Call to Order and Roll Call
The4th meeting of the Interim Joint Committee on Appropriations and Revenue was held on Thursday, September 26, 2013, at 1:00 PM, in Room 154 of the Capitol Annex. Representative Rick Rand, Chair, called the meeting to order, and the secretary called the roll.
Members:Senator Bob Leeper, Co-Chair; Representative Rick Rand, Co-Chair; Senators Walter Blevins Jr., Tom Buford, David P. Givens, Sara Beth Gregory, Denise Harper Angel, Ernie Harris, Stan Humphries, Ray S. Jones II, Alice Forgy Kerr, Christian McDaniel, and Gerald A. Neal; Representatives John Carney, Leslie Combs, Jesse Crenshaw, Ron Crimm, Robert R. Damron, Mike Denham, Bob M. DeWeese, Myron Dossett, Kelly Flood, Richard Henderson, Jimmie Lee, Reginald Meeks, Marie Rader, Jody Richards, Steven Rudy, Arnold Simpson, Rita Smart, David Watkins, Jim Wayne, Susan Westrom, and Addia Wuchner.
Guests: Ms. Carrie Banahan, Executive Director, Office of the Kentucky Health Benefit Exchange, Ms. D. J. Wasson, Legislative Liaison, Department of Insurance; Mr. Joe Cowles, Commissioner, Department of Employee Insurance; and Ms. Sharron Burton, Deputy Executive Director, Office of Legal Services, Personnel Cabinet.
Representative Henderson moved to approve the minutes from the previous meeting as written. Representative Richards seconded the motion. The motion carried by voice vote.
Health Benefit Exchange
Ms. Carrie Banahan, Executive Director of the Office of the Kentucky Health Benefit Exchange, testified about the Kentucky Health Benefit Exchange (Exchange). There are 640,000 uninsured people in the state. Of these, 300,000 may qualify for Medicaid under the new eligibility rules, 290,000 may qualify for premium assistance through the Exchange, and 50,000 may purchase insurance on the Exchange without subsidy. She provided information regarding the percentage of uninsured in each county.
Ms. Banahan described the purpose of the Exchange. It is an organized marketplace for individuals and employees of small businesses to shop for health insurance offered by insurers, and to compare those plans based on price and quality. Individuals may also apply for Medicaid and the Kentucky Children’s Health Insurance Program (KCHIP) coverage. The Affordable Care Act requires states to create their own exchanges or default to a federal exchange, and Kentucky opted to create its own. She also outlined the insurers who are participating in the Exchange.
Ms. Banahan discussed the Small Business Health Options Program (SHOP) within the Exchange. States must have a SHOP program to provide health insurance options to small businesses of 2 to 50 employees in Kentucky. SHOP will ease the administrative burden on the small employers that now administer group health plans. Kentucky has merged the SHOP exchange with the individual market for administrative and financial simplification.
Ms. Banahan discussed federal premium assistance tax credit requirements. She stated that individuals may qualify for premium assistance if their household income for the taxable year is between 138 percent and up to 400 percent of the federal poverty level. Individuals may also qualify for cost sharing reductions if their income is below 250 percent of the federal poverty level. A small business may qualify for a tax credit if it pays at last 50 percent of the premium for each employee, has fewer than 25 full-time equivalent employees for the tax year, and the average annual wage of the group is less than $50,000.
Ms. Banahan gave several examples of estimated costs to purchase health insurance on the Exchange, for various types of individuals and businesses at different coverage levels.
Ms. Banahan discussed the internet website for the Exchange, the various pages on the website and their ease of use, and the differences between the individual and SHOP areas of the website. She showed how to browse insurance plans and use criteria filters to compare insurance plans.
Ms. Banahan discussed the Exchange’s education and outreach program that was implemented in recent months. Exchange representatives have visited county fairs, health fairs, community events, and the State Fair distributing information to the public. After the beginning of open enrollment on October 1, the governor and Exchange representatives will be touring the state informing the public of the Exchange. Open enrollment begins October 1 and runs through March 31, 2014, with coverage beginning as soon as January 1, 2014.
