SENATE HEALTH, EDUCATION AND SOCIAL SERVICES COMMITTEE February 24, 1999 1:32 p.m. MEMBERS PRESENT Senator Mike Miller, Chairman Senator Pete Kelly, Vice-Chairman Senator Gary Wilken Senator Drue Pearce Senator Kim Elton MEMBERS ABSENT All members were present COMMITTEE CALENDAR CS FOR SENATE BILL NO. 48(HES) "An Act relating to health insurance provided by and provisions relating to the Comprehensive Health Insurance Association." -MOVED OUT OF COMMITTEE CS FOR SENATE BILL NO. 27(HES) "An Act relating to school records and driver license records of certain children." -MOVED OUT OF COMMITTEE PREVIOUS SENATE COMMITTEE ACTION SB 48 - No previous action to report SB 27 - See HESS Committee Minutes 2/22/99 WITNESS REGISTER Senator Jerry Mackie Alaska State Capitol Juneau, AK 99811-1182 POSITION STATEMENT: Presented SB 48 Mr. Cecil Vykerk, Executive Vice President Mutual of Omaha Insurance Companies Omaha, Nebraska POSITION STATEMENT: Commented on SB 48 Ms. Sandra Cole, Public Advocate Comprehensive Health Insurance Association Wasilla, AK POSITION STATEMENT: Commented on SB 48 Ms. Marianne Burke, Director Division of Insurance Department of Commerce & Economic Development PO Box 110805 Juneau, AK 99811-0805 POSITION STATEMENT: Supported SB 48 Mr. Mike Pauley, Staff Aide Senator Loren Leman Alaska State Capital Juneau, AK 99801-1182 POSITION STATEMENT: Commented on SB 27 Ms. Beth Lape, Special Assistant Department of Education 801 W. 10th St. Ste. 200 Juneau, AK 99801-1894 POSITION STATEMENT: Commented on SB 27 ACTION NARRATIVE TAPE 99-07, SIDE A Number 001 SB 48-STATE HEALTH INSURANCE CHAIRMAN MILLER called the Senate Health, Education and Social Services (HESS) Committee to order at 1:32 p.m. and announced that SB 48 would be the first order of business, with Senator Jerry Mackie speaking on the bill. CHAIRMAN MILLER noted a proposed committee substitute in the packets, and SENATOR MACKIE stated that all of his testimony would address the draft CS. CHAIRMAN MILLER asked for a motion to adopt CSSB 48(HES). SENATOR PEARCE so moved, and without objection it was adopted. Number 019 SENATOR MACKIE thanked the committee for hearing the bill, and stated that Marianne Burke and others would comment on the details of the legislation. He introduced the bill at the request of the Board of Directors of The Comprehensive Health Insurance Association(CHIA). The association makes individual health insurance available to residents who are high risks or are federally-defined eligible individuals. The directors represent the principle providers of health insurance in Alaska. He said the legislation has the support of the Division of Insurance. The CHIA was created by statute, with copies in the committee packets. The legislation amends AS 21.55 to (1) allow the board greater flexibility to design more cost-effective health insurance plans for individuals eligible for coverage under the CHIA plan; (2) increase the number of potential administrators of the CHIA by eliminating the requirement that the administrator be an insurer; (3) allow greater flexibility in evaluating an administrator and in setting the terms of the administrative contract; (4) simplify administration by decreasing the number of declinations required for eligibility; (5) make technical corrections relating to the determination of premium rates, terminology, premium payment modes, board member terms and voting at board meetings; and (6) give the director of insurance a more effective and appropriate mechanism to enforce the requirement that members pay their share of the CHIA assessments on a timely basis. SENATOR MACKIE continued, saying the legislation will allow the board to manage CHIA in a more cost-effective and efficient manner. It also is particularly important in light of the new federal requirements, and the use of CHIA as the mechanism to guarantee portability of health insurance coverage to federally eligible individuals. He pointed out the zero fiscal note from the Division of Insurance and a detailed sectional analysis in the packets. Number 065 SENATOR ELTON questioned why in Section 7 100% for medical can be paid, but only 50% for the treatment of mental and nervous conditions when some mental conditions like schizophrenia and bipolar need continuous medication. SENATOR MACKIE deferred to Ms. Burke for an answer. CHAIRMAN MILLER asked Senator Mackie if any groups are opposed to the bill. SENATOR MACKIE replied there are none. A lot of these are technical changes. CHAIRMAN MILLER invited the on-line witnesses to testify. Number 100 MR. CECIL VYKERK, Executive Vice President and Chief Actuary for Mutual of Omaha insurance companies, Omaha Nebraska, stated he's been involved with the CHIA board since its inception in 1992. The legislation in Alaska passed in 1992 and they began insuring the first policyholders in 1993. The board is composed of five insurer representatives that currently include Blue Cross Alaska, Aetna, and Mutual of Omaha; and two consumer representatives from Wasilla, including Sandra Cole who is on-line today. MR. VYKERK continued, it's a very important plan for Alaskans who are unable to purchase health insurance through the private market due to preexisting conditions and other factors. It's also important to meet the requirements of the HIP legislation passed by the federal government several years ago. A group that