THE GENERAL ASSEMBLY OF PENNSYLVANIA

SENATE BILL

INTRODUCED BY FOLMER, TOMLINSON, BROWNE, ALLOWAY, EARLL, ORIE, SCARNATI, SMUCKER, ERICKSON, PICCOLA, CORMAN, PILEGGI, GREENLEAF, WAUGH, WONDERLING, M. WHITE, BAKER AND D. WHITE, MARCH 2, 2009

SENATOR CORMAN, APPROPRIATIONS, RE-REPORTED AS AMENDED, APRIL 19, 2010  

AN ACT

Establishing the Pennsylvania High-Risk Health Insurance Pool,

the Pennsylvania High-Risk Health Insurance Pool Fund and the

State Comprehensive Health Insurance Pool Board; providing

for the powers and duties of the pool and the board, for

selection of administering insurer and for payment of plan

costs; and prescribing plan benefits.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1.  Short title.

This act shall be known and may be cited as the High-Risk

Health Insurance Pool Act.

Section 2.  Definitions.

The following words and phrases when used in this act shall

have the meanings given to them in this section unless the

context clearly indicates otherwise:

"Board."  The State Comprehensive Health Insurance Pool

Board.

"Commissioner."  The Insurance Commissioner of the

Commonwealth.

"Fund."  The Pennsylvania High-Risk Health Insurance Pool

Fund.

"Health insurance."  A hospital or medical expense incurred

policy, nonprofit health care services plan contract, health

maintenance organization, subscriber contract or any other

health care plan or arrangement that pays for or furnishes

medical or health care services whether by insurance or

otherwise, when sold to an individual or as a group policy. This

term does not include short-term, accident, dental-only, fixed

indemnity, limited benefit or credit insurance, coverage issued

as a supplement to liability insurance, insurance arising out of

a workers' compensation or similar law, automobile medical-

payment insurance or insurance under which benefits are payable

with or without regard to fault and which is statutorily

required to be contained in any liability insurance policy or

equivalent self-insurance.

"Insured."  A person who is a legal resident of this

Commonwealth and a citizen of the United States who is eligible

to receive benefits from the pool. The term includes a dependent

and family member.

"Insurer."  An entity that is authorized in this Commonwealth

to write health insurance or that provides health insurance in

this Commonwealth. The term includes an insurance company,

nonprofit health care services plan, fraternal benefits society,

health maintenance organization, third-party administrators,

State or local governmental unit, to the extent permitted by

Federal law any self-insured arrangement covered by section 3 of

the Employee Retirement Income Security Act of 1974 (Public Law

93-406, 29 U.S.C. § 1002), that provides health care benefits in

this Commonwealth, any other entity providing a plan of health

insurance or health benefits subject to State insurance

regulation and any reinsurer or stop-loss plan providing

reinsurance or stop-loss coverage to a health insurer in this

Commonwealth.

"Medicare."  Coverage under both Parts A and B of Title XVIII

of the Social Security Act (42 U.S.C. § 1395 et seq.).

"Physician."  An individual licensed to practice medicine

under the laws of this Commonwealth.

"Plan."  The Comprehensive Health Insurance Plan as adopted

by the State Comprehensive Health Insurance Board.

"Pool."  The Pennsylvania High-Risk Health Insurance Pool.

"Preexisting condition."  A condition for which medical

advice, care or treatment was recommended or received during the

six months prior to effective date of coverage under the pool.

Except as otherwise provided in this act, preexisting conditions

<--

shall not be covered during the 12 months following the person's

effective date of coverage under the plan.

"Producer."  A person who is licensed to sell health

insurance in this Commonwealth.

"Resident."  Any of the following:

(1)  An individual who has been legally domiciled in this

Commonwealth for a minimum of 90 days for persons eligible

<--

for enrollment in the pool.

