Final
August 22nd Meeting of the Health Insurance Interim Committee
HEALTH INSURANCE
Votes:
Action Taken:
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09:14 AM
Senator Hagedorn called the meeting and introduced Jamie Amaral, National Director of Health Research and Development for the National Federation of Independent Businesses (NFIB). Ms. Amaral began her presentation (Attachment A) with some ideas for solutions to the problem of the uninsured. She listed some of the factors that create the problem, including the fact that it is currently not a "buyer's market," the rising cost of malpractice insurance, rising cost of insurance without improvement in quality or service, the fact that fewer carriers have caused virtual monopolies in some states, and carriers making record profits on a business they say is unprofitable. She discussed the lack of price elasticity in the traditional small group market. Ms. Amaral's presentation then moved onto small businesses and subsidies, touching on the skepticism of small businesses to accept subsidies for fear of losing them down the road. NFIB members believe free market solutions are the best option. She also discussed some fully insured health care cost drivers, including industry structure, small group administration and marketing, inadequate competition among carriers, mandates, HIPAA, and the lack of price transparency and sensitivity. Ms. Amaral believes health savings accounts are the best thing for the market. They are similar to medical savings accounts, but much more flexible. HSAs are open to everyone with a qualified high deductible health insurance plan, they are tax deferred with expenses outlined in 213(d) of the IRS code, and unused dollars can be rolled over from year to year. Another aspect of the HSA is that health plans can be paired with them to cover eligible expenses not covered by the insurance policy. Senator Mitchell pointed out that only 120,000 MSAs were sold in the 10 years of their existence, while almost a million HSAs have been sold since January 2004.
09:29 AM
Ms. Amaral continued discussing enrollment in HSAs, contrasting that with the enrollment in MSAs. She also provided some statistics regarding deductibles and premiums. Senator Keller asked a question about services costing more for people with HSAs. Ms. Amaral answered that it is a problem because, in the health care industry, people who pay with cash actually pay a higher price for goods and services because they do not have the benefit of discount arrangements worked out by insurers. She mentioned that NFIB has found that doctors and hospitals are beginning to discount services to those paying with cash or HSAs because they get their money faster than the standard 90 to 120 days. Senator Mitchell asked about the structure of HSAs and how the money is funded and dispersed. Ms. Amaral began her discussion of high deductible health plans. She likened it to car insurance in that there are no front end benefits until the deductible is met, but there is 100% coverage after the deductible. She mentioned that there are very few plans like this in the fully-insured market today. She believes that the best plans are offered through Assurant and United Healthcare. Some states have none at all. She provided an explanation of the 213(d) benefits. They offer a wider range of benefits that most insurance plans would not cover like over the counter drugs. Additionally, even expenses that won't count toward the deductible are tax free. There are limitations to the HSAs, however. Eligible individuals cannot be covered under another health plan that is not a qualified high deductible plan, although specified disease coverage, hospital indemnity, and auto insurance do not count as other coverage and vision, dental, accident and disability also do not count as other coverage. Eligible individuals must not be entitled to Medicare and must not be eligible to be claimed as a dependent on another person's tax return. Ms. Amaral discussed the realization of savings through plan design features. Employers need to seed the deposit account, at least in the first year, and they encourage families to match that amount. She would like to see spouses and families included in the enrollment process. Finally, she recommends sticking with the same network, if possible.
09:44 AM
The presentation continued with a case study of the savings benefits of switching from a point of service plan to a health savings account design. Ms. Amaral gave a case study of a Minnesota manufacturer with 17 employees who switched from a point of service plan in 2004 to a HSA plan in 2005. Total premiums dropped almost $50,000 per year. The total premiums per employee dropped approximately $3,000 a year. There was some discussion of why HSAs might not work. HSAs rely on each of the 50 states having good high deductible health plans to choose from, but not every state has them. There must be real premium savings or there is not enough money to fund the deposit account. HSAs will improve with small business health plans. Senator Mitchell asked about Representative Shadegg's proposal in Congress to allow businesses to purchase out-of-state insurance products and wondered if Ms. Amaral thought that might solve the problem of the availability of high deductible plans. She agreed that Representative Shadegg's bill and the companion bill in the Senate might be steps in the right direction. Senator Hagedorn asked how Ms. Amaral's definition of association health plans (AHPs) differs from MEWAs. She clarified that AHPs must be sponsored by a bona fide trade association and they would not be preempted by individual state legislation. Senator Mitchell asked if it would be helpful for individual states to give their residents the same power to buy insurance across state lines, regardless of what happens with the federal legislation. Ms. Amaral thought it might work, as long as carriers were willing to take a risk on something new. Representative Green asked if it would work to offer the whole range of insurance plans (PPO, POS, AHP, HSA) through trade associations in order to defray some of the risk to carriers. Ms. Amaral responded that those plan designs are great, but too expensive for NFIB members. Senator Hagedorn asked about a multi-state compact and Ms. Amaral believes that is a very good idea. She continued to discuss how small business health plans (AHPs) would work. They would allow small employers to band across state lines as part of a bona fide association. They would allow plans to be filed with the Department of Labor (DOL) under ERISA. They would be rigorously regulated by DOL. The NFIB model would level the playing field. She stated that small business health plans will be consumer driven plans, portable across employers and state lines, great for part-time employees and there would be no participation requirements. They will prevent initiatives toward government-controlled health insurance, which NFIB members overwhelmingly want. She also discussed who would oppose small business health plans, including the health insurance industry and some governors and senators. Ms. Amaral provided resources for further information. Senator Shaffer asked if the NFIB answer to the insurance crisis is the AHP. Ms. Amaral responded that, coupled with HSAs, she thinks AHPs are the best answer. He also asked for clarification regarding lack of mandates. Ms. Amaral believes that the plan design ought to be the responsibility of the carriers and the people they are trying to sell to. She thinks basic mandates are necessary, but that the rest should be determined based on each situation.
