SB 179-DEPENDENT HEALTH INSURANCE; AGE LIMIT  CHAIR DAVIS announced consideration of SB 179. 1:34:41 PM TOM OBERMEYER, Staff to Senator Davis, presented SB 179, Version \M. The title was changed by a previous committee to make it shorter; it is "An Act requiring family health care insurance coverage for dependent children who are less than 26 years of age." He said this bill presented questions that he hoped to address in the sponsor statement and the explanation that was handed out to committee members. He then proceeded to read the sponsor statement. SB 179 mandates family private health insurance coverage for dependent children through age 25. It prohibits a health care insurer from denying or removing enrollment or eliminating coverage under age 26. Young adults, ages 19-29, are one of the largest growing segments of the U.S. population without health insurance. In 2004 almost 14 million young adults lacked coverage, an increase of 2.5 million since 2000. This rapid change is due in part to their losing coverage under their parents' policies at 19, or Medicaid, or State Children's Health Insurance Program, or graduation from high school or college. Almost half of college graduates and high graduates will be uninsured for a substantial time after graduation. Age 19 is a crucial year in health insurance coverage. Both public and private insurance plans treat this age as a turning point for insurance coverage. Even if youth go on to college, parents' insurance plans often stop before graduation. Almost all private universities and about one fourth of public universities require health insurance as a condition of enrollment. Forty percent of part-time students and non-students, and 20 percent of full-time students ages 19-23 are uninsured. States are taking action to mandate coverage for young adults, often allowing for targeted policy options. For example, in 2006 New Jersey required most group health plans to cover single adult dependents up to age 30. Massachusetts as part of its expanded health insurance law in 2006 considered dependents for insurance purposes up to age 25 or for two years after they are no longer claimed on their parents' tax returns. Since 1994 Utah has required coverage through age 26, and New Mexico provides coverage for unmarried dependents up to age 25, regardless of school enrollment. Texas in 2003 allowed full-time students up to be covered by their parents' insurance plans to age 25. It is not uncommon, or unreasonable, therefore, that Senate Bill 179 requires offering family health insurance coverage to dependent children up to age 26. MR. OBERMEYER added that there had been questions by insurers as to how this might be implemented, so he drew on an example from a previous bill, SB 190. He hoped this explanation would help assure insurers that SB 179 would not wrest control of benefits and premium costs from them. SB 179 added a new subsection (e) to AS 21.345 [21.42.345] "Required provision for coverage of dependents." This was similar to the addition to the same subsection in SB 170 regarding well-baby exams, which was sponsored by Senator McGuire and was in Senate Rules. 1:38:25 PM Linda Hall, Director, Division of Insurance, Department of Commerce, Community & Economic Development, Juneau, AK, in a letter to Senator Green on March 18, 2008, explained and compared the coverage for well-baby exams to existing mandates for dental, vision and hearing under the same subsection 21.42.385. Ms. Hall wrote, in part: With respect to how a mandated offer requirement is implemented, first of all, insurers who write health care insurance and offer dependent coverage would be required to provide coverage forms which include coverage for well-baby care, that is for this particular benefit, in this case up to age 26. Second, insurers are responsible for assuring compliance with mandates and we have seen insurers comply with 21.42.385 in a number of different ways including: a) offering the specified benefit in their health policies (if the insurer already includes coverage, no additional offer would need to be made. b) developing or offering a separate rider or amendment that provides the specified benefit, which is then offered in conjunction with a base health insurance policy for a separate premium. The application form would provide an option to select the specified benefit. c) developing and offering a stand-alone policy that contains the required benefit, or d) offering the benefit as one of several available optional benefits from which employers or individuals can select and which, if selected on the application form, is incorporated directly into that employer's or individual's health insurance policy as a premium. MR. OBERMEYER said, as he understood it, this provided that the insurers still had a number of options available to control their costs. There was no actuarial basis at that time to determine what the costs might be, which was why the zero fiscal note indicated an "indeterminate" dollar amount. It had been recognized that, particularly in family plans, students in the middle of their college career might suddenly be faced with a significant premium to maintain health insurance required by the school. This would allow these people in particular, to extend coverage under the family plan for a little longer. 1:41:45 PM SENATOR ELTON asked Mr. Obermeyer for the definition of a dependent child. MR. OBERMEYER answered that he thought the definition was covered in each policy by each insurer, but was not sure. SENATOR ELTON asked if he had understood correctly that each insurer could offer a different health insurance plan say, for a child who was 23 and one who was 16; for example the insurer might have a health policy that would cover catastrophic illness, but not vision and dental. He asked Mr. Obermeyer if that was possible under this bill. MR. OBERMEYER said he did not understand all the nuances of it, but the implication of the letter from Ms. Hall regarding SB 170 under mandated coverage was that there would be a lot of flexibility in how they drafted their policies. Also, the coverage would not be free. If a family wanted to continue to cover their children, they would have to elect that coverage and pay for it. This bill simply required the company to offer it. That was the mandate. SENATOR ELTON read it differently. The language said the insurer "may not deny enrollment and may not disenroll or eliminate coverage" and it seemed to him that meant the insurer would have to continue to extend the same kind of policy they had when the child was 18. He asked Mr. Obermeyer if he was reading it incorrectly. 