On June 29, 2023, Governor J.B. Pritzker signed House Bills 579 and 2296 into law, enacting sweeping changes to Illinois health insurance law that grants the Illinois Department of Insurance (IDOI) expanded regulatory powers. These bills will have significant impacts on consumers and health insurers beginning as soon as 2025.
H.B. 579 added a new Section 1405-50 to the Illinois Insurance Code and amended certain other provisions of the Insurance Code dealing with Illinois’ health insurance exchange (commonly called the marketplace). This Bill requires IDOI to move the state marketplace from the federal platform to a purely state-based and operated exchange by plan year 2026. The Governor and the sponsors of the bill have said that establishing a state-based exchange will enable Illinois consumers to enroll in Affordable Care Act or Medicaid plans in the same place, take advantage of more enrollment windows than the federal exchange offers, and insulate Illinois health insurance consumers from potential changes to the federal marketplace system and related federal policies. The new system directly addresses recent history where federal funding for organizations that help consumers was significantly reduced and the number of annual enrollment days was cut approximately in half.
H.B. 2296 enacted deeper changes to IDOI’s regulatory authority and contained changes that have a much more significant direct impact on Illinois health insurers. Chief among the changes is a requirement that health insurers file rates annually starting in 2025 for plan year 2026, and the granting of new authority to the IDOI, also starting in 2025, to review and approve or disapprove all future individual, large employer, and small group health insurance rate changes. The newly amended statutes also require IDOI to post all filed health insurance rates and summaries on its website, including a justification for any rate increase or decrease (with certain required information). There will also be a 30-day public comment period for all proposed rate changes and IDOI is required to post all comments on its website. IDOI is required to take into account the public comments as well as actuarial justifications for the proposed rate changes in approving or disapproving the change. Rate disapprovals may be appealed and are subject to judicial review under the State Administrative Review Law. There are certain exceptions to this new statutory approval scheme. Finally, H.B. 2296 requires IDOI to report to the Governor and General Assembly annually on health insurance coverage, affordability, and cost trends.
These recent developments in Illinois insurance law impose significant affirmative compliance requirements on health insurers in Illinois and invite significant additional public and governmental review and contribution into health insurance rate changes. The Illinois health insurance industry should expect IDOI to issue related guidance and implement related rules and regulations regarding the coming changes over the next 1-3 years. Illinois health insurers would be well-advised to consult with insurance regulatory counsel as they begin preparing for the new rate filing and approval process before its impact is felt in 2025.
