Legislature(1999 - 2000)

04/10/1999 10:07 AM HES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
HB 149 - INSURANCE: MENTAL HEALTH & SUBSTANCE ABUSE                                                                             
                                                                                                                                
Number 2077                                                                                                                     
                                                                                                                                
CO-CHAIRMAN COGHILL announced the next order of business as House                                                               
Bill No. 149, "An Act relating to insurance coverage for treatment                                                              
of mental illness and substance abuse; repealing provisions of ch.                                                              
8, SLA 1997, that terminates required mental health benefit                                                                     
coverage; and providing for an effective date."                                                                                 
                                                                                                                                
REPRESENTATIVE GARY DAVIS, Alaska State Legislature, sponsor of HB
149, came forward to present it.  He stated that HB 149, the mental                                                             
health parity bill, is an issue that affects every state because of                                                             
federal legislation passed three or four years ago.  He finds it                                                                
interesting that insurance treats mental health differently.  A                                                                 
task force was put together to study the issue, and the result is                                                               
the "Mental Health Parity Task Force Report" and HB 149.                                                                        
                                                                                                                                
DEB DAVIDSON, Legislative Administrative Assistant to                                                                           
Representative Gary Davis, presented the sponsor statement for HB
149.  Briefly, HB 149 affects businesses with 20 or more employees                                                              
who already provide health insurance benefits to their employees.                                                               
It requires these businesses to provide mental health substance                                                                 
abuse benefits that are equal to those that they provide for                                                                    
physical health.  It specifically says that in providing health                                                                 
insurance regarding mental health benefits, a plan cannot require                                                               
different deductibles, coinsurance ,or copayments, than they                                                                    
require for physical health.  They cannot impose different lifetime                                                             
benefit limits and cannot use different maximum out-of-pocket                                                                   
expenses.  Additionally, it requires they use the same claim                                                                    
payment methodologies for mental and physical health.  They cannot                                                              
apply different limits for treatment services or general coverage                                                               
such as pre-notification requirements for second opinions of                                                                    
existing conditions.  The different claim payment methodologies and                                                             
different limits for treatment services are criteria that are                                                                   
currently in statute in the substance abuse statute, and they just                                                              
incorporated that into HB 149.  The bill was drafted to allow                                                                   
insurance plans to implement these two things as either a part of                                                               
the existing limits, or as "separate but equal."  For example, if                                                               
there is a $250 deductible, they can say that the deductible is met                                                             
when both physical and mental health bills reach that amount, or                                                                
they can have a $250 deductible for each.  They leave it up to the                                                              
individual plans and employers.                                                                                                 
                                                                                                                                
MS. DAVIDSON continued that recognizing that a lot of the costs can                                                             
be contained through managed care, HB 149 does not prohibit the                                                                 
involvement of a managed care organization to provide mental health                                                             
and substance abuse treatment.  But it does state however, that                                                                 
involvement cannot diminish or negate the requirements and intents                                                              
of the bill itself.  It also says the organization may not use                                                                  
administrative or clinical protocols that reduce the access to                                                                  
treatment.  Additionally, the managed care organization must still                                                              
provide timely and appropriate access to and adequate quantity of                                                               
location and specialty distribution for the providers.                                                                          
                                                                                                                                
MS. DAVIDSON explained that the task force determined that the                                                                  
types of mental illness to be covered would be those disorders that                                                             
are described in the Diagnostic and Statistical Manual of Mental                                                                
Disorders (DSM-IV) which is published by the American Psychiatric                                                               
Association.  These include the mental disorders that have a                                                                    
biological or chemical cause for the onset.  It excludes the                                                                    
disorders classified with a "V" code--these types of disorders                                                                  
related normally to a relationship or workplace problems.                                                                       
                                                                                                                                
MS. DAVIDSON stated that they also decided to require the coverage                                                              
for substance abuse under the legislation because it is very common                                                             
for individuals diagnosed with mental illness to also suffer from                                                               
substance abuse or vice versa.  It has been shown that in many                                                                  
cases, one ailment cannot be controlled without also treating the                                                               
other.  The primary concerns are who is affected by this                                                                        
legislation and how much is it going to cost; how much will claims                                                              
to insurance companies increase; and how much will the health                                                                   
insurance premiums increase.                                                                                                    
                                                                                                                                
MS. DAVIDSON reported that preliminary estimates provided by the                                                                
task force's consultant shows that there are approximately 2,000                                                                
Alaska businesses employing more than 20 individuals.  These                                                                    
businesses have an estimated 218,000 employees.  There are a number                                                             
of businesses that are self-insured or otherwise fall under federal                                                             
Employees Retirement and Income Security Act (ERISA), and thus                                                                  
would be exempt.  The legislation cannot mandate this type of                                                                   
coverage to a company that self insures.  Additionally, businesses                                                              
that do not currently provide health insurance are not affected.                                                                
This legislation affects only those businesses who do not fall                                                                  
under ERISA and who do offer health insurance benefits.  Taking                                                                 
those things into account, the task force consultant and C & S                                                                  
Management Associates estimated that somewhere between 103,000 and                                                              
127,000 individuals would have this coverage which is about 17 to                                                               
20 percent of the state's population.                                                                                           
                                                                                                                                
MS. DAVIDSON reported that according to Ron Bachman, the actuarial                                                              
consultant, he estimated that insurance premiums could increase                                                                 
between $31 and $79 per year, per person.  This would depend on the                                                             
amount of managed care involved in it.  The costs to companies that                                                             
currently provide mental health coverage would not increase as much                                                             
as perhaps companies that provide no mental health coverage.  He                                                                
also estimated the cost of claims filed with insurance could                                                                    
increase between 1.7 and 4.3 percent.  There are a lot of                                                                       
unanswered questions regarding this legislation as to the impact on                                                             
the employers as well as the individuals who need the benefits.                                                                 
The task force decided it was an important issue to get on the                                                                  
table to discuss the best solution.                                                                                             
                                                                                                                                
REPRESENTATIVE DAVIS handed out the Mental Health Parity Task Force                                                             
report.  He explained that this legislation was drafted around the                                                              
recommendations after lengthy debate and discussion.   Some of the                                                              
provisions may seem questionable, but they were thought out, and                                                                
there are reasons why the bill was drafted as it is.                                                                            
                                                                                                                                