included the Division of Insurance worked hard to make the legislation successful. The bill is largely a collection of technical adjustments to make it easier to manage the pool in a cost- efficient manner. Number 141 MS. SANDRA COLE, Public Representative on CHIA, stated she has been on the board for two years. She spoke to the changes in the bill, noting the one vote for the public advocates. She asserted that to change the $200 deductible to a $500 minimum is not a problem for the public. She said there is a need to keep the premiums at the current high insurance rates in Alaska. In order for people to afford this program, which many including herself cannot, there must be changes in other areas to decrease the cost of the program. She discussed hospitalization, competition, and language changes including the use of age as a definition for premiums and the elimination of vague wording such as "excessive" and "inadequate" which are impossible to define. MS. COLE said in summary that the program is vital to the people of Alaska. Number 209 CHAIRMAN MILLER announced to the Close Up students present in the audience that the committee is considering SB 48. SENATOR WILKEN asked where the students were from. They each stood and introduced themselves, and they were all from Akiak and Akiachuk. SENATOR KELLY stated that he is unsure what the bill does, and he wondered if it creates a board which develops policy with money appropriated in the bill passed by the legislature last year. Number 232 MS. MARIANNE BURKE, Director, Division of Insurance, stated this company was created by the legislature in 1993, separate from state government without state subsidy. She said it is critical for the many people who cannot get health insurance, no matter the cost, and gives them a chance to participate in the cost of their own insurance. The board only collects about 20% of the total cost, the remainder of the cost being assessed against the writers of insurance in the state. As a condition for doing business in the state, the insurance writers agree to assist in funding this mechanism. Without it, most of these people would be on Medicaid. They aren't paying much, but for many it's a point of pride and personal dignity that they are participating. They include people with incurable or terminal diseases such as AIDS, cancer, or hemophilia who cannot get insurance. It is not a perfect program, but it provides the care and allows individuals to participate, and it spreads the cost over all the insureds in the state of Alaska. SENATOR KELLY stated that it creates a catastrophic policy, and he asked about the deductibles. MS. BURKE replied there are a variety of deductibles ranging from $500 to $10,000 which the individual selects according to what he can afford to pay. It is also geared to age. There is no other underwriting. She clarified that the individual pays a premium but it only covers about 20% of the total cost incurred. The CHIA is the insurance company, funded in part by the premiums and in part by the writers of insurance in Alaska. SENATOR KELLY asked if the cost spread to the insurance companies is an equal distribution. MS. BURKE answered that it is based on the pro-rata share of the premiums they write on any health policy in the state. The company writing more premiums than any other would get the biggest share of the assessment. SENATOR KELLY asked how much this is going to cost and how much each company is going to be assessed. MS. BURKE responded since the inception of CHIA in 1993, approximately $7 million has been assessed. In 1993, $250.0 was assessed for seed money. Originally there were very few participants. The assessment is always made based on the cost of the plan which is monitored by the board. Within its statutory constraints the board tries to control those costs, like hiring a case manager to help negotiate discounts with the hospitals. The assessments have been as high as $1.5 million, and currently Blue Cross is the largest writer in the state, covering about 38% of that. Back when the state was insured, Blue Cross and Aetna covered roughly 70% of the cost. Number 311 SENATOR KELLY discussed Senator Murkowski's Medicaid bill that passed last year, with millions accruing to the state to cover people at 200% of the poverty level, depending on the number of children. If you made in excess of $37,000, you were eligible for Medicaid. He asked if that provision makes this legislation obsolete. MS. BURKE replied no, because it was specifically directed at uninsured children. They may be uninsured for many reasons, but seldom because they can't be insured because of a medical condition. This plan, on the other hand, is set up for individuals -not families or groups - who have a medical condition that precludes them from buying a policy on the open market. They are two separate programs. SENATOR MACKIE clarified that the legislature in 1992 determined that insurance companies, as part of doing business here, contribute back to those folks who cannot get insurance for medical conditions, to take care of catastrophic illnesses. SENATOR ELTON asked why in the existing language in Section 7 there is a differentiation between physical health and mental health, with only 50% coverage of mental health disorders which may be physically based. MS. BURKE replied that she cannot explain that. It was