LRBs0320/1
PJK/JK:wlj/lmk/kf:ch
2005 - 2006 LEGISLATURE
SENATE SUBSTITUTE AMENDMENT 1,
TO 2005 SENATE BILL 451
November 25, 2005 - Offered by Senator Kapanke.
SB451-SSA1,3,2
1An Act to repeal 20.435 (4) (u), 20.435 (4) (v), 25.17 (1) (gf), 25.55 (intro.), 149.10
2(2m), 149.10 (10), 149.12 (3) (c), 149.14 (3) (c) 2., 149.14 (4c), 149.14 (5) (d),
3149.14 (5) (e), 149.14 (5m), 149.14 (6) (a), 149.14 (8), 149.142 (1) (b), 149.142 (2),
4149.144, 149.145, 149.146 (2) (am), 149.146 (2) (b), 149.15, 149.16, 149.165 (4),
5149.17 (2), 149.17 (4), 149.175, 149.20, 149.25 and 149.40;
to renumber 149.14
6(3) (p) and 149.14 (6) (b);
to renumber and amend 25.55 (3), 25.55 (4), 149.12
7(2) (f), 149.14 (4m), 149.142 (1) (a) and 149.146 (2) (a);
to consolidate,
8renumber and amend 149.146 (1) (a) and (b);
to amend 1.12 (1) (b), 13.172
9(1), 13.62 (2), 13.94 (1) (b), 13.94 (1) (g), 13.95 (intro.), 16.002 (2), 16.004 (4),
1016.004 (5), 16.004 (12) (a), 16.045 (1) (a), 16.15 (1) (ab), 16.41 (4), 16.417 (1) (a),
1116.52 (7), 16.528 (1) (a), 16.53 (2), 16.54 (9) (a) 1., 16.70 (2), 16.72 (2) (e) (intro.),
1216.72 (2) (f), 16.75 (1m), 16.75 (8) (a) 1., 16.75 (8) (a) 2., 16.75 (9), 16.765 (1),
1316.765 (2), 16.765 (4), 16.765 (5), 16.765 (6), 16.765 (7) (intro.), 16.765 (7) (d),
116.765 (8), 16.85 (2), 16.865 (8), 71.21 (4), 71.26 (1) (be), 71.26 (2) (a), 71.34 (1)
2(g), 71.45 (2) (a) 10., 76.67 (2), 77.54 (9a) (a), 77.92 (4), 101.055 (2) (a), 101.177
3(1) (d), chapter 149 (title), 149.10 (intro.), 149.10 (2), 149.10 (2j) (a) 3., 149.10
4(2t) (c), 149.10 (3), 149.10 (3e), 149.10 (7), 149.10 (8), 149.10 (9), 149.115, 149.12
5(1) (intro.), 149.12 (1) (a), 149.12 (1m), 149.12 (3) (a), 149.13 (1), 149.13 (3) (a),
6149.13 (3) (b), 149.13 (4), 149.14 (1) (a), 149.14 (2) (a), 149.14 (3) (intro.), 149.14
7(3) (c) 3., 149.14 (3) (c) 3., 149.14 (3) (d), 149.14 (3) (e), 149.14 (3) (m), 149.14 (3)
8(o), 149.14 (4) (d), 149.14 (4) (m), 149.14 (5) (b), 149.14 (5) (c), 149.14 (7) (b),
9149.14 (7) (c), 149.165 (1), 149.165 (2) (a) (intro.), 149.165 (2) (bc), 149.165 (3)
10(a), 149.165 (3) (b) (intro.), 149.165 (3m), 149.17 (1), 149.18, 230.03 (3), 230.80
11(4), 601.41 (1), 601.415 (12), 601.64 (1), 601.64 (3) (a), 601.64 (3) (c), 601.64 (4),
12613.03 (4), 632.785 (title) and 895.65 (1) (c);
to repeal and recreate 149.11,
13149.14 (3) (b), 149.14 (3) (c) 1., 149.14 (4), 149.14 (5) and 149.143; and
to create
1413.94 (1) (dh), 20.145 (5), 70.11 (41m), 71.07 (5g), 71.10 (4) (cp), 71.28 (5g), 71.30
15(3) (dm), 71.47 (5g), 71.49 (1) (dm), 76.655, subchapter I (title) of chapter 149
16[precedes 149.10], 149.10 (1), 149.105, subchapter II (title) of chapter 149
17[precedes 149.11], 149.12 (2) (f) 2., 149.12 (2) (g), 149.12 (4) and (5), 149.14 (3)
18(f), 149.141, subchapter III of chapter 149 [precedes 149.40], subchapter IV of
19chapter 149 [precedes 149.60] and 631.20 (2) (f) of the statutes;
relating to: the
20Health Insurance Risk-Sharing Plan; creating the Health Insurance
21Risk-Sharing Plan Authority; a health benefit program for persons eligible for
22tax credits for payment of premiums; an income and franchise tax credit for
1Health Insurance Risk-Sharing Plan assessments; and making an
2appropriation.