WALTER MAJOROS, Executive Director, Alaska Mental Health Board                                                                  
(AMHB), Office of the Commissioner, Department of Health and Social                                                             
Services, came forward to testify.  He pointed out that the                                                                     
composition of the Alaska Mental Health Board must include, by                                                                  
statute, mental health consumers or family members of mental health                                                             
consumers.  They are in touch with those who experience mental                                                                  
illnesses.  Mental health parity is AMHB's number one legislative                                                               
priority this year.  The reason they need advocacy for mental                                                                   
health parity is because there is serious discrimination now.  The                                                              
fact is 90 percent of insurance policies treat mental illness                                                                   
differently than physical illness.  Their goal is to achieve                                                                    
equality and end discrimination through this legislation.  They                                                                 
believe there isn't much debate on this.  The issue is medical                                                                  
necessity.  Anyone who meets the definition should have access to                                                               
the treatment, regardless whether the ailment has a physical base,                                                              
a mental base or a substance or chemical base.   He indicated they                                                              
can debate about how quickly they get there, the cost, and the size                                                             
of the risk pool, but there should be no debate on the issues of                                                                
discrimination and equality.  They should consider mental health                                                                
parity now because of the prevalence of mental illness and                                                                      
substance abuse in Alaska.                                                                                                      
                                                                                                                                
MR. MAJOROS mentioned that the AMHB is responsible for estimating                                                               
the number of people in Alaska who experience mental illness and                                                                
serious emotional disturbances.  They do the estimate in                                                                        
conjunction with the Center for Mental Health Services.  They                                                                   
estimate that there are 44,500 adults and children who experience                                                               
serious mental illness and serious emotional disturbances in                                                                    
Alaska.  The prevalence of mental illness is shown by the fact that                                                             
six out of ten of the leading medications prescribed by general                                                                 
practitioners (not psychiatrists) at Providence Hospital are                                                                    
psychotropic medications for mental illness.                                                                                    
                                                                                                                                
Number 1444                                                                                                                     
                                                                                                                                
MR. MAJOROS reported there is data based on a 1997-1998 Gallup Poll                                                             
that indicates that 18.5 percent of Alaskan men and 8.6 percent of                                                              
Alaskan women meet the definition of alcohol abuse.  For drug                                                                   
abuse, it is 2.9 percent of Alaskan men and 1.1 percent of Alaskan                                                              
women.  He noted that prevalence alone is not the important factor,                                                             
but the fact that treatment works for both mental illness and                                                                   
substance abuse.  There is a tremendous recognition now that mental                                                             
illnesses are brain disorders caused by chemical imbalances that                                                                
can be treated successfully through neuropsychology and                                                                         
psychotropic medication.  Not only is there success, the mental                                                                 
illnesses are being treated more effectively and less expensively                                                               
than treating major physical illnesses.  For example, treatment of                                                              
bipolar disorders and schizophrenia is less expensive and more                                                                  
effective than treating physical ailments such as diabetes and                                                                  
heart disease.  A report from 1995-1998 showed that 34 percent of                                                               
Alaskans going through residential treatment for substance abuse                                                                
abstained from substances for one year of post-treatment.  For                                                                  
those that participated in outpatient treatment, 59 percent                                                                     
abstained from substance abuse for an entire year.  He reiterated                                                               
that there is strong evidence that treatment works.                                                                             
                                                                                                                                
MR. MAJOROS pointed out that parity increases consumer self-                                                                    
reliance.  The AMHB hears from people who want to work but cannot                                                               
work.  One of the reasons they cannot work is they cannot afford to                                                             
pay for their medications.  Private insurance does not pay for                                                                  
these medications, and they are the same medications that prevent                                                               
these people from being institutionalized and causes them to be                                                                 
successful in society.  These people with mental illnesses revert                                                               
to the public system.  So instead of being productive citizens,                                                                 
they are dependant on the public welfare system.  He stated that                                                                
parity can help reverse that trend.                                                                                             
                                                                                                                                
Number 1319                                                                                                                     
                                                                                                                                
MR. MAJOROS believes that parity is cost-effective, not expensive,                                                              
and this is demonstrated by the actuarial study done by Ron Bachman                                                             
of Price Waterhouse Coopers.  He is the leading expert in the                                                                   
nation of actuarial studies on the impact of mental health parity.                                                              
Mr. Bachman estimates that the cost of implementing this                                                                        
legislation would average about $2.62 per person, per month.  That                                                              
is the equivalent of giving someone a 3.5 cent per hour raise.                                                                  
There is demonstrated evidence from other states with mental health                                                             
parity that the costs are not high in terms of the increases.  He                                                               
told the committee they will hear different information from                                                                    
different parties today, but the AMHB can quote many studies that                                                               
have indicated that the cost of implementing mental health parity                                                               
has been very small.  In many cases combined with managed care, the                                                             
costs of these services have gone down.  Mental health parity will                                                              
help give access to treatment earlier, and this will result in                                                                  
higher productivity and lower absenteeism for employees.  Early                                                                 
access will also prevent more serious and costly conditions from                                                                
developing.  It will prevent more people from being                                                                             
institutionalized and allow people to receive services in the                                                                   
community.                                                                                                                      
                                                                                                                                
MR. MAJOROS acknowledged that there will be some impact on small                                                                
businesses, although they don't see it as an enormous hardship; the                                                             
legislation does include an exemption for businesses with under 20                                                              
employees.                                                                                                                      
                                                                                                                                
MR. MAJOROS stated from the AMHB's perspective, they are not a big                                                              
fan of mandates, but they understand what a risk pool means, and                                                                
they understand that Alaska does not have a huge population.  In                                                                
order for the risk pool to be large enough to keep the costs down,                                                              
it is critical that these services be mandated.  If it is left as                                                               
a total voluntary situation, the risk pool will shrink because                                                                  
employers do not choose this coverage, and then the costs will                                                                  
skyrocket.  It is economics that brings them to this conclusion.                                                                
                                                                                                                                
