This bill creates the Small Business Health Options Program Authority
(authority) that is a public body corporate and politic that is created by state law but
that is not a state agency. The authority is governed by a board of directors consisting
of the commissioner of insurance (commissioner), the secretary of employee trust
funds, the director of the state Medical Assistance program, the executive director
of the Health Insurance Risk-Sharing Plan Authority, and the following members
who are nominated by the governor, and with the advice and consent of the senate
appointed, for three-year terms: a member in good-standing of the American
Academy of Actuaries, a health economist, an employee benefits specialist, a
representative of small employers, a representative of an organization that
represents consumer interests, and a representative of organized labor. The
chairperson of the board is the commissioner, who must appoint an executive director
of the authority. The executive director must, among other duties, supervise the
administrative affairs and general management and operation of the authority,
employ professional and clerical staff, as necessary, and prepare the authority's
annual budget.

The authority is not a state agency, so numerous laws that apply to state
agencies do not apply to the authority. However, the authority is treated like a state
agency in the following ways, among others: it is subject to auditing by the
Legislative Audit Bureau; it is subject to open meeting and open records laws; and
it is exempt from property tax, income tax, and sales and uses taxes. The authority
has powers, including adopting bylaws and policies and procedures for the
regulation of its affairs and conduct of its business; hiring employees; incurring debt;
suing and being sued in its own name; and executing contracts. The bill establishes
a process that the authority must use when it contracts for professional services.
Under the bill, the authority is subject to civil liability for its acts or omissions except
that the maximum amount recoverable in a civil action against the authority is
$100,000. However, a member of the authority's board of directors, the authority's
executive director, or an authority employee is exempt from civil liability unless the
member, director, or employee acted with willful misconduct or in intentional
violation of the law.

Under the bill, the authority must establish and, by January 1, 2011, begin
operating a health benefit plan exchange (exchange), except that the authority must
seek federal grant moneys for the exchange and the exchange may not begin
operating unless federal grant moneys are received for that purpose. The
commissioner must determine the initial health benefit plan designs, including the
minimum benefit levels, and the authority must approve the plans that may be

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offered through the exchange. The authority must rank the plans offered through
the exchange and place each one into one of three tiers. Plans that offer full benefits
are to be designated as "gold" plans; plans that provide 75 percent of the actuarial
value of a "gold" plan are to be designated as "silver" plans; and plans that provide
60 percent of the actuarial value of a "gold" plan are to be designated as "bronze"
plans.

Any small employer, defined generally as an employer with at least two but not
more than 50 employees, any limited term state employee, and any individual who
contracts with the state to perform services for the state are eligible to purchase
coverage under a health benefit plan offered through the exchange. Individuals and
employees may select coverage under any of the plans offered through the exchange.
Although the employees of the same small employer may select coverage under
different plans, all employees of the same small employer must select coverage under
plans in the same tier.

Any insurer authorized to do business in this state in one or more lines of
insurance that includes health insurance may offer coverage through the exchange,
and no insurer may offer or issue coverage to a small employer except through the
exchange. An insurer that offers coverage through the exchange may offer only the
health benefit plans that have been approved for the exchange by the authority and
must offer at least one health benefit plan in each tier. An insurer may not impose
any annual or lifetime limits on coverage; premiums for coverage through the
exchange may be based only on age, sex, geographic location, whether coverage is
single or family, and plan design; and all individuals covered under all plans issued
by an insurer must be considered one pool. An insurer must pay a commission to an
insurance intermediary who enrolls an individual or employees of a small employer
in a plan offered by the insurer through the exchange. To pay administrative
expenses of the exchange, the authority may impose a surcharge on each insurer
offering plans through the exchange.

With regard to administering the exchange, the authority enrolls individuals
and employer groups in plans, collects the initial premiums, and remits the
premiums and enrollment information to the appropriate insurers. The
commissioner must develop a standard application form that all prospective
enrollees must use. The authority must establish an independent and binding
appeals process for resolving disputes over eligibility and other determinations
made by the authority, must establish and operate a service center for providing
information about the exchange, may establish risk-adjustment mechanisms, and
may audit and require reports from insurers offering coverage through the exchange.