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1    AN ACT concerning regulation.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 1. Short title. This Act may be cited as the Health
5Insurance Coverage Premium Misalignment Study Act.
 
6    Section 5. Purpose. This Act is intended to enable the
7State to study possible misalignment in the Illinois health
8insurance marketplace that would produce increased premium or
9cost sharing for some consumers and drive some consumers into
10lower value qualified health plans or out of the marketplace
11altogether.
 
12    Section 10. Findings. The General Assembly finds that:
13    (1) Section 1402 of the Patient Protection and Affordable
14Care Act requires health insurance issuers to provide
15cost-sharing reductions to low-income marketplace consumers
16below the 250% federal poverty level who choose a silver level
17plan; it also requires the United States Department of Health
18and Human Services to reimburse issuers for cost-sharing
19reductions. Cost-sharing reductions are important because they
20help low-income marketplace consumers afford out-of-pocket
21costs, including deductibles and copayments, and therefore
22keep them in the marketplace.

 

 

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1    (2) On October 12, 2017, the federal government, through
2executive action, announced that it would be discontinuing
3cost-sharing reduction payments to issuers in the Patient
4Protection and Affordable Care Act marketplace. Illinois, like
5the majority of other states, took action to mitigate the
6losses that Illinois issuers would endure without the federal
7cost-sharing reduction payments by adopting a practice called
8"silver loading" or "cost-sharing reduction uncertainty cost"
9beginning in the 2018 plan year. Silver loading allows issuers
10to increase their silver plan baseline premiums to make up the
11costs lost from the missing federal cost-sharing reduction
12payments. Most of these premium increases are offset by higher
13advanced premium tax credits from the federal government.
14    (3) However, due to silver loading and resulting pricing
15of silver plans in the Illinois marketplace, it appears that
16the current metal-level premiums in the Illinois marketplace
17are misaligned and do not reflect coverage generosity of the
18plans. The fact that silver plans are now overpriced for
19enrollees ineligible for generous cost-sharing reductions has
20driven some of those enrollees into non-silver (mostly bronze)
21plans with levels of cost sharing that are a worse match for
22their needs. In other words, Illinois marketplace consumers
23could be currently paying more than they should for low value
24plans and less than they should for high value plans.
 
25    Section 15. Premium misalignment study.

 

 

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1    (a) The Department of Insurance shall oversee a study to
2explore rate setting approaches that may yield a misalignment
3of premiums across different tiers of coverage in Illinois'
4individual health insurance market. The study shall examine
5these approaches with a view to attempts to make coverage more
6affordable for low-income and middle-income residents. The
7study shall follow the best practices of other states targeted
8at addressing metal-level premium misalignment and include an
9Illinois-specific analysis of:
10        (1) the number of consumers who are eligible for a
11    premium subsidy under the Patient Protection and
12    Affordable Care Act (Pub. L. 111-148) and the relative
13    affordability of the plans;
14        (2) if the plan is in the silver level, as described by
15    42 U.S.C. 18022(d), the relation of the premium amount
16    compared to premiums charged for qualified health plans
17    offering different levels of coverage, taking into account
18    any funding or lack of funding for cost-sharing reductions
19    and the covered benefits for each level of coverage; and
20        (3) whether the plan issuer utilized the induced
21    demand factors developed by the Centers for Medicare and
22    Medicaid Services for the risk adjustment program
23    established under 42 U.S.C. 18063 for the level of
24    coverage offered by the plan or any State-specific induced
25    demand factors established by Department rules.
26    (b) The study shall produce cost estimates for Illinois

 

 

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1residents addressing metal-level premium misalignment policy
2as studied in subsection (a) along with the impact of the
3policy on health insurance affordability and access and the
4uninsured rates for low-income and middle-income residents,
5with break-out data by geography, race, ethnicity, and income
6level. The study shall evaluate how premium realignment if
7implemented would affect costs and outcomes for Illinoisans.
8    (c) The Department of Insurance shall develop and submit,
9no later than January 1, 2024, a report to the General Assembly
10and the Governor concerning the design, costs, benefits, and
11implementation of premium realignment to increase
12affordability and access to health care coverage that
13leverages existing State infrastructure.
 
