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 STEVE LEBRUN, A GROUP SERVICES ACCOUNT MANAGER WITH AETNA 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 baby. 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 resources. 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 KAREN PERDUE, MEMBER OF THE HEALTH RESOURCES AND ACCESS TASK 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 SHERRIE GOLL, LOBBYIST, ALASKA WOMEN'S LOBBY AND KIDPAC, 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 child. 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.