Analysis by the Legislative Reference Bureau
Background of Health Insurance Risk-Sharing Plan
The Health Insurance Risk-Sharing Plan (HIRSP) under current law provides
major medical health insurance coverage for persons who are covered under
Medicare because they are disabled, persons who have tested positive for human
immunodeficiency virus (HIV), persons who have been refused coverage, or coverage
at an affordable price, in the private health insurance market because of their mental
or physical health condition, as well as persons (called "eligible individuals" in the
statutes) who do not currently have health insurance coverage, but who were covered
under certain types of health insurance coverage (called creditable coverage) for at
least 18 months in the past. HIRSP is funded by premiums paid by covered persons,
insurer assessments, and provider payment discounts, and is administered by the
Department of Health and Family Services (DHFS), a board of governors, and a plan
administrator.
Creation of Health Insurance Risk-Sharing Plan Authority
This substitute amendment creates the Health Insurance Risk-Sharing Plan
Authority (HIRSP Authority) for the primary purpose of assuming the
administration of HIRSP, beginning on July 1, 2006. An authority is a public body
with a board of directors that is created by state law but that is not a state agency.
The board of directors of the HIRSP Authority consists of the commissioner of
insurance (commissioner), or the commissioner's designee, as a nonvoting member
and 13 other members who are appointed by the governor, with the advice and
consent of the senate, for three-year terms. These 13 members must include persons
with coverage under HIRSP and representatives of insurers, health care providers,
and small businesses. The board may appoint an executive director, who may not be
a member of the board.
Because the HIRSP Authority is not a state agency, numerous laws that apply
to state agencies do not apply to the HIRSP Authority. However, the HIRSP
Authority is treated like a state agency in the following respects, among others: 1)
it is generally subject to the open records and open meetings laws; 2) it is treated like
a state agency for purposes of the law regulating lobbying; 3) its employees may not
engage in political activities while engaged in official duties; 4) it must use a
competitive bid or proposal process whenever contracting for professional services;
5) it is exempt from income tax, sales and use tax, and property taxes; and 6) the Code
of Ethics for Public Officials and Employees covers the HIRSP Authority.
The HIRSP Authority is unlike a state agency in many other ways, including:
1) it approves its own budget without going through the state budgetary process; 2)
its employees are not state employees, are not included in the state system of
personnel management, may not participate in the system for state retirement
benefits or health insurance coverage, and are hired outside the state hiring system;
3) it is not subject to statutory rule-making procedures, including requirements for
legislative review of proposed rules; and 4) although HIRSP is subject to an annual
financial audit by the Legislative Audit Bureau, the HIRSP Authority is not subject
to auditing by the Legislative Audit Bureau.
Unlike most other authorities under current law, the HIRSP Authority may not
issue bonds. It pays the administrative and operating expenses of HIRSP, as under
current law, through premiums paid by persons with coverage under HIRSP, insurer
assessments, and provider payment discounts. The HIRSP Authority must annually
submit a report to the legislature and to the governor on the operation of HIRSP.
Changes to the Health Insurance Risk-Sharing Plan
This substitute amendment makes a number of changes to HIRSP, including
the following:
1. Administration. Under current law, HIRSP is administered by DHFS, a
board of governors, and a plan administrator under contract with DHFS. Effective
July 1, 2006, the substitute amendment eliminates the HIRSP board of governors
and transfers administrative authority over HIRSP from DHFS to the HIRSP
Authority and its board of directors. The substitute amendment requires DHFS to
terminate its contract with the plan administrator, effective July 1, 2006, and
requires the HIRSP Authority to enter into an identical contract with the same plan
administrator with a beginning date of July 1, 2006, and an ending date that is the
same as the ending date of the original contract between DHFS and the plan
administrator. Because the substitute amendment authorizes the HIRSP Authority
to enter into contracts for the administration of HIRSP, after the end of its contract
with the current plan administrator, it may contract with the same or a different plan
administrator, but must use a competitive request-for-proposals process to do so.
