Legislature(2007 - 2008)BUTROVICH 205
03/31/2008 01:30 PM Senate HEALTH, EDUCATION & SOCIAL SERVICES
| Audio | Topic |
|---|---|
| Start | |
| SB179 | |
| HB319 | |
| HB354 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 354 | TELECONFERENCED | |
| + | SB 179 | TELECONFERENCED | |
| + | HB 319 | TELECONFERENCED | |
SB 179-DEPENDENT HEALTH INSURANCE; AGE LIMIT
CHAIR DAVIS announced consideration of SB 179.
1:34:41 PM
TOM OBERMEYER, Staff to Senator Davis, presented SB 179, Version
\M. The title was changed by a previous committee to make it
shorter; it is "An Act requiring family health care insurance
coverage for dependent children who are less than 26 years of
age." He said this bill presented questions that he hoped to
address in the sponsor statement and the explanation that was
handed out to committee members. He then proceeded to read the
sponsor statement.
SB 179 mandates family private health insurance
coverage for dependent children through age 25. It
prohibits a health care insurer from denying or
removing enrollment or eliminating coverage under age
26.
Young adults, ages 19-29, are one of the largest
growing segments of the U.S. population without health
insurance. In 2004 almost 14 million young adults
lacked coverage, an increase of 2.5 million since
2000. This rapid change is due in part to their losing
coverage under their parents' policies at 19, or
Medicaid, or State Children's Health Insurance
Program, or graduation from high school or college.
Almost half of college graduates and high graduates
will be uninsured for a substantial time after
graduation.
Age 19 is a crucial year in health insurance
coverage. Both public and private insurance
plans treat this age as a turning point for
insurance coverage. Even if youth go on to
college, parents' insurance plans often stop
before graduation. Almost all private
universities and about one fourth of public
universities require health insurance as a
condition of enrollment. Forty percent of
part-time students and non-students, and 20
percent of full-time students ages 19-23 are
uninsured.
States are taking action to mandate coverage
for young adults, often allowing for
targeted policy options. For example, in
2006 New Jersey required most group health
plans to cover single adult dependents up to
age 30. Massachusetts as part of its
expanded health insurance law in 2006
considered dependents for insurance purposes
up to age 25 or for two years after they are
no longer claimed on their parents' tax
returns. Since 1994 Utah has required
coverage through age 26, and New Mexico
provides coverage for unmarried dependents
up to age 25, regardless of school
enrollment. Texas in 2003 allowed full-time
students up to be covered by their parents'
insurance plans to age 25. It is not
uncommon, or unreasonable, therefore, that
Senate Bill 179 requires offering family
health insurance coverage to dependent
children up to age 26.
MR. OBERMEYER added that there had been questions by insurers as
to how this might be implemented, so he drew on an example from
a previous bill, SB 190. He hoped this explanation would help
assure insurers that SB 179 would not wrest control of benefits
and premium costs from them.
SB 179 added a new subsection (e) to AS 21.345 [21.42.345]
"Required provision for coverage of dependents." This was
similar to the addition to the same subsection in SB 170
regarding well-baby exams, which was sponsored by Senator
McGuire and was in Senate Rules.
1:38:25 PM
Linda Hall, Director, Division of Insurance, Department of
Commerce, Community & Economic Development, Juneau, AK, in a
letter to Senator Green on March 18, 2008, explained and
compared the coverage for well-baby exams to existing mandates
for dental, vision and hearing under the same subsection
21.42.385. Ms. Hall wrote, in part:
With respect to how a mandated offer requirement is
implemented, first of all, insurers who write health
care insurance and offer dependent coverage would be
required to provide coverage forms which include
coverage for well-baby care, that is for this
particular benefit, in this case up to age 26. Second,
insurers are responsible for assuring compliance with
mandates and we have seen insurers comply with
21.42.385 in a number of different ways including:
a) offering the specified benefit in their health
policies (if the insurer already includes coverage, no
additional offer would need to be made.
b) developing or offering a separate rider or
amendment that provides the specified benefit, which
is then offered in conjunction with a base health
insurance policy for a separate premium. The
application form would provide an option to select the
specified benefit.
c) developing and offering a stand-alone policy that
contains the required benefit, or
d) offering the benefit as one of several available
optional benefits from which employers or individuals
can select and which, if selected on the application
form, is incorporated directly into that employer's or
individual's health insurance policy as a premium.