MR. MAJOROS indicated they are estimating 115,000 plus or minus 10                                                              
percent as the size of the risk pool.  This is a soft number                                                                    
because there is no uniform data base.  They drew some information                                                              
from the Department of Labor, from other states and insurance                                                                   
companies, and Mr. Bachman also validated their estimates.  They                                                                
all come to the same conclusion of 115,000 people.  They would be                                                               
willing to look at other information if someone can provide it.                                                                 
                                                                                                                                
MR. MAJOROS summarized that the very technical issues involving                                                                 
mental health parity, size of the risk pool, mandates, and cost                                                                 
implications can be debated at the Labor and Commerce Committee.                                                                
He believes the important policy issue at the HESS committee is                                                                 
whether or not they should move towards equality and away from                                                                  
discrimination.  He urged the committee's support conceptually for                                                              
this legislation.                                                                                                               
                                                                                                                                
Number 1104                                                                                                                     
                                                                                                                                
CO-CHAIRMAN DYSON declared on the record that he has an obvious                                                                 
conflict of interest, in that his wife is a mental health provider.                                                             
She derives much of their income from insurance payments and                                                                    
copayments.  He has not been able to find anything in the code that                                                             
would allow him to excuse himself from the vote.  He requested that                                                             
he not be a part of any subcommittee that may come out of this.                                                                 
                                                                                                                                
Number 1041                                                                                                                     
                                                                                                                                
REPRESENTATIVE GREEN said they had been told there are some 44,000                                                              
mentally ill patients in the state, and that the risk pool, because                                                             
of exemptions, would be somewhere around 110,00 to 125,000.  That                                                               
seems to indicate that two out of those in the risk pool would be                                                               
paying for the third one.  Mr. Majoros indicated about $2 to $3 per                                                             
month and earlier Ms. Davidson said it would be between $30 and $79                                                             
per month, he wondered how they can address the cost of mental                                                                  
illness among what would then be some 80,000 people to pay for                                                                  
44,000 patient's treatments at only $79 or $2-$3 per month.                                                                     
                                                                                                                                
Number 0993                                                                                                                     
                                                                                                                                
MR. MAJOROS believes there is no contradiction there; he was giving                                                             
the average cost per month while Ms. Davidson was talking about the                                                             
cost per year.  Most of the 44,000 people now receive services                                                                  
through the public mental health system.  Part of the issue is that                                                             
the burden for providing mental health services lies almost                                                                     
exclusively on the public system.  They are trying to shift that                                                                
balance and put some of the responsibility within the private                                                                   
sector.                                                                                                                         
                                                                                                                                
REPRESENTATIVE GREEN asked about the majority of the 44,000 being                                                               
handled by the state who are probably on medication of some sort.                                                               
                                                                                                                                
MR. MAJOROS explained that figure includes some of those people                                                                 
would be receiving medication.  Mental illness is episodic; people                                                              
may be successfully existing with the community for a long period                                                               
of time, sometimes with or without the assistance of medication,                                                                
and then there may be the need for short-term hospitalization.  The                                                             
figure does not mean that 44,000 people are receiving mental health                                                             
services every day during that year.  It may mean at some time                                                                  
during that year that they would require some sort of mental health                                                             
service.                                                                                                                        
                                                                                                                                
REPRESENTATIVE GREEN asked for clarification on the denominator                                                                 
used to reach the figure of $35 to $70 per month for those in the                                                               
risk pool.  He also asked if it is then borne by the private sector                                                             
and what assurance do they have that it will not escalate quite                                                                 
rapidly.                                                                                                                        
                                                                                                                                
MR. MAJOROS mentioned there are two primary mechanisms on that.                                                                 
One is the issue of medical necessity which insurance companies use                                                             
as a standard by which they make decisions about whether a person                                                               
should receive service or not.  If someone comes and wants to                                                                   
receive relationship counseling, they are not going to get it under                                                             
this coverage.  That is one way costs would be controlled and                                                                   
monitored and have been successful in many other states.  The other                                                             
is the issue of managed care.  There are many methods insurance                                                                 
companies do use, including prior authorization and continued                                                                   
utilization to manage costs and benefits, to keep them from                                                                     
escalating.                                                                                                                     
                                                                                                                                
Number 0673                                                                                                                     
                                                                                                                                
REPRESENTATIVE GREEN asked why haven't some of the industry come                                                                
forward to offer mental health coverage if it is only going to cost                                                             
about $30 or $40 per year.                                                                                                      
                                                                                                                                
MR. MAJOROS commented that there have been incredible advances in                                                               
the fields of mental illness and substance abuse, and there are                                                                 
more successful treatment methodologies available today than there                                                              
were a few years ago.  Some of this is a new mind set; they are                                                                 
seeing treatment effectiveness that they didn't see 10 to 20 years                                                              
ago.  They also need to educate the insurance companies so they are                                                             
more aware of the effectiveness of preventive techniques and                                                                    
earlier interventions that can lower costs in the long run.                                                                     
                                                                                                                                
REPRESENTATIVE DAVIS responded that the perception of mental                                                                    
illness for a majority of Americans is "One Flew Over the Cuckoo's                                                              
Nest," and that it is handled in institutions.  A lot of other                                                                  
options haven't gotten a lot of consideration.                                                                                  
                                                                                                                                
MR. MAJOROS thanked Representative Davis for co-chairing the task                                                               
force and introducing the legislation.                                                                                          
                                                                                                                                
Number 0409                                                                                                                     
                                                                                                                                
GENE GRASTO, National Alliance for the Mentally Ill, Fairbanks,                                                                 
testified via teleconference from Fairbanks.  He stated that over                                                               
the course of a year, many millions of Americans, including many                                                                
Alaskans, experience severe mental illness.  Today most insurance                                                               
plans put restrictions on care for severe mental illness that                                                                   
include higher copayments, additional deductibles, stricter limits                                                              
on the length of hospital stays and the number of outpatient                                                                    
visits.  He believes that insurance companies are more concerned                                                                
about making money than mental health patients getting the care                                                                 
they need.  It reinforces the stigma when insurance companies                                                                   
discriminate against mental health patients and refuse to give them                                                             
equal coverage.  They don't take emotional pain or mental suffering                                                             
as seriously as physical pain.  When a person suffering from the                                                                
flu or a fever and is incoherent, they work to stabilize the                                                                    
patient, but a mentally ill patient who needs to be stabilized, is                                                              
thrown in jail.  It is the only illness he knows of that people get                                                             
thrown in jail for.                                                                                                             
                                                                                                                                
