Health Insurance (07/28/2005)

Final
STAFF SUMMARY OF MEETING

HEALTH INSURANCE

Date:	07/28/2005	ATTENDANCE

Time:	10:10 AM to 04:39 PM	Green	X
		Johnson	X
Place:	HCR 0112	Keller	X
		McCluskey	E
This Meeting was called to order by		McElhany	X
	Senator Hagedorn	Penry	X
		Riesberg	X
This Report was prepared by		Shaffer	E
	Elizabeth Burger	Boyd	X
		Hagedorn	X
		X = Present, E = Excused, A = Absent, * = Present after roll call

Bills Addressed:		Action Taken:
Opening Remarks Access to Health Insurance CACI/Denver Metro Chamber of Commerce Colorado Health Institute Credit Scoring and Health Insurance Division of Insurance Dental Direct Reimbursement		- - - - - - -

10:10 AM -- Opening Remarks

Members present for the first meeting of the Interim Committee to study Health Insurance were Senator Hagedorn, Senator Keller, Senator Johnson, Senator McElhany, Representative Boyd, Representative Riesberg, Representative Penry, and Representative Green. Senator Mitchell was also present and joined the committee at the table.

Senator Hagedorn gave opening remarks regarding the uninsured. He stated that the recent recession has caused a number of employers to cut health insurance benefits for their employees, and that many employers are not restoring health insurance benefits as the economy recovers. He discussed cost shifting. Senator Hagedorn stated that a large amount of money already goes to care for the uninsured, and that properly leveraging the money could provide coverage for most of the uninsured. He discussed future meeting dates of the committee and described the topics that will be addressed at the meetings, including network adequacy issues, reinsurance, and general health insurance proposals. Senator Hagedorn reminded the members of the committee that all bill draft ideas must be submitted by the September 7 meeting. He described a number of studies and papers regarding health insurance that were previously distributed to the committee.

10:23 AM -- Presentation by the National Conference of State Legislatures

Laura Tobler, National Conference of State Legislatures, discussed state options for providing health insurance to the uninsured and distributed an overview of her presentation to the committee (Attachment A). Between 15 and 18.9 percent of Coloradans do not have health insurance. State initiatives for covering the uninsured fall into three categories: private market initiatives; public/private sector initiatives; and public sector initiatives. She described private market initiatives including: offering "bare bones" health insurance policies, or policies without mandates; creating group purchasing arrangements; extending the state continuation period; expanding the definition of dependent; instituting individual market reforms; creating employer mandates; and offering tax incentives. She stated that states that have made significant progress in insuring more individuals have made a number of significant policy changes, not just one. She discussed other private market initiatives including requiring college students to be insured, required provision of health insurance as a condition of state contracts, and the use of medical savings accounts and health savings accounts.

10:45 AM

Ms. Tobler described public/private initiatives to increase access to health insurance. She listed some public/private initiatives including expanding state employee health plans to include groups other than state employees and premium assistance programs that use Medicaid or Children's Basic Health Plan (CHP+) dollars or other funds to assist individuals to purchase private insurance. She further described employer-assistance initiatives in other states, and stated that other states have reported cost savings from implementing such programs. She discussed a waiver program implemented in New Mexico which provides low-cost basic health insurance through an employer-based benefit program in conjunction with the state. She responded to questions from Senator Hagedorn regarding whether the Centers for Medicare and Medicaid will continue to approve waivers which utilize unspent CHP+ dollars to subsided health insurance programs. She discussed state-funded reinsurance programs, and stated that the Healthy New York reinsurance program has made progress in reducing premiums and the number of uninsured in the state. She responded to questions from the committee regarding the reduction in uninsured in New York after the implementation of the Healthy New York program. She reiterated that states often must implement a number of different programs and initiatives in order to decrease the number of uninsured.

11:17 AM

Ms. Tobler described a number of public initiatives that may improve coverage including: expanding Medicaid and CHP+ through 1115 Health Insurance Flexibility and Accountability (HIFA) waivers; imposing cost sharing for new populations; and redirecting unused Disproportionate Share Hospital Funding, CHP+, and tobacco dollars. She discussed the Utah Primary Care Network which was implemented through an 1115 waiver and described a program recently instituted in Iowa that expands Medicaid to approximately 30,000 new eligibles per year and uses incentives in order to encourage individuals to make healthier lifestyle choices. She discussed recent legislation that mandates the collection and reporting of employment data on Medicaid beneficiaries.