MR. OBERMEYER said, as he understood it, this provided that the
insurers still had a number of options available to control
their costs. There was no actuarial basis at that time to
determine what the costs might be, which was why the zero fiscal
note indicated an "indeterminate" dollar amount.
It had been recognized that, particularly in family plans,
students in the middle of their college career might suddenly be
faced with a significant premium to maintain health insurance
required by the school. This would allow these people in
particular, to extend coverage under the family plan for a
little longer.
1:41:45 PM
SENATOR ELTON asked Mr. Obermeyer for the definition of a
dependent child.
MR. OBERMEYER answered that he thought the definition was
covered in each policy by each insurer, but was not sure.
SENATOR ELTON asked if he had understood correctly that each
insurer could offer a different health insurance plan say, for a
child who was 23 and one who was 16; for example the insurer
might have a health policy that would cover catastrophic
illness, but not vision and dental. He asked Mr. Obermeyer if
that was possible under this bill.
MR. OBERMEYER said he did not understand all the nuances of it,
but the implication of the letter from Ms. Hall regarding SB 170
under mandated coverage was that there would be a lot of
flexibility in how they drafted their policies. Also, the
coverage would not be free. If a family wanted to continue to
cover their children, they would have to elect that coverage and
pay for it. This bill simply required the company to offer it.
That was the mandate.
SENATOR ELTON read it differently. The language said the insurer
"may not deny enrollment and may not disenroll or eliminate
coverage" and it seemed to him that meant the insurer would have
to continue to extend the same kind of policy they had when the
child was 18. He asked Mr. Obermeyer if he was reading it
incorrectly.
1:45:32 PM
MR. OBERMEYER answered that the way he read it, the concept of
disenrolling or eliminating [coverage] would be if a party was
already enrolled and the insurance company wanted to remove that
person for some reason. He did not have a definite answer
however; he apologized for not having someone from the Division
of Insurance on hand.
CHAIR DAVIS said she would like to speak to that. The bill had
already been heard in Labor and Commerce, where they had
discussed the matter of being "disenrolled." Once the child was
on the coverage, neither the parents nor the insurance company
th
could disenroll them until their 26 birthday. As for having
different coverage for an 18 year old vs. a 24 year old, she
could not respond to that but would get an opinion from legal.
SENATOR ELTON insisted that it would depend on the definition of
a dependent child.
CHAIR DAVIS said she had not pursued a definition because she
thought each insurance company might have their own; but if he
felt it would be helpful, they could put a definition in the
corpus of the bill.
SENATOR ELTON pointed out that if a dependent child was
considered simply someone who lived at home until the age of 26,
that dependent child might have a job and have insurance through
that job; it seemed to him they would want a provision that, if
the child was covered under another plan, they need not be
covered under the family plan.
CHAIR DAVIS agreed.
SENATOR DYSON asked Mr. Obermeyer if he had meant to imply that
the enactment of this piece of legislation would not keep the
insurance company from raising the cost of the insurance policy.
MR. OBERMEYER responded that he believed, based on his
interpretation of the bill and the letter from Linda Hall from
Division of Insurance, that the insurer would have the ability
to offer riders, which would be a separate addition to a policy
and would add to the cost of the policy; or offer other options
that could be worked into the existing policy. It wasn't
anticipated that this would be blended into all rates unless
they elected to do that because of actuarial experience; so he
could not respond specifically to the question, except to say
that it would offer some flexibility to insurers and they would
not be locked into a particular fee schedule.
SENATOR DYSON continued that he thought he had just heard Mr.
