January 17, 2008, Introduced by Rep. Calley and referred to the Committee on Insurance.
A bill to amend 1956 PA 218, entitled
"The insurance code of 1956,"
by amending section 3705 (MCL 500.3705), as added by 2003 PA 88.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 3705. (1) For adjusting premiums for health benefit plans
subject to this chapter, a carrier may establish up to 10
geographic areas in this state. A nonprofit health care corporation
shall establish geographic areas that cover all counties in this
state.
(2) Premiums for a health benefit plan under this chapter are
subject to the following:
(a) For a nonprofit health care corporation, only industry and
age may be used for determining the premiums within a geographic
area for a small employer or sole proprietor located in that
geographic area. For a health maintenance organization, only
industry, age, and group size may be used for determining the
premiums within a geographic area for a small employer or sole
proprietor located in that geographic area. For a commercial
carrier,
only industry, age, group size, and health status, alcohol
abuse, nicotine use, and controlled substances abuse may be used
for determining the premiums within a geographic area for a small
employer or sole proprietor located in that geographic area.
(b) The premiums charged during a rating period by a nonprofit
health care corporation or a health maintenance organization for a
health benefit plan in a geographic area to small employers or sole
proprietors located in that geographic area shall not vary from the
index rate for that health benefit plan by more than 35% of the
index
rate. However, for a health benefit plan issued before the
effective
date of this chapter January
23, 2004 by a nonprofit
health care corporation or health maintenance organization, the
premiums for the plan are subject to the following:
(i) For a renewal occurring on or after the
effective date of
this
chapter January 23, 2004 and
through December 31, 2004, the
premiums charged for a health benefit plan in a geographic area to
small employers or sole proprietors located in that geographic area
shall not be higher than 15% above the index rate or lower than 35%
below the index rate.
(ii) For a renewal occurring on or after January 1, 2005, the
premiums charged for a health benefit plan in a geographic area to
small employers or sole proprietors located in that geographic area
shall not vary from the index rate for that health benefit plan by
more than 35% of the index rate.
(c) The premiums charged during a rating period by a
commercial carrier for a health benefit plan in a geographic area
to small employers or sole proprietors located in that geographic
area shall not vary from the index rate for that health benefit
plan by more than 45% of the index rate. However, for a health
benefit
plan issued before the effective date of this chapter
January 23, 2004 by a commercial carrier, the premiums for the plan
are subject to the following:
(i) For a renewal occurring on or after the
effective date of
this
chapter January 23, 2004 and
through December 31, 2004, the
premiums charged for a health benefit plan in a geographic area to
small employers or sole proprietors located in that geographic area
shall not vary from the index rate for that health benefit plan by
more than 70% of the index rate.
(ii) For a renewal occurring on or after January 1, 2005 and
through December 31, 2005, the premiums charged for a health
benefit plan in a geographic area to small employers or sole
proprietors located in that geographic area shall not vary from the
index rate for that health benefit plan by more than 55% of the
index rate.
(iii) For a renewal occurring on or after January 1, 2006, the
premiums charged for a health benefit plan in a geographic area to
small employers or sole proprietors located in that geographic area
shall not vary from the index rate for that health benefit plan by
more than 45% of the index rate.
(d) For a sole proprietor, a small employer carrier may charge
an additional premium of up to 25% above the premiums in
subdivision (b) or (c).
(e) Except as otherwise provided in this section, the
percentage increase in the premiums charged to a small employer or
sole proprietor in a geographic area for a new rating period shall
not exceed the sum of the annual percentage adjustment in the
geographic area's index rate for the health benefit plan and an
adjustment pursuant to subdivision (a). The adjustment pursuant to
subdivision (a) shall not exceed 15% annually and shall be adjusted
pro rata for rating periods of less than 1 year. This subdivision
does not prohibit an adjustment due to change in coverage.
(3)
Beginning 1 year after the effective date of this chapter
January 23, 2005, if a small employer had been covered by a self-
insured health benefit plan immediately preceding application for a
health benefit plan subject to this chapter, a carrier may charge
an additional premium of up to 33% above the premium in subsection
(2)(b) or (c) for no more than 2 years.
(4) Health benefit plan options, number of family members
covered, and medicare eligibility may be used in establishing a
small employer's or sole proprietor's premium.
(5) A small employer carrier shall apply all rating factors
consistently with respect to all small employers and sole
proprietors in a geographic area. Except as provided in subsection
(4), a small employer carrier shall bill a small employer group
only with a composite rate and shall not bill so that 1 or more
employees in a small employer group are charged a higher premium
than another employee in that small employer group.