2. Eligibility. To be eligible for HIRSP, a person must be a state resident. The
substitute amendment changes from 30 days to three months the length of time that
a person must be domiciled in this state to be considered a state resident for purposes
of HIRSP eligibility.
In general, a person who is eligible for Medical Assistance (MA) is not eligible
for HIRSP. The substitute amendment provides that persons who are eligible for
only certain limited services provided under MA, such as family planning services
for low-income women and payment of Medicare premiums, deductibles, and
coinsurance for persons eligible for Medicare who meet the income and resource
limitations, are not ineligible for HIRSP coverage because of their eligibility for only
those MA services. The substitute amendment provides, however, that HIRSP will
not pay for services that are reimbursed under MA. The substitute amendment also
specifically provides that persons who are eligible for certain listed programs or
benefits, such as the Badger Care Health Care Program and Long-Term Support
Community Options Program, are ineligible for HIRSP coverage.
Under current law, a person who is rejected for health insurance coverage by
one or more insurers within nine months of applying for HIRSP coverage is eligible
for HIRSP. The substitute amendment changes that requirement to two or more
insurers.
The substitute amendment adds Medicare Part D, which is the prescription
drug benefit under Medicare, to the definition of Medicare for purposes of HIRSP.
Thus, a person who is eligible for HIRSP based on their coverage under Medicare
because they are disabled would be eligible for HIRSP coverage if they had coverage
under Medicare Part D. In addition, HIRSP does not pay for benefits that are paid
for by Medicare, so HIRSP would not pay for prescription drugs covered under the
person's Medicare Part D coverage.
3. Benefit design. Benefits provided by HIRSP, as well as deductibles and
out-of-pocket limits, are specified in the statutes. Except for eligible individuals,
who are not subject to any preexisting condition exclusion, a condition that a person
was diagnosed with or treated for within six months of obtaining coverage under
HIRSP is excluded from coverage for the first six months. Current law authorizes
DHFS to establish copayments and out-of-pocket limits for prescription drug
coverage. The substitute amendment retains all current law benefits, deductibles,
copayments, out-of-pocket limits, and the preexisting condition exclusion through
December 31, 2006. Beginning on January 1, 2007, benefits are modified somewhat,
mostly by limiting the extent of certain benefits to the extent that commercial
insurers are required to provide under the statutes known as health insurance
mandates, and coverage for the services of a home health agency, to the extent
required by the health insurance mandate, is added. No benefits are eliminated.
Also beginning on that date, the HIRSP Authority is authorized to establish
deductibles, copayments, coinsurance, limitations, and, except for eligible
individuals, exclusions that are not specified in the statutes, and to develop
additional benefit designs that are responsive to market conditions. The Office of the
Commissioner of Insurance (OCI) may disapprove any policy developed by the
HIRSP Authority if the benefit design is not comparable to a typical comprehensive
individual health insurance policy in the private market, the benefit levels do not
generally reflect comprehensive individual health insurance in the private market,
or the deductibles, copayments, or coinsurance are not actuarially equivalent to
comprehensive individual health insurance in the private market or would create
undue financial hardship.
4. Payment of plan costs. Current law sets out a complex formula for payment
of the administrative and operating expenses of HIRSP. In general, premiums must
be set at a rate that pays for 60 percent of costs and may not exceed 200 percent of
the rate a standard risk would be charged for the same coverage and deductibles.
Insurer assessments and provider payment discounts must each pay for half of the
remaining 40 percent of costs. The substitute amendment eliminates the formula
but retains the requirements that premiums must be set at a rate to pay for 60
percent of costs, excluding premium, deductible, and copayment subsidy costs
(subsidy costs), and may not exceed 200 percent of rates applicable to standard risks,
that insurer assessments must be set at an amount to cover 20 percent of costs,
excluding subsidy costs, and that provider payment discounts must be set at a rate
to cover 20 percent of costs, excluding subsidy costs. Subsidy costs are to be paid first
from any federal high risk pool grant funds that are received by OCI, and the
remainder of subsidy costs are paid equally through insurer assessments and
provider payment discounts. If federal high risk pool grant funds received in a year
exceed subsidy costs in that year, the excess federal funds must be used to pay the
administrative and operating costs before premiums, insurer assessments, and
provider discounts are applied to the costs.