(2)  An individual who is legally domiciled in this

Commonwealth and is eligible for enrollment in the pool as a

result of the Health Insurance Portability and Accountability

Act of 1996 (Public Law 104-191, 110 Stat. 1936).

(3)  An individual who is legally domiciled in the pool 

<--

this Commonwealth and is eligible for enrollment as a result

<--

of the Trade Adjustment Assistance Reform Act of 2002 (Public

Law 107-210, 116 Stat. 933).

"State-mandated health insurance benefit."  The right,

<--

established by an act of the General Assembly, of an insured

under a health insurance policy to receive reimbursement from

the insurer of an expenditure or cost of a medical test,

procedure or service related to the health of the insured, which

test, procedure or service is provided by a medical provider.

Section 3.  Pennsylvania High-Risk Health Insurance Pool.

(a)  Establishment.--A nonprofit legal entity to be known as

the Pennsylvania High-Risk Health Insurance Pool is hereby

established.

(b)  Availability date for health insurance policies.--Health

insurance policies available in accordance with this act shall

be available for sale within one year from the effective date of

this section.

(c)  Fund.--The Pennsylvania High-Risk Health Insurance Pool

Fund is established in the State Treasury.

Section 4.  Pool coverage eligibility.

(a)  General rule.--Any individual person who is and

continues to be a resident of this Commonwealth and a citizen of

the United States shall be eligible for coverage from the pool

if evidence is provided of one of the following:

(1)  (i)  A notice of rejection or refusal to issue

substantially similar insurance for health reasons by two

insurers, provided that at least two insurers offer

individual health insurance coverage in this

Commonwealth.

(ii)  If only one insurer offers individual market

health insurance coverage in this Commonwealth then one

rejection shall be sufficient.

(iii)  A rejection or refusal by an insurer offering

only stop-loss, excess loss or reinsurance coverage with

respect to the applicant shall not be sufficient except

under this subsection.

(2)  (i)  A refusal by two insurers to issue insurance

except at a rate exceeding the pool rate, provided that

at least two insurers offer individual health insurance

coverage in this Commonwealth.

(ii)  If only one insurer offers individual market

health insurance coverage in this Commonwealth, then one

quote that exceeds the pool rate shall be sufficient.

(3)  A diagnosis of the individual with one of the

medical or health conditions listed by the board in

accordance with section 6. A person diagnosed with one or

more of these conditions shall be eligible for a pool

coverage without applying for health insurance coverage.

(4)  For persons eligible due to eligibility under the

Health Insurance Portability and Accountability Act of 1996

(Public Law 104-191, 110 Stat. 1936), the maintenance of

health insurance coverage for the previous 18 months with no

gap in coverage greater than 63 days of which the most recent

coverage was through an employer-sponsored plan.

(5)  For persons eligible as a result of certification

for Federal trade adjustment assistance or for pension

benefit guarantee corporation assistance as provided by the

Trade Adjustment Assistance Reform Act of 2002 (Public Law

107-210. 116 Stat. 933), coverage with no preexisting

conditions limitation for individuals with three months of

prior creditable coverage with a break in coverage of no more

than 63 days.

(b)  Dependents.--Each dependent of a person who is eligible

for coverage from the pool shall also be eligible for coverage

from the pool. In the instance of a child who is the primary

insured, resident family members shall also be eligible for

coverage.

(c)  Preexisting waiting periods.--A person may maintain pool

coverage for the period of time the person is satisfying a

preexisting waiting period under another health insurance policy

or insurance arrangement intended to replace the pool policy.

(d)  Conditions for ineligibility.--A person is ineligible

for coverage from the pool if the person:

(1)  has in effect on the date pool coverage takes effect

health insurance coverage from an insurer or insurance

arrangement;

(2)  is eligible for other health care benefits at the

time application is made to the pool, including COBRA

continuation except:

(i)  coverage, including COBRA continuation, other

continuation or conversion coverage, maintained for the

period of time the person is satisfying any preexisting

condition waiting period under a pool policy;

(ii)  employer group coverage conditioned by the

limitations described by subsection (a)(4) and (5); or

(iii)  individual coverage conditioned by the

limitation described by subsection (a)(1), (2) or (3).

