HB3236eng 97TH GENERAL ASSEMBLY

HB3236 Engrossed LRB097 09331 AEK 49466 b

AN ACT concerning business.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 5. The Illinois Insurance Code is amended by adding Section 44.1 as follows:

(215 ILCS 5/44.1 new)

Sec. 44.1. Health care cooperatives.

(a) In addition to all other provisions of this Article not in conflict with this Section, a company seeking to organize under this Article as a health care cooperative shall meet all of the following requirements:

(1) The company shall comply with all provisions applicable to domestic mutual insurance companies under this Code.

(2) The articles of incorporation of the company shall demonstrate that the company is to be organized as a nonprofit member corporation and that the governance of the company shall be subject to a majority vote of all members.

(3) The activities of the company shall be limited to the issuance of health care plans in the individual and small group markets.

(4) Either the articles of incorporation or the bylaws of the company shall incorporate ethics and conflict of interest standards and the governance requirements set forth in Section 1322(c)(3)(C) of the federal Patient Protection and Affordable Care Act.

(5) The company or a related entity or any predecessor of either shall not have been a health insurance issuer on July 16, 2009.

(6) The company shall not be sponsored by a State or local government, any political subdivision thereof, or any instrumentality of such government or political subdivision.

(7) Excess surplus shall be used to lower premiums, to improve benefits, or for other programs intended to improve the quality of health care delivered to its members.

(8) No representative of a federal, State, or local government, or any political instrumentality thereof, and no representative of a company described in paragraph (5) of subsection (a) of this Section may serve on the board of directors of the company.

(b) Notwithstanding Section 37 of this Article, the corporate name of any organization seeking to organize under this Article as a health care cooperative need not contain the word "Mutual" but shall contain the phrase "Health Care Cooperative". The corporate name shall not be the same as, or deceptively similar to, the name of any domestic organization or of any foreign or alien organization authorized to transact business in this State.

(c) A company seeking to be organized as a health care cooperative shall submit an application to the Director according to procedures and meeting such requirements as the Director shall adopt by rule. No company shall transact any business of insurance until it has received a certificate of authority as set forth in Section 51 of this Article.

Section 10. The Co-operative Act is amended by changing Section 22 and by adding Section 30 as follows:

(805 ILCS 310/22) (from Ch. 32, par. 326)

Sec. 22. No corporation or association hereafter organized or doing business for profit in this State shall be entitled to use the term "Co-operative" as a part of its corporate or other business name or title unless it has complied with the provisions of this Act, except (1) a corporation organized under the Business Corporation Act of 1983 for the purpose of ownership or administration of residential property on a cooperative basis, or (2) a cooperative corporation organized under the General Not For Profit Corporation Act of 1986 or its predecessor or successor statutes, or (3) a domestic mutual insurance company licensed as a health care cooperative by the Director of Insurance under Article III of the Illinois Insurance Code. Any corporation or association violating the provision of this Section may be enjoined from doing business under such name at the instance of any shareholder of any association or corporation organized under this Act.

(Source: P.A. 95-368, eff. 8-23-07.)

(805 ILCS 310/30 new)

Sec. 30. Health benefit purchasing cooperative.

(a) Notwithstanding any other provisions of this Act, health benefit purchasing cooperatives may be organized by one or more persons under this Section in each of the geographic areas identified in subsection (l) of this Section.

(b) The purpose of a health benefit purchasing cooperative is to provide health care benefits for the individuals specified in subsection (i) of this Section, under a single group health care policy or plan through a contract between the health benefit purchasing cooperative and an insurer authorized to do health insurance business in this State.

(c) A health benefit purchasing cooperative shall be designed so that all of the following are accomplished:

(1) The members become better informed about health care trends and cost increases.

(2) All members receive their health care benefits under the group health care policy or plan negotiated under subsection (i) of this Section.

(3) The members are actively engaged in designing health care benefit options that are offered by the insurer and that meet the needs of their community.

(4) The health insurance risk of all of the members is pooled.

(5) The members actively participate in health improvement decisions for their community.

(d) The articles of a health benefit purchasing cooperative shall set forth the name and address of at least one incorporator who will act as the temporary board.

(e) Each health benefit purchasing cooperative shall be organized on a membership basis with no capital stock.

(f) Subject to subsection (g) of this Section, any person that does business in, is located in, has a principal office in, or resides in the geographic area in which a health benefit purchasing cooperative is organized, that meets the membership criteria established by the health benefit purchasing cooperative in its bylaws, and that pays the membership fee may be a member of the health benefit purchasing cooperative.

(g) A health benefit cooperative may limit membership of self-employed individuals through its membership criteria, but such criteria must be applied in the same manner to all self-employed individuals.

(h) Each health benefit purchasing cooperative shall file its membership criteria, as well as any amendments to the criteria, with the Director.

(i) The health care benefits offered by a health benefit purchasing cooperative shall be negotiated between the health benefit purchasing cooperative and the insurer and shall be offered in a single group health care policy or plan. The insurer must offer coverage under the group health care policy or plan to all of the following:

(1) An individual who is a member, officer, or eligible employee of a member of the health benefit purchasing cooperative.

(2) A self-employed individual who is a member of the health benefit purchasing cooperative.

(3) A dependent of an individual under subdivisions (i)(1) and (2) who receives coverage.

(j) The contract between the health benefit purchasing cooperative and an insurer shall be for a term of 3 years. Upon enrollment in the insurer's group health care policy or plan, each member shall pay to the health benefit purchasing cooperative an amount determined by the health benefit purchasing cooperative that is not less than the member's applicable premium for the 36th month of coverage under the contract. If a member withdraws from the health benefit purchasing cooperative before the end of the contract term, the health benefit purchasing cooperative may retain, as a penalty, an amount specified by the health benefit purchasing cooperative that is not less than the premium that the member paid for the 36th month of coverage.

(k) Each health benefit purchasing cooperative shall submit to the Director all of the following:

(1) Annually, no later than September 30, a report on the progress of the health benefit purchasing arrangement described in this Section and, to the extent possible, any significant findings in the criteria under subdivision (k)(2) of this Section.

(2) Within one year after the end of the term of the contract under subsection (j) of this Section, a final report that details significant findings from the project and that includes, at a minimum, to the extent available, information on all of the following:

(A) The extent to which the health benefit purchasing arrangement had an impact on the number of uninsured in the geographic area in which it operated.

(B) The effect on health care coverage premiums for groups in the geographic area in which the health benefit purchasing arrangement operated, including groups other than the health benefit purchasing cooperative.

(C) The degree to which health care consumers were involved in the development and implementation of the health benefit purchasing arrangement.

(l) The Director shall designate, by order, the geographic areas of the State in which health benefit purchasing cooperatives may be organized. A geographic area may overlap with one or more other geographic areas.

(m) As used in this Section, "Director" means the Director of the Department of Insurance.

Section 99. Effective date. This Act takes effect upon becoming law.