5. Subsidies. Under current law, generally, persons with coverage under
HIRSP who have household incomes below $25,000 receive premium and deductible
subsidies and may receive prescription drug copayment subsidies. For a person who
is eligible for a subsidy, the statutes set out, on the basis of the person's household
income category, the specific deductible amount that the person must pay and the
premium rate that the person must pay as a percentage of the rate that a standard
risk would be charged for the same coverage and deductibles. The substitute
amendment retains the subsidies and makes no changes to the categories of persons
who are eligible for subsidies and no changes to the standard risk rates that are the
basis for premium reductions. Beginning on January 1, 2007, however, the specific
reduced deductible amounts are eliminated and the HIRSP Authority is directed to
establish and provide deductible subsidies for those persons paying reduced
deductibles under current law and is authorized to provide prescription drug
copayment subsidies for those same persons.
Health Care Tax Credit Program
The federal Trade Adjustment Assistance Reform Act of 2002 (TAA) provides,
among other benefits related to employment, a federal income tax credit for up to 65
percent of the amount of the premium paid by eligible persons for coverage for
themselves and their dependents under qualified health insurance. Eligible persons
are those who are eligible for TAA employment-related benefits because they have
lost their jobs or experienced reduced work hours and wages because of increased
imports and those who are at least 55 years of age and receiving benefits from the
Pension Benefit Guaranty Corporation. The substitute amendment requires the
HIRSP Authority to design and administer, as long as the federal income tax credit
is available, a plan of health care coverage that satisfies the requirements for
qualified health insurance for coverage of persons who are eligible for the tax credit.
Assessment Credits
The substitute amendment creates an income and franchise tax credit and a
license fee credit for insurers that pay assessments to OCI. The amount of the credit
is equal to a percentage of the amount of the assessment that the insurer paid in the
calendar year in which the insurer's taxable year begins. The Department of
Revenue and OCI determine the percentage of the amount that each insurer may
claim in each taxable year so that the total amount of the credits awarded to all
insurers in each fiscal year is approximately $5,000,000. Although the credits apply
to taxable years beginning after December 31, 2005, the credits awarded for the 2006
and 2007 taxable years may not be claimed until taxable years beginning after
December 31, 2007.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
SB451-SSA1,7,72
1.12
(1) (b) "State agency" means an office, department, agency, institution of
3higher education, the legislature, a legislative service agency, the courts, a judicial
4branch agency, an association, society
, or other body in state government
which that 5is created or authorized to be created by the constitution or by law, for which
6appropriations are made by law
, excluding the Health Insurance Risk-Sharing Plan
7Authority.
SB451-SSA1,7,139
13.172
(1) In this section, "agency" means an office, department, agency,
10institution of higher education, association, society
, or other body in state
11government created or authorized to be created by the constitution or any law,
which 12that is entitled to expend moneys appropriated by law, including the legislature and
13the courts, and any authority created in
subch. III of ch. 149 or in ch. 231, 233
, or 234.
SB451-SSA1,7,1815
13.62
(2) "Agency" means any board, commission, department, office, society,
16institution of higher education, council
, or committee in the state government, or any
17authority created in
subch. III of ch. 149 or in ch. 231, 232, 233, 234, or 237, except
18that the term does not include a council or committee of the legislature.
SB451-SSA1,8,1020
13.94
(1) (b) Audit the records of every state department, board, commission,
21independent agency
, or authority
, excluding the Health Insurance Risk-Sharing
22Plan Authority, at least once each 5 years and audit the records of other departments
23as defined in sub. (4) when the state auditor deems it advisable or when he or she is
24so directed and, in conjunction therewith, reconcile the records of the department
25audited with those of the department of administration. Audits of the records of a
1county, city, village, town
, or school district may be performed only as provided in par.
2(m). Within 30 days after completion of any such audit, the bureau shall file with the
3chief clerk of each house of the legislature, the governor, the department of
4administration, the legislative reference bureau, the joint committee on finance, the
5legislative fiscal bureau
, and the department audited, a detailed report thereof,
6including its recommendations for improvement and efficiency and including
7specific instances, if any, of illegal or improper expenditures. The chief clerks shall
8distribute the report to the joint legislative audit committee, the appropriate
9standing committees of the legislature
, and the joint committee on legislative
10organization.