(3)  has terminated coverage in the pool within 12 months

of the date that application is made to the pool unless the

person demonstrates a good faith reason for the termination;

(4)  is confined in a county jail or imprisoned in a

State correctional institution;

or

(5)  has not had prior coverage with the pool terminated

for nonpayment of premiums or fraud.

(e)  Waiver of preexisting condition requirements.--Pool

preexisting condition requirements shall be waived for the

following individuals:

(1)  an individual for whom, as of the date on which the

individual seeks plan coverage, the aggregate of the periods

of creditable coverage is 18 months or more and whose most

recent prior creditable coverage was under group health

insurance coverage offered by a health insurance issuer, a

group health plan, a governmental plan, or a church plan, or

health insurance coverage offered in connection with any such

plans, or any other type of creditable coverage that may be

required by the Health Insurance Portability and

Accountability Act of 1996, or the regulations under that

act;

(2)  an individual who is eligible for Federal trade

adjustment assistance or for pension benefit guarantee

corporation assistance, as provided by the Trade Adjustment

Assistance Reform Act of 2002, provided that as of the date

on which the individual was certified as eligible for Federal

trade adjustment assistance, the individual had at least

three months of prior creditable coverage with no longer than

a 63-day break in coverage as established by the Trade

Adjustment Assistance Reform Act of 2002 or the regulations

under that act.

(f)  Termination of pool coverage.--Pool coverage shall

terminate:

(1)  on the date a person is no longer a resident of the

<--

person's state this Commonwealth, except for a child who is a

<--

student under 23 years of age and who is financially

dependent on a parent, a child for whom a person may be

obligated to pay child support or a child of any age who is

disabled and dependent on a parent;

(2)  on the date a person requests coverage to end;

(3)  on the death of the covered person;

(4)  on the date State law requires cancellation of the

policy;

(5)  at the option of the pool, 30 days after the pool

sends to the person an inquiry concerning the person's

eligibility, including an inquiry concerning the person's

residence, to which the person does not reply;

(6)  on the 31st day after the day on which a premium

payment for pool coverage becomes due, if the payment is not

made before that date; or

<--

(7)  on the date a person reaches the maximum lifetime

<--

limit, as provided in this act; or

(8) (7)  at such time as the person ceases to meet the

<--

eligibility requirements of this section.

(g)  Termination due to eligibility.--A person who ceases to

meet the eligibility requirements of this section may have the

person's coverage terminated at the end of the policy period.

Section 5.  State Comprehensive Health Insurance Pool Board.

(a)  Establishment.--The State Comprehensive Health Insurance

Pool Board is established. The board members shall be appointed

as follows:

(1)  One representative of a domestic insurance company

appointed by the President pro tempore of the Senate from a

list supplied by the Insurance Federation of Pennsylvania,

Inc., or its successor.

(2)  One representative of a domestic insurance company

appointed by the Speaker of the House of Representatives from

a list supplied by the Insurance Federation of Pennsylvania,

Inc., or its successor.

(3)  One representative of a nonprofit health care

service plan appointed by the President pro tempore of the

Senate.

(4)  One representative of a health maintenance

organization appointed by the Speaker of the House of

Representatives.

(5)  One member representing the medical provider

community, such as a physician licensed to practice medicine

in this Commonwealth or a hospital administrator appointed by

the Secretary of Health from lists supplied by the

Pennsylvania Medical Society, or its successor, and the

Hospital & Healthsystem Association of Pennsylvania, or its

successor.

