House Insurance Interim Report to the 87th Legislature

The House Committee on Insurance has released its interim report to the 87th Legislature. Recommendations relate to legislation passed during the 86th, adequacy of laws in regulating the insurance market, and reports from the State Auditor’s office. For more information please see the full report here.

Spotlight on Recommendations

Interim Charge #1 – Monitor implementation of legislation

HB 259

• The Legislature should remain vigilant of the possible impacts HB 259 could have on the uninsured and underinsured motorist population. The lack of available data from TDI at this time combined with the uncertainty in the market caused by COVID-19 makes it difficult to accurately assess the bill’s impact. However, the preliminary data provided by insurers related to increased UM and UIM claims is concerning. Although this may not be directly attributable to the elimination of these policies, the Legislature should continue to request relevant data to determine the true impact of HB 259’s implementation on policy affordability and the uninsured motorist population.

HB 1900

• The Legislature should ensure that HB 1900 is being implemented as intended. In light of the concerns related to the purchase of reinsurance, the Legislature should amend the statute to specify that loss adjustment expenses are not insured losses and should thus not be factored into the 100-year PML calculation.
• The Legislature should consider adding additional requirements to ensure transparency in TWIA’s purchasing of reinsurance. The Legislature should consider adding requirements that TWIA utilize a single model to determine its 1 in 100-year PML and that the entity executing the model not have a financial interest in the outcome of the model.
• The Legislature should consider alternative funding methods for TWIA that would eliminate the need to constantly increase rates for coastal policyholders. Coastal policyholders are rightfully frustrated by the constant threat of rate increases from TWIA. Additionally, many coastal policyholders are either still recovering from the substantial damage from Hurricane Harvey or other more recent natural disasters. The Legislature should craft a funding structure that provides a better balance of the financial burdens faced by coastal policyholders, the growing reliance of TWIA on bonding debt, and the insurance industry’s role in being assessed.

HB 2536

• The Legislature should consider adopting a proposal to cap copayments for insulin to ensure that growing costs do not prevent diabetic Texans from having access to this necessary drug.
• The Legislature should consider creating an insulin safety net program, similar to Minnesota’s, to ensure that the neediest Texans have reliable access to insulin in emergency situations. Although pharmaceutical manufacturers have their own programs that seek to provide insulin at low or no cost to individuals, these programs are generally not widely known and do not provide a centralized platform for diabetic Texans to contact in order to receive an emergency supply of insulin.
• The Legislature should require manufacturers to detail specific factors and the portion of the price increase related to that factor as was required in the House passed version of HB 2536.
• The Legislature should require further detail in explaining price increases including specific information on the drug’s acquisition and specific cost attributed to the drug.

SB 442

• The Legislature should continue to monitor the impact of flood disclosures and the associated prevalence of flood insurance policies in Texas. However, the Legislature should also consider the possibility of innovative ideas to provide more consumer-friendly disclosures. Since consumers often complain that they receive too many disclosures/notices in their policies as it is, it would be worth considering innovative ideas that provide more efficient disclosures that will actually be read by consumers.

SB 1264

• The Legislature should consider expanding the prohibition on balance billing patients to include ambulatory services. Throughout the COVID-19 pandemic, several patients have reported receiving substantial surprise medical bills from ambulance services. By expanding the prohibition to include ambulatory services, the Legislature would be building on the consumer-oriented progress made by SB 1264 by ensuring that surprise medical billing protections are comprehensive of all costs associated with emergency care.
• The Legislature should consider offering a clarification to the “prudent layperson” standard to require health plans to determine whether patients qualify for emergency care based on their presenting symptoms, not their ultimate diagnoses. SB 1264 was intended to remove patients from payment disputes and this goal would be furthered by ensuring patients are held harmless when they’re experiencing symptoms that lead to emergency care.
• The Legislature should consider providing the TDI Commissioner with the authority to set a maximum arbitrator fee by rule. Early data provided by TDI indicates that there is wide variation in the fees set by arbitrators so far. By providing the Commissioner with the ability to authorize a maximum fee, the Legislature could ensure predictability and affordability in the arbitration process.
• The Legislature should work to improve data collection to ensure TDI can better monitor the impact of arbitration and billed charges as a part of arbitration to determine the whole impact on healthcare spending. Additionally, the Legislature should work with TDI to include data about how allowing a revised bill and revised insurance reimbursement might be impacting arbitration decisions.

SB 1852

• The Legislature should expand the strong, up-front consumer disclosure requirements from SB 1852 to all alternative health plans marketed to individuals in Texas. As evident by the data provided by TDI, alternative health plans are becoming more common in Texas. The Legislature should ensure that consumers have proper disclosure associated with the policies they purchase so that they are not surprised by uncommon exclusions or ambiguous policy terms.
• The Legislature should provide TDI and other relevant agencies with sufficient authority to collect necessary data from alternative health plans moving forward. Additionally, the Legislature should consider providing these agencies with additional enforcement authority to protect consumers from the many of the questionable practices currently occurring in the marketing of these alternative plans.
• The Legislature should continue to study ways to ensure alternative health plans are also subject to strong consumer protections such as the prohibition on surprise medical billing, mental health parity requirements, network adequacy standards, and prompt pay requirements.

SB 1940

• The Legislature should consider a reinsurance program through a 1332 waiver in order to help reduce the cost of health coverage for Texans. Data has indicated that 1332 reinsurance waivers have reduced premiums in other comparable states and would be a positive step in seeking to reduce the uninsured population in Texas.
• The Legislature should strongly consider the benefits that could be achieved by expanding Medicaid in Texas. The COVID-19 pandemic has only exasperated this problem as more and more individuals continue to lose their employer-sponsored health insurance. Due to the growing uninsured rate, Texas should consider this in order to ensure Texans have equitable access to healthcare.
• The Legislature should study the possibility of setting up a state-based exchange. In light of efforts by Pennsylvania to accomplish this in their own state, the Legislature should closely monitor their progress to assess if Texas could experience similar cost-savings and improved coverage outcomes.

Interim Charge #2 – Study the adequacy of the state’s insurance laws on regulating the introduction of insurtech products into the Texas insurance market, including the impact of big data, blockchain, internet of things, and artificial intelligence technologies

• The Legislature should require that online providers selling or servicing insurance policies be licensed insurance agents. While technological innovation is incredibly beneficial, it is important to ensure that consumers have confidence that those selling them insurance policies are appropriately knowledgeable.
• The Legislature should consider adopting the NAIC Insurance Data Security Model Law. Since 11 states have already adopted it, it would be worth studying the model law’s progress and efficacy in these states before adopting it in Texas.
• The Legislature should continue to study this issue and work with industry groups and state agencies to ensure that any reforms properly balance the interests of protecting consumers and technological innovation.

Interim Charge #3 – Monitor State Auditor’s Report

• No recommendations