The measure, signed into law last week by Utah Gov. Jon Huntsman, also allows insurers to sell low-cost health insurance policies that exclude some state-mandated benefits—such as diabetes management—have high deductibles and limit coverage for preventive care services.
Insurers issuing the bare-bones policies will not be permitted to base rates on medical history, though rates may be based on an individual’s age, place of residence and family composition.
To prevent adverse selection, the state will provide financial assistance to insurers through a nonprofit reinsurance pool that will be created by the state insurance department.
H.B. 188 also creates the Utah NetCare Plan, a low-cost health benefit plan that employees can choose as an alternative to federal COBRA coverage, state-based COBRA coverage or any conversion products that are offered to them by group insurers when their employment is terminated.
The so-called “defined contribution arrangement” program will become available to small employers beginning on January 1, 2010, and to large employers on January 1, 2012. The legislation does not say how many employees an employer must have to qualify as a small employer.
The legislation was included in a package of reform measures that also require vendors that contract with the state to provide health benefits for their employees, increase the level of evidence that plaintiffs must show to win emergency room-related medical malpractice lawsuits and establish a demonstration project for streamlining how providers bill insurers.
“There isn’t another state in America that wouldn’t want to trade places with where we are with this legislation,” said Gov. Huntsman after he signed the bills.
The reforms will improve affordability, accessibility and portability of health insurance policies and make the market more transparent, the Republican governor said.
Approximately 306,000 state residents, 12 percent of Utah’s population, are uninsured.