Legislature(2019 - 2020)DAVIS 106
03/17/2020 03:00 PM House HEALTH & SOCIAL SERVICES
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| Audio | Topic |
|---|---|
| Start | |
| Confirmation Hearing(s): State Medical Board | |
| HB267 | |
| HB255 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| *+ | HB 267 | TELECONFERENCED | |
| *+ | HB 255 | TELECONFERENCED | |
| + | TELECONFERENCED |
HB 267-SHORT-TERM HEALTH CARE INSURANCE
3:48:20 PM
VICE CHAIR SPOHNHOLZ announced that the next order of business
would be HOUSE BILL NO. 267, "An Act relating to short-term
health care insurance; and providing for an effective date."
3:48:26 PM
REPRESENTATIVE DRUMMOND moved to adopt the committee substitute
(CS) for HB 267, Version 31-LS1521\S, Marx, 3/10/20, as the
working document.
VICE CHAIR SPOHNHOLZ objected for discussion purposes.
3:48:50 PM
REPRESENTATIVE ZULKOSKY, as prime sponsor of HB 267, introduced
the CS for HB 267, Version S, as follows:
This legislation seeks to enact consumer protections
for Alaskans insured by short-term limited duration
(STLD) health insurance plans. This bill, from our
perspective, is narrow and seeks to remedy the lack of
protections in Alaska related to short-term health
insurance. In the last two years, many states have
enacted similar protections for consumers. This
legislation seeks to bring similar standards to Alaska
and ensure that Alaskans are no longer put at undue
risk for significant financial hardship posed by these
plans.
REPRESENTATIVE ZULKOSKY added that Version S reflected changes
suggested by the Division of Insurance, [Department of Commerce,
Community & Economic Development (DCCED)]. The proposed
legislation had a zero fiscal note offering the opportunity to
protect consumers at no cost to the State of Alaska.
3:50:32 PM
JULIA BUSCHMANN, Staff, Representative Tiffany Zulkosky, Alaska
State Legislature, on behalf of Representative Zulkosky, prime
sponsor of HB 267, presented Version S, with the use of a
PowerPoint presentation. She began with slide 2, entitled
"Short-Term Limited Duration Health Insurance," which read:
? Intended to fill a temporary gap in health coverage.
? Prior to October 2018, STLD plans were
permitted for a maximum of 90 days.
? STLD plans offer lower premiums and are
advertised as an affordable alternative to plans
that, while more expensive, offer comprehensive
essential coverage.
? The fine print: These plans do not meet federal
qualifications for minimum essential coverage.
? They do not provide coverage for the Essential
Health Benefits, the 10 categories of health care
that federal law deems essential.
? They are able to charge more for those with
pre-existing conditions.
? They can deny an individual's enrollment in a
health plan due to their health status, age,
gender, or other factors that may affect the
purchaser's use of insurance.
MS. BUSCHMANN added that STLD plans, also referred to as "short-
term plans" or "short-term insurance," were defined by the
federal government as insurance coverage with an expiration date
of less than 12 months - a definition in place for nearly 20
years. In 2016, STLDs were redefined as lasting up to 90 days
with no renewals. She said Alaska statutes currently lacked
consumer protections for individuals with short-term plans;
short-term insurance was not required by statute to cover
services that were otherwise mandated by health insurance, such
as infant hearing screening, telemedicine, diabetes equipment,
mammograms, and screenings for colorectal, prostate, and
cervical cancers. The plans could exclude coverage for entire
categories of benefits, charge higher premiums based on health
status, exclude coverage for preexisting conditions, and impose
annual limits. They had significantly higher out-of-pocket
cost-sharing than other plans available on the individual
market. She concluded that while the plans were sold as
individual health coverage, they very often did not cover
consumers.
3:52:37 PM
MS. BUSCHMANN turned to slide 3, entitled "Federal Rule-Making
Finalized in October 2018," which read:
? The final rule amended the definition of short-term
limited duration insurance:
? Lengthening plan duration to 364 days
? Increasing renewal options to permit a total
coverage period of 36 months
? Possible impacts noted in the federal rule:
? "Reduced access to some services and providers
for some consumers who switch from available
individual market plans and possibly reduced
choice for individuals remaining in the
individual market risk pools."
