Proposed state legislation - health insurance rating zones

May 31, 2011

The Board of County Commissioners proposed state legislation to address the disparity in health care rates across the state. The legislation would define a statewide rate and would reduce costs for rural counties.

10-16-104.9. Geographic Rating Areas. (1) The commissioner shall promulgate a rule establishing a geographic rating area or areas, giving due consideration and weight to the age of covered individuals, the insureds’ geographic location, and tobacco use. Geographical rating areas may be established as one rating area for the entire state, or rating areas based on a combination of counties, or areas in which all zip codes share the first three digits, or areas based on metropolitan statistical areas (known as “MSA’s”) combined with non-MSA’s. In promulgating such rule, the commissioner shall establish one geographical rating area for the entire state unless the commissioner determines and concludes by clear and convincing evidence that, in selecting from the geographic rating area options under this section, another geographic rating area is, or areas are, substantially preferable for state residents residing in MSA’s, non-MSA’s and rural counties. In establishing that evidence, the commissioner shall employ a publicly-transparent and recorded procedure to take testimony from all interested parties, including, but not limited to, consumer advocates and consumers, insurers, carriers, health care providers, local government, the state demographer, and producers. The rule shall include, without limitation, the following features:

  1. In rate filings to the commissioner, a carrier shall be required to show that rates reflect a relativity to rates across the state and that rates and relativities are not excessive, inadequate or unfairly discriminatory throughout and across geographic rating areas;
  2. The rule shall contain a determination of the appropriate population base for statistical and actuarial reliability in establishing geographic rating areas;
    1. The rule shall provide justifications of why separate geographic areas, if any, serve the best public interest by ensuring that premium rates within and across those geographic rating areas are not excessive, inadequate, or unfairly discriminatory when evaluated within a geographic rating area boundary and relative to other geographic rating areas;
    2. If the commissioner determines that a single geographic rating area is not in the best interest of state insureds, the commissioner shall, according to the analysis and transparent procedure required or contemplated by this section, provide detailed justifications concerning the establishment of separate geographic areas, in connection with which the commissioner shall, at least thirty business days before establishing separate geographical rating areas selected from among the options available under this section, make public the impact the areas may have on insurance premiums for the separate geographic rating areas;
  3. In adopting the rule under this section, the commissioner must consider the cost of health care in a geographic area, utilization of health care within any separate geographic area, including utilization of health care obtained, or likely to be obtained, in one or more geographical rating areas by residents of another geographical rating area, and information including actuarial opinions relevant to the establishment of any rating area or areas. In no case shall any rule by the commissioner under this section compromise or unreasonably adversely impact the public interest of insureds and potential insureds of this state.