written back when it was the norm in writing and structuring a policy, and the coverage has not been changed since that time. SENATOR ELTON noted that Representative Gary Davis and Senator Torgerson have some recommendations for the Mental Health Parity Task Force. CHAIRMAN MILLER also noted that the bill has a referral to Labor & Commerce after it leaves HESS. MS. BURKE stated that the division supports the bill. The board is charged with running the plan as cost-effectively as they can and it's to their advantage to do so because their companies foot the bill. Right now the board pays the highest administrative cost in the country. Only one company has been willing to act as administrator. If the division can help them have more choices in that area to lower the cost of the plan, more people will benefit from it. SENATOR WILKEN moved CSSB 48(HES) out with individual recommendations and the attached zero fiscal note. CHAIRMAN MILLER asked for objection, and hearing none, CSSB 48(HES) passed from committee with individual recommendations. SB 27-ACCESS TO DRIVING/SCHOOL RECORDS OF CHILD CHAIRMAN MILLER brought up SB 27 and asked Mike Pauley to join the committee at the table. Number 367 MR. MIKE PAULEY, Staff to Senator Leman, stated he worked with Legal Services at the chairman's request to draft a committee substitute. He then highlighted the page and line numbers of the changes as follows. On Page 1, lines 10-12, new language regarding releasing school records states that the school district has the discretion to decline releasing information that consists of the child's address if there is reason to believe its release would pose a threat to the health or safety of the child. In reference to the last hearing on the bill, this amended language tries to address the concern expressed by the Council on Domestic Violence & Sexual Assault that there could be some circumstances of a non-custodial parent with a restraining order because of child abuse being able to locate the child by accessing this address information from the school district. The second change is on Page 2, line 2, where language was removed that provided for DMV to charge a fee for the driving abstract, thus making it consistent with Senator Wilken's amendment. The third change is on Page 2, lines 4-6 which similarly adds an exception that the DMV can refuse to release this address information if it has reason to believe that its release might jeopardize the health or safety of the driver. It is consistent with the language in the bill that relates to school records. Number 398 CHAIRMAN MILLER asked for a motion to adopt the committee substitute. SENATOR WILKEN moved to adopt CSSB 27 Version D as a working document, and there being no objection, it was so ordered. Number 405 MS. BETH LAPE, Special Assistant to the Department of Education, briefly stated that the department feels that the 53 school districts in the state are currently in compliance with the federal law relating to family educational and privacy rights, so it believes that the first section of the bill is not necessary. SENATOR ELTON asked Ms. Lape if the bill passed, could she give an estimate of how many school districts would be out of compliance with state law. He said he's thinking of Anchorage and Juneau which currently exclude medical and psychological records in their local policies. MS. LAPE answered she does not know. Number 416 MS. MONA MAEHARA thanked the bill sponsor for working with the council in drafting language that addressed their concerns. MR. MIKE PAULEY addressed Senator Elton's earlier question, stating the Anchorage school district policy excludes release of medical and psychological records of a past or present student who is 18 years of age or older, but it does not exclude that information for students under 18. Since this proposed legislation only applies to children under the age of 18, it would not put Anchorage school district in violation of the federal law. The federal law gives a student, on becoming an adult, the right to consent to the release of medical information. The sponsor's view is that prior to that age, it's the parent's right to know medical information about their child. SENATOR ELTON asked if he knows the policies of other school districts. MR. PAULEY replied he hasn't researched all 56 districts, although Ms. Lape stated the department feels they are all in compliance with federal law. If that is the case, they wouldn't release that information after the student turns 18. Number 440 SENATOR WILKEN asked Ms. Lape if leaving Section 1 in the bill, which the department feels is unnecessary, would create problems for school districts. MS. LAPE replied it's a good legal question. The federal law refers to withholding funds to any local or state agency that has a policy of not releasing records to parents. As far as the department knows, no education agencies in the state are out of compliance. This state law would bring different consequences and a different set of liability. SENATOR WILKEN asked Mr. Pauley how that squares with what Senator Leman is trying to do with the bill. The department seems to be suggesting it doesn't need fixing, and this is duplicative language. MR. PAULEY replied that it's not exactly duplicative language. The federal law says in order to be eligible for funding you need to do this, while the state