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:

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.