SB451-SSA1, s. 5
11Section
5. 13.94 (1) (dh) of the statutes is created to read:
SB451-SSA1,8,1412
13.94
(1) (dh) Notwithstanding par. (b), annually conduct a financial audit of
13the Health Insurance Risk-Sharing Plan under subch. II of ch. 149 and file copies
14of each audit report under this paragraph with the distributees specified in par. (b).
SB451-SSA1,9,216
13.94
(1) (g) Require each state department, board, commission, independent
17agency
, or authority
, excluding the Health Insurance Risk-Sharing Plan Authority,
18to file with the bureau on or before September 1 of each year a report on all
19receivables due the state as of the preceding June 30 which were occasioned by
20activities of the reporting unit. The report may also be required of other
21departments, except counties, cities, villages, towns
, and school districts. The report
22shall show the aggregate amount of such receivables according to fiscal year of origin
23and collections thereon during the fiscal year preceding the report. The state auditor
24may require any department to file with the bureau a detailed list of the receivables
1comprising the aggregate amounts shown on the reports prescribed by this
2paragraph.
SB451-SSA1,9,16
513.95 Legislative fiscal bureau. (intro.) There is created a bureau to be
6known as the "Legislative Fiscal Bureau" headed by a director. The fiscal bureau
7shall be strictly nonpartisan and shall at all times observe the confidential nature
8of the research requests received by it; however, with the prior approval of the
9requester in each instance, the bureau may duplicate the results of its research for
10distribution. Subject to s. 230.35 (4) (a) and (f), the director or the director's
11designated employees shall at all times, with or without notice, have access to all
12state agencies, the University of Wisconsin Hospitals and Clinics Authority,
the
13Health Insurance Risk-Sharing Plan Authority, and the Fox River Navigational
14System Authority
, and to any books, records
, or other documents maintained by such
15agencies or authorities and relating to their expenditures, revenues, operations
, and
16structure.
SB451-SSA1,9,2218
16.002
(2) "Departments" means constitutional offices, departments
, and
19independent agencies and includes all societies, associations
, and other agencies of
20state government for which appropriations are made by law, but not including
21authorities created in
subch. III of ch. 149 and in chs. 231, 232, 233, 234, 235, and
22237.
SB451-SSA1,9,2524
16.004
(4) Freedom of access. The secretary and such employees of the
25department as the secretary designates may enter into the offices of state agencies
1and authorities created under
subch. III of ch. 149 and under chs. 231, 233, 234, and
2237, and may examine their books and accounts and any other matter
which that in
3the secretary's judgment should be examined and may interrogate the agency's
4employees publicly or privately relative thereto.
SB451-SSA1,10,96
16.004
(5) Agencies and employees to cooperate. All state agencies and
7authorities created under
subch. III of ch. 149 and under chs. 231, 233, 234, and 237,
8and their officers and employees, shall cooperate with the secretary and shall comply
9with every request of the secretary relating to his or her functions.
SB451-SSA1,10,1711
16.004
(12) (a) In this subsection, "state agency" means an association,
12authority, board, department, commission, independent agency, institution, office,
13society
, or other body in state government created or authorized to be created by the
14constitution or any law, including the legislature, the office of the governor
, and the
15courts, but excluding the University of Wisconsin Hospitals and Clinics Authority
,
16the Health Insurance Risk-Sharing Plan Authority, and the Fox River Navigational
17System Authority.
SB451-SSA1,10,2419
16.045
(1) (a) "Agency" means an office, department, independent agency,
20institution of higher education, association, society
, or other body in state
21government created or authorized to be created by the constitution or any law,
which 22that is entitled to expend moneys appropriated by law, including the legislature and
23the courts, but not including an authority created in
subch. III of ch. 149 or in ch. 231,
24232, 233, 234, 235, or 237.
SB451-SSA1,11,3
116.15
(1) (ab) "Authority" has the meaning given under s. 16.70 (2), but
2excludes the University of Wisconsin Hospitals and Clinics Authority
and the Health
3Insurance Risk-Sharing Plan Authority.
SB451-SSA1,11,65
16.41
(4) In this section, "authority" means a body created under
subch. III of
6ch. 149 or under ch. 231, 233, 234, or 237.
SB451-SSA1,11,138
16.417
(1) (a) "Agency" means an office, department, independent agency,
9institution of higher education, association, society
, or other body in state
10government created or authorized to be created by the constitution or any law,
which 11that is entitled to expend moneys appropriated by law, including the legislature and
12the courts, but not including an authority
or the body created under subch. III of ch.
13149.