Legislature(1995 - 1996)
01/09/1996 01:30 PM Senate L&C
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SENATE LABOR AND COMMERCE COMMITTEE
January 9, 1996
1:30 P.M.
MEMBERS PRESENT
Senator Tim Kelly, Chairman
Senator John Torgerson, Vice Chairman
Senator Mike Miller
Senator Jim Duncan
Senator Judy Salo
MEMBERS ABSENT
None
COMMITTEE CALENDAR
SENATE BILL NO. 178
"An Act relating to small employer health insurance."
PREVIOUS SENATE COMMITTEE ACTION
SB 178 - No previous action to record.
WITNESS REGISTER
Senator Steve Reiger
State Capitol Bldg.
Juneau, AK 99801-1182
POSITION STATEMENT: Sponsor of SB 178.
Joe Heueisen, Vice President
Life and Group Benefits
Shattuck and Grummett
301 Seward St.
Juneau, AK 99801
POSITION STATEMENT: Supported SB 178.
Gordon Evans
Health Insurance Association of America
318 4th Street
Juneau, AK 99801
POSITION STATEMENT: Supported SB 178.
Sherman Ernouf, Legislative Aide
Senator Tim Kelly
State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Commented on SB 178.
Marianne Burke, Director
Division of Insurance
Department of Commerce and Economic Development
P.O. Box 110805
Juneau, AK 99811-0805
POSITION STATEMENT: Neutral position on SB 178.
ACTION NARRATIVE
TAPE 96-1, SIDE A
Number 001
SL&C - 1/9/96
SB 178 SMALL EMPLOYER HEALTH INSURANCE
CHAIRMAN KELLY called the Senate Labor and Commerce Committee
meeting to order at 1:30 p.m. and announced SB 178 to be up for
consideration.
SENATOR REIGER, sponsor, explained that in 1973 legislation he
sponsored legislation created an association of insurers to
transact small business health insurance and required those
insurers to join the association as a condition of doing business
in Alaska. The legislation allows a member of the association to
reinsure health coverage of a small employer and required them to
offer small employers at least two health benefit plans.
SENATOR REIGER said that the measure successfully increased the
availability of health insurance to small groups. Because of that
success there is only one change this bill makes. It increases the
size of an employer from 2 - 25 people to 2 - 50 people.
Number 40
SENATOR KELLY noted that there were letters supporting SB 178 from
Baldwin Financial Concepts, Lincoln Financial Group, Souther Alaska
Life Underwriters Association, Hagan Insurance, and David Frasier
and Associates.
Number 66
JOE HEUEISEN, Vice President, Life and Group Benefits, Shattuck and
Grummett, said he deals specifically with small employer groups and
employee benefits and life insurance. He endorsed SB 178, because
when the statute came into being, it literally opened up the market
for them. It has been a god-send for groups of 2 - 25.
SENATOR TORGERSON asked how much of a market increase there would
be with SB 178. MR. HEUEISEN replied he thought it would affect
several hundred employers.
Number 92
SENATOR SALO asked how the premiums compare for people in small
markets to people in large group health insurance. MR. HEUEISEN
answered that the only difference was the small group market
doesn't quite have the latitude on some of the benefits, but they
are able to maintain adequate coverage with realistic deductibles
in the same price category as the large groups.
Number 108
SENATOR DUNCAN asked how many groups he had signed up for the small
employer pool. MR. HEUEISEN answered that he hadn't signed anyone
up, because the law "gets the attention of the providers who were
skimming before...." Now they have to take these people. He
explained that it has changed the insurance provider's attitude
about they types of risks they are willing to write.
SENATOR KELLY asked if health insurance companies are covering more
small businesses, because of this pooling concept. MR. HEUEISEN
said that was correct.
Number 162
SENATOR DUNCAN noted that every study he had seen recently
indicated that we are seeing a decrease in employer based insurance
coverage and he asked if Blue Cross would testify. SHERMAN ERNOUF
said they had just spoken informally.
SENATOR DUNCAN asked why stop at 50 if the law is having the impact
MR. HEUEISEN says its having. MR. HEUEISEN said he thought it was
because of the insurance providers rating system classifies over a
100 employees and over as an experience rated case; under that
number is not an experience rated case.
SENATOR KELLY commented that this legislation increases the
availability of the small insurance market.
GORDON EVANS, Health Insurance Association of America, supported SB
178. He added that this bill, if enacted, would make Alaska the
18th state that goes up to 50 employees. Most of the other states
are still at 25. MR. EVANS said that a Task Force study indicated
that the original law could affect about 85% of private small
businesses in Alaska. He recalled there was an indication that
that would go up to 90% or 92% of employers in Alaska if the number
were raised to 50.
NUMBER 200
SENATOR SALO asked if he would support raising the number to 100.
MR. EVANS replied that he wouldn't, because you are then getting
out of the small employer definition and getting into the large
employer definition.
SENATOR SALO said she was concerned that there would be a gap of
people who would remain uninsured. MR. EVANS said the other 8%
would include companies like Carr's.
SENATOR KELLY commented that there is no reason an employee in 50 -
100 range is not receiving insurance today if the employer decides
to give it to them. MR. EVANS said that was correct; that it hits
the employers who weren't able to get insurance before, because of
exclusions and other conditions.
SENATOR DUNCAN commented that one of the reasons the small
businesses don't have insurance is not just because of pre-existing
condition exclusions, it's because they just can't afford it. He
thought SB 178 was a good faith attempt to try to increase
accessibility for small employers to have insurance for their
employees, but he said they have seen only one coded in October and
maybe two. So he didn't think it had very much impact. He thought
the cost of the insurance was the real problem. He also wanted to
see data that supports the theory that the insurance providers
provided more coverage.
Number 302
SENATOR REIGER explained that now, as a condition of doing business
in Alaska, you must say yes to an employer who applies for
insurance, but the way to keep from taking an unacceptably high
risk is to buy reinsurance for a 50% premium for the entire group,
over what they charge, or five times the ordinary premium for an
individual.
SENATOR KELLY asked if there was any opposition to the bill. MR.
ERNOUF said there was no opposition.
MARIANNE BURKE, Director, Division of Insurance, said they are
neutral on this bill. She said that two employers have gone into
the reinsurance pool, because of high health risk within their
business. This does not mean there was a limited number of
employers. It could mean there are a lot of healthy groups of
employees in the 2 - 25 person range that should have been given
insurance all along. Now they have it and the two who are in the
pool are the high risk ones.
SENATOR DUNCAN asked if she had statistics on how many employers in
the 2 - 25 group have purchased insurance since the bill became
effective. MS. BURKE replied that they are in the process of
putting out a questionnaire to the providers who would have signed
up new employers. Normally they do not get data on the size of the
companies being insured.
SENATOR DUNCAN said he didn't think going to 50 was a bad idea. He
didn't want to sell this as the idea to getting small employers
insured in this state, because it's really the cost of insurance
that is prohibitively high.
Number 351
SENATOR TORGERSON moved to pass SB 178 from committee with
individual recommendations. There were no objections and it was so
ordered.
SENATOR KELLY adjourned the meeting at 1:55 p.m.
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