MR. GRASTO continued saying the constitution of the state of Alaska                                                             
in Article I says, "All persons are equal and entitled to equal                                                                 
rights, opportunities, and protection under the law."  Since                                                                    
insurance companies operate under the rules of state law, it is                                                                 
wrong to treat mentally ill people in a discriminatory way.  It is                                                              
time to fix it and make it right.  Please support mental health                                                                 
parity.                                                                                                                         
                                                                                                                                
JEANETTE GRASTO, President, National Alliance for the Mentally Ill,                                                             
Fairbanks, testified via teleconference from Fairbanks.  She stated                                                             
it is important to remember that severe mental illness is                                                                       
biological and can be diagnosed and treated as effectively as other                                                             
physical conditions.  The cost of treating mental illness is                                                                    
comparable to the costs of treating other medical conditions.  The                                                              
direct costs in 1990 for treating a person with diabetes was $7,725                                                             
compared with $7,158 for treating a person with schizophrenia.  She                                                             
researched insurance companies for her son, who suffers from                                                                    
bipolar disorder, after he was no longer covered under his father's                                                             
insurance and discovered that Blue Cross would not take him because                                                             
he had bipolar disorder.  He finally got insurance through his                                                                  
employer, but that plan did not cover mental health for the first                                                               
year of employment.  After the first year he will be given 50                                                                   
percent coverage.  A large portion of his wages have gone to                                                                    
medical costs including his deductible and copayments.  He is                                                                   
qualified to go on disability, but he doesn't want to; he wants to                                                              
work.  He needs adequate treatment, including his doctor visits and                                                             
his medication, to be able to work.  It is a Catch-22 situation.                                                                
She knows another young man with bipolar disorder who puts himself                                                              
in the hospital and gets medication, but when he is released, he                                                                
cannot afford the medication.  He goes without treatment and gets                                                               
worse.                                                                                                                          
                                                                                                                                
TAPE 99-34, SIDE A                                                                                                              
                                                                                                                                
Number 0047                                                                                                                     
                                                                                                                                
VICKI TURNER MALONE, Owner, Malone and Company, Inc., Independent                                                               
Insurance Agents, testified via teleconference from Bethel.  She                                                                
stated she has become an advocate for mental illness.  She shared                                                               
an article she read in the National Insurance Underwriter, a                                                                    
mainstream trade journal focusing on life and health issues.  In                                                                
this article they were advocating parity in mental health.  Their                                                               
logic was that mental illness left untreated becomes severe and                                                                 
chronic; it was much more effective to treat it earlier than later.                                                             
They don't blatantly mention cost-effectiveness, but obviously,                                                                 
they have competent actuarial people helping them develop this                                                                  
position.  She pointed out that if mainstream insurance industry is                                                             
supporting parity in mental illness, then it is certainly time for                                                              
Alaska to do it.  She faxed the article to the committee.                                                                       
                                                                                                                                
Number 0198                                                                                                                     
                                                                                                                                
NANCY CAUGHELL, Parents Incorporated., testified via teleconference                                                             
from Anchorage.  She pointed out that most insurance covers mental                                                              
health at a lower rate than physical health.  Families are unable                                                               
to get their mental health issues covered; this causes a great                                                                  
financial burden and conditions go untreated.  These conditions can                                                             
be treated, and family health and well-being can be restored if                                                                 
more coverage were provided.  Treatments are stopped because                                                                    
families cannot afford to continue, or they reach the maximum                                                                   
amount of mental health coverage.  Parents Incorporated believes                                                                
that the whole person needs to be treated.  A family's mental                                                                   
health is the key to happiness and a productive life.                                                                           
                                                                                                                                
Number 0333                                                                                                                     
                                                                                                                                
SCOT WHEAT, National Alliance for the Mentally Ill, testified via                                                               
teleconference from Homer.  He is a public member on the Alaska                                                                 
Psychiatric Institute board so he is very aware of the issues                                                                   
surrounding hospitalization and utilization and community support                                                               
or the lack thereof.  He is a mental health consumer with an Access                                                             
I diagnosis.  In his experience, it is the untreated mental illness                                                             
that is expensive.  There are drugs available within the past five                                                              
years that have allowed people to go back to work, at least part-                                                               
time.  He believes it is necessary to keep people involved in the                                                               
work force.  He has only been able to get help in the last few                                                                  
years, out of 45 years, that has been effective.  In the first six                                                              
years of his involvement with the state's Medicaid program, there                                                               
was a bill for $193,000; it was paid at $143,000 for his various                                                                
medical treatments.  He believes most of this would have been                                                                   
unnecessary, including three hospitalizations, if he had been                                                                   
getting treatment and medication through the years .  He concluded                                                              
that untreated mental illness is the problem; mental health                                                                     
treatment is very cost effective.                                                                                               
                                                                                                                                
Number 0527                                                                                                                     
                                                                                                                                
REPRESENTATIVE DAVIS asked Mr. Wheat how old he was when he was                                                                 
initially diagnosed.                                                                                                            
                                                                                                                                
MR. WHEAT answered that the first real diagnosis was in 1985 when                                                               
he was 31.                                                                                                                      
                                                                                                                                
Number 0562                                                                                                                     
                                                                                                                                
ELIZABETH LaCROSSE, Vice President, National Alliance for the                                                                   
Mentally Ill, Alaska; Member, Alaska Mental Health Board; Member,                                                               
Governor's Committee on Employment and Rehabilitation of People                                                                 
With Disabilities, testified via teleconference from Ketchikan.                                                                 
She has a psychiatric disability and has good and bad experiences                                                               
with the mental health system in Alaska.  She has been receiving                                                                
services from Medicaid since 1992, including mental health                                                                      
services.  It is through these services that she is able to                                                                     
function at a higher level of awareness since the onset of her                                                                  
illness.  Prior to that she was in debt for her medical care                                                                    
including psychiatric prescription medication.  She worked two jobs                                                             
at the time, yet received no health insurance benefits for her                                                                  
mental illness.  Once her bills were too large, her providers began                                                             
demanding payment up-front for mental health services.  She often                                                               
had to borrow money for her medication and went without food.  Had                                                              
she been eligible for mental health services through her                                                                        
employment, she may have been able to recover faster.  She urged                                                                
the committee to support HB 149 to make sure every Alaskan has                                                                  
equal opportunity to health insurance benefits, regardless whether                                                              
it is a physical or mental disorder.                                                                                            
                                                                                                                                
