HBA-NIK C.S.H.B. 2051 76(R)BILL ANALYSIS


Office of House Bill AnalysisC.S.H.B. 2051
By: Thompson
Insurance
5/3/1999
Committee Report (Substituted)



BACKGROUND AND PURPOSE 

There is concern that certain insurance carriers' practice of significantly
reducing the commission levels to agents for small employers is a
disincentive to agents to solicit business from smaller employers.
C.S.H.B. 2051 clarifies for small employer carriers when it is allowable to
vary rates based on the number of employees. This bill also precludes
carriers from varying commission rates based on the number of employees in
a group. 

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that this bill does
not expressly delegate any additional rulemaking authority to a state
officer, department, agency, or institution. 

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Article 26.02(5), Insurance Code, to provide that the
term "case characteristics" does not include the number of employees and
dependents, health status related factors, duration of coverage since the
date of issuance of a health benefit plan, or whether a covered person is
or may become pregnant. 

SECTION 2. Amends Article 26.73, Insurance Code, by adding Subsection (c),
as follows: 

(c) Authorizes a small employer carrier to vary the agent commission rates
paid on small employer premiums, but only if the only factor that is used
to differentiate agent commission levels is the number of employees covered
under the small employer plan, and the commission levels are inversely
related to the number of employees covered under the small employer plan. 

SECTION 3. Effective date: September 1, 1999.
Provides that this Act applies only to a small employer health benefit plan
that is delivered, issued for delivery, or renewed on or after January 1,
2000. 

SECTION 4. Emergency clause.

COMPARISON OF ORIGINAL TO SUBSTITUTE

C.S.H.B. 2051 removes the proposed amendment in  SECTION 1 (Article 26.31,
Insurance Code) which adds Subsection (g) to authorize a small employer
carrier to divide small employer groups with similar case characteristics
into different classes of business based on the number of employees covered
under the small employer plan.  

C.S.H.B. 2051adds a new SECTION 1 to amend Article 26.02(5), Insurance
Code, by modifying the definition of  "case characteristics" to provide
that the term does not include the number of employees and dependents,
health status related factors, duration of coverage since the date of
issuance of a health benefit plan, or whether a covered person is or may
become pregnant.