HB 326-CHILD-ONLY HEALTH CARE COVERAGE  4:00:13 PM CHAIR OLSON announced that the final order of business would be HOUSE BILL NO. 326, "An Act requiring health care insurers to offer a child-only policy; and providing for an effective date." 4:00:18 PM REPRESENTATIVE DAVID GUTTENBERG, Alaska State Legislature, stated that a constituent contacted his office to inform him there is not any child-only health care offered in the state. He explained that if a person has a healthy child who is not eligible for Denali Kid Care, and does not have a condition that would put the child into a high-risk pool, that no insurer offers health care for the child. He related grandparents who become the custodial parents have no place to go for coverage. This bill, HB 326, would ask the insurance industry to offer plans to cover at-risk children due to an insurability gap. This would ensure that every competent is eligible. He expressed dismay that there is not any child-only health care in the state. He pointed out that the bill has a termination date that repeals AS 21.42.420 on January 1, 2014 since if health care continues forward that the health care would be offered, regardless; however, right now there is not any health care available. 4:02:59 PM REPRESENTATIVE JOHNSON said he thought it was a good concept and he likes it. He asked in light of the pending U.S. Supreme Court case if he wanted to repeal this provision on January 1, 2014. REPRESENTATIVE GUTTENBERG left it up to the committee to decide. 4:03:16 PM REPRESENTATIVE JOHNSON suggested that if it is a good idea that there wasn't any reason not to extend it. 4:03:38 PM REPRESENTATIVE SADDLER asked how big the universe of children whose families too rich to qualify for Denali Kid Care, but do not have enough means to afford private insurance. REPRESENTATIVE GUTTENBERG answered that the AARP indicates that 11,000 grandparents have custody of their grandchildren. 4:04:26 PM REPRESENTATIVE SADDLER inquired as to whether children are defined as being under 18 years of age. REPRESENTATIVE GUTTENBERG answered yes; under 18 years of age. 4:04:37 PM REPRESENTATIVE SADDLER referred to some good analysis of costs. He inquired as to whether an estimate of cost for the policies for children-only is available. REPRESENTATIVE GUTTENBERG answered no, that the actuarial will come up with those figures. He clarified that the bill does not ask for discounts or waivers. The insurance companies would market it as a normal product. REPRESENTATIVE SADDLER asked whether the policies would be purchased by an adult for a child. REPRESENTATIVE GUTTENBERG agreed. 4:05:22 PM LINDA HALL, Director, Division of Insurance, Anchorage Office, Department of Commerce, Community & Economic Development (DCCED), stated that she is available for questions. 4:06:01 PM CHAIR OLSON asked if the children in question would have access to the Alaska Comprehensive Health Association (ACHIA) high-risk insurance. MS. HALL answered that healthy children would not be eligible since ACHIA is established for people with conditions that make them uninsurable. 4:06:32 PM CHAIR OLSON inquired as to whether this could be done on an administrative basis. MS. HALL answered no; the division has explored that option. The division does not have any statutory authority to allow the division to promulgate regulations although some states can do so. CHAIR OLSON related his understanding that the division cannot roll out new products. MS. HALL answered no. 4:06:57 PM REPRESENTATIVE JOHNSON asked whether this is a unique problem to Alaska or if other states have addressed this issue. MS. HALL recalled that 17 states had the same condition as Alaska. She noted that some states were able to administratively require an open enrollment period. The terms vary, some range for 30 days. She recalled two states have two separate 30-day periods and other states offer longer periods of time. 4:07:47 PM MS. HALL stated that the open enrollment period is longer in this bill than most she has seen. She related that under the federal health care reform some provisions went into effect in September 2010. One provision pertained to the underwriting of children under ages of 19, she said. 4:08:39 PM MS. HALL related that the prohibition of any underwriting that would have amounted to a guarantee issue of January 1, 2014. Many insurers did not want to take the risk of having adverse selection, such that an individual only purchase insurance when the person really needs it. She explained that most insurance is based on the theory of large numbers plus large numbers of people contributing, but not all of them actually using the funds. She pointed out that is one of the problems the division has encountered with the high-risk pool - which is subsidized at $5 million per year. Thus taking risks without being able to underwrite creates a bigger risk of using the resources than some insurers were willing to take so two insurers have pulled out of Alaska. She said that throughout the country this is not unusual. 4:10:14 PM REPRESENTATIVE JOHNSON asked if Alaska mandates this by passing the bill, whether the state is likely to see other insurance companies pull out. MS. HALL said she can't answer that question. She has not heard anyone threaten to do so, but she is unsure she would hear. She explained that she has had some indication that if the playing field was a level playing field and everyone has to provide the insurance it may not be so onerous. She explained that if one company offers coverage and they get all the unhealthy kids to cover is more onerous than if all the companies have to insure the children and the unhealthy children are spread among them. 4:11:25 PM REPRESENTATIVE SADDLER asked whether the shadow of health care mandates darken the prospects for any change in health insurance. He inquired as to whether there is any chilling effect during the wait for the U.S. Supreme Court to issue the ACAPPA decision. MS. HALL said she did not know. She related that the health insurance industry is under some stress of the unknown. She related that the division receives new regulations almost weekly and or receives interpretations of certain pieces of the federal health care law. 4:12:39 PM MS. HALL stated the division may be impacted three months from now with more changes and unknown obligations that are as chilling as anything. She pointed out that the enactment of pieces of the federal health care law continues. 