Number 0703                                                                                                                     
                                                                                                                                
JEFF JESSEE, Executive Director, Alaska Mental Health Trust                                                                     
Authority Board of Trustees, testified via teleconference from                                                                  
Anchorage.  He expressed the support of the trustees for HB 149.                                                                
They believe it is a positive step forward in providing a continuum                                                             
of services and funding mechanisms for mental health services for                                                               
all Alaskans.  In response to the question "Why aren't the                                                                      
insurance companies coming forward with support," he believes it is                                                             
because there still is a misunderstanding about mental health                                                                   
issues.                                                                                                                         
                                                                                                                                
MR. JESSEE pointed out that many mental illnesses are, in fact,                                                                 
brain chemistry disorders; they are physical.  The manifestations                                                               
of those physical difficulties in behavior and thought processes,                                                               
historically, have been very scary to people, particularly when                                                                 
there wasn't medications and treatments to help improve situations.                                                             
If businesses and insurance companies were coming forward today and                                                             
saying, "We no longer want to cover diabetes," or "AIDS is                                                                      
expensive, and we don't want to cover that under health policy," he                                                             
believes the legislature would be justly concerned about the cost                                                               
shifting that would occur as the insurance industry pulled back out                                                             
of covering some of those health conditions.  The difference is                                                                 
mental health hasn't been covered in the past.  There should be no                                                              
distinction.  It is imperative that the state incorporate this                                                                  
funding mechanism as a part of the public/private partnership to                                                                
provide care to all Alaskans; the trustees support this                                                                         
legislation.                                                                                                                    
                                                                                                                                
Number 0857                                                                                                                     
                                                                                                                                
REPRESENTATIVE GREEN asked Mr. Jessee if he knew what the cost                                                                  
would be statewide for those that would qualify for services.                                                                   
                                                                                                                                
MR. JESSEE suggested that he ask the people who were on the task                                                                
force to answer that.                                                                                                           
                                                                                                                                
Number 0906                                                                                                                     
                                                                                                                                
ROBYN HENRY, Executive Director, National Alliance for the Mentally                                                             
Ill, Alaska, testified via teleconference from Anchorage.  She has                                                              
the privilege of working daily with a group of very courageous                                                                  
people.  A group of people who, through no fault of their own,                                                                  
struggle daily with the devastating affects of the debilitating and                                                             
biologically based diseases that fall under the category of mental                                                              
illness.  It is a group of people who, far too often, are first and                                                             
foremost seen as their illness, and not as the valuable individuals                                                             
and the contributions that they can make as individuals.  They have                                                             
a great deal to contribute to society.  Far too often these                                                                     
contributions are not able to be made, not because of lack of                                                                   
talent or ability, but because of lack of accessibility to                                                                      
effective treatment that can help open the door for peace of mind                                                               
and pave the way for creativity, entrepreneurship and self-                                                                     
actualization.                                                                                                                  
                                                                                                                                
MS. HENRY indicated that the committee had all the data and                                                                     
information, and she urged the legislators to see this as an issue                                                              
to be rectified.  It may be a leap of faith, but with the                                                                       
information they have, it is not a large leap of faith.  Many                                                                   
states have made the decision to end discrimination with less                                                                   
information, and she urged them to support the legislation.                                                                     
                                                                                                                                
JOHN GEORGE, Lobbyist for American Council of Life Insurance, came                                                              
forward to testify.  He commented that they have heard some                                                                     
interesting testimony today and many of the things he concurred                                                                 
with.  The problem the insurance industry has is that health                                                                    
insurance is not mandatory.  Employers can go under a self-insured                                                              
program under ERISA, and they wouldn't be subject to these                                                                      
requirements.  He described three choices:                                                                                      
                                                                                                                                
     You can buy insurance with a number of mandated                                                                            
     coverages; you can become self-insured, partially, and                                                                     
     not have to meet the mandates, that's cheaper; or you can                                                                  
     not provide insurance to your employees at all, and                                                                        
     that's certainly cheaper.  So, trying to compete with                                                                      
     self-insurance and no insurance at all, you've got one                                                                     
     faction that you're saying 'We're going to increase the                                                                    
     cost for and make your product much less attractive than                                                                   
     the others.'                                                                                                               
                                                                                                                                
     We heard someone way that they can't work because they                                                                     
     can't afford their medication so they need a job so they                                                                   
     be covered by insurance to afford the medications.  Well,                                                                  
     by definition then, you're assuming that that's going to                                                                   
     be an insured program, not a self-insured program, and                                                                     
     that the insurance company is going to pay.  But I'll                                                                      
     tell you, these are not unfunded mandates.  These are                                                                      
     funded mandates.  Insurance companies are in business to                                                                   
     make a profit.  Someone said "The insurance companies                                                                      
     have more interest in making a profit than taking care of                                                                  
     people's mental illness.  Well, I guess that's true                                                                        
     because they are a profit-making organization, and the                                                                     
     way they do that is by charging a premium to the policy                                                                    
     holders.  If you mandate a coverage, that means if it                                                                      
     costs more, they pass that on to their customers.  The                                                                     
     small employers in the state who then have to make a                                                                       
     decision:  'Do I pay the extra money, or do we become                                                                      
     uninsured.' So you may actually find that fewer people                                                                     
     will be covered by insurance if you increase the costs                                                                     
     incrementally.                                                                                                             
                                                                                                                                
     You heard ... several people testify that by actually                                                                      
     providing this mandated coverage, the overall cost of                                                                      
     insurance should go down because people won't have other                                                                   
     physical ailments or whatever.  If in fact that's true,                                                                    
     the insurance companies would, I believe, have already                                                                     
     subscribed to this, and I think this group needs to do a                                                                   
     better job of selling the insurance industry on the fact                                                                   
     that that is true, rather than coming in through the                                                                       
     legislature and mandating the coverage.                                                                                    
                                                                                                                                