10:06 AM
Representative Penry asked a question about the start-up costs of a HSAs and whether a tax credit might be a good solution. Ms. Amaral clarified that a tax credit would be a good solution, but only for the working uninsured. A discussion ensued regarding tax credits and the degree to which they would be an effective incentive for the uninsured. Representative Penry began a discussion of the problems encountered by the Tennessee (TennCare) program.
10:17 AM
Julie Hoerner, Deputy Director Department of Regulatory Agencies, provided a handout (Attachment B) summarizing her presentation regarding network adequacy. Ms. Hoerner began with some background of HB 97-1122. She continued with subsequent modifications to network adequacy and provided some differences between preferred provider organizations and health maintenance organizations. Representative McCluskey asked for statistics on the number of complaints about balance billing problems. Ms. Hoerner talked about how the law and its interpretation has lead to unintended consequences. She also discussed the alternatives presented by the HB 04-1177 public hearings. She then showed that SB 05-227, concerning the provision of health care services, adopted three of those nine alternatives. It required hospitals to inform a consumer at the time of admission that a treatment or services might be provided by providers who are not in the consumer's health plan and that they may be balance billed for treatment and services not covered by the plan. It distinguished between emergency and nonemergency services for the purposes of reimbursement to nonparticipating providers. It prohibited balance billing for emergency services. The bill also limited the amount of balance billing for nonemergency services to amounts above the amount the carrier would otherwise pay a like specialty non-network provider in the same geographic area. SB 05-227 excluded services provided by a HMO providing services under the Medical Assistance Act.
10:36 AM
The providers group was represented by Dr. Randy Clarke, Colorado Medical Society (Attachment C). He discussed the participation-non participation status of hospital-based physicians. He believes it is a growing field that needs to be represented. He talked about the different public meetings and workgroups that have addressed the subject recently. His group wanted to ask the committee to permit a thorough discussion around the anecdotal data regarding the problem. The primary issue he addressed was the idea that hospital-based physicians have no incentive to contract with insurance providers for discounted services. Dr. Clarke does not believe this to be accurate. He thinks it is in the best interest of everyone to negotiate a fair and balanced contract. He asked that the legislature keep that in mind when considering legislation that might limit the ability of hospital-based physicians to negotiate contracts. Representative Green asked what percentage of hospital patients are uninsured. Dr. Clarke did not have specific numbers.
10:46 AM
The health insurers were represented by Jerri Jones, Chief Operating Officer of United Healthcare. Ms. Jones stated that the issue for the health plans is that each has a different attitude and strategy around the subject of health access. That makes it difficult to analyze SB 05-227 for its usefulness as a broad industry standard. She discussed the need for transparency for both insurers and consumers to make the best decisions. Rep. Green asked for Ms. Jones' opinion of HSAs and whether United carries them. Ms. Jones responded that United is the largest carrier of HSAs in the United States and in Colorado, and she sees them as a great idea, but not necessarily the only solution. Senator Hagedorn asked if United offers their clients information about rates for hospital treatment and services in order for the clients to make smart, informed choices. Ms. Jones responded that United does try to do that in general terms, but that there are no numbers posted yet reflecting individual hospital or doctor rates. They are trying to implement something like that.
10:57 AM
Travis Berry, Business Council on Health Care Competition, represented the employers group. He discussed the employers' take on the issue of network adequacy, which they looked at from four different points of view. First, networks have helped improve clinical quality and oversight. Second is better cost control through rigorous contract negotiations. Third is the improved efficiency of having standardized systems throughout the network. Finally, employers want to have as broad a network as possible because employees appreciate that. The group hopes that the legislature will keep in mind the necessity of keeping a balance within the market between the insurers and the providers on the issue of adequacy.
