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.