4:13:24 PM REPRESENTATIVE SADDLER asked if the division has sufficient data to estimate costs of child-only insurance. MS. HALL answered no; the division has a rate approval effective date of January 1, but the rates will need to be filed with the Division of Insurance and justified actuarially. So while she cannot predict the costs she can say that health care in Alaska is extremely expensive. She said health insurance rates are considerably higher in the state than most places so she would not expect child-only health care coverage to be inexpensive. 4:14:34 PM REPRESENTATIVE MILLER stated he reviewed some of the provisions of the bill. He referred to page 2, lines 8-17 to the definition of late enrollee. He pointed out if a child had never been covered by insurance that the language seems to exclude them from the bill. MS. HALL agreed. She suggested that the late enrollee allows people to enroll outside the open enrollment period which is defined in paragraph 2. She agreed the provisions he mentions does not appear to allow a child who has never been covered. She related that if the circumstance arises in which a child who has never been covered needs insurance the adult custodian might risk some adverse selection. She recalled the invincible "20 somethings" who are sure they don't need insurance because nothing will happen. She said when a parent has a healthy child who doesn't need insurance who is later diagnosed with something and the parent then buys insurance represents the worst-case scenario in the insurance world. She pointed out that illustrates the purpose of the open enrollment period since that is the point at which insurance is offered for healthy children. She explained that adding the option to one of exceptions in the provisions on page 2, lines 8-17 would make it an open-ended ability to enroll. 4:17:43 PM REPRESENTATIVE MILLER related his understanding that if a child has never been covered the child would not be covered in this bill. MS. HALL pointed out the child would be during eligible under paragraph (2) during the enrollment period from January 1 - March 31 of each year. She explained that helps put some parameters on when people can go out and buy insurance. 4:18:56 PM MS. HALL explained that ACHIA is insurance that people with serious health conditions can purchase and the premiums are fairly high. The ACHIA has a public meeting each year. She heard public testimony in which a person testified that they purchased ACHIA in December of the prior year, had a full hip replacement for about $100,000, then dropped coverage in February. She offered this as an example of adverse selection. The person paid for two months of premiums for a few thousand dollars, but incurred surgery costs of $100,000 and then dropped the insurance. She indicated that the open enrollment period tries to balance this out. She reiterated that people have the option to obtain coverage while they are healthy during the open enrollment period. 4:20:55 PM MARIE DARLIN, Coordinator, AARP Capital City Task Force, stated that there is no sense repeating the testimony. She stated that this bill is needed and important. She referred to the AARP's letter of support, and noted that currently no insurance companies in Alaska offer children-only insurance. She pointed out that many grandparents are raising their grandchildren. She related statistics that at estimated 5,000 grandparents are raising 8,000 grandchildren in Alaska. She pointed out that Medicare covers the grandparent, but coverage does not extend to family members. She stated that grandparents take on this responsibility but health care is an issue. The coverage is not inexpensive. She stated that the 2010 Census and the Alaska Department of Labor and Workforce Development estimates 11,778 grandchildren under the age of 18 are in a household led by a grandparent. She indicated that these grandparents desire to furnish health care if they can afford to do so. She stated that the AARP speaks in support of the bill since it is one more way for grandparents to take care of their grandchildren. 4:24:23 PM ADAM WOOL stated he is a parent of two children. He and his wife buy their insurance through ACHIA. He explained that they each have pre-existing conditions although neither is seriously ill, but cannot be covered by other insurance. He reported that their first child was born about five years ago and has her own policy through Blue Cross/Blue Shield. Their second child was born two years ago and the law or insurance policy has since changed and they cannot buy insurance. He pointed out that their second child is basically in a "black hole" of not being eligible for any insurance coverage. He said right now there is not a way to buy insurance for both children. CHAIR OLSON hoped that some remedy would be forthcoming. 4:26:06 PM REPRESENTATIVE SADDLER asked if he could buy insurance through ACHIA. MR. WOOL answered no; that the child would need to have had a pre-existing medical condition. REPRESENTATIVE SADDLER asked for the insurance cost to his family. MR. WOOL answered that the family has three individual insurance plans. Their oldest daughter has a Blue Cross/Blue Shield plan with a $5,000 deductible. He and his wife each have individual plans with ACHIA, each with a $5,000 deductible. He summarized that the three of them have $15,000 deductible for their insurance policies, but they cannot buy insurance for the youngest, healthy child. He said he spoke to the ACHIA representative several times. He learned that in some other states a family plan is allowed so healthy children of parents on ACHIA can be incorporated into the plan; however that is not the case in Alaska. 4:27:57 PM REPRESENTATIVE SADDLER asked for the amount of the premiums. MR. WOOL answered that combined premiums for ACHIA cost approximately $1400 and the oldest daughter's insurance premiums cost about $200 per month. He pointed out the oldest child is a healthy child who was covered before the rule changed and her premiums cost approximately $200 per month. 4:28:39 PM [HB 326 was held over.]