HOUSE BILL REPORT

HB 1505

BYRepresentatives Zellinsky, Baugher, Sayan, Dellwo, Chandler, Anderson, Day, Crane, Winsley, Beck, Schmidt, Prentice, Rayburn, Kremen, Rector, Bowman and P. King 

Forbidding the use of age as a basis for rating the cost of medicare supplemental health insurance.

House Committe on Financial Institutions & Insurance

Majority Report:  Do pass.  (13)

      Signed by Representatives Dellwo, Chair; Zellinsky, Vice Chair; Chandler, Ranking Republican Member; Anderson, Baugher, Crane, Day, Dorn, Inslee, P. King, Nutley, Schmidt, and Winsley.

Minority Report:  Do not pass.  (1)

      Signed by Representative K. Wilson.

House Staff:John Conniff (786-7119)

AS PASSED HOUSE JANUARY 10, 1990

BACKGROUND:

Medicare supplemental health insurance provides coverage to complement health care benefits available under the federal medicare program.  The insurance code contains extensive provisions regulating the sale, and content of these medicare supplemental health insurance policies.  Indirectly, through the regulation of the relationship between benefits paid and premiums collected (loss ratios), medicare supplemental health insurance prices are also regulated.  Generally, the price set for such insurance is partly determined by the age of the person insured and the loss ratio of the insurer.

SUMMARY:

Medicare supplemental health insurance policies may not be priced according to the age of the person insured, but rather must be priced according to the expected loss ratio of all policyholders taken as a whole - community rating.

Fiscal Note:      Not Requested.

House Committee ‑ Testified For:    Dave Rodgers, Insurance Commissioner's Office.

House Committee - Testified Against:      Mel Sorensen, Washington Physicians Service; and Jean Leonard, State Farm Insurance Company.

House Committee - Testimony For:    The Insurance Commissioner's Office has no objection to requiring medicare supplemental health insurance policies to be rated on a community basis.  Such a requirement is a method of resolving health insurance affordability problems encountered by senior citizens.

House Committee - Testimony Against:      Insurers can administer a medicare supplemental health insurance plan requiring community rating, but community rating requires younger senior citizens to subsidize older senior citizens.  By prohibiting the use of age as a factor in setting medicare supplemental policy rates, insurers are prevented from using a factor designed to ensure rate equity.

VOTE ON FINAL PASSAGE:

      Yeas 97; Nays 1.

Voting Nay: Representative K. Wilson