OFFICE OF FISCAL ANALYSIS

Legislative Office Building, Room 5200

Hartford, CT 06106 (860) 240-0200

http: //www. cga. ct. gov/ofa

sSB-11

AN ACT CONCERNING THE RATE APPROVAL PROCESS FOR CERTAIN HEALTH INSURANCE POLICIES.

OFA Fiscal Note

State Impact:

Agency Affected

Fund-Effect

FY 12 $

FY 13 $

Insurance Dept.

IF - Cost

2,245,000

2,245,000

Note: IF=Insurance Fund

Municipal Impact: None

Explanation

This bill is estimated to result in costs of approximately $2. 245 million annually associated with establishing a new rate approval process for certain health insurance policies. This will result in additional annual cost for staffing, outside hearing officers, and transcription expenses. The extent of these costs will be dependent upon the number of additional reviews that must be performed by the Insurance Department, as well as the number of public hearings that must be held.

The total additional staff necessary to implement this bill is 7. 5 full time equivalent positions, at a cost of $1. 03 million, including fringe benefitsi. This assumes 30 additional rate reviews annually, as well as 102 public hearings, as detailed in the footnote. The estimate of 102 hearings is based on the average number of rate filings in 2009 and 2010 that exceeded the 10% rate increase trigger (72), plus an additional 30 new filings that are required by the bill.

In addition to the two additional staff assumed above for internal hearing offices, it is estimated that 40 of the 102 hearings will require the contracting of outside counsel. Assuming a total of 60 hours per hearing at a contracted rate of $400 per hour, this will result in an additional $960,000 annually.

The Department of Insurance will also incur an additional cost per hearing for transcription services. Assuming a cost of $2,500 per hearing, this will result in costs of $255,000 annually.

The Out Years

The annualized ongoing fiscal impact identified above would continue into the future subject to inflation.

i

 

FTE

Annual Sal.

Subtotal

Fringe %

Totals

 
             

Actuarial Rate Review - Estimated 30 additional rate reviews, at 15 hours per rate review, for Group Indemnity Authority

0. 25

99,559

$ 24,890

* 1. 60

$ 39,824

 

Actuarial Rate Hearing Activities -Estimated 102 hearings, hearing prep, hearing, post hearing activities

0. 75

99,559

$ 74,669

* 1. 60

$ 119,471

 

Legal Rate Hearing Activities - Estimated 102 Hearings, Counsel to Hearing Officer, Counsel to Commissioner and Actuarial Staff; hearing prep, hearing, post hearing activities

3. 00

77,057

$ 231,171

* 1. 60

$ 369,874

 

Internal Hearing Officers - Estimated 62 Hearings, will use outside staff below in Section II for an estimated 40 Hearings, Pre and Post Hearing Activities, preside at hearing

2. 00

99,559

$ 199,118

* 1. 60

$ 318,589

 

IT Support - Technology support for hearing

0. 50

72,022

$ 36,011

* 1. 60

$ 57,618

 

Consumer Affairs - handle increased consumer complaints following public notice

1. 00

77,796

$ 77,796

* 1. 60

$ 124,474