David Powell for Kansas

Legislative Actions

The following summarizes changes to current Kansas statutes that Dave presented to the 2009 legislators for consideration. Cited are modifications to specific current statues that Dave believes could help ALL KANSANS to see improvements and possible rate reductions in their insurance plans. The goal of all of these changes is to offer improvements in insurance plans and programs without a need for any tax increase!

Many were reduced to bill form and several were considered by committees, but none were sent to the chamber floors for full debate.

Dave is working to have all of these modifications reconsidered in the 2010 session of the legislature.

Summary of Health Care reform law changes and reason for changes.

40-2209 - Specially designed policies
1. Short term policies are a unique temporary policy with special policy design that does not fit the mold of individual nor group definition, HIPPA continuation or normal pricing structures. This prevents the KDOI from requiring a carrier wishing to bring a new short term plan into Kansas from classifying that product as an individual or group product, when it is neither, in reality.
2. Stand alone policies will become a part of the specialty policy mix if plans free of mandates with some limitations on non-MD plans are allowed under 40-2260.
(4)(A)Changing the Kansas preexisting coverage waiting period from 90 day to 180 days could make as much as a 6% reduction in health care premiums for group plans. Also changes this reference in 40-2209f (a). Kansas has the shortest pre-existing period at 90 days of all 50 states, while Missouri, Oklahoma and all surround states are at 12 months. This moves us slightly in that direction without going all that way.
40-2209h – increasing the index rate from 20% to 35% could save as much as another 5%. This gives carriers a larger spread from their highest to the lowest pricing for a class of business. So if the high end premiums need to be increased the increases on the lower end are not artificially force up as quickly.
40-2215 – Changes to a file and use rates structure with minimum and maximum loss ratio safeguards including refund of excess premium requirements if safeguard are exceeded by actual results.
1. Also contains language that will shorten the approval process by requiring that the commissioner cite all deficiencies in a disapproved filing at the initial notice to a filer of a policy. For years, a filing has been made, deficiencies noted and returned, those were corrected, then a new list of deficiencies not previously noted, was sent out when no new provisions or material modification was made to the original filing except to correct deficiencies first noted. This caused many carriers delays, often into periods of a year or two and finally withdrawal of any attempts to bring new products or additional products to Kansas.
40-2242 – Shortens the period from 2 years to 6 months required that an employer has not offered a group health plan to their employees before they are eligible to take advantage of the provisions of this law to help them financially through tax credits, to establish or re-establish a group plan. In these hard economic times, employers in this situation are so squeezed that having this time period shortened may be the only assistance avenue available to aid in restarting a group health plan. Having to wait 2 years for credits will likely result in never restarting a plan again.
1. Also increasing the monthly credit per eligible employee during the first 3 years, brings the law into a more realistic relationship to current premium ranges.
2. 40-2242 (d) includes added language the allows an employer to take immediate credits again Kansas taxes due on a month to month basis, providing immediate use of the credit to help pay premiums on newly installed health plans. For many businesses not being able to use the tax credits until year end when annual returns are filed, does them no good in paying premiums NOW for new health insurance plans. In these cases using the credit each month NOW helps pay for the new plan.
New section 40-2260 creates a new alternative health benefit plan. The intent is to create a mandate free health plan or plans that may also limit coverage to some non-MD or hospital providers in their plan design. An acknowledgement from the insured person that they are knowingly purchasing this policy that has these specific limitation is required. This tied to the ability of insurers to create optional specially designed policies to fill selective gaps in coverage that may be desired by an insured person will allow a client to custom design their coverage to fit their needs and pocket book. These types of plans may reduce premiums as much as 30% or more based upon plan design.
1. This section is a compilation of the best existing laws regarding mandate free health plans currently on the books or proposed in Arkansas, Colorado, Florida, Kentucky, Mississippi, Missouri, Montana, Nebraska, New Jersey, North Dakota, Oklahoma, Utah, Virginia and West Virginia.
2. No specific list of coverage that must be included has been submitted. These coverage requirements or exemption allowances vary by state and will require careful consideration by legislators. Too much or not enough will defeat the proposed savings. That is why the specially designed plans options becomes an important part of the overall consideration of this section.
40-2255 – This section has long prevented current carriers in the individual market from bringing newly designed or redesigned plans that could offer significantly lower premiums, into Kansas. It is not unrealistic that a block of business might enter a death spiral in terms of salability because of increasing base premiums due to increased claims ratios caused when healthier persons leave the coverage when they can find cheaper premiums with similar coverage elsewhere. This leaves only high users in the pool of insured people. The block becomes un-sellable. The carrier does not want to cancel the block because of their commitment to those they insure, nor do they want to leave the state completely (must for 5 years under current law). Current law requires them to destroy any new low cost plan they desire to bring into the state by forcing them to move the large claim people to the new plan and give them non-underwritten base premiums. They are not forced to do this in other states as so they take their new plans to those states, instead of to Kansas.
40-2257 (d)(2) – this change reduces the drop-dead provision of discontinuing the marketing individual policies in Kansas from five years to one year. This change is needed to encourage carriers to re-enter the Kansas market to help bolster competitiveness among carriers thereby encouraging reductions in premiums. The five-year non-reentry period is more of a penalty to Kansans than it is to the carriers!
New Section 1. 40-4610 – This is designed to level the playing field among all carriers. This new section will eliminate provider discounts, since every carrier pays a particular provider the same fee for the same service. This does not prevent providers from establishing the fee for a service that may be different from the fee some other provider charges for that same service. It is also designed to help providers by prohibiting carriers from forcing providers to accept unreasonably low reimbursements for their services resulting in the need to charge other carriers considerably higher fees for their services. Finally this will aid with the goal of transparency in the medical field. If transparency becomes reality, it will not require a provider to post 10 or more different fee schedules for each procedure performed, based upon which carrier is being used or if insurance coverage exists. (This section addition was requested by by the legal departments of most of the carriers generating input into these law changes). This change alone could reduce premiums as much as 25% with many carriers. (based upon their actuarial studies)
The definition of providers includes the current statue definitions, meaning physicians, hospitals, facilities of a all types providing medical services, pharmacies or any types of prescription providers, nurse assistants, PA’s, medical equipment suppliers and in general any person or entity or supplier of medical services, supplies or medications.
Each provider is free to set their own fee or price for their service or product based upon their determined cost and quality of their services or supplies.
40-4611 is designed to create a set of universal, uniform health applications that all carriers are required to use for either small group or individual policies. One fits all. This new law is in direct response to requests from many individuals and employers through the years! This is already being done on the property and casualty side of the insurance market with the ACORD application. It should be done on the accident and sickness side of the market as well.
The final suggestion is not in bill language but requests a directive to obtain a Medicare waiver to allow Kansas to us current health insurance plans to provide better coverage at cheaper cost than the current Medicare and Medicaid premium assistance programs. Many other states are doing it and saving large amounts of money while providing wider choices of providers and better compensation to those providers with improved coverage.

There are several more suggested changes that could be made to help encourage more carriers to compete in Kansas and designed to help reduce current premiums to the people of Kansas making it possible to reduce the number of uninsured in Kansas.

After all, the task at hand for legislators is to bring health care reform to the table without spending additional state revenues, if possible. Realistically, the above changes could result in reductions as high as 30% in premiums currently being charged for health insurance in Kansas. The mandate light plans have been estimated to save as much as 50%, making being uninsured no longer a premium problem! With this optional addition, if someone is uninsured it will be because they will not buy health insurance no matter what the cost and it should not be up to the rest of us to make them take coverage!