(6)  Five members of the general public who are not

employed by or affiliated with an insurance company or plan,

group hospital or other health care provider and are not

reasonably expected to qualify for coverage in the pool, with

one appointment by each of the following: the Majority Leader

of the Senate, the Minority Leader of the Senate, the

Majority Leader of the House of Representatives, the Minority

Leader of the House of Representatives and the Insurance

Commissioner.

No elected official may be a member of the board.

(b)  Special qualification.--In making appointments to the

board, efforts shall be made to ensure that at least one person

serving on the board is at least 60 years of age.

(c)  Terms of board members.--The original members of the

board shall be appointed for the following terms:

(1)  Three Four members for a term of one year.

<--

(2)  Two Three members for a term of two year.

<--

(3)  Two Three members for a term of three years.

<--

(4)  All terms after the initial term shall be for three

years.

(d)  Chairman.--The board shall elect one of its members as

chairman, who may serve in that capacity only for two years.

(e)  Reimbursement of expenses.--Members of the board may be

reimbursed from moneys of the pool for actual and necessary

expenses incurred by them in the performance of their official

duties as members of the board but shall not otherwise be

compensated for their services.

(f)  Limitation of liability.--Members of the board are not

liable for an action or omission performed in good faith in the

performance of powers and duties under this act, and no cause of

action may arise against a member for the action or omission.

(g)  Plan to be submitted.--

(1)  The board shall adopt a plan pursuant to this act

and submit its articles, bylaws and operating rules to the

commissioner for approval.

(2)  If the board fails to adopt a plan and suitable

articles, bylaws and operating rules within 180 days after

appointment of the board, the commissioner shall promulgate

rules to effectuate the provisions of this act and such rules

shall remain in effect until superseded by a plan and

articles, bylaws and operating procedures submitted by the

board and approved by the commissioner.

Section 6.  Board duties.

The board shall:

(1)  Operate, supervise and administer the pool.

(2)  Establish administrative and accounting procedures

for the operation of the pool.

(3)  Establish procedures under which applicants and

participants in the plan may have grievances reviewed by an

impartial body and reported to the board.

(4)  Select an administering insurer in accordance with

section 8.

(5)  Require that all policy forms issued by the board

conform to standard forms developed by the board. The forms

shall be approved by the commissioner.

(6)  Develop a program to publicize the existence of the

plan, the eligibility requirements of the plan, the

procedures for enrollment in the plan and shall maintain

public awareness of the plan.

(7)  Promulgate a list of medical or health conditions

for which a person shall be eligible for pool coverage

without applying for health insurance. The list shall be

effective on the first day of the operation of the pool and

may be amended from time to time as may be appropriate.

(8)  No later than June 1 of each year, make an annual

report to the Governor, the General Assembly and the

commissioner. The report shall summarize the activities of

the pool in the preceding calendar year, including

information regarding net written and earned premiums, plan

enrollment, administration expenses and paid and incurred

losses.

Section 7.  Operation of pool.

(a)  General rule.--The pool may exercise any of the

authority that an insurance company authorized to write health

insurance in this Commonwealth may exercise under the laws of

this Commonwealth.

(b)  Specific powers.--As part of its authority, the pool

may:

(1)  Provide health benefits coverage to persons who are

eligible for that coverage under this act.

(2)  Enter into contracts that are necessary to carry out

this act, including, with the approval of the commissioner,

entering into contracts with similar pools in other states

for the joint performance of common administrative functions

or with other organizations for the performance of

administrative functions.

(3)  Sue or be sued, including taking any legal actions

necessary or proper to recover or collect assessments due the

pool.

(4)  Institute any legal action necessary to avoid

payment of improper claims against the pool or the coverage

provided by or through the pool, to recover any amounts

erroneously or improperly paid by the pool, to recover any

amount paid by the pool as a mistake of fact or law and to

recover other amounts due the pool.

(5)  Establish appropriate rates, copayments,

<--

deductibles, rate schedules, rate adjustments, expense

allowance, agents' referral fees and claim reserve formulas

and perform any actuarial function appropriate to the

operation of the pool.