Ms. Banahan discussed the Exchange’s estimated operating budget through FY 2019. Costs include staffing, technology costs, vendor support staff, and operational costs including hardware and software, rent and facility costs. Federal funds may be used for Exchange operation through 2014, but it must be self-sustaining by 2015.
In response to a question from Representative Lee, Ms. Banahan said if coverage is offered to an employee and the premium is less than 9.5 percent of their household income, then that employee cannot purchase coverage on the Exchange. If the employer also offers coverage for the employees’ dependents, then they are not eligible for premium assistance on the Exchange if the offered premium is less than 9.5 percent of their household income. If no coverage is offered to dependents, then they may use the Exchange and also qualify for premium assistance. Ms. Banahan also stated that the Exchange has an incoming phone call capacity of about 5,000 calls per day.
In response to a question from Senator McDaniel, Ms. Banahan said that there is a fee assessment of up to 1 percent on insurers to fund part of the Kentucky Access high-risk insurance program. Kentucky Access will be terminating at the end of 2013. Transferring this fee assessment to the Exchange is one funding possibility for the Exchange.
In response to a question from Representative Westrom, Ms. Banahan said that no federal funds will be used to support the Exchange by 2015, when the Exchange is expected to be self-sustaining.
In response to a question from Senator Gregory, Ms. Banahan said that for individuals under 30, the Exchange will offer some “catastrophic” plan options. These will have higher deductibles and lower premiums, but will cover all 10 essential health benefits.
In response to a question from Senator Humphries, Ms. Banahan stated that all policies, both in the Exchange and outside, are required to offer the 10 essential health benefits. For behavioral health, policies are required to cover inpatient hospitalization, outpatient therapy, substance abuse services, and residential treatment.
In response to a question from Representative DeWeese, Ms. Banahan said that the Exchange has received spending authority for $252 million in federal funding for development, implementation, and operation expenses.
In response to a question from Representative Meeks, Ms. Banahan stated that individuals without internet access can call the contact center and file an application over the phone. There will also be individual “connectors” in communities to help facilitate the application process, in places like local libraries.
In response to questions from Senator Leeper, Ms. Banahan said that all claims through Kentucky Access are expected to be paid by September 2014. She said that to fund program operations and pay claims, insurers can be assessed up to a 1 percent premium tax. Ms. Wasson stated that with a .5 percent assessment the Department of Insurance collected $13 million last year. A 1 percent assessment should result in about $26 million.
State Employees’ Health Plan for Plan Year 2014
Mr. Joe Cowles, Commissioner of the Department of Employee Insurance, and Ms. Sharron Burton, Deputy Executive Director of the Office of Legal Services, Personnel Cabinet, updated the committee regarding the state employees’ health plan for 2014. Mr. Cowles stated there are very few changes due to grandfather status for plan design elements and employee contributions. The employer contribution was increased 2 percent, and the annual trends are projected to be in the 8 to 9 percent range.
Mr. Cowles stated that many of the mandates under healthcare reform begin to take effect in 2014. These changes are reflected in the 2014 designs with benefit enhancements like preventive services such as immunizations, screenings, well child and well adult visits all with no member cost. The 2014 plans expand wellness offerings and there are premium incentives for non-use of all tobacco products. He discussed Kentucky’s overall health status, stating that Kentucky ranks 45th among all states. Kentucky has a lower than average life expectancy and higher percentages of adults who are overweight and use tobacco products.
Mr. Cowles and Ms. Burton briefly discussed the health initiatives included in the two 2014 LivingWell plans. These plans require health awareness, monitoring of heath status, setting goals for improving health, and encouraging preventative health care. The preventive care benefits are at no cost to members. Ms. Burton stated that all information collected during the health assessment is strictly confidential.
Mr. Cowles discussed enrollment in the 2014 plans. Open enrollment is mandatory for all employees and lasts from October 1-31, 2013. Benefit fairs will be held throughout the state from October 1 through October 18. The fairs will offer free flu shots and health screenings. He provided an overview of the four plan options, discussing coverage and cost.
In response to a question from Representative Denham, Mr. Cowles said that the Affordable Care Act increased costs for the state employees’ health plan.
There being no further business, the meeting adjourned at 3:40 p.m.