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F I S C A L I M P A C T R E P O R T
SPONSOR Feldman
DATE TYPED 03/01/05 HB
SHORT TITLE Wellness Program Health Insurance Incentives
SB 745
ANALYST Geisler
APPROPRIATION
Appropriation Contained Estimated Additional Impact Recurring
or Non-Rec
Fund
Affected
FY05
FY06
FY05
FY06
NFI
(Parenthesis ( ) Indicate Expenditure Decreases)
Relates to: SJM 10
SOURCES OF INFORMATION
LFC Files
Responses Received From
Public Regulation Commission (PRC)
Department of Health (DOH)
Health Policy Commission (HPC)
SUMMARY
Synopsis of Bill
SB 745 amends adjusted community rating to permit insurers to offer discounts or credits when
qualified wellness and disease management programs are provided as a part of coverage. This
applies to individual and small employer group health insurance.
The qualified program shall: 1) meet federal requirements under HIPPA, 2) provide financial
incentives to covered individuals and 3) provide reasonable alternatives to non-participants. The
rating factors may take into consideration: 1) anticipated participation, 2) anticipated incentives,
3) historical participation, 4) expected success rates, 5) clinical studies and 6) the insurer’s ex-
perience.
Significant Issues
Investment in wellness and disease management programs can reduce future health care costs. If
pg_0002
Senate Bill 745 -- Page 2
insurers could recognize these savings in determination of premiums, lower premiums could be
an incentive to involve more people in wellness and disease management programs. Without
amendment, insurers cannot anticipate these cost savings under adjusted community rating.
Such savings would be passed along to the consumer only as they are realized.
CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP
SB 745 relates to SJM 10 (Study Health Insurance Discounts), which would require the Depart-
ment of Health, in conjunction with the insurance division of the Public Regulation Commission
(PRC), to conduct a study to explore the benefits and feasibility of requiring health insurance
companies to offer discounted premiums for enrollees who participate in approved health promo-
tion activities or wellness programs.
OTHER SUBSTANTIVE ISSUES
Carriers would develop and oversee the programs using “in-house” resources or contract for such
programs through an outside organization to offer wellness and disease management programs.
If insurers decide to use the rating factor allowed by SB 745, the result may be more insured in-
dividuals participating in covered wellness or disease management programs. Wellness programs
generally focus on the primary prevention of chronic diseases that result from tobacco use,
physical inactivity, suboptimal diet, or stress. Worksite wellness programs have been shown to
increase levels of fitness and reduce risk factors for coronary heart disease. They have also re-
sulted in lower health care costs, reduced absenteeism and lower turnover in companies with
comprehensive health promotion programs. (“Employee fitness and Wellness programs in the
Workplace”, Am Psychol Feb 1990)
Disease management programs provide secondary prevention to covered individuals who already
have chronic diseases, including asthma, congestive heart failure, and diabetes, amongst others.
Disease management programs show early results in decreasing hospitalizations and emergency
department visits. (“Measuring DM’s Net Effect is Harder Than You Might Think”, Managed
Care June 2003) Depending on the quality and intensity of such programs, varying degrees of
improved health outcomes and associated potential savings in health care expenditures may be
realized.
WILL BE THE CONSEQUENCES OF NOT ENACTING THIS BILL.
If SB 745 is not enacted, insurers would not be able to develop rating factors that incorporate
wellness or disease management programs.
AMENDMENTS
HPC suggests that the key elements of the bill should be defined such as “qualified wellness pro-
gram” and “disease management program” since these terms may have different meanings for
different people. For example, the term “wellness program” is very broad in its meaning and
could be as exclusive of a gym membership or an educational program devoted to meditation.
GG/lg