(6)  Adopt policy forms, endorsements and riders and

applications for coverage.

(7)  Issue insurance policies subject to this act and the

plan of operation.

(8)  Appoint appropriate legal, actuarial and other

committees that are necessary to provide technical assistance

in operating the pool and performing any of the functions of

the pool.

(9)  Employ and set the compensation of any persons

necessary to assist the pool in carrying out its

responsibilities and functions.

(10)  Contract for stop-loss insurance for risks incurred

by the pool.

(11)  Borrow money as necessary to implement the purposes

<--

of the pool.

(12) (11)  Issue additional types of health insurance

<--

policies to provide optional coverage which comply with

applicable provisions of Federal and State law, including

Medicare supplemental health insurance.

(13) (12)  Provide for and employ cost containment

<--

measures and requirements, including, but not limited to,

preadmission screening, second surgical opinion and

concurrent utilization case management for the purpose of

making the benefit plans more cost effective.

(14) (13)  Design, utilize, contract or otherwise arrange

<--

for delivery of cost-effective health care services,

including establishing or contracting with preferred provider

organizations and health maintenance organizations.

(15) (14)  Provide for reinsurance on either a

<--

facultative or treaty basis, or both.

(15)  Comply with the provisions of 62 Pa.C.S. Pt. I

<--

(relating to Commonwealth Procurement Code) in the award of

any contract for goods or services.

(16)  Develop and implement bylaws that prohibit a member

of the board from voting on the selection of an insurer as

the plan's administrating insurer or on a contract for goods

or services, where the board member has a conflict of

interest resulting from employment or membership on the

governing board of the insurer or the company that would

provide the goods or services under the contract. The bylaws

shall include a procedure for a board member to disclose

potential voting conflicts to the other board members.

Section 8.  Selection of administering insurer.

(a)  General rule.--The board shall select an insurer,

through a competitive bidding process, to administer the plan.

The board shall evaluate the bids submitted under this

subsection based on criteria established by the board, which

criteria shall include, but not be limited to, the following:

(1)  The insurer's proven ability to handle large group

accident and health policies insurance.

(2)  The efficiency of the insurer's claims-paying

procedures.

(3)  An estimate of total charges for administering the

plan.

(b)  Term of contract.--

(1)  The administering insurer must enter into a contract

with the board. The term of the contract shall be for a

period of three years.

(2)  At least one year prior to the expiration of each

three-year period of service by an administering insurer, the

board shall invite all insurers, including the current

administering insurer, to submit bids to serve as the

administering insurer for the succeeding three-year period.

(3)  The selection of the administering insurer for the

succeeding three-year period shall be made at least six

months prior to the end of the current three-year period.

(c)  Duties of administering insurer.--The administering

insurer shall:

(1)  Perform all eligibility and administrative claims-

payment functions relating to the plan.

(2)  Pay an agent's referral fee as established by the

board to each agent who refers an applicant to the plan, if

the applicant is accepted. The selling or marketing of plans

shall not be limited to the administering insurer or its

agents. The referral fees shall be paid by the administering

insurer from moneys received as premiums for the plan.

(3)  Establish a premium billing procedure for collection

of premiums from persons insured under the plan.

(4)  Perform all necessary functions to assure timely

payment of benefits to covered persons under the plan,

including, but not limited to, the following:

(i)  Making available information relating to the

proper manner of submitting a claim for benefits under

the plan and distributing forms upon which submissions

will be made.

(ii)  Evaluating the eligibility of each claim for

payment under the plan.

(iii)  Notifying each claimant within 30 days after

receiving a properly completed and executed proof of

loss, whether the claim is accepted, rejected or

compromised.

(5)  Submit regular reports to the board regarding the

operation of the plan. The frequency, content and form of the

reports shall be determined by the board.