? "Potential increase in out-of-pocket costs for
some consumers, possibly leading to financial
hardship."
? "Potential increase in uncompensated care by
hospitals."
MS. BUSCHMANN referred to the graph on slide 4, entitled
"Estimated Costs Between Plans six months following
diagnosis," to point out the high out-of-pocket costs to the
consumer associated with the new rule. The estimates on the
graph showed the differences in costs between Affordable Care
Act (ACA) [the U.S. comprehensive health care reform law enacted
in March 2010], compliant plans, and STLD plans. She explained
that the graph demonstrated the possible cost for an individual
with a six-month plan, the possible cost for an individual with
a three-month plan including costs from loss of coverage, and
the risk of allowing plans that did not cover preexisting
conditions. If an individual's three-month plan ended and was
renewed while the person still required [medical] treatment,
short-term plans could exclude coverage for services associated
with a condition through medical underwriting. She gave an
example: If the individual's preexisting condition was high
blood pressure, and the person had a stroke as a result, the
insurer could refuse to pay for any treatment related to the
stroke, even if at the time the person had short-term insurance.
3:54:15 PM
MS. BUSCHMANN moved on to slide 5, entitled "Prevalence of State
Regulations January 2020," which illustrated by way of a map
that 32 states and the District of Columbia had regulated the
STLD plans: in 8 states STLD plans were banned or precluded
based on longstanding requirements; some states had chosen to
limit plan duration to 90 days or six months; other states had
opted for a full year including renewals. She referred to the
handout in the committee packet entitled "Duration and renewals
of 2019 Short Term Medical plans by state," for greater detail
on state policies. She relayed that on slide 5, states were
categorized by permitted length of plan duration, but she
suggested that there were other policy areas in which states
could enact consumer protections.
MS. BUSCHMANN referred to slide 6, entitled "State-level
policies that have since been enacted," which read:
? Limit initial plan duration
? Limit number of renewals
? Limit maximum duration
? Limited availability
? Coverage for pre-existing conditions
? Some states have opted to require coverage for pre-
existing conditions only upon plan renewal
? Coverage for essential health benefits
? Required notice to the consumer specifying that STLD
plans do not qualify as providing minimum essential
coverage
MS. BUSCHMANN relayed that it was possible to limit the
availability of the plans: some states didn't allow them to be
purchased during the open enrollment period - the period when
people could purchase plans on the federal marketplace - or
during an individual special enrollment period; Maine required
that short-term plans be purchased in person, and there were no
short-term plans being sold in Maine currently.
MS. BUSCHMANN continued by saying states had required short-term
plans covered certain services: Indiana required short-term
plans cover emergency services; the District of Columbia
requires that plans cover services sought in the prior 12
months, if related to a preexisting condition. Some states
require that the insurer provide a notice to the consumer
relaying that it might medically underwrite the policy and not
cover certain services that do not qualify as minimum essential
coverage.
3:56:07 PM
MS. BUSCHMANN turned to slide 7, entitled "Features of HB 267,"
which read:
? Defined Duration: The initial term may not be more
than 90 days, which conforms with the duration of STLD
plans currently sold in Alaska.
? Limited Renewal: An individual can renew an STLD
plan once.
? Required Coverage for Essential Health Benefits and
Pre-Existing Conditions: A plan must cover the ten
essential health benefits and services related to a
pre-existing condition.
? Limited Availability: STLD plans may only be sold
outside of the federal marketplace's open enrollment
period or an individual's special enrollment period.
MS. BUSCHMANN added that the provision under the last bullet on
the slide is important because it required that a person would
not be purchasing inherently temporary insurance - a short-term
plan - when he/she had the opportunity to purchase longer-term
insurance that provides comprehensive coverage.
MS. BUSCHMANN moved on to slide 8, entitled "Summary of Changes
for Proposed CS HB 267," which read in part:
? Limited Renewal: An individual can renew an STLD
plan twice.
? Required Coverage for Emergency Services: A plan
must, at a minimum, cover ambulatory, emergency,
hospitalization, and laboratory services.
? Protections for Pre-Existing Conditions: A plan must
provide coverage for services associated with pre-
existing conditions if an individual renews their
plan.