1:45:32 PM MR. OBERMEYER answered that the way he read it, the concept of disenrolling or eliminating [coverage] would be if a party was already enrolled and the insurance company wanted to remove that person for some reason. He did not have a definite answer however; he apologized for not having someone from the Division of Insurance on hand. CHAIR DAVIS said she would like to speak to that. The bill had already been heard in Labor and Commerce, where they had discussed the matter of being "disenrolled." Once the child was on the coverage, neither the parents nor the insurance company th could disenroll them until their 26 birthday. As for having different coverage for an 18 year old vs. a 24 year old, she could not respond to that but would get an opinion from legal. SENATOR ELTON insisted that it would depend on the definition of a dependent child. CHAIR DAVIS said she had not pursued a definition because she thought each insurance company might have their own; but if he felt it would be helpful, they could put a definition in the corpus of the bill. SENATOR ELTON pointed out that if a dependent child was considered simply someone who lived at home until the age of 26, that dependent child might have a job and have insurance through that job; it seemed to him they would want a provision that, if the child was covered under another plan, they need not be covered under the family plan. CHAIR DAVIS agreed. SENATOR DYSON asked Mr. Obermeyer if he had meant to imply that the enactment of this piece of legislation would not keep the insurance company from raising the cost of the insurance policy. MR. OBERMEYER responded that he believed, based on his interpretation of the bill and the letter from Linda Hall from Division of Insurance, that the insurer would have the ability to offer riders, which would be a separate addition to a policy and would add to the cost of the policy; or offer other options that could be worked into the existing policy. It wasn't anticipated that this would be blended into all rates unless they elected to do that because of actuarial experience; so he could not respond specifically to the question, except to say that it would offer some flexibility to insurers and they would not be locked into a particular fee schedule. SENATOR DYSON continued that he thought he had just heard Mr. Obermeyer say yes; so indeed the insurance company could raise the cost of that rider to the point that it would be prohibitive to continue the coverage. He said that before he would be willing to vote this out of committee, he would want to be clear on the definition of a dependent and what the insurance companies would be free to do with the costs. He felt they could all agree that a teenager not living at home, now able to drive a car, would add some risk to the insurer; but he would want clarification. CHAIR DAVIS said they could call upon someone from legal to discuss Senator Dyson's question later on. SENATOR COWDERY asked what this would do to a dependent who produced a child of his or her own; would it require the insurer to cover the dependent of the dependent? CHAIR DAVIS said she was not able to answer that. SENATOR DYSON commented that was a good question. SENATOR COWDERY continued to say that whether the dependent were the mother or the father of a child or children, if they were dependent on his or her parents, he would be interested to know how far down the line insurance coverage would go. CHAIR DAVIS noted that Senator Thomas had left the room. She pointed out that some insurance companies covered full-time students until they were 21 to 23 years old; but with the cost of college and the length of time many students had to attend, this bill would ensure access to the required medical coverage throughout their college years without having to bear another expense. She asked if there was someone present from legal who could answer questions about the bill. There was not. 1:55:00 PM SENATOR DYSON disagreed with the notion that dependent children would continue to get coverage without additional cost; somebody would pay. He also disagreed with the idea that it was the government's responsibility to make sure everyone had insurance; he thought what they were really interested in was everyone taking responsibility for their own health and their health care in whatever way they chose. He added that on a national level, the more mandates put upon the insurance companies, the less attractive Alaska appeared to health insurance companies that might want to come into the market. 1:57:12 PM DENNY DEWITT, State Director, National Federation of Independent Business (NFIB), Juneau, AK, opposed SB 179. The NFIB appreciated where Chair Davis was headed with it and he understood personally, having just who reached the age at which they had to purchase insurance. The difficulty the NFIB saw was that this bill focused on a very small percentage of Alaskans covered by insurance, those who were in traditional insurance programs regulated by the state. It would not cover those in union pension welfare programs; it would not cover anyone who worked for the state; it would not cover anyone whose employer had an ARISA plan; small employers would have to fund this while larger employers would be exempt. So while the intent was admirable, the implementation of it was very biased against small Alaska-based companies. He pointed out that there was no real cost to the insurance company; the cost was to the premium payer and the premium payer in this case would most likely be small businesses that were trying to provide coverage to their employees. Insurance companies moved money around and administered programs; but in fact, the cost fell upon the person who paid the premiums, which tended to be the small employer. The language, in their judgment, was also somewhat confusing. It appeared to be a mandated offering bill but at the same time, should an employer choose that offering, there did not appear to be any way out. By preventing disenrollment, a small employer who might be looking at it optimistically and hoping the cost would be very small, would be forced to consider that if he were wrong, he would be on the hook with no way to get out. MR. DEWITT said that rather than encouraging companies to look at this and take the risk, most would be reluctant to do so. Also, when some disabled youth turned 18 they became eligible for public programs as their family plans no longer covered them; he was concerned that those costs would be shifted back to private employers from age 18-26 and if that were the case, it would indeed drive the cost of this benefit significantly higher than they had anticipated. 2:02:01 PM CHAIR DAVIS did not feel there would be a problem with disabled youth being forced back on their parents' insurance, but she said she would check on it. She agreed that the unions and the state's plan would not fall under this mandate, but pointed out that the state's plan changed at least every 2 years and if there were enough employees interested in that coverage, they might add it, just as they had the well-baby exams. MR. DEWITT said the NFIB wondered why it was appropriate for them to mandate a particular coverage on employees of small businesses if they, as employers, were unwilling to mandate that coverage on their own employees. CHAIR DAVIS said that before she heard the bill for the well- baby exams, she believed that it would include the state plan; if left up to her it would. CHAIR DAVIS set SB 179 aside for further work.