05/19/2003 08:03 AM Senate L&C

    CSHB 10(HES)- GROUP HEALTH INSURANCE FOR PRIVATE GROUPS                                                                 
                                                                                                                                
CHAIR BUNDE announced CSHB 10(HES) to be up for consideration.                                                                  
                                                                                                                                
MS.  HELEN BEDDER,  staff to  Representative Cheryl  Heinze, said                                                               
this bill  is very different from  it original version. It  had a                                                               
large  fiscal  note  and the  Department  of  Administration  was                                                               
involved.  Currently,  the  bill  has  no  fiscal  note  and  the                                                               
department is  no longer involved. A  key feature of the  bill is                                                               
that  it really  works  to help  non-profit organizations  obtain                                                               
insurance. The  [non-profits] have  a commitment from  the Mental                                                               
Health Trust  Authority to  provide funding  to help  them obtain                                                               
insurance  through this  type of  policy and  they are  currently                                                               
very actively  working with Dennis  McMillan in Anchorage  to get                                                               
funding.                                                                                                                        
                                                                                                                                
CHAIR BUNDE said  one comment in the  health insurance purchasing                                                               
cooperative reports says  that in many instances  state laws have                                                               
prohibited insurers from offering co-op  premiums at a lower rate                                                               
than those  charged to  employers outside a  co-op. He  asked why                                                               
states  would have  laws  against trying  to  provide the  lowest                                                               
possible insurance depending on the market.                                                                                     
                                                                                                                                
MS. BEDDER replied that she didn't know the answer to that.                                                                     
                                                                                                                                
MS. KATIE  CAMPBELL, Division of Insurance,  explained that state                                                               
laws differ,  but most states  have small employer  reforms where                                                               
you  have to  guarantee issue  to a  small employer.  Most states                                                               
define  a small  employer as  one with  2 to  50 employees.  Most                                                               
states with  cooperatives have required  the premiums  within the                                                               
pool  to be  somewhat  nearer the  outside  to prevent  selection                                                               
problems where only the healthier  or the sicker people remain in                                                               
one  area or  the  other. She  pointed out,  "You  don't want  to                                                               
disadvantage one market for the other."                                                                                         
                                                                                                                                
CHAIR BUNDE  said they don't  insure on personal risk  but rather                                                               
on the risk of the group.                                                                                                       
                                                                                                                                
MS. CAMPBELL replied that is true.                                                                                              
                                                                                                                                
SENATOR  FRENCH  asked  her  to   explain  the  following  bullet                                                               
statement:                                                                                                                      
                                                                                                                                
       Under HB 10, a health care insurer may decline to                                                                        
      cover or may restrict the coverage offered to a self-                                                                     
     employed  individual under  an  association plan.  This                                                                    
     applies only to a  self-employed individual who joins a                                                                    
     group, but not  for employees of either  large or small                                                                    
     employers.                                                                                                                 
                                                                                                                                
MS. CAMPBELL replied that is  a complicated issue. Initially they                                                               
weren't able to include the self-employed  in this kind of a plan                                                               
because  of  the  fear  that  individuals  who  are  particularly                                                               
unhealthy would attempt to join the  pools and cause the rates to                                                               
go  up.  In  order  to  avoid  that  problem,  this  bill  allows                                                               
insurance  companies  to  look at  the  individual  self-employed                                                               
people  separately from  employees  of an  employer. By  allowing                                                               
that,  the insurer  can prevent  a particularly  unhealthy person                                                               
from increasing  the rates  for everybody  else. With  this bill,                                                               
the insurer  can actually decline  coverage or put  a restriction                                                               
on the  coverage for that  individual self-employed  person only.                                                               
It doesn't affect anyone else.                                                                                                  
                                                                                                                                
CHAIR  BUNDE asked  if  that  is because  there  are fewer  self-                                                               
employed people than there are employees.                                                                                       
                                                                                                                                
MS. CAMPBELL  replied the issue  is the self-employed  are really                                                               
not  a group;  they are  individuals.  When insurers  come in  to                                                               
offer insurance  to a market,  they look  at the market  they are                                                               
going to insure and get a volume discount.                                                                                      
                                                                                                                                
SENATOR FRENCH said:                                                                                                            
                                                                                                                                
     It  sounds like  a compromise  and a  way of  balancing                                                                    
     risk for the insurance company  to be able to stop this                                                                    
     one  sick individual  from joining  the  pool, but  not                                                                    
     being able to stop this group that wants to get in...                                                                      
                                                                                                                                
CHAIR BUNDE  added, "Who might  have a sick individual,  but will                                                               
have hundreds  of other  people whose premiums  will make  up for                                                               
the sick one."                                                                                                                  
                                                                                                                                
MS. CAMPBELL responded, "That's about right."                                                                                   
                                                                                                                                
SENATOR SEEKINS  moved to pass  CSHB 10(HES) from  committee with                                                               
individual  recommendations   and  zero  fiscal   note.  SENATORS                                                               
STEVENS, FRENCH,  SEEKINS and  BUNDE voted  yea and  CSHB 10(HES)                                                               
passed from committee.