3:57:30 PM
VICE CHAIR SPOHNHOLZ referred to the third bullet on the slide
and asked what the reasoning was for that provision.
3:57:56 PM
REPRESENTATIVE ZULKOSKY explained Director [Lori] Wing-Heier,
[Division of Insurance, DCCED] had relayed some Alaskans
reported they lost [health insurance] coverage or had high
medical bills, because at the end of 90 days, their policies had
to be underwritten; any new medical conditions identified in the
initial 90-day window were excluded from coverage. For example,
an Alaskan had a leg injury during the initial 90-day period;
when the individual had surgery on the leg during a different
90-day period, he/she was told it was a preexisting condition
and the cost would not be reimbursed. The consumer was then
responsible for the entirety of the coverage being denied.
MS. BUSCHMANN continued with slide 8, which read in part:
? Increase in the Cost-Sharing Provision: A plan can
allow up to $10,000 for self-only coverage and up to
$19,500 for family coverage.
MS. BUSCHMANN explained that the cost-sharing was increased to
reflect that lower premium plans tend to have higher cost-
sharing.
3:59:15 PM
REPRESENTATIVE ZULKOSKY drew the committee's attention to the
handout in the committee packet describing the STLD plans
offered in Alaska.
MS. BUSCHMANN reported there were two insurance companies
allowed to issue plans in Alaska - Moda Health and Independence
American Insurance Company (IAIC). The plans on the handout
were those of IAIC.
3:59:47 PM
REPRESENTATIVE ZULKOSKY referred to the plans on the handout -
offered in Juneau, Bethel, and Anchorage. She pointed out the
disparity between the premiums for a female and those for a
male, even though pre-natal care and prescriptions drugs were
not covered. She relayed that a female paying for a STLD plan
is paying $132 per month for the least expensive option, or just
over $1,500 per year; the deductible is $10,000; the coinsurance
rate is 50 percent after the deductible is paid. She said,
"Essentially while this is being marketed and sold in Alaska as
being a health care coverage option, it's essentially not really
covering Alaskans who are paying several thousand dollars a year
to receive this coverage." She stated that with the
understanding that there are Alaskans who may experience a gap
in insurance coverage and need a short-term plan until they
could purchase more comprehensive coverage, the intent of the
proposed legislation was to put parameters around these plans to
ensure Alaskans are not exposed to an undue cost burden.
4:01:51 PM
VICE CHAIR SPOHNHOLZ asked why the insurance cost more for
women, considering the typical additional coverages for women
like reproductive health care were not covered under the plans.
4:02:27 PM
SARAH LUECK, Policy Analyst, Center on Budget and Policy
Priorities, offered her belief that younger women tended to seek
more health care. She acknowledged that without maternity
coverage and prescription drug coverage, it was difficult to
understand the disparity between women and men regarding cost.
She said the higher rates for women reflected practices of the
private insurance market before ACA and opined that the short-
term plans adopted these practices because they can do so.
VICE CHAIR SPOHNHOLZ asserted any woman would maintain the
reason young women use health care more than men is because they
are using birth control to prevent pregnancies or because they
are pregnant; therefore, if those services are not covered, it
makes no sense that health care would cost more.
4:04:20 PM
MS. LUECK relayed that having observed the changes in the short-
term plans and the development of the market over the past
couple years as the federal rules have changed, she has heard of
situations in which people have been harmed under these plans -
with expensive claims not covered. She explained the consumer
may understand the plan was not as good as private individual
market insurance; however, the surprises for the consumer were
not just with benefits not being covered, but with the
preexisting exclusions, for which the insurers had a great deal
of latitude. There have been cases in which claims were not
covered due to some health condition in the person's past that
is not readily recognized by the person to be associated with
the present claim. The result is a "bait-and-switch" situation
for the consumer in which the person has an expensive and
unexpected catastrophic incident occur and discovers that the
"catastrophic" insurance does not cover it.
MS. LUECK offered that the data available from the National
Association of Insurance Commissioners (NAIC) shows that many of
the plans are popular nationwide; they have a medical loss ratio
(MLR) of about 40-50 percent. The MLR is a measure of the
percentage of the premiums that a health plan spends on medical
claims. In the regular individual insurance market, there is a
requirement for insurers not only to cover essential health
benefits (EHB) and preexisting conditions, and to rate men and
women the same, but to spend a minimum portion of the money
collected from consumers on actual medical care - 80 percent.