(6)  Following the close of each calendar year, determine

net premiums, reinsurance premiums less administrative

expenses allowance, the expense of administration pertaining

to the reinsurance operations of the pool and the incurred

losses for the year, and report this information to the board

and the commissioner.

(7)  Pay claims expenses from the premium payments

received from or on behalf of covered persons under the plan.

Section 9.  Payment of plan costs.

(a)  General rule.--The board shall pay plan costs, excluding

<--

any premium, deductible and copayment subsidies, first from

Federal funds, if any, that are transferred to the fund under

<--

subsection (b) and that exceed premium, deductible and copayment

<--

subsidy costs in a policy year. The remainder of the plan costs,

excluding premium, deductible and copayment subsidy costs, shall

be paid as follows:

<--

(1)  66 2/3% from premiums paid by eligible persons.

(2)  33 1/3% from transfers or appropriations to the

fund.

(b)  Application for Federal funds.--The board shall make

application for any Federal grants or other sources under which

the plan may be eligible to receive moneys. To the extent

allowable, the board shall use any moneys received from a

Federal grant or other source to offset plan deficits before

drawing from any alternative funding sources.

(c)  Surplus funds.--

(1)  If grants, assessments and other receipts by the

pool exceed the actual losses and administrative expenses of

the plan, the excess shall be held at interest and used by

the board to offset future losses or to reduce premiums.

(2)  As used in this subsection, the term "future losses"

include reserves for claims incurred but not reported.

Section 10.  Direct insurance by pool.

The coverage provided by the plan shall be directly insured

by the pool and the policies administered through the

administering insurer.

Section 11.  Plan benefits.

(a)  General rule.--The plan shall offer in an annually

renewable policy the coverage specified in this section for each

eligible person. In approving any of the benefit plans to be

offered by the plan, the board shall establish such benefit

levels, deductibles, coinsurance factors, exclusions and

limitations as it may deem appropriate and that it believes to

be generally reflective of and commensurate with individual

market health insurance that is provided in the individual

health insurance market in this Commonwealth.

(b)  High deductible health plan option.--Notwithstanding any

other provisions of this section, the plan shall provide every

eligible person the option of selecting a health plan option

from at least one high deductible health plan that would qualify

to be used in conjunction with a health savings account under

section 223 of the Internal Revenue Code of 1986 (Public Law

99-514, 26 U.S.C. § 1 et seq.). In conjunction with such a high

deductible health plan, the plan shall provide for the

establishment and administration of health savings accounts on

behalf of eligible persons who chose to be covered by a high

deductible health plan under this section.

(c)  Major medical expense coverage.--The plan shall offer

major medical expense coverage to every eligible person who is

not eligible for Medicare. Major medical expense coverage

offered under the plan shall pay an eligible person's covered

expenses, subject to a lifetime limit of $1,000,000 per covered

<--

individual.

(d)  Covered expenses.--

(1)  The usual customary charges or negotiable

reimbursement for the following services and articles, when

prescribed by a physician and medically necessary, shall be

covered expenses:

(i)  Hospital services.

(ii)  Professional services for the diagnosis or

treatment of injuries, illness or conditions, other than

dental, which are rendered by a physician or by others at

his direction.

(iii)  Drugs requiring a physician's prescription.

(iv)  Services of a licensed skilled nursing facility

for eligible individuals, ineligible for Medicare, for

not more than 100 calendar days during a policy year, if

the services and reimbursements are the type which would

qualify as reimbursable services under Medicare.

(v)  Services of a home health agency, which services

are of a type that would qualify reimbursable services

under Medicare.

(vi)  Use of radium or other radioactive materials.

(vii)  Oxygen.

(viii)  Anesthetics.

(ix)  Prosthesis, other than dental prosthesis.

(x)  Rental or purchase, as appropriate, of durable

medical equipment, other than eyeglasses and hearing

aids.

(xi)  Diagnostic X-rays and laboratory tests.

