Public Act 88 of 2003

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• Introduced by Sen. Bruce Patterson (R) on May 7, 2003, to require that health insurance companies writing policies for small companies and groups (between two and 50 employees) use a “rate band” pricing method, which would limit price variations so that insurance for the highest and lowest cost group could be no more than a certain percentage greater than the lowest cost group (the “rate band”). “Cherry picking” by insurers, or only insuring the healthier members of a very small group, would be restricted by allowing an insurer to require that most or all of the members of a particular group be included under a policy. The rate bands would be somewhat narrower for Blue Cross Blue Shield (BCBS), a tax-exempt non-profit entity which currently controls most of the small group market, than for private, for profit insurance companies which are not tax exempt. In addition, the bill imposes limits on small group health policy price increases, and many other regulations on insurers. It is part of a legislative package which would subject the private companies participating in this market to extensive new government regulations, while easing some of the existing regulations on BCBS, which would still have less flexibility than the private companies.
  • Referred to the Senate Health Policy Committee on May 7, 2003.
  • Reported in the Senate on May 13, 2003, with the recommendation that the substitute (S-1) be adopted and that the bill then pass.
  • Substitute offered in the Senate on May 28, 2003, to replace the previous version of the bill with one recommended by the committee which reported it. The substitute incorporates many changes resulting from extensive negotiations between legislators and the various interest groups affected. See the Senate-passed version. The substitute passed by voice vote in the Senate on May 28, 2003.
• Passed 34 to 4 in the Senate on May 28, 2003, to require that health insurance companies writing policies for small companies and groups (between two and 50 employees) use a “rate band” pricing method, which would limit price variations so that insurance for the highest and lowest cost group could be no more than a certain percentage greater than the lowest cost group (the “rate band”). “Cherry picking” by insurers, or only insuring the healthier members of a very small group, would be restricted by allowing an insurer to require that most or all of the members of a particular group be included under a policy. The rate bands would be somewhat narrower for Blue Cross Blue Shield (BCBS), a tax-exempt non-profit entity which currently controls most of the small group market, than for private, for profit insurance companies which are not tax exempt. In addition, the bill imposes limits on small group health policy price increases, and many other regulations on insurers. It is part of a legislative package which would subject the private companies participating in this market to extensive new government regulations, while easing some of the existing regulations on BCBS, which would still have less flexibility than the private companies. A similar bill (HB 4553, H-3), which has been reported in the House, grants more flexibility to for-profit, non-tax exempt private insurers relative to Blue Cross Blue Shield.
  Who Voted "Yes" and Who Voted "No"
• Received in the House on June 4, 2003.
  • Substitute offered by Rep. Stephen Ehardt (R) on June 5, 2003, to replace the previous version of the bill with the text of House Bill 4553, which also establishes rate bands and extensive new regulations, but grants more flexibility to for-profit, non-tax exempt private insurers relative to Blue Cross Blue Shield, which currently dominates the small group health insurance market. The substitute passed by voice vote in the House on June 5, 2003.
  • Amendment offered by Rep. William Van Regenmorter (R) on June 5, 2003, to exempt HMO contracts with small employers and groups from a provision which mandates a long list of required health care coverages an HMO must provide in other contracts. The amendment failed by voice vote in the House on June 5, 2003.
  • Amendment offered by Rep. Stephen Ehardt (R) on June 5, 2003, to clarify language in a provision contained in the bill. The amendment passed by voice vote in the House on June 5, 2003.
  • Amendment offered by Rep. Stephen Ehardt (R) on June 5, 2003, to grant more flexibility to for-profit, non-tax exempt private insurers relative to Blue Cross Blue Shield in the maximum amount they can raise a small group or employer's health insurance rates based on the groups industry and size, and the age and gender of its members. The amendment passed by voice vote in the House on June 5, 2003.
  • Amendment offered by Rep. Stephen Ehardt (R) on June 5, 2003, to clarify the provisions regarding the different phase in dates for new pricing regulations on Blue Cross Blue Shield, HMO's and for-profit, non-tax exempt private insurers. The amendment passed by voice vote in the House on June 5, 2003.
  • Amendment offered by Rep. Stephen Ehardt (R) on June 5, 2003, to clarify language in a provision contained in the bill in a way that does not change the substance of the provision. The amendment passed by voice vote in the House on June 5, 2003.
  • Amendment offered by Rep. Fulton Sheen (R) on June 5, 2003, to exempt high deductible, medical savings account-type health plans from the extensive new regulations the bill would impose on the small group health insurance market. The amendment passed by voice vote in the House on June 5, 2003.
  • Amendment offered by Rep. Stephen Ehardt (R) on June 5, 2003, to exempt certain small insurance companies, and high deductible, medical savings account-type health plans from the extensive new regulations the bill would impose on the small group health insurance market. The amendment passed by voice vote in the House on June 5, 2003.
  • Amendment offered by Rep. William Van Regenmorter (R) on June 5, 2003, to exempt HMO contracts with small employers and groups from a provision which mandates a long list of required health care coverages an HMO must provide in contracts with other groups. The amendment passed by voice vote in the House on June 5, 2003.
• Passed 58 to 45 in the House on June 5, 2003, to require that health insurance companies writing policies for small companies and groups (between two and 50 employees) use a “rate band” pricing method, which would limit price variations so that insurance for the highest and lowest cost group could be no more than a certain percentage greater than the lowest cost group (the “rate band”). “Cherry picking” by insurers, or only insuring the healthier members of a very small group, would be restricted by allowing an insurer to require that most or all of the members of a particular group be included under a policy. The rate bands would be somewhat narrower for Blue Cross Blue Shield (BCBS), a tax-exempt non-profit entity which currently controls most of the small group market, than for private, for profit insurance companies which are not tax exempt. In addition, the bill imposes limits on small group health policy price increases, and many other regulations on insurers. It is part of a legislative package which would subject the private companies participating in this market to extensive new government regulations, while easing some of the existing regulations on BCBS, which would still have less flexibility than the private companies. The House-passed version grants more flexibility to for-profit, non-tax exempt private insurers relative to Blue Cross Blue Shield.
  Who Voted "Yes" and Who Voted "No"
• Received in the Senate on June 11, 2003.
• Failed 2 to 36 in the Senate on June 11, 2003, to concur with a House-passed version of the bill. The vote sends the bill to a House-Senate conference committee to work out the differences.
  Who Voted "Yes" and Who Voted "No"
• Received in the House on June 12, 2003.
• Passed 81 to 27 in the House on June 25, 2003, to adopt a compromise version of the bill reported by a House-Senate conference committee. The committee version is similar to that passed by the Senate. Significantly, it would limit the discounts that a taxable, for-profit health insurance company could offer based on the (younger) age of an insured. Provisions in the House package requiring Blue Cross Blue Shield to only offer long term care insurance through a taxable for-profit subsidiary, and not directly, are included. See Senate-passed version for more details.
  Who Voted "Yes" and Who Voted "No"
• Received in the Senate on June 17, 2003.
• Passed 34 to 3 in the Senate on June 25, 2003, to adopt a compromise version of the bill reported by a House-Senate conference committee. The committee version is similar to that passed by the Senate. Significantly, it would limit the discounts that a taxable, for-profit health insurance company could offer based on the (younger) age of an insured. Provisions in the House package requiring Blue Cross Blue Shield to only offer long term care insurance through a taxable for-profit subsidiary, and not directly, are included. See Senate-passed version for more details.
  Who Voted "Yes" and Who Voted "No"
• Signed by Gov. Jennifer Granholm on July 21, 2003.