     In my former life as the director of insurance, I used to                                                                  
     hear a lot of complaints about health insurance is too                                                                     
     expensive.  We can't afford health insurance.  But in                                                                      
     fact, every time you turn around there's someone                                                                           
     mandating a coverage and you look at the list of                                                                           
     mandates:  chiropractors, nurse-midwives, advanced                                                                         
     practitioners, naturopaths, physical therapists,                                                                           
     occupational therapists, marital and family therapists,                                                                    
     clinical social workers, the list goes on, those are all                                                                   
     increments that have to be added to insurance that small                                                                   
     employers have to pay and they have to decide whether or                                                                   
     not to buy insurance if they only have, say, $200 a month                                                                  
     per employee to contribute to insurance, and the least                                                                     
     expensive insurance is $250 because of these mandated                                                                      
     coverages, they become uninsured employees rather than                                                                     
     insured employees.                                                                                                         
                                                                                                                                
     Really, insurance companies are trying to provide an                                                                       
     affordable product, and by doing so, they can be                                                                           
     competitive with self-insurance, and hopefully the moral                                                                   
     aspects of providing insurance for employees ... is on                                                                     
     their side, and if they can keep the product relatively                                                                    
     affordable they will sell that product.                                                                                    
                                                                                                                                
     I often heard also that small employers compete with                                                                       
     government and with large employers for employees.  Your                                                                   
     small employer in Juneau, for instance, and you want to                                                                    
     hire a clerk typist for your small business.  You go over                                                                  
     and get the state pay scale, and that's pretty much what                                                                   
     you have to pay because that's the option the employee                                                                     
     has.  ...You're paying the same, but they have better                                                                      
     benefits.  Well, now as a small employer, I have to                                                                        
     provide more benefits as well.  So ... people have to                                                                      
     compete in a small business with major employers for                                                                       
     employees and the employee benefits to health insurance                                                                    
     is certainly one aspect they have to compete on.                                                                           
     Government and self-insured major employers are not                                                                        
     required to provide this benefit.  So you're really                                                                        
     loading against the small employer who has to provide                                                                      
     insurance to compete, and now they have to provide                                                                         
     benefits greater than the other major entities have to                                                                     
     provide.                                                                                                                   
                                                                                                                                
Number 1400                                                                                                                     
                                                                                                                                
CO-CHAIRMAN DYSON indicated that they have gotten charts from                                                                   
California that show for every increment going up in the cost of                                                                
health insurance, a group of folks opt out of the pool.  He asked                                                               
Mr. George if there is anyone in the industry here who can advise                                                               
what that ratio of price participation would be like in Alaska.                                                                 
                                                                                                                                
MR. GEORGE said he could not tell them that today, but he could see                                                             
if he could find it.  Alaska is unique in that there are so many                                                                
people covered under government systems and others.  It could well                                                              
be different than other states.  He can try to find the answer.                                                                 
                                                                                                                                
CO-CHAIRMAN DYSON asked Mr. George how many people now have health                                                              
insurance but don't have mental health parity.  He commented that                                                               
is an important piece of information for the committee and asked                                                                
Mr. George to try to get that for them.                                                                                         
                                                                                                                                
MR. GEORGE said he will certainly try to get that information.                                                                  
                                                                                                                                
REPRESENTATIVE BRICE asked Mr. George when he had been director of                                                              
insurance.                                                                                                                      
                                                                                                                                
MR. GEORGE replied that he left in 1988.                                                                                        
                                                                                                                                
Number 1497                                                                                                                     
                                                                                                                                
REPRESENTATIVE BRICE noted that it was right around the time the                                                                
legislature passed mandated mammography.  He asked Mr. George if                                                                
there was a noticeable drop in health insurance coverage for                                                                    
employees when the legislature mandated mammography and substance                                                               
abuse parity.                                                                                                                   
                                                                                                                                
MR. GEORGE said he didn't have the answer, but he could try and get                                                             
an answer.                                                                                                                      
                                                                                                                                
REPRESENTATIVE BRICE commented that would be interesting                                                                        
information to have.                                                                                                            
                                                                                                                                
Number 1614                                                                                                                     
                                                                                                                                
DON DAPCEVICH, Executive Director, Governor's Advisory Board on                                                                 
Alcoholism and Drug Abuse, came forward to testify in support of HB
149.  A year and a half ago the advisory board did a key informant                                                              
survey around the state of Alaska.  One of the results of that                                                                  
survey was nine out of ten Alaskans felt that alcoholism was the                                                                
number one health problem in this state.  To significantly alter                                                                
the way they administer one health problem over other health                                                                    
problems seems to be irresponsible.  He agreed there is cost                                                                    
involved in parity for substance abuse and mental health services,                                                              
however, the savings received will far outweigh those costs.                                                                    
Recent studies have been done in California that indicate there is                                                              
a seven for one return for every one dollar that is spent on                                                                    
substance abuse treatment; society recoups seven dollars in savings                                                             
in other areas.                                                                                                                 
                                                                                                                                
MR. DAPCEVICH believes that insurers don't opt to buy insurance on                                                              
their own because the risk pool is so small.  If there were a                                                                   
mandate, the risk pool is larger and the costs go down.  Most                                                                   
states' experience has been that the cost does not go up that high;                                                             
less than $3 per month per person is the cost other states have                                                                 
experienced.  Some have found there are appreciable savings.  He                                                                
believes that as the state moves from the public dole to individual                                                             
responsibility, they will accrue some savings if they pass this                                                                 
legislation.  He urged the committee to give it serious                                                                         
consideration.                                                                                                                  
                                                                                                                                
REPRESENTATIVE GREEN asked Mr. Dapcevich if he knew what a                                                                      
reasonable size of the risk pool would be.                                                                                      
                                                                                                                                
MR. DAPCEVICH answered he was not part of the task force or the                                                                 
actuarial studies that were done, but it appears that it is less                                                                
than $3 per person, per month with a pool of 110,000, so they would                                                             
be over that threshold.                                                                                                         
                                                                                                                                