11:24 AM

Ms. Tobler responded to questions from Senator Mitchell regarding medical and health savings accounts. She further responded to questions from Senator McElhany regarding the number of uninsured in the country. Senator McElhany expressed concern that a percentage of the population goes without care because of choice. Representative Green asked for more information on disease management and shared information systems. Representative Riesberg asked Ms. Tobler for information about tax incentives and disincentives for charity care.

11:50 AM -- Presentation by the Colorado Association of Commerce and Industry and the Denver Metro Chamber of Commerce

Travis Berry, Business Council on Healthcare Competition (the healthcare council of the Colorado Association of Commerce and Industry), and Sara Cassidy, Denver Metro Chamber of Commerce, introduced themselves and distributed two handouts to the committee (Attachments B and C). Mr. Berry discussed increases in health insurance costs from 2001 to 2005 and stated that 58 percent of individuals receive their health care coverage from their employer. He stated that employers care about their employees and their families and that it is important for employers to provide health insurance to their employees. He stated that health insurance coverage solutions should not shift costs to employees and that reforms instituted by state lawmakers only affect the small group market because federal law regulates large and self-funded employers. Mr. Berry responded to questions from Representative Green regarding what health insurance plans the Business Council on Healthcare Competition may support.

12:02 PM

Sara Cassidy discussed the health care committee of the Denver Metro Chamber of Commerce. Ms. Cassidy and Mr. Berry responded to questions from Senator Keller regarding employee leasing companies. Ms. Cassidy listed a number of items that the Health Insurance Interim Committee should keep in mind when considering health insurance proposals, including: preserving and supporting initiatives currently in place which are having or have the potential of having a positive impact of the system, specifically workers compensation reforms; preserving pharmaceutical practices; and reducing cost shifting to business by reimbursing providers adequately. She suggested that the committee examine best practices from other states.

12:06 PM

The committee recessed for lunch.

01:28 PM -- Presentation by the Colorado Health Institute

The committee reconvened.

Pam Hanes, Colorado Health Institute, described the activities and mission of the Colorado Health Institute and distributed a packet of information to the committee (Attachment D). She began her discussion of health insurance issues in Colorado by describing problems in accessing health insurance coverage and health care in Colorado including: small employers and their employees being priced out of the health insurance market; exacerbation of the problem by the move away from the modified community rating; an increase in the number of providers who are unwilling to accept Medicare and Medicaid patients; and hospital emergency departments becoming the default primary care providers. She discussed increases in small group premiums and the percentage of small firms offering health insurance in Colorado from 1996 to 2002. She stated that although the number of employers who offered health insurance to their employees remained stable, there was a 12 percent decline in the number of employees in small group firms who enrolled in coverage. Eleven percent of Coloradoans receive health insurance through the small group market, while 16 percent of the population are uninsured. Seventy-six percent of uninsured persons are employed and, of that number, 61 percent work in firms with less than 100 employees. She reviewed the functions of state policy makers in the healthy policy arena including: establishing the ground rules for the subvention of federal funds; setting the regulatory framework for the healthcare marketplace and healthcare professionals; and promoting innovation at the state and local level.

01:45 PM

Ms. Hanes continued her discussion of health insurance access in Colorado by describing a chart showing the uninsured population in Colorado by county. She described three case studies of innovation at the local level. First, the Roaring Fork Valley Community Health Access Program is developing an evidence-based insurance model pilot, is exploring innovative community and regional financing mechanisms to underwrite insurance for uninsured residents, and is testing quality-focused clinical strategies and administrative efficiencies. The Roaring Fork Valley Community Health Access Program is currently developing a community health access plan that addresses regulatory issues, administrative issues, community capacity, purchasing pools, the use of co-payments, premium sharing and deductibles, and the assessment of the plan's interface with other public and private programs. In the past, the Roaring Fork Valley has pursued other successful private/public partnerships including funding a local transportation system and an affordable housing program.

01:54 PM

Ms. Hanes continued her discussion of innovations at the local level by describing the El Paso Community Health Partnership. The partnership between the local medical society, local foundations, public and mental health departments, the Department of Human Services, and safety net providers was formed in 1996. Areas addressed by the partnership include: substance abuse; pharmacy; access to care; chronic disease; and cultural competence. The partnership has received federal grants to track patients who visit various community providers. She described the impact of certain state policy decisions on access to the health care system in El Paso County, including the implementation of CBMS, the freeze in enrollment in CHP+, and the discontinuation of presumptive eligibility. She continued her discussion by describing the Northern Larimer County Health District. The Northern Larimer County Health District originally was formed to fund hospital construction, but has since expanded to fund other community health initiatives. She emphasized the importance of partnerships between public and private entities; intergovernmental partnerships; and government, private sector, and individual partnerships to address health care access problems.

