Legislature(1999 - 2000)
03/16/1999 01:38 PM Senate L&C
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SB 48-STATE HEALTH INSURANCE
MR. DAVE GRAY, Aide to Senator Mackie, sponsor, explained that the
Comprehensive Health Insurance Association (CHIA) was established
in 1992 by the legislature. It's made up of insurers and is a
pooled health insurance system that was established for Alaskans
who couldn't get insurance anywhere else, because their health
condition was uninsurable and who could not otherwise find adequate
health coverage. The legislation mandated that all providers of
health insurance in the State must participate in the pool. The
Association, then, makes health insurance available to Alaska
residents who are high risk or are federally defined eligible
individuals. These people typically suffer the most severe health
conditions and face insurmountable costs in medical treatment and
care. In addition to operating the insurance pool, the Board of
Directors of CHIA, is directed to periodically report on the
effectiveness of the association in promoting rate stability,
product availability, and affordability of coverage, and to make
recommendations on further legislative or administrative
improvements.
SB 48 is a direct result of the efforts by the Association to make
the program work better and is supported by the Division of
Insurance. It amends AS 21.55 to do the following: 1. It allows
the Board greater flexibility to design more cost effective health
insurance plans for individuals eligible for coverage under the
CHIA plan. 2. It increases the number of potential administrators
by CHIA by eliminating the requirement that the administrator be an
insurer. 3. It allows greater flexibility in evaluating an
administrator and in setting terms of the administrative contract.
4. It simplifies administration by decreasing the number of
declinations required for eligibility. 5. It makes technical
corrections relating to the determination of premium rates,
terminology, premium payment modes, board member terms, and voting
by members. 6. It gives the Director of the Division of Insurance
a more effective and appropriate mechanism to enforce the
requirement that members pay their share of CHIA assessments on a
timely basis.
This legislation will allow the Board to manage the Association and
insurance plan in a more cost effective and efficient manner.
Also, it is particularly important in light of new federal
requirements in the use of CHIA as a mechanism to guarantee
portability of health insurance coverage to federally eligible
individuals.
CHAIRMAN MACKIE asked for a list of illnesses that CHIA deals with.
MR. GRAY deferred to the Division of Insurance for that
information.
MS. MARIANNE BURKE, Director, Division of Insurance, explained that
individuals who turn to CHIA for insurance coverage are dealing
with truly life-threatening situations like dying of cancer to
hemophilia, to AIDS, and severe heart problems and diabetes, high
blood pressure and cholesterol. These are not rich or poor people,
but individuals who are facing devastating health costs. CHIA
gives them the opportunity to participate in the cost of their own
coverage. A middle class family who has a son with hemophilia
faces a $2,000 - $4,000 per month medical cost which for most of us
isn't possible. With CHIA a person can pay what is still a very
high premium, but those premiums pay for only 20 percent of the
actual costs that are incurred by this mechanism. The additional
80 percent is assessed against the insurance companies who write
insurance in the State of Alaska. We all basically pick up a
portion of the cost.
MS. BURKE explained that the individuals pays a premium, not a
sliding scale, based on their age and what they choose as a
deductible they can live with from $200 - $10,000 deductible.
CHAIRMAN MACKIE asked how SB 48 would make her job easier and save
money.
Number 200
MS. BURKE explained that currently CHIA pays four times as much for
administrative services as any other state in the nation. The
reason is because the Board's hands are tied. They have to select
as an administrator one of the insurance companies that writes in
this state. Since its inception there has been only one company
who has been willing to provide this service, Aetna. This bill
would create an immediate cost reduction if we could apply good
business practices and put an RFP out for an administrator who
would do this appropriately, yet cost effectively.
Additionally, since every insurance company that does business in
this state must pay their fair share based on the premium dollars
that they write, they all should pay and pay promptly. Currently,
there are some who are less than prompt and there is nothing she
can do to encourage them to make their payments on a prompt basis.
This legislation would allow her to fine them if they do not pay in
accordance with a reasonable time table. It also exempts companies
who may write such a small amount that it's not really cost
effective for the Division to assess them. If their portion is
$10, it costs more to collect that than $10. SB 48 provides
flexibility in providing more response to the customers who are
seeking this coverage in that they can be offered a greater range
of options. If they are willing to take managed care, for
instance, it's their choice and that can help save money.
Number 250
MR. BOB NIEBRUGGE supported the CHIA program and the amendments
which fine-tune the original bill.
MS. SANDRA COLE, Mat-Su Board member, said she has 26 years of
medical experience and a law degree. She said this program is
vital to the people of the State of Alaska. She was disabled from
an accident a year and a half into her law practice and she could
testify to what sudden illness and loss of a job does to you in
terms of your ability to get health insurance. Most of the changes
in the bill keep lowering the continually raising costs of health
care and she added that many people cannot afford the program as it
is now. No one is choosing a $200 deductible because it is too
costly.
CHAIRMAN MACKIE asked Ms. Burke if there was any opposition to this
bill.
MS. BURKE responded that there is not. All of the insurance
companies who comprise the largest writers in the State are on the
Board and crafted this legislation.
SENATOR KELLY moved to pass CSSB 48(L&C) with individual
recommendations. There were no objections and it was so ordered.
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