ARIZONA STATE SENATE
Phoenix, Arizona
comprehensive health
insurance; risk pool
Purpose
Appropriates $6.8 million over two years to establish a health insurance plan within the Department of Insurance (DOI) to guarantee access for individuals who cannot obtain health insurance in the private market and for those individuals with a catastrophic medical condition.
Background
Individuals with pre-existing medical conditions are often uninsurable in private health insurance markets. H.B. 2589 establishes a health insurance plan within the DOI to provide insurance to individuals who would otherwise be uninsurable in the market place. Individuals who have been refused health insurance for health reasons by at least two health insurers or for certain other medical conditions. These individuals would be required to pay health insurance premiums close to market rates and maintain other requirements to keep their requirements. H.B. 2589 appropriates $4.7 million in FY 2001–2002 and $2.1 million in FY 2002–2003 to operate and administer aspects of the plan.
While H.B. 2589 appropriates $6.8 million over the next two fiscal years, the full fiscal impact of the program has not yet been determined.
Provisions
1. Appropriates $4.7 million from the state general fund in FY 2001-2002 and $2.1 million from the state general fund in FY 2002-2003.
2. Establishes a ten-member board to govern DOI’s comprehensive health plan.
3. Prescribes requirements for the board, including that:
a) The Director of DOI chairs the board;
b) Each member of the board, except the chair, serves a three-year term;
c) No board member receives compensation;
d) The board submits an annual report to the Governor, the Speaker of the House and the President of the Senate.
4. Establishes that the board is required to submit a plan of operation with specific procedures included in the plan of operation.
5. Prescribes various powers and authority to the plan, including the ability to:
a) Enter into contracts, sue or be sued;
b) Establish and modify actuarial functions appropriate to the plan operation;
c) Issue insurance policies;
d) Borrow money, and employ individuals;
e) Provide for reinsurance of risks incurred by the plan and employ cost containment measures.
6. Prohibits the plan from operating at a loss.
7. Prescribes that, upon discovery that the plan’s expenses and losses exceed the total income from premiums and appropriated monies, the board:
a) Terminate the plan;
b) Report to the President of the Senate, the Speaker of the House and the Director of DOI that the plan has terminated;
c) Liquidate the plan’s assets and pay its liabilities.
8. Limits the plans capacity to 2,000 participants.
9. Establishes eligibility requirements including:
a) Six month residency requirement;
b) Rejection by two other plans to issue substantially similar insurance for health reasons;
c) Diagnosis of certain health conditions determined by the board.
10. Declares ineligibility if:
a) One million dollars in benefits has been paid out on behalf of the individual;
b) The individual is eligible to have substantially similar coverage to the plan policy;
c) The individual is an inmate or resident of a public institution;
d) The individual has terminated plan coverage within the past year;
e) The individual is eligible for health care benefits under the Arizona Health Care Cost Containment System.
11. Requires the individual to pay between 100-150 percent of the average price for an individual Health Insurance Portability and Accountability Act portability product.
12. Requires the board to hold any excess amount in an interest bearing account and use the excess to offset future losses.
13. Requires plan termination on January 1, 2007.
14. Requires an Auditor General’s audit of the plan and recommendation of whether the plan is to continue by November 15, 2005.
15. Provides for a delayed effective date of January 1, 2002.
Amendments
Adopted by Appropriations Committee
1. Prohibits the plan from operating at a loss.
2. Prescribes that, upon discovery that the plan’s expenses and losses exceed the total income from premiums and appropriated monies, the board:
a) Terminate the plan;
b) Report to the President of the Senate, the Speaker of the House and the Director of DOI that the plan has terminated;
c) Liquidate the plan’s assets and pay its liabilities.
3. Reallocates the appropriation to $4.7 million FY 2001-2002 and $2.1 million in FY 2002-2003.
House Action Senate Action
FII 2/28/01 DPA/SE 9-0-0-1 BI 3/29/01 DP 4-1-1-0
HEA 3/5/01 DPA/SE 9-0-0-1 APPROP 4/18/01 DPA 10-0-2-0
APPROP 3/13/01 DPA/SE 12-0-0-4
3rd Read 3/15/01 DPA 41-14-5-0
Prepared by Senate Staff
April 19, 2001