Legislature(1993 - 1994)

03/31/1993 03:00 PM HES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
  CHAIR BUNDE brought HB 22 to the table, but said he did not                  
  anticipate that the committee would complete work on the                     
  bill that day.                                                               
  (Rep. Olberg departed at 4:43 p.m.  Rep. Brice returned at                   
  4:44 p.m.)                                                                   
  Number 100                                                                   
  HB 22:  ALASKA HEALTHY START PROGRAM                                         
  REP. JIM NORDLUND testified as PRIME SPONSOR of HB 22.  He                   
  said the bill would establish a pool to provide health                       
  insurance for children.  He said the CS version of the bill                  
  proposes requiring the families to pay 100 percent of the                    
  premiums for such insurance for their children, though the                   
  bill originally included some state subsidy.  The bill gives                 
  authority to a board to establish coverage levels and keep                   
  premium levels low, with an emphasis on prevention and on                    
  emergency care.  The bill provides prenatal coverage for                     
  pregnant women, but not coverage of the cost of delivery                     
  services.  The bill allows premiums to be paid by deductions                 
  from the child's Alaska Permanent Fund dividend, and allows                  
  the board or corporation established under the bill to                       
  accept private contributions and special legislative                         
  appropriations.  He noted the large fiscal note and said it                  
  could be possible to reduce the state's administrative cost                  
  by including that expense in the participants' premiums.                     
  Number 164                                                                   
  HEALTH PLANS, testified via teleconference from Seattle in                   
  support of HB 22.  He said he had asked Rep. Nordlund to                     
  coordinate analysis of potential claim costs.  (A letter                     
  from Mr. LeBrun to Rep. Nordlund outlining some elements of                  
  the analysis is on file.)  He said the most effective care                   
  would be wellness and preventative care, and a package                       
  including well baby care, full immunization, routine medical                 
  care and vision exams would cost about $6 per month in claim                 
  costs.  He said he had worked up a dental benefits package                   
  that would cost about $20 per month, and an ambulatory out-                  
  patient care package that would cost about $54 per month.  A                 
  package to cover delivery of newborns would assume delivery                  
  would cost about $600, he said.  He stated that those costs                  
  were based on usual costs in Alaska.  He said the size of                    
  administration costs would depend on how much of the work                    
  was left to the insurance company.                                           
  MR. LEBRUN commented, "One area of concern we do have with                   
  the bill is that we would request reconsideration of what                    
  appears to be a requirement now that the insurer of the                      
  state plan be required to bid, and would only as that, given                 
  the as-yet undefined broad authority vested in the                           
  corporation to set the final rule, that we consider that                     
  somewhat unreasonable that there be requirement to bid                       
  without further verification and definition of the coverage                  
  and administration."  He said the company supported the bill                 
  in general, and said it offered the potential to bring                       
  uninsured children into the insurance fold and help prevent                  
  more costly medical care later.                                              
  Number 260                                                                   
  REP. TOOHEY asked what it might cost an individual, without                  
  state assistance, for health insurance for a healthy newborn                 
  MR. LEBRUN said it cost from $2,500 to $3,000 to deliver a                   
  baby in Alaska.                                                              
  Number 280                                                                   
  REP. TOOHEY repeated her question as to the cost of                          
  insurance for an already-born baby.                                          
  MR. LEBRUN asked if she meant how much such coverage would                   
  cost under HB 22.                                                            
  Number 285                                                                   
  REP. TOOHEY said she thought HB 22 would offer a family the                  
  chance to be covered by insurance.                                           
  MR. LEBRUN said that was correct.  He said such coverage                     
  would be approximately $80 to cover average claims, plus an                  
  administrative cost of from $15 to $30 per month.                            
  Number 295                                                                   
  REP. TOOHEY asked if the Municipality of Anchorage and other                 
  larger communities did not already offer for free many of                    
  the services he had mentioned.                                               
  MR. LEBRUN said he could not answer, but some preventative                   
  services were probably available through community                           
  Number 301                                                                   
  REP. VEZEY said he was confused by Mr. LeBrun's comments                     
  concerning the average cost of insuring a newborn and mother                 
  for about $80 per month, when Aetna provided health                          
  insurance to state workers at a cost of about $460 per month                 
  for a family.                                                                
  MR. LEBRUN said the figures he had cited were the cost for                   
  each child, not including delivery services or any in-                       
  patient services, and excluding any psychiatric or substance                 
  abuse treatment or home nursing coverage.  He said almost                    
  half of the monthly premium for state workers goes to cover                  
  in-patient services.                                                         
  REP. VEZEY said the insurance package for children would                     
  exclude the cost of in-patient medical services.                             