(xii)  Oral surgery for partially or completely

erupted, impacted teeth and oral surgery with respect to

the tissues of the mouth when not performed in connection

with the extraction or repair of teeth.

(xiii)  Services of a physical therapist.

(xiv)  Transportation provided by a licensed

ambulance service to the nearest facility qualified to

treat a condition.

(xv)  Processing of blood, including, but not limited

to, collecting, testing, fractioning and distributing

blood.

(xvi)  Services for the treatment of alcohol and drug

abuse, but the insured shall be required to make a 50%

copayment, and the payment of the plan shall not exceed

$4,000.

(xvii)  As an option, made available at an additional

premium, services provided by a duly licensed

chiropractor.

(e)  Excluded expenses.--Covered expenses shall not include

the following:

(1)  A charge for treatment for cosmetic purposes, other

than for repair or treatment of an injury or congenital

bodily defect to restore normal bodily functions.

(2)  A charge for care which is primarily for custodial

or domiciliary purposes which does not qualify as an eligible

service under Medicaid.

(3)  A charge for confinement in a private room, to the

extent that the charge is in excess of the charge by the

institution for its most common semiprivate room unless a

private room is prescribed as medically necessary by a

physician.

(4)  Any part of a charge for services or articles

rendered or provided by a physician or other health care

personnel that exceeds the prevailing charge in the locality

where the service is provided or any charge for services or

articles not medically necessary.

(5)  A charge for services or articles the provision of

which is not within the authorized scope of practice of the

institution or individual providing the services or articles.

(6)  An expense incurred prior to the effective date of

the coverage under the plan for the person on whose behalf

the expense was incurred.

(7)  A charge for routine physical examinations.

(8)  A charge for the services of blood donors and any

fee for the failure to replace the first three pints of blood

provided to an eligible person annually.

(9)  A charge for personal services or supplies provided

by a hospital or nursing home or any other nonmedical or

nonprescribed services or supplies.

(f)  Annual deductible choices.--The board shall provide for

at least two choices of annual deductibles for major medical

expenses, plus the benefits payable under any other type of

insurance coverage or workers' compensation, provided that if

two individual members of a family satisfy the applicable

deductible, no other members of the family shall be required to

meet deductibles for the remainder of that calendar year.

(g)  Schedule of premium rates to be determined.--

(1)  The board shall annually determine the schedule of

premium rates, copayments and deductibles for each benefit

<--

plan option offered by the pool.

(2)  Rates and rate schedules may be adjusted for

appropriate risk factors, including age and variation in

claim costs, and the board may consider appropriate risk

factors in accordance with established actuarial and

underwriting practices. The adjustment in rates and rating

<--

schedules attributed to the difference in age between the

oldest insured person and the youngest insured person shall

not exceed a 4-to-1 ratio.

(3)  (i)  The board shall determine the standard risk

rate by considering the premium rates charged by other

insurers offering health insurance coverage to

individuals. The standard risk rate shall be established

using reasonable actuarial techniques and shall reflect

anticipated experience and expenses for such coverage.

(ii)  The initial pool rate may not be less than 150%

and may not exceed 200% of rates established as

applicable for individual standard rates.

(iii)  Subsequent rates shall be established to

provide fully for the expected costs of claims, including

recovery of prior losses, expenses of operation,

investment income of claim reserves and any other cost

factors subject to the limitations described in this

subsection.

(iv)  In no event shall pool rates exceed 200% of

rates applicable to individual standard risks.

(4)  All rates and rate schedules shall be submitted to

the commissioner for approval, and the pool may not use them

unless the commissioner approves the rates and rate

schedules. The commissioner in evaluating the rates and rate

schedule of the pool shall consider the factors provided by

this section.

(h)  Last payer of benefits.--The board shall provide that

the pool shall be the last payer of benefits whenever any other

benefit or source of third party payment is available.

Section 12.  Effective date.

This act shall take effect in 60 days.