health benefit plan from excluding coverage or limiting the amount, type, or extent of coverage under the plan for a specified health condition, injury, sickness, or disability unless the exclusion or limitation is based on sound actuarial principles or actual or reasonably anticipated loss experience. The bill requires the issuer to use actuarial data or loss experience data that is accurate, reliable, geographically specific, and current at the time of use. The bill authorizes the commissioner of insurance to adopt the necessary rules to implement these provisions. The bill specifies that these provisions do not apply to a plan that provides coverage only for benefits for a specified disease or for another limited benefit. The bill prohibits an insurance agent, third party administrator, or life insurance counselor from offering, recommending, selling, or administering a health benefit plan that violates the prohibitions on exclusions and limitations, or participating in the offering, recommendation, sale, or administration of such a plan. The bill also specifies that an actuary who certifies a health benefit plan as complying with the prohibitions against exclusions and limitations commits a violation if the actuary knows, at the time the certification is made, that the certification is false. H.B. 190 specifies that a violation of these provisions is an unfair and deceptive act or practice in the business of insurance and is subject to sanctions and penalties. The bill provides that the approval of the commissioner of insurance of the policy form or other form used by the health benefit plan issuer is not a defense to an action brought against a violation of the bill's provisions. EFFECTIVE DATE September 1, 2001, and applies only to a health benefit plan that is delivered, issued for delivery, or renewed on or after January 1, 2002.