This issue of the American Academy of Actuaries’ StateScan Quarterly highlights state legislative and regulatory activities in the fourth quarter of 2016, including actions taken on automobile insurance, Affordable Care Act (ACA) reforms, principle-based reserving, and state adoptions of Own Risk and Solvency Assessments (ORSA).
Most states that allow prefiled bills at the end of 2016 will convene in the first quarter of 2017. All 50 state legislatures will be in session this year. The Virginia legislature is expected to adjourn at the end of February, and several other legislatures will adjourn as early as March.
The following includes some recent practice-specific and cross-practice state activities. For a more comprehensive review of legislation and regulations, log in to access StateScan.
SB 156, a bill prefiled in Florida in December, requires certain motor vehicle insurance policies to provide property damage liability and bodily injury liability coverage. A Texas bill also prefiled in December mandates that minimum liability insurance requirements apply to transportation network companies and drivers logged in to a digital network.
In the Florida Senate, SB 112, a bill that was prefiled in December, authorizes the Division of Emergency Management to administer a matching grant program for local governments to implement flood hazard risk reduction policies.
Credit for Reinsurance
A few states recently finalized regulations regarding credit for reinsurance. A Massachusetts regulation covering rules and procedural requirements for reinsurers operating in the state went into effect on Oct. 7. A Nevada regulation that went to effect in November revises provisions governing certified reinsurers, including the security of obligations assumed by certain assuming insurers. It also establishes certain provisions relating to reinsurance contracts, such as including a funding clause relating to the security that must be provided and maintained by a certified reinsurer.
A Virginia bill prefiled in December authorizes the State Corporation Commission to adopt regulations that specify additional requirements relating to the valuation of assets or reserve credits.
Montana House Bill 120 prefiled in December revises state statutes relating to NAIC accreditation and the state insurance commissioner’s regulation of insurers.
The Oregon Department of Consumer and Business Services proposed a regulation in October that requires insurers to use a “process that is comparable to the process described in the July 2014 edition of the NAIC Own Risk and Solvency Assessment (ORSA) Guidance Manual.”
Affordable Care Act Market Reforms
New Jersey lawmakers are considering a prefiled bill that is intended to prevent high out-of-network medical bills by requiring hospitals and doctors to disclose whether they are part of a patient’s insurance network before treatment occurs.
In December, Sylvia Burwell, the U.S. Secretary of Health and Human Services, approved a five-year extension of a Medicaid waiver agreement program called “Arkansas Works.” Gov. Asa Hutchinson signed the program into law in April, which allows Arkansas to use Medicaid funds to purchase health insurance for low income residents.
A Texas bill prefiled in November allows for the expansion of eligibility for Medicaid in certain Texas counties under the ACA. The bill allows the state’s executive commissioner to seek a waiver and provide Medicaid benefits to individuals who are not otherwise eligible.
Prescription Drug Reforms
California Proposition 61, the Drug Price Standards Initiative, was defeated by the state’s voters on Nov. 8. The initiative aimed to regulate drug prices in the state by requiring state agencies to pay no more than the U.S. Department of Veterans Affairs pays for drugs. It also aimed to exempt purchases of prescription drugs under managed care programs funded through Medi-Cal.
New York’s new health insurance reforms designed to mitigate New York state’s heroin and opioid crisis went into effect Jan. 1, 2017. The reforms are part of a package signed by the governor in June. Key highlights of the package include: ending prior insurance authorization for drug treatment services and medications; requiring all insurers operating in New York state to use objective, state-approved criteria when making coverage determinations for substance use disorder treatments; and mandating insurance coverage of the opioid overdose-reversal drug Naloxone. According to the state Department of Financial Services, the new insurance coverage requirements apply to small group and large group plans regulated by the department that are issued or renewed beginning Jan. 1, 2017, as well as plans sold to individual consumers.
State Healthcare Exchanges
A Washington State bill prefiled in December requires the submission of a waiver to the federal government to create a single health financing entity called the Washington Health Security Trust. The trust would be designed to increase access to health care and control costs.
A proposed regulation in South Dakota would amend a rule to adopt the National Association of Insurance Commissioners’ Valuation Manual.
A bill prefiled in Wyoming in December concerning principle-based reserving would modify reserve requirements for specified insurers, require the use of specific mortality tables, and define the nonforfeiture interest rate for specified insurance policies.
Public Pension Plans
A Nevada bill prefiled in November would make changes to the leadership structure of the Public Employees’ Benefits Program and the Deferred Compensation Program. It would also create the Employee Benefits Division of the Department of Administration.
The Ohio legislature passed a bill in December revising statutes governing the state’s retirement systems. The bill, which currently awaits the governor’s signature, calls for the public employees’ retirement board to contract with an independent actuary to complete an actuarial study to determine the mitigating rate calculations associated with an alternative retirement program.
A Missouri Senate bill prefiled in December creates a new retirement plan for most state employees hired on or after Jan. 1, 2018. The bill requires the life annuity for members of the plan to be calculated by multiplying 1 percent of the final average pay of the employee and the years of service. Annuities for certain elected officials would be subject to different calculations.
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