02:07 PM

Ms. Hanes responded to questions from Representative Riesberg regarding a single-entry point to health care access in El Paso county.

02:11 PM

The committee recessed briefly.

02:15 PM -- Presentation on Credit Scoring and Health Insurance

Rick Turano, Allstate Insurance, stated that no health insurers currently use credit information to underwrite or rate health insurance. He stated that credit scoring is used in rating and underwriting property insurance because credit scoring can very accurately predict future loses. He discussed Senate Bill 04-216, which is a model act that regulates the use of credit scoring. He responded to questions from the committee.

02:21 PM -- Presentation by the Colorado Division of Insurance

Susan Gambrill, Colorado Division of Insurance, began her discussion of Colorado's small group market and distributed a number of handouts to the committee, including an overview of her presentation (Attachment E), small group premium comparison reports (Attachments F and G), and a press release regarding the decline of Colorado's small group market (Attachment H). She discussed the climate in Colorado preceding small group reforms including: unaffordable premiums; small employers not offering or dropping coverage; insurance scams on the rise; high use of PPOs and HMOs; and the rating up of sick groups. Further, sick employees and dependents could be excluded from coverage and some carriers refused to write policies for very small groups. Currently, sick employees and dependents cannot be excluded from coverage, all small group products are offered on a guaranteed issue basis, and portability provisions minimize pre-existing condition limitations. She discussed trends in the insurance marketplace which include: market consolidation; changes in rating flexibility; decreasing benefit levels; greater consumer cost sharing; carriers constricting marketing forces and commissions; the shrinking small group market; and increased provider clout. She responded to questions from the committee regarding which recent legislative proposals have increased provider clout. She further responded to questions from the committee regarding constricting market forces.

02:31 PM

Ms. Gambrill continued her presentation by discussing legislation that made changes to small group regulation in the past 15 years. She discussed House Bill 94-1210, which created guarantee issue for basic and standard plans, phased in a modified community rate, enhanced pre-existing condition benefits, and included business groups of one. Additional legislative changes were necessary after the implementation of the federal Health Insurance Portability and Accountability Act (HIPAA), including the elimination of pregnancy from the definition of pre-existing condition, expansion of small group guaranteed issue to all products, provision of limited guaranteed issue in the individual market, and prohibition of eligibility based on health status for all groups. She described other legislative adjustments, including: open enrollment periods for business groups of one; exemption from small group laws for certified leasing companies; exemption from small group laws for MEWA pilots; rate banding for health status; and re-entrance penalties. She discussed a survey of small group health plans conducted by the Division of Insurance to determine if small employers experiences premium decreases as a result of small group rating reforms. She responded to questions from the committee regarding rating discounts and the effect of rating reforms on increasing health insurance coverage. She stated that the rating reforms have not increased the number of lives insured in the small group market, but may have made the small group market healthier. She stated that the Division of Insurance will monitor the effects of small group rating reforms, including rate banding.

02:50 PM

Ms. Gambrill stated that healthy business groups of one are still more likely to be part of the individual market than the small group market. She stated that leasing companies are attracting some small groups, limited use of individual policies in the small group market is affecting enrollment, and self-funded plans are marketing to smaller and smaller groups. She emphasized that although the number of small groups covered in the small group market is declining, that doesn't necessarily mean that all of the groups are losing coverage. She described the adversarial relationship between providers and plans. She stated that originally, health insurance was intended to cover unexpected risks, but managed care and mandates have added anticipated costs. She discussed the impact of small group reforms. Although small group reforms did not decrease the number of Colorado's uninsured, they enhanced access to the small group market. Winners of the reforms included: self-employed business groups of one; unhealthy groups; employers switching jobs; and larger carriers. Losers in the reforms included: small carriers without market share to support guaranteed issue; unhealthy groups; some agents; and employers who leave the market for non-small group coverage and then want to reenter.

03:00 PM

The committee recessed briefly.

03:20 PM -- Presentation by the Colorado Dental Association Regarding Direct Dental Reimbursement

The committee reconvened.

