|
Wyoming health insurance pool-2. |
07LSO-0456.L1 |
FISCAL NOTE
This bill contains an appropriation of $5,000,000 from the GENERAL FUND.
Discussion of appropriation:
The appropriation will ultimately result in an expenditure increase from the General Fund and then from the Wyoming Health Insurance Pool (WHIP). With the additional enrollment in WHIP anticipated under the new eligibility provisions of the bill, health care claims to the WHIP will increase. Further, under the provisions of the current contract with the administrator (Blue Cross Blue Shield) of the WHIP, administrative expenses will rise.
Assumptions:
The administrator estimated that to cover 400 to 450 additional individuals in the WHIP would cost approximately $5,000,000 per year. Additionally, under the current contract with the WHIP administrator, fees would increase as follows:
There are approximately 650 individuals in the pool now. Once there are over 700 individuals in the pool, the administrator is entitled to an additional $3 per month on each of those individuals over 700. Assuming 450 additional individuals in the pool, the administrator would receive $3 x 400, or $1,200 additional fees per month or $14,400 per year. Also, the additional 450 individuals are each charged $2.50 per month for the network access fee. Therefore, the administrator would receive an additional 450 x $2.50 or $1,125 per month or $13,500 per year. The total increase to the administrator per year would be approximately $27,900 ($13,500 + $14,400).
In addition, there would be an indeterminable revenue decrease and an indeterminable revenue increase generated from this bill.
Source of revenue increase:
Increased premiums paid to WHIP due to increased participant numbers that will result from the bill provisions.
Assumptions:
The bill amends the WHIP statutes so that those individuals otherwise eligible for the pool and whose income is at 300 percent or less of the federal poverty guideline will be able to participate in the pool at reduced rates. It is anticipated by the WHIP administrator that the changes to the WHIP statute will increase enrollment by 400 to 450 individuals. This, in turn, will increase revenues to the pool by the amount of premiums paid by these new participants. The amount of those new premiums cannot be determined at this time for several reasons. Although an estimate of new participants has been made, the number of new enrollees will not be known until they actually sign up. Also, under the current law and the proposed amendments in the bill, the WHIP Board is required to determine where to set premiums for the new enrollees. The premiums must be set between 100% and 120% of the standard market for these new, low income, participants. Until the WHIP Board makes these determinations and others required of it under the law, it is not possible to estimate the premium income increase. The Board relies to a great extent on the WHIP administrator and its actuaries in setting premiums. The Board must also decide on the amount of the insurance companies’ assessments; and those assessments will also affect the setting of premium rates.
Source of potential revenue decrease:
The bill provides that insurers shall not be assessed more than $2,500,000 in any fiscal year for operation of the WHIP. The current law contains no cap on assessments to insurers and, in fact, the most recent assessment was for $4,000,000. Therefore, it is possible that insurers will be assessed less than in past years which would decrease income to the WHIP.
Assumptions: It is not possible to know the amount of any revenue decrease from the assessment cap currently. The WHIP Board is required to decide the assessment amount each year based upon the advice of the administrator and its actuaries. If an assessment was made under the provisions of this bill, there would be a decrease in revenue if the needed assessment was over $2,500,000, but there would not be a decrease in revenue if the needed assessment was $2,500,000 or under. It is also possible that the additional premiums paid by the new enrollees and the general fund appropriation under the bill would make up some or all of the assessed funds lost under the bill.
Prepared by: Don Richards, LSO Phone: 777-7881
(Information provided by Ken Vines, Insurance Department; phone: 777-6894.)