law says you shall do it. That's the legal difference. The language was added by the sponsor to clarify the statute relating to the records a custodial parent can access. SENATOR WILKEN asked Ms. Lape if she recommends leaving Section 1 as it is, or removing it. She replied that she recommends taking the first section out. CHAIRMAN MILLER stated the committee is at the mark up stage and there are some proposed amendments. SENATOR WILKEN asked if Mr. Pauley could take it back to Senator Leman and advise him of this discussion, because it started out as a driver's license bill. Number 476 SENATOR KELLY asked Ms. Lape to explain her statement that a different set of circumstances would apply if the Section 1 language is in the bill. He asked why there would be ramifications from the federal government if we put in state law that which is in federal law. MS. LAPE replied that if it's in state law, there are liability issues with school districts that don't currently exist with federal law. MR. PAULEY responded to a question from Senator Kelly regarding what that liability would be. He said that under state law, if a parent tried to get school records and was denied, they could theoretically file an action in court saying this is illegal. Senator Leman is strongly committed to having the first section in the bill, and part of his concern is that it adds clarity to the statute. He added that the state statutes are a lot more accessible than the federal law. SENATOR KELLY stated there are no unintended consequences of having Section 1 beyond what the sponsor wanted to do. He said he would prefer to keep Section 1 in the bill. Number 508 SENATOR ELTON said he could not agree with Senator Kelly because the committee had already found one unintended consequence that the CS has remedied. He reiterated he would like to know the consequences of this addition to statute. He feels that if a student knew that medical records would be open to the custodial or non-custodial parent, it would be a disincentive to the student to be treated, as an example, for a sexually-transmitted disease. He'd like to know the experiences in other school districts. He asserted that the problem with the driver's record which led to the drafting of this bill could have been solved by the parent revoking permission to drive if DMV doesn't release that information and the child is under 18. Instead, SENATOR ELTON stated, we've fashioned a law that addresses one instance that happened in the past and expanded it to include school records without really understanding the net effect on the current practices of school districts. He stated he is bothered by that. SENATOR KELLY said he didn't have strong feelings about this bill until Senator Elton talked him into it. Number 530 CHAIRMAN MILLER asked the wish of the committee. MR. PAULEY addressed Senator Kelly's and Senator Elton's comments. The Anchorage school district policy does include some health- related information in the records such as speech pathology reports and a cumulative health card. This is a standard part of an academic record disclosed to parents. He cannot explain their policies regarding what is recorded on the health card. Number 538 SENATOR ELTON stated he's tempted to offer an amendment to remove Section 1, but there is a compelling reason to work with parents and release these records. SENATOR ELTON offered an amendment as follows: on Page 1, Line 9: add a new "(1) medical records; or" and Renumber the existing (1) and (2). The intent is to add an exemption of medical records from release. He stated he's not sure he wants to preclude medical records if a school district wants to release them, but to keep it an option for the school district instead of a state mandate. MS. LAPE expressed concern over becoming an educational agency setting up policies in opposition to federal law. Not giving certain records to parents would lead to ineligibility for federal funds. She said that this section is subject to the federal law which has three exceptions to accessing records, in addition to those students over 18. CHAIRMAN MILLER stated the bill goes to Finance, and of course, to the Senate Floor. He recommended that Senator Elton work with the department and the sponsor to come up with an amendment that would do what he wants without making it mandatory for the school district. SENATOR ELTON withdrew his Amendment #1. He then offered a new amendment to strike Section 1. CHAIRMAN MILLER asked for objection. There was objection to the amendment. Hearing no discussion, a roll call vote was taken with Senator Elton voting "yea," and Senators Kelly, Wilken and Chairman Miller voting "nay." The amendment failed. SENATOR WILKEN moved CS SB 27(HES) out of committee with individual recommendations and the zero fiscal note. Hearing no objection, it was so ordered. CHAIRMAN MILLER noted that the committee would not meet Monday, March 1 because of the four-day recess. On Wednesday, March 3 the committee will take up Senate Bills 56, 57, 58 and 59, the legislation resulting from the Long-Term Care Task Force. His intent would be to do as much work as possible on the bills next week as he will be gone the following week when Senator Wilken and Vice-Chairman Kelly will continue the work on the bills. With no further business to come before the committee, Chairman Miller adjourned at 2:30 p.m.