GORDAN EVANS, Lobbyist for Health Insurance Association of America                                                              
(HIAA), came forward to testify.  He agreed with the comments made                                                              
by Mr. George and told the committee they have his written                                                                      
statement and the HIAA's statement in the task force report.  They                                                              
have sent the committee lengthy facts of some statistical                                                                       
information.  He pointed out by mandating this type of legislation                                                              
in Alaska, they are really getting to the smaller employers.  The                                                               
state government isn't covered by mandates, although they have on                                                               
some occasions voluntarily followed mandates.  The Municipality of                                                              
Anchorage, Carr's supermarkets, British Petroleum Company and Exxon                                                             
Company are not covered.  They are getting down to the smaller                                                                  
employers.                                                                                                                      
                                                                                                                                
MR. EVANS noted that this bill differentiates between what is a                                                                 
small employer and what the small employer group health insurance                                                               
bill calls for.  That says a small employer is one who employs 2 to                                                             
50 employees.  Most of the federal legislation is based on that                                                                 
level, 50 people or less.  This bill says under 20, which means 19                                                              
or less.  He believes they have to get some equality out of this,                                                               
but also any time they start mandating coverages, employers do drop                                                             
coverage.  It is cheaper for them to raise their employees' wages                                                               
by $10 per month than to continue to pay for health insurance; so                                                               
then there are more people uninsured.  A pool of 115,000 is not a                                                               
very good-sized pool when they are looking at coverage like this.                                                               
He offered to get some of the same information they asked from Mr.                                                              
George, but he is not too confident that they can come up with                                                                  
precise information, but they will see what they can do.                                                                        
                                                                                                                                
Number 1887                                                                                                                     
                                                                                                                                
PAMELA LaBOLLE, President, Alaska State Chamber of Commerce, came                                                               
forward to testify.  She handed out a sheet that shows the                                                                      
difference between the Federal Mental Health Parity Act (MHPA) and                                                              
the provisions called for in HB 149.  Most of the larger employers                                                              
within Alaska would be exempt; they are really targeting the small                                                              
business people.  She has heard from several small employers who                                                                
have said this would be the difference of them offering any health                                                              
insurance; they couldn't afford it.  Many have said the costs have                                                              
been continually rising for what they offer now.  It is imperative                                                              
for them to offer some benefits, if they are to compete with the                                                                
state and local governments who offer very good benefits.  The                                                                  
state and local governments are exempt under this law.  Because of                                                              
the generous benefit package they already offer, the problem of                                                                 
mandating coverage puts a hidden tax on employers.  It is taking a                                                              
public problem and transferring it to small businesses.  It is an                                                               
unfunded mandate, and they are against unfunded mandates.  The                                                                  
state has continually complained to the federal government about                                                                
the unfunded mandates that are passed down to the state.  Only now                                                              
the state is passing them down to small business.  Yes, the savings                                                             
would be to the state but at the cost of the employers.                                                                         
                                                                                                                                
MS. LaBOLLE indicated that it also forces employees who pay part of                                                             
their health insurance, pay for something they may not want.  They                                                              
are very sorry that there are people who need mental health care                                                                
coverage.  There are people who need dental or vision coverage, but                                                             
in general medical policies those things aren't covered; it is an                                                               
option of the employer to buy them as another benefit.  These are                                                               
market-place driven options, and they oppose the mandate aspect of                                                              
this.  If mental health care coverage is offered as it is in the                                                                
federal law, then it should be at a level of parity with the                                                                    
medical coverage that is offered.  That is not a problem, but to                                                                
force them to offer, pay for it and pick up the costs that society                                                              
now picks up, is not acceptable.  Furthermore, the people who no                                                                
longer are covered because the small employers have to drop their                                                               
insurance, their catastrophic illnesses are going to fall to the                                                                
state, or they will fall to the rest of the consumers who because                                                               
the hospitals and health care providers will pick it up and pass it                                                             
on to the consumers.  There is no such thing as a free program.                                                                 
                                                                                                                                
Number 2095                                                                                                                     
                                                                                                                                
CO-CHAIRMAN DYSON asked Ms. LaBolle if she has a mechanism to find                                                              
out how many people have health insurance that doesn't cover mental                                                             
illness.                                                                                                                        
                                                                                                                                
MS. LaBOLLE answered only through a survey of her membership, which                                                             
would be doable but time consuming.                                                                                             
                                                                                                                                
CO-CHAIRMAN DYSON believes this bill will not get through this year                                                             
and it sunsets in 2001.  If she does a survey for other reasons in                                                              
the next few months, he asked her if she could get them some                                                                    
information.                                                                                                                    
                                                                                                                                
MS. LaBOLLE said she would consider that.                                                                                       
                                                                                                                                
REPRESENTATIVE GREEN asked how many small employers might be either                                                             
factually or perceptually wanting to drop their health insurance                                                                
coverage.                                                                                                                       
                                                                                                                                
MS. LaBOLLE indicated that the most common response she has had                                                                 
from her members is that they would drop it.                                                                                    
                                                                                                                                
Number 2175                                                                                                                     
                                                                                                                                
CO-CHAIRMAN COGHILL said it might be more helpful to know if a                                                                  
business were to drop coverage, how many employees it has, whether                                                              
is has under 20 or under 50 because this law is asking them to draw                                                             
a line there, and then the pool changes.  Because of that, there                                                                
might be added pressure for people to opt out.                                                                                  
                                                                                                                                
MS. LaBOLLE concluded that decisions about what types of health                                                                 
care to offer, if it is mandated, becomes based on the preferences                                                              
of politics and interest groups, rather than on the needs and                                                                   
desires of small business owners and their employees.  They oppose                                                              
mandating of this.                                                                                                              
                                                                                                                                
CO-CHAIRMAN COGHILL said there is a philosophical difference on the                                                             
mandate, and even mental health people recognize the problem of a                                                               
mandate.  He will offer some information to the state on how they                                                               
can encourage insurance companies to draw them into insurance,                                                                  
rather than mandate them into insurance.  There may be ways that                                                                
the state and the mental health trust might be able to induce                                                                   
insurance companies to facilitate that.  He believes the                                                                        
subcommittee should look at that area.                                                                                          
                                                                                                                                
MS. LaBOLLE stated that it is a matter of cost.  Employers would                                                                
like to offer mental health care coverage if it is affordable, and                                                              
she is sure if they offered it, they would like it to be at a level                                                             
of parity.                                                                                                                      
                                                                                                                                