11:01 AM
The consumers group was represented by Carrie Curtis, Policy Director of the Consumer Health Initiative. Their group supports the current statute on network adequacy because they think it protects consumers against balance billing and they do not want to see any changes that weaken consumer protections. Consumers pay a great deal for their health care and medical costs account for 50% of bankruptcies. They are very concerned with the shift of cost from carriers to the consumers for services from nonparticipating providers. Discussion ensued from the committee surrounding the issue of consumers paying for services from nonparticipating providers. Ms. Curtis stated that the group would like to see an independent, third-party group to oversee dispute resolution. Jean Robinson of the Consumer Health Initiative discussed the issue of balance billing. Her main concern was that even educated consumers who do their homework ahead of time will be saddled with bills from nonparticipating providers through circumstances beyond their control. She advocated for stronger consumer protections. Glenn Jamison also represented the consumers group. He gave some background explanation of balance billing and how that affects consumers. He provided some anecdotal evidence about his personal experience with balance billing and how that adversely affected his credit rating.
11:30 AM
Senator Hagedorn recessed for lunch.
01:06 PM
The committee came back to order. Jo Donlin, Colorado Health Institute, presented the expansion of state employee health programs (Attachments D and E). Ms. Donlin began with an overview of the expansion, putting it into a national context. In 2002, state employee health plans provided coverage to about 3.4 million state government employees. Colorado's state employee health plan covers roughly 25,000 individuals. State employee health plans have unique advantages. State negotiating power can help smaller public and private entities gain access to coverage with more plan flexibility, achieve more favorable rates and decrease costs. Administration may be streamlined. Additions must be calculated carefully to avoid adverse selection and increased costs to state employees or new groups. They are another piece of the uninsured puzzle. Ms. Donlin offered other state examples to illustrate her point about the advantages. The committee discussed these advantages and the examples provided.
01:25 PM
Some states are expanding their state health plan to cover small businesses. She discussed the situations in Connecticut, New Mexico and West Virginia. Things to consider when expanding include availability of data to estimate new groups to be added, current status of the small group market and possible positive and adverse effects, current and future administrative costs, policy goals, and the fact that this is only one component of a group of policies that address Colorado's uninsured workers. Representative Green asked if premiums for state employees would go up or down if an expansion is tried in Colorado. Ms. Donlin said that it depends on which groups are included in the plans. Senator Johnson asked why an insurance carrier would offer this type of expansion. Ms. Donlin stated that creating a pool big enough to make this plan attractive to carriers is a key component of any expansion scenario.
01:39 PM
The committee discussed requests for bill drafts at the next meeting. Senator Hagedorn clarified how requests should be framed and the scope of legislation.
01:45 PM
Charlie Hebeler represented the Colorado providers working group. The group discussed the expansion of state employees' health insurance programs and determined that the notion has merit. They did have some misgivings because of the lack of concrete numbers in the information provided to them. Ms. Hebeler expressed some concern about how the risk pools would be determined. The group thought that the state had moved to self insurance and they were unsure how that affects a proposal to expand the state employees' health insurance programs. Ms. Hebeler mentioned that the group wondered how ERISA would affect the whole thing. Senator Johnson asked if the goal was to cover the uninsured or to reduce costs for the included groups. Ms. Hebeler understood that the goals covered both of those things.
01:58 PM
Travis Berry, representing the employers group, provided a handout (Attachment F) to the committee. Mr. Berry reiterated the criteria his group uses to determine whether something is a viable option. Those criteria take into account if a plan is equitable, sustainable, efficient and accountable. The group filtered the idea of expansion of state employees' health insurance programs through these criteria and determined that the proposal appears to be equitable to those who sign up, but could have a severe impact on the small group market. The proposal does not appear to be sustainable because it would likely lead to increased cost for the state plan. It would create some economies of scale, but not much larger than the state plan already enjoys. Finally, it is not based on a target price reduction that is proven to increase the number of individuals covered and has no monitoring system. Senator Johnson asked for a bottom line to recommend the plan. Senator Shaffer asked what Mr. Berry thinks of HSAs. Mr. Berry said that HSAs offer many advantages, but they are not a silver bullet for all problems of the uninsured. Representative Riesberg asked if some group would be willing to do a study or survey to determine what premium people would be willing to pay. How high is too high and what services would you need to see in order to enter the market?
02:12 PM
Carrie Curtis represented the consumers group, which thinks the idea of expanding state employees' health insurance programs is interesting, but they have the same concerns as the providers and the employers. Consumers want to look at what the benefits levels are and what cost sharing situation is in place. Miller Hudson, Colorado Association of State Employees, discussed state employees' concerns about the cost of health insurance. He referenced a state auditor's report about the state's compensation package (Attachment G). Mr. Hudson pointed out that the state insurance package is not terribly comprehensive and is very costly. He also indicated that improving benefits means that more people join the program, which increases the cost. Mr. Hudson indicated that state employee attrition rates are very high right now and part of that is that they can work elsewhere for more money and better benefits (retention problem and ability to attract new employees).
02:26 PM
Jerry McElroy, Colorado Association of Health Plans, presented the insurers group's thoughts regarding the Blueprint for a Colorado Health Plan. Mr. McElroy discussed Colorado's experience with health insurance purchasing cooperatives.
02:30 PM
Senator Hagedorn adjourned the meeting.