Dr. Ken Versman, Dennis McHugh, and Brent Frazee, representing the Colorado Dental Association, introduced themselves and distributed a handout to the committee (Attachment I). Dr. Versman began his presentation by stating that the Colorado Dental Association supports all types of dental insurance. He stated that dental insurance is different than other types of insurance in that the employer usually determines the percentage of reimbursement and maximum benefit per year, and there is usually no catastrophic coverage available. He stated that direct reimbursement is a plan whose time is coming.

03:26 PM

Dennis McHugh discussed direct reimbursement which is defined as a dental benefit plan where patients are reimbursed a percentage of their expenses based on the dollars spent rather than a class of procedure codes. He testified that the American Dental Association (ADA) believes that direct reimbursement best promotes patients' oral health and that direct reimbursement also promotes provider choice. He stated that most people receive a limited dental benefit - only $240 per person annually and that the ADA is not looking to replace dental insurance with direct reimbursement, but only to inform employers that there are a number of choices for dental coverage. Mr. McHugh testified that the employers who have implemented direct reimbursement have been satisfied with the plan.

03:33 PM

Brent Frazee, representing Colorado East Bank and Trust, stated that his company has a direct reimbursement plan for its employees and the plan is working well. He testified that he has saved 20 percent in dental insurance costs in two years and that employees also really like the plan. Mr. Frazee stated that employees must take responsibility for their health care costs and will avoid unnecessary procedures if they have to pay a portion of the cost of the services.

03:37 PM

Dr. Ken Versman stated that employers can design their own direct reimbursement plans and that the direct reimbursement plan is not intended to increase dentist's fees, but to eliminate interruption in the Doctor/Patient relationship. He stated that many patients with dental insurance choose to go out of network to remain with a dentist who they trust. This may mean that even though the patient is paying increased costs for a high level of dental insurance, they must pay additional charges seeing an out-of-network provider. He described how some policies of dental insurance companies affect the manner in which dentists may treat patients. He stated that one-third of persons with dental insurance never use their benefit, and an additional one-third of persons only use their benefit for preventative care.

03:50 PM

Rick Ellis, COPIC Insurance, testified that the COPIC companies had a self-funded dental insurance program for many years, but switched to dental insurance. Problems with the dental insurance company caused the company to decide to implement a direct reimbursement system and they are satisfied with the direct reimbursement plan.

03:52 PM

Mr. McHugh responded to questions from Senator McElhany regarding state regulation of direct reimbursement plans. He stated that most direct reimbursement plans are regulated under federal law because they are self-funded plans. The panel responded to questions from Representative Riesberg regarding cost sharing between the employer and employee for the dental benefit.

03:58 PM -- Presentation by Delta Dental of Colorado Regarding Direct Dental Reimbursement

Kate Paul, Delta Dental of Colorado, testified that Delta Dental is a nonprofit organization and 90 percent of dentists in Colorado are in the Delta Dental network. She stated that the cost savings associated with direct reimbursement occur because individuals are utilizing their benefits less, and may not be receiving appropriate preventative dental treatment. She stated that some employers have dropped direct reimbursement in favor of dental insurance.

04:05 PM

Cathye Smithwick, Mercer Human Resource Consulting, defined direct reimbursement as a method of providing benefits under which the patient receives care, pays the dentist, and is later reimbursed by their employer up to some annual dollar limit. She stated that there is not a lot of pricing information available to the consumer regarding medical and dental benefits. She stated that dental plan designs have been designed over time by dentists, and that good dental plans include varying levels of patient cost sharing in order to promote wise consumer use of dental benefits. Direct reimbursement is a plan advocated by organized dentistry, and that there is really no means of evaluating its performance as an alternative to traditional designs. She stated that there are currently no barriers for employers to offer direct reimbursement plans, but discussed some negatives associated with direct reimbursement including: the lack of employee cost share; lack of plan design; lack of fee management; and lack of essential protections for employees and employers.

04:28 PM

Miller Hudson, Colorado Association of Public Employees, stated that more Colorado public employees participate in dental plans than in health insurance plans. He stated that most state employees want an insurance program in which all members of a family can receive a preventive dental benefit. Mr. Hudson responded to questions form the committee regarding the benefit levels in direct reimbursement versus dental insurance.

04:36 PM

Dr. Terry Batliner, Delta Dental, testified that the Delta Dental product provides a number of consumer protections and that Delta Dental can identify dentists that are practicing without a license or engaging in unauthorized billing processes. He stated that the only way that money is saved through direct reimbursement is through decreased utilization of dental benefits. The representatives from Delta Dental distributed two handouts to the committee (Attachments J and K).

04:39 PM

The committee adjourned.