  MR. LEBRUN answered that was correct.                                        
  Number 333                                                                   
  REP. VEZEY asked whether the estimated total cost of the                     
  program could be derived by adding the administrative costs                  
  under the Division of Retirement and Benefits to the                         
  coverage costs.                                                              
  MR. LEBRUN said that was correct, but there would be an                      
  additional cost for the insurance company administrative                     
  costs of paying claims.  He commented he had not seen the                    
  fiscal note from the Division of Retirement and Benefits.                    
  REP. VEZEY said the Division of Retirement and Benefits'                     
  fiscal note indicated a cost of about $361,000 for FY94 and                  
  about $500,000 in the out years.  He asked how much the                      
  insurance company would cost for its markup, and suggested                   
  it might be from 15 percent to 20 percent.                                   
  Number 344                                                                   
  MR. LEBRUN said the amount would probably be higher than                     
  that.  He said if the insurance covered only the costs of                    
  preventative health care, then the cost of administration                    
  might exceed the cost of benefits.                                           
  Number 362                                                                   
  FORCE, testified via teleconference from Fairbanks in                        
  support of HB 22 and of the sponsor substitute.  She said                    
  the bill would organize the market so as to make a                           
  previously unavailable product available for sale to Alaska                  
  families.  She said poor working families had few options                    
  for minimal health insurance coverage of the minor medical                   
  needs of children.  She said that a program such as HB 22                    
  might allow parents to budget for medical care and                           
  prevention for their children.  Parents could still have                     
  catastrophic health insurance coverage for their children,                   
  with large deductibles and relatively low costs, he pointed                  
  out.  Programs such as the one proposed in HB 22 have been                   
  successful in other states, she said.  She stated keeping                    
  the price of such coverage down was essential and very                       
  possible, given the low exposure to the risk of costly                       
  hospital care.                                                               
  Number 403                                                                   
  testified in Juneau in support of HB 22.  She said HB 22 was                 
  supported by the Health Resources and Access Task Force.                     
  She said the bill would provide an important level of                        
  preventative health care for about 20,000 children whose                     
  parents were too poor for private insurance, but too rich                    
  for Medicaid.  She said the bill would allow children and                    
  parents to develop relationships with a pediatrician for                     
  preventative medicine.                                                       
  REP. TOOHEY asked Rep. Nordlund why it was necessary to have                 
  state government serve as a middleman between the insurance                  
  industry and families, and why insurance companies did not                   
  themselves offer basic health insurance for about $900 per                   
  Number 435                                                                   
  REP. NORDLUND said that if he could he would eliminate the                   
  bureaucracy set up by the bill, but he did not believe Aetna                 
  would take the initiative to create a pool of uninsured                      
  children.  He noted the CHIPRA (Comprehensive Health                         
  Insurance Price Reform Act) proposal and state Sen. Jim                      
  Duncan's health care authority proposal would both create                    
  entities with much broader ranges of authority than that                     
  proposed under HB 22.  He said if such entities were                         
  created, then there would be no need for such a bill as                      
  HB 22.                                                                       
  Number 449                                                                   
  REP. TOOHEY said that the state of Alaska paid about $4,500                  
  per year to provide health insurance for an employee's                       
  family of five, and it should be possible to provide health                  
  insurance for one child for about $900 per year.                             
  REP. NORDLUND noted that the state acts as the pooling agent                 
  for state workers and their families.  He said he did not                    
  know how the insurance companies could create a pool of                      
  uninsured children itself, but if it were possible, he would                 
  like to hear how.                                                            
  CHAIR BUNDE said that the issue would be discussed further                   
  at a later date, and he ADJOURNED the meeting at 5:10 p.m.                   

Document Name Date/Time Subjects