Obermeyer say yes; so indeed the insurance company could raise
the cost of that rider to the point that it would be prohibitive
to continue the coverage. He said that before he would be
willing to vote this out of committee, he would want to be clear
on the definition of a dependent and what the insurance
companies would be free to do with the costs. He felt they could
all agree that a teenager not living at home, now able to drive
a car, would add some risk to the insurer; but he would want
clarification.
CHAIR DAVIS said they could call upon someone from legal to
discuss Senator Dyson's question later on.
SENATOR COWDERY asked what this would do to a dependent who
produced a child of his or her own; would it require the insurer
to cover the dependent of the dependent?
CHAIR DAVIS said she was not able to answer that.
SENATOR DYSON commented that was a good question.
SENATOR COWDERY continued to say that whether the dependent were
the mother or the father of a child or children, if they were
dependent on his or her parents, he would be interested to know
how far down the line insurance coverage would go.
CHAIR DAVIS noted that Senator Thomas had left the room.
She pointed out that some insurance companies covered full-time
students until they were 21 to 23 years old; but with the cost
of college and the length of time many students had to attend,
this bill would ensure access to the required medical coverage
throughout their college years without having to bear another
expense.
She asked if there was someone present from legal who could
answer questions about the bill. There was not.
1:55:00 PM
SENATOR DYSON disagreed with the notion that dependent children
would continue to get coverage without additional cost; somebody
would pay. He also disagreed with the idea that it was the
government's responsibility to make sure everyone had insurance;
he thought what they were really interested in was everyone
taking responsibility for their own health and their health care
in whatever way they chose.
He added that on a national level, the more mandates put upon
the insurance companies, the less attractive Alaska appeared to
health insurance companies that might want to come into the
market.
1:57:12 PM
DENNY DEWITT, State Director, National Federation of Independent
Business (NFIB), Juneau, AK, opposed SB 179. The NFIB
appreciated where Chair Davis was headed with it and he
understood personally, having just who reached the age at which
they had to purchase insurance. The difficulty the NFIB saw was
that this bill focused on a very small percentage of Alaskans
covered by insurance, those who were in traditional insurance
programs regulated by the state. It would not cover those in
union pension welfare programs; it would not cover anyone who
worked for the state; it would not cover anyone whose employer
had an ARISA plan; small employers would have to fund this while
larger employers would be exempt. So while the intent was
admirable, the implementation of it was very biased against
small Alaska-based companies.
He pointed out that there was no real cost to the insurance
company; the cost was to the premium payer and the premium payer
in this case would most likely be small businesses that were
trying to provide coverage to their employees. Insurance
companies moved money around and administered programs; but in
fact, the cost fell upon the person who paid the premiums, which
tended to be the small employer. The language, in their
judgment, was also somewhat confusing. It appeared to be a
mandated offering bill but at the same time, should an employer
choose that offering, there did not appear to be any way out. By
preventing disenrollment, a small employer who might be looking
at it optimistically and hoping the cost would be very small,
would be forced to consider that if he were wrong, he would be
on the hook with no way to get out.
MR. DEWITT said that rather than encouraging companies to look
at this and take the risk, most would be reluctant to do so.
Also, when some disabled youth turned 18 they became eligible
for public programs as their family plans no longer covered
them; he was concerned that those costs would be shifted back to
private employers from age 18-26 and if that were the case, it
would indeed drive the cost of this benefit significantly higher
than they had anticipated.
2:02:01 PM
CHAIR DAVIS did not feel there would be a problem with disabled
youth being forced back on their parents' insurance, but she
said she would check on it. She agreed that the unions and the
state's plan would not fall under this mandate, but pointed out
that the state's plan changed at least every 2 years and if
there were enough employees interested in that coverage, they
might add it, just as they had the well-baby exams.
MR. DEWITT said the NFIB wondered why it was appropriate for
them to mandate a particular coverage on employees of small
businesses if they, as employers, were unwilling to mandate that
coverage on their own employees.
CHAIR DAVIS said that before she heard the bill for the well-
baby exams, she believed that it would include the state plan;
if left up to her it would.
CHAIR DAVIS set SB 179 aside for further work.
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