14    Section 105. The Illinois Insurance Code is amended by
15changing Section 355 as follows:
 
16    (215 ILCS 5/355)  (from Ch. 73, par. 967)
17    Sec. 355. Accident and health policies; provisions.
18policies-Provisions.)
19    (a) As used in this Section, "unreasonable rate increase"
20means a rate increase that the Director determines to be
21excessive, unjustified, or unfairly discriminatory in
22accordance with 45 CFR 154.205.
23    (b) No policy of insurance against loss or damage from the
24sickness, or from the bodily injury or death of the insured by

 

 

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1accident shall be issued or delivered to any person in this
2State until a copy of the form thereof and of the
3classification of risks and the premium rates pertaining
4thereto have been filed with the Director; nor shall it be so
5issued or delivered until the Director shall have approved
6such policy pursuant to the provisions of Section 143. If the
7Director disapproves the policy form he shall make a written
8decision stating the respects in which such form does not
9comply with the requirements of law and shall deliver a copy
10thereof to the company and it shall be unlawful thereafter for
11any such company to issue any policy in such form.
12    (c) All individual and small group accident and health
13policies written in compliance with the Patient Protection and
14Affordable Care Act must file rates with the Department for
15approval. Rate increases found to be unreasonable rate
16increases in relation to benefits under the policy provided
17shall be disapproved. The Department shall provide a report to
18the General Assembly on or after January 1, 2023, regarding
19both on and off exchange individual and small group rates in
20the Illinois market.
21    (d) A rate increase filed under this Section must be
22approved or denied within 60 calendar days after the date the
23rate increase is filed with the Department. Any rate increase
24that is not approved or denied by the Department shall
25automatically be approved on the 61st calendar day.
26    (e) No less than 30 days after the federal Centers for

 

 

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1Medicare and Medicaid Services has certified the policies
2described in this Section for the upcoming plan year, the
3Department shall publish on its website a report explaining
4the rates for the subsequent calendar year's certified
5policies.
6(Source: P.A. 79-777.)
 
7    Section 110. The Health Maintenance Organization Act is
8amended by changing Section 4-12 as follows:
 
9    (215 ILCS 125/4-12)  (from Ch. 111 1/2, par. 1409.5)
10    Sec. 4-12. Changes in Rate Methodology and Benefits,
11Material Modifications. A health maintenance organization
12shall file with the Director, prior to use, a notice of any
13change in rate methodology, or benefits and of any material
14modification of any matter or document furnished pursuant to
15Section 2-1, together with such supporting documents as are
16necessary to fully explain the change or modification.
17    (a) Contract modifications described in subsections
18(c)(5), (c)(6) and (c)(7) of Section 2-1 shall include all
19form agreements between the organization and enrollees,
20providers, administrators of services and insurers of health
21maintenance organizations.
22    (b) Material transactions or series of transactions other
23than those described in subsection (a) of this Section, the
24total annual value of which exceeds the greater of $100,000 or

 

 

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15% of net earned subscription revenue for the most current
2twelve month period as determined from filed financial
3statements.
4    (c) Any agreement between the organization and an insurer
5shall be subject to the provisions of the laws of this State
6regarding reinsurance as provided in Article XI of the
7Illinois Insurance Code. All reinsurance agreements must be
8filed. Approval of the Director is required for all agreements
9except the following: individual stop loss, aggregate excess,
10hospitalization benefits or out-of-area of the participating
11providers unless 20% or more of the organization's total risk
12is reinsured, in which case all reinsurance agreements require
13approval.
14    (d) All individual and small group accident and health
15policies written in compliance with the Patient Protection and
16Affordable Care Act must file rates with the Department for
17approval. Rate increases found to be unreasonable rate
18increases in relation to benefits under the policy provided
19shall be disapproved. The Department shall provide a report to
20the General Assembly on or after January 1, 2023, regarding
21both on and off exchange individual and small group rates in
22the Illinois market.
23    (e) A rate increase filed under this Section must be
24approved or denied within 60 calendar days after the date the
25rate increase is filed with the Department. Any rate increase
26that is not approved or denied by the Department shall

 

 

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1automatically be approved on the 61st calendar day.
2    (f) No less than 30 days after the federal Centers for
3Medicare and Medicaid Services has certified the policies
4described in this Section for the upcoming plan year, the
5Department shall publish on its website a report explaining
6the rates for the subsequent calendar year's certified
7policies.
8    (g) As used in this Section, "unreasonable rate increase"
9means a rate increase that the Director determines to be
10excessive, unjustified, or unfairly discriminatory in
11accordance with 45 CFR 154.205.
12(Source: P.A. 86-620.)