Legislature(2011 - 2012)BARNES 124
04/04/2012 03:15 PM House LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| SB122 | |
| SB104 | |
| HB326 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 326 | TELECONFERENCED | |
| + | SB 122 | TELECONFERENCED | |
| + | SB 104 | TELECONFERENCED | |
| + | TELECONFERENCED |
HB 326-CHILD-ONLY HEALTH CARE COVERAGE
4:00:13 PM
CHAIR OLSON announced that the final order of business would be
HOUSE BILL NO. 326, "An Act requiring health care insurers to
offer a child-only policy; and providing for an effective date."
4:00:18 PM
REPRESENTATIVE DAVID GUTTENBERG, Alaska State Legislature,
stated that a constituent contacted his office to inform him
there is not any child-only health care offered in the state.
He explained that if a person has a healthy child who is not
eligible for Denali Kid Care, and does not have a condition that
would put the child into a high-risk pool, that no insurer
offers health care for the child. He related grandparents who
become the custodial parents have no place to go for coverage.
This bill, HB 326, would ask the insurance industry to offer
plans to cover at-risk children due to an insurability gap.
This would ensure that every competent is eligible. He
expressed dismay that there is not any child-only health care in
the state. He pointed out that the bill has a termination date
that repeals AS 21.42.420 on January 1, 2014 since if health
care continues forward that the health care would be offered,
regardless; however, right now there is not any health care
available.
4:02:59 PM
REPRESENTATIVE JOHNSON said he thought it was a good concept and
he likes it. He asked in light of the pending U.S. Supreme
Court case if he wanted to repeal this provision on January 1,
2014.
REPRESENTATIVE GUTTENBERG left it up to the committee to decide.
4:03:16 PM
REPRESENTATIVE JOHNSON suggested that if it is a good idea that
there wasn't any reason not to extend it.
4:03:38 PM
REPRESENTATIVE SADDLER asked how big the universe of children
whose families too rich to qualify for Denali Kid Care, but do
not have enough means to afford private insurance.
REPRESENTATIVE GUTTENBERG answered that the AARP indicates that
11,000 grandparents have custody of their grandchildren.
4:04:26 PM
REPRESENTATIVE SADDLER inquired as to whether children are
defined as being under 18 years of age.
REPRESENTATIVE GUTTENBERG answered yes; under 18 years of age.
4:04:37 PM
REPRESENTATIVE SADDLER referred to some good analysis of costs.
He inquired as to whether an estimate of cost for the policies
for children-only is available.
REPRESENTATIVE GUTTENBERG answered no, that the actuarial will
come up with those figures. He clarified that the bill does not
ask for discounts or waivers. The insurance companies would
market it as a normal product.
REPRESENTATIVE SADDLER asked whether the policies would be
purchased by an adult for a child.
REPRESENTATIVE GUTTENBERG agreed.
4:05:22 PM
LINDA HALL, Director, Division of Insurance, Anchorage Office,
Department of Commerce, Community & Economic Development
(DCCED), stated that she is available for questions.
4:06:01 PM
CHAIR OLSON asked if the children in question would have access
to the Alaska Comprehensive Health Association (ACHIA) high-risk
insurance.
MS. HALL answered that healthy children would not be eligible
since ACHIA is established for people with conditions that make
them uninsurable.
4:06:32 PM
CHAIR OLSON inquired as to whether this could be done on an
administrative basis.
MS. HALL answered no; the division has explored that option.
The division does not have any statutory authority to allow the
division to promulgate regulations although some states can do
so.
CHAIR OLSON related his understanding that the division cannot
roll out new products.
MS. HALL answered no.
4:06:57 PM
REPRESENTATIVE JOHNSON asked whether this is a unique problem to
Alaska or if other states have addressed this issue.
MS. HALL recalled that 17 states had the same condition as
Alaska. She noted that some states were able to
administratively require an open enrollment period. The terms
vary, some range for 30 days. She recalled two states have two
separate 30-day periods and other states offer longer periods of
time.
4:07:47 PM
MS. HALL stated that the open enrollment period is longer in
this bill than most she has seen. She related that under the
federal health care reform some provisions went into effect in
September 2010. One provision pertained to the underwriting of
children under ages of 19, she said.
4:08:39 PM
MS. HALL related that the prohibition of any underwriting that
would have amounted to a guarantee issue of January 1, 2014.
Many insurers did not want to take the risk of having adverse
selection, such that an individual only purchase insurance when
the person really needs it. She explained that most insurance
is based on the theory of large numbers plus large numbers of
people contributing, but not all of them actually using the
funds. She pointed out that is one of the problems the division
has encountered with the high-risk pool - which is subsidized at
$5 million per year. Thus taking risks without being able to
underwrite creates a bigger risk of using the resources than
some insurers were willing to take so two insurers have pulled
out of Alaska. She said that throughout the country this is not
unusual.
4:10:14 PM
REPRESENTATIVE JOHNSON asked if Alaska mandates this by passing
the bill, whether the state is likely to see other insurance
companies pull out.
MS. HALL said she can't answer that question. She has not heard
anyone threaten to do so, but she is unsure she would hear. She
explained that she has had some indication that if the playing
field was a level playing field and everyone has to provide the
insurance it may not be so onerous. She explained that if one
company offers coverage and they get all the unhealthy kids to
cover is more onerous than if all the companies have to insure
the children and the unhealthy children are spread among them.
4:11:25 PM
REPRESENTATIVE SADDLER asked whether the shadow of health care
mandates darken the prospects for any change in health
insurance. He inquired as to whether there is any chilling
effect during the wait for the U.S. Supreme Court to issue the
ACAPPA decision.