The short-term market insurers are not under the 80 percent
requirement and, therefore, spend much less.
MS. LUECK concluded, "People may feel, when they buy a short-
term plan, that they're getting a good deal or that it's better
than nothing." If they are healthy and young, they may be able
to find a plan that costs a few hundred dollars per month;
however, it may be too much of an expense for the protection
they are getting and the risk of financial harm.
4:08:19 PM
VICE CHAIR SPOHNHOLZ asked for clarification of MLR. She
expressed her understanding that it is the amount of funds paid
as premium that are used to pay for care.
MS. LUECK answered, "Exactly." She explained that it is the
portion of the premiums of the entire group of consumers that is
used for medical care. She stated that the rest of the money is
used by the insurer for overhead, administrative costs, chief
executive officer (CEO) salary, and profit. She further stated
that in the regular individual insurance market, the companies
were required to spend 80 percent of the premiums on medical
care and quality improvement; the remaining 20 percent could be
used for overhead, CEO salary, and profit. She maintained that
this requirement incentivized companies to not price the
insurance plans too high.
MS. LUECK continued by describing the short-term plans - without
the 80 percent requirement: Administrative costs were not
limited as much. Short-term plans permitted underwriting, which
the regular individual insurance market did not permit.
Underwriting is an expensive service; it involves looking into
the medical records of a consumer, examining medical histories,
speaking with physicians, and determining if the consumer was
honest and fully disclosed medical conditions upon application.
She said that medical underwriting involved a broker and broker
commission. The result is that the short-term plans are much
more expensive than the ACA plans.
4:11:03 PM
REPRESENTATIVE ZULKOSKY confirmed for Vice Chair Spohnholz that
Moda and IAIC are the two insurance companies that offered the
short-term plans, and Moda is just now getting into the market.
She relayed there was an interest among insurance companies to
expand into the short-term insurance market in Alaska, which is
why it was important to establish consumer protections.
VICE CHAIR SPOHNHOLZ asked whether the proposed legislation
provided a limit for the MLR.
REPRESENTATIVE ZULKOSKY answered that there is not currently an
MLR [limit]; however, there is precedence in other states and
would be considered for Alaska.
4:12:28 PM
VICE CHAIR SPOHNHOLZ asked for comment on the proper role of the
short-term plan and the array of options for health care in
Alaska.
LORI WING-HEIER, Director, Anchorage Office, Division of
Insurance, Department of Commerce, Community and Economic
Development (DCCED), answered short-term plans did not offer
very good coverage. She maintained there was a need for short-
term plans in the event of a "gap" in coverage. She pointed out
that currently many people were suddenly without jobs due to
COVID-19 [a novel coronavirus disease]. She mentioned the U.S.
Consolidated Omnibus Reconciliation Act (COBRA) was an option
for some people but is extremely expensive. She offered other
reasons for suddenly losing health insurance - a divorce or the
death of a spouse. She maintained that the short-term plan
provided a stopgap measure until a person could determine
his/her next step - employee benefits, the individual insurance
market, [U.S. Centers for Medicare and Medicaid Services (CMS),
U.S. Department of Health and Social Services (HSS)] health
insurance programs ("Medicaid") and ("Medicare"), or something
else.
VICE CHAIR SPOHNHOLZ offered her understanding that in the
regular insurance market, Alaska managed the MLR; she asked
whether there were other states that managed the MLR
proportions.
MS. WING-HEIER answered that the MLR [of 80 percent] was a
provision of ACA; all states in that market must comply. She
mentioned that in August 2019, Primera [Blue Cross] sent checks
to its consumers, because it had not met the 80 percent MLR and,
therefore, was required to refund the money. She added that all
insurers must do the same under the ACA for the individual and
small group markets.
VICE CHAIR SPOHNHOLZ asked whether any states had limited the
MLR on short-term limited plans.
MS. WING-HEIER replied, "Not that I'm aware of." She offered to
provide that information.
REPRESENTATIVE ZULKOSKY offered to provide a document to
committee members showing all state-level actions on STLD plans
in a side-by-side comparison. She said there were MLR
restrictions in the following states: Delaware at 60 percent;
Kansas at 60 percent; Maine at 50 percent; North Dakota at 55
percent; and Vermont at 80 percent.