CO-CHAIRMAN COGHILL understands that there are people out there in                                                              
need.  The policy makers don't want to slight them because of                                                                   
economics, but at the same time, they could inadvertently do that                                                               
by mandating something that would have an adverse affect.  It is                                                                
worthy of study.                                                                                                                
                                                                                                                                
TAPE 99-34, SIDE B                                                                                                              
                                                                                                                                
Number 2322                                                                                                                     
                                                                                                                                
REPRESENTATIVE GREEN asked if the subcommittee could find out the                                                               
sliding scale to see how much more it costs the small employer than                                                             
large employer.                                                                                                                 
                                                                                                                                
Number 2283                                                                                                                     
                                                                                                                                
PAT CLASBY, Alaska State Hospital and Nursing Home Association,                                                                 
came forward to testify in support of mental health parity as                                                                   
designed in HB 149.  The Association has followed this along and                                                                
participated in the task force meetings providing information.                                                                  
This is a complex and difficult issue and impacts all of their                                                                  
health care facilities in Alaska.  She agreed there will be a cost                                                              
to individuals who have the opportunity under a mandated health                                                                 
insurance policy that allows them to buy into adequate mental                                                                   
health insurance.  Part of it will be borne by the employees that                                                               
is passed on by the employers, and part of it will be borne by the                                                              
employers.  It will also cost the state, the health care                                                                        
facilities, and the  communities that end up supporting health care                                                             
facilities.                                                                                                                     
                                                                                                                                
MS. CLASBY went on to say when there isn't adequate insurance for                                                               
some of the primary social problems in Alaska, whether it is                                                                    
alcohol, drug abuse, mental illness, sexual abuse, the                                                                          
victimization, and the resulting emotional problems those Alaskans                                                              
feel throughout their lives, they all experience them.  She agreed                                                              
that there are unanswered questions.  She sat through the testimony                                                             
of the national expert that did the actuarial studies, and she                                                                  
learned a great deal.  She hopes that he speaks not only to the                                                                 
subcommittee, but to all of the HES Committee members the Labor and                                                             
Commerce Committee members, so that they fully understand.                                                                      
                                                                                                                                
MS. CLASBY noted that Mr. Bachman indicated that the risk pool has                                                              
to be approximately 100,000, or if it goes below that, the cost to                                                              
the individuals that opt in to it becomes much higher because then                                                              
they are self-selecting.  They take it because they know they have                                                              
a problem and will need it.  The whole point of insurance is                                                                    
spreading the risk so that everyone who goes in will have the                                                                   
benefit at the time of need.                                                                                                    
                                                                                                                                
MS. CLASBY told the committee that they support HB 149 and will                                                                 
work with the subcommittee.  She has some data from several years                                                               
ago from their facilities that showed that the mental health                                                                    
admissions in the state were a much higher percentage charged to                                                                
the public health sector than to the private sector versus the                                                                  
other physical illnesses.  She will provide that information to the                                                             
committee.                                                                                                                      
                                                                                                                                
Number 2130                                                                                                                     
                                                                                                                                
PATRICIA ARNOLD testified via teleconference from Homer.  She was                                                               
formerly married to a small employer and knows the difficulty of                                                                
providing insurance for a small business.  Since then she has                                                                   
separated and has used mental health services that are covered by                                                               
Medicaid.  It is a two-edged sword in terms of her own life                                                                     
experience.  (indisc--simult. speech).                                                                                          
                                                                                                                                
The Committee took an at-ease from 12:41 p.m. to 12:42 p.m.                                                                     
                                                                                                                                
CO-CHAIRMAN DYSON asked if there is an immediate time crisis on                                                                 
this bill.  They want to have the best and right thing in place                                                                 
before the 2001 date.                                                                                                           
                                                                                                                                
REPRESENTATIVE DAVIS agreed the task force understands the                                                                      
difficulty of informing different committees and the public of the                                                              
issue.  Because of the complexity of the issue and the numbers                                                                  
crunching they are looking for, probably a subcommittee is the                                                                  
place to do it.                                                                                                                 
                                                                                                                                
Number 2008                                                                                                                     
                                                                                                                                
MR. MAJOROS offered that the AMHB would be happy to work with the                                                               
subcommittee.  He noted the task force did deal with many of these                                                              
issues through a lengthy six-month process, and they used all the                                                               
available data they were aware of to address the issues that came                                                               
forward.  He is somewhat concerned about reinventing the wheel.                                                                 
Another concern is that the issues of cost and business analysis                                                                
will be debated and addressed in the Labor and Commerce Committee,                                                              
so he is concerned about having multiple debates on that issue.  He                                                             
suggested that perhaps this subcommittee may not be the appropriate                                                             
venue to debate some of those business issues.  He suggested that                                                               
the subcommittee deal with the policy issues and perhaps save some                                                              
of the business issues for debate at the Labor and Commerce                                                                     
Committee.                                                                                                                      
                                                                                                                                
CO-CHAIRMAN DYSON understood the 2001 date as where they start                                                                  
running into people being harmed.                                                                                               
                                                                                                                                
MR. MAJOROS believes that the date 2001 is the sunset date under                                                                
federal legislation.  He is not sure if there is an exact                                                                       
correlation between that process and this process.                                                                              
                                                                                                                                
CO-CHAIRMAN DYSON stated that he doesn't intend that their lack of                                                              
action today would make things worse for people.  One question he                                                               
does have is should they have started with covering everything in                                                               
DSM-IV, or should they start with a more incremental approach.                                                                  
                                                                                                                                
CO-CHAIRMAN COGHILL appointed Representatives Brice, Whitaker and                                                               
Morgan to serve on the subcommittee to deal with this insurance                                                                 
issue. He noted that the information will be collected for the                                                                  
subcommittee, and he intends to be active in reviewing what is                                                                  
going on in the subcommittee.  The policy issue is part of the                                                                  
question of getting the answer so they can make a worthwhile                                                                    
policy.  He is not comfortable in mandating it without exploring                                                                
some of these questions.  [HB 149 was held over and assigned to a                                                               
subcommittee.]                                                                                                                  
                                                                                                                                
The Committee took an at-ease from 12:47 p.m. to 12:48 p.m.                                                                     
                                                                                                                                

Document Name Date/Time Subjects