MS. HALL said she did not know. She related that the health
insurance industry is under some stress of the unknown. She
related that the division receives new regulations almost weekly
and or receives interpretations of certain pieces of the federal
health care law.
4:12:39 PM
MS. HALL stated the division may be impacted three months from
now with more changes and unknown obligations that are as
chilling as anything. She pointed out that the enactment of
pieces of the federal health care law continues.
4:13:24 PM
REPRESENTATIVE SADDLER asked if the division has sufficient data
to estimate costs of child-only insurance.
MS. HALL answered no; the division has a rate approval effective
date of January 1, but the rates will need to be filed with the
Division of Insurance and justified actuarially. So while she
cannot predict the costs she can say that health care in Alaska
is extremely expensive. She said health insurance rates are
considerably higher in the state than most places so she would
not expect child-only health care coverage to be inexpensive.
4:14:34 PM
REPRESENTATIVE MILLER stated he reviewed some of the provisions
of the bill. He referred to page 2, lines 8-17 to the
definition of late enrollee. He pointed out if a child had
never been covered by insurance that the language seems to
exclude them from the bill.
MS. HALL agreed. She suggested that the late enrollee allows
people to enroll outside the open enrollment period which is
defined in paragraph 2. She agreed the provisions he mentions
does not appear to allow a child who has never been covered.
She related that if the circumstance arises in which a child who
has never been covered needs insurance the adult custodian might
risk some adverse selection. She recalled the invincible "20
somethings" who are sure they don't need insurance because
nothing will happen. She said when a parent has a healthy child
who doesn't need insurance who is later diagnosed with something
and the parent then buys insurance represents the worst-case
scenario in the insurance world. She pointed out that
illustrates the purpose of the open enrollment period since that
is the point at which insurance is offered for healthy children.
She explained that adding the option to one of exceptions in the
provisions on page 2, lines 8-17 would make it an open-ended
ability to enroll.
4:17:43 PM
REPRESENTATIVE MILLER related his understanding that if a child
has never been covered the child would not be covered in this
bill.
MS. HALL pointed out the child would be during eligible under
paragraph (2) during the enrollment period from January 1 -
March 31 of each year. She explained that helps put some
parameters on when people can go out and buy insurance.
4:18:56 PM
MS. HALL explained that ACHIA is insurance that people with
serious health conditions can purchase and the premiums are
fairly high. The ACHIA has a public meeting each year. She
heard public testimony in which a person testified that they
purchased ACHIA in December of the prior year, had a full hip
replacement for about $100,000, then dropped coverage in
February. She offered this as an example of adverse selection.
The person paid for two months of premiums for a few thousand
dollars, but incurred surgery costs of $100,000 and then dropped
the insurance. She indicated that the open enrollment period
tries to balance this out. She reiterated that people have the
option to obtain coverage while they are healthy during the open
enrollment period.
4:20:55 PM
MARIE DARLIN, Coordinator, AARP Capital City Task Force, stated
that there is no sense repeating the testimony. She stated that
this bill is needed and important. She referred to the AARP's
letter of support, and noted that currently no insurance
companies in Alaska offer children-only insurance. She pointed
out that many grandparents are raising their grandchildren. She
related statistics that at estimated 5,000 grandparents are
raising 8,000 grandchildren in Alaska. She pointed out that
Medicare covers the grandparent, but coverage does not extend to
family members. She stated that grandparents take on this
responsibility but health care is an issue. The coverage is not
inexpensive. She stated that the 2010 Census and the Alaska
Department of Labor and Workforce Development estimates 11,778
grandchildren under the age of 18 are in a household led by a
grandparent. She indicated that these grandparents desire to
furnish health care if they can afford to do so. She stated
that the AARP speaks in support of the bill since it is one more
way for grandparents to take care of their grandchildren.
4:24:23 PM
ADAM WOOL stated he is a parent of two children. He and his
wife buy their insurance through ACHIA. He explained that they
each have pre-existing conditions although neither is seriously
ill, but cannot be covered by other insurance. He reported that
their first child was born about five years ago and has her own
policy through Blue Cross/Blue Shield. Their second child was
born two years ago and the law or insurance policy has since
changed and they cannot buy insurance. He pointed out that
their second child is basically in a "black hole" of not being
eligible for any insurance coverage. He said right now there is
not a way to buy insurance for both children.
CHAIR OLSON hoped that some remedy would be forthcoming.
4:26:06 PM
REPRESENTATIVE SADDLER asked if he could buy insurance through
ACHIA.
MR. WOOL answered no; that the child would need to have had a
pre-existing medical condition.
REPRESENTATIVE SADDLER asked for the insurance cost to his
family.
MR. WOOL answered that the family has three individual insurance
plans. Their oldest daughter has a Blue Cross/Blue Shield plan
with a $5,000 deductible. He and his wife each have individual
plans with ACHIA, each with a $5,000 deductible. He summarized
that the three of them have $15,000 deductible for their
insurance policies, but they cannot buy insurance for the
youngest, healthy child. He said he spoke to the ACHIA
representative several times. He learned that in some other
states a family plan is allowed so healthy children of parents
on ACHIA can be incorporated into the plan; however that is not
the case in Alaska.
4:27:57 PM
REPRESENTATIVE SADDLER asked for the amount of the premiums.
MR. WOOL answered that combined premiums for ACHIA cost
approximately $1400 and the oldest daughter's insurance premiums
cost about $200 per month. He pointed out the oldest child is a
healthy child who was covered before the rule changed and her
premiums cost approximately $200 per month.
4:28:39 PM
[HB 326 was held over.]