VICE CHAIR SPOHNHOLZ expressed that it was troubling that 50
percent of a person's premium for a short-term plan was not
being spent on health care; a 50 percent profit on health care
was excessive. She mentioned the rate differentials between
women and men were concerning, as the plans did not cover
reproductive health care. She asked for comment on that issue.
4:17:02 PM
MS. WING-HEIER replied that she shared that concern; however,
the actuarial data indicated that young women are more expensive
in terms of health care.
VICE CHAIR SPOHNHOLZ asked whether the expense difference is due
to health care providers giving young women an annual exam and
inoculations.
MS. WING-HEIER said that could very well be.
VICE CHAIR SPOHNHOLZ related an anecdote: She saw her health
care provider more frequently than her husband because she was
responsible for the reproductive health care for her family.
With an annual exam, she received inoculations and preventative
care; but to save money, her husband did not.
4:18:20 PM
REPRESENTATIVE TARR asked whether establishing an MLR
restriction would create an administrative burden.
MS. WING-HEIER said it would for plans that are underwritten.
She described the increased administrative burden: There are no
questions about preexisting conditions on an ACA plan
application, but there are on the short-term plan applications.
For processing claims, the short-term plan application would be
reviewed more thoroughly to determine whether there was a
preexisting condition that disqualified the claim.
4:19:44 PM
The committee took a brief at-ease.
[Vice Chair Spohnholz returned the gavel to Chair Zulkosky.]
4:19:54 PM
REPRESENTATIVE SPOHNHOLZ removed her objection to Version S.
There being no further objection, Version S was adopted as the
working document.
CHAIR ZULKOSKY indicated that HB 267 would be held over.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 255 Sponsor Statement 3.3.20.pdf |
HHSS 3/17/2020 3:00:00 PM |
HB 255 |
| HB 255 Sectional Analysis 3.3.20.pdf |
HHSS 3/17/2020 3:00:00 PM |
HB 255 |
| HB 255 version A.PDF |
HHSS 3/17/2020 3:00:00 PM |
HB 255 |
| HB 255 Fiscal Note HSS.pdf |
HHSS 3/17/2020 3:00:00 PM |
HB 255 |
| HB 255 Supporting Documents.pdf |
HHSS 3/17/2020 3:00:00 PM |
HB 255 |
| HB 267 ver.S Work Draft.pdf |
HHSS 3/17/2020 3:00:00 PM |
HB 267 |
| HB 267 ver.S Sponsor Statement.pdf |
HHSS 3/17/2020 3:00:00 PM |
HB 267 |
| HB 267 ver.S Sectional Analysis.pdf |
HHSS 3/17/2020 3:00:00 PM |
HB 267 |
| HB 267 Summary of Changes Version U to Version S.pdf |
HHSS 3/17/2020 3:00:00 PM |
HB 267 |
| HB 267 Fiscal Note DCCED.pdf |
HHSS 3/17/2020 3:00:00 PM |
HB 267 |
| HB 267 Handout_Patient Implications Brief.pdf |
HHSS 3/17/2020 3:00:00 PM |
HB 267 |
| HB 267 Handout_State STLD Policies.pdf |
HHSS 3/17/2020 3:00:00 PM |
HB 267 |
| HB 267 Handout_STLD Plans Offered in Alaska.pdf |
HHSS 3/17/2020 3:00:00 PM |
HB 267 |
| Christopher Gay Resume_Redacted.pdf |
HHSS 3/17/2020 3:00:00 PM |
Governor's Appointees to State Medical Board |
| State Medical Board Sarah Bidelow Hood.pdf |
HHSS 3/17/2020 3:00:00 PM |
Governor's Appointees to State Medical Board |
| HB 255 PPT.pdf |
HHSS 3/17/2020 3:00:00 PM |
HB 255 |
| HB 267 ver.S PowerPoint.pdf |
HHSS 3/17/2020 3:00:00 PM |
HB 267 |
| HB 255 Supporting Document- CBPP Factsheet on Workers 3.17.20.pdf |
HHSS 3/17/2020 3:00:00 PM |
HB 255 |