Interim Joint Committee on Banking and Insurance


Minutes of the<MeetNo1> 2nd Meeting

of the 2003 Interim


<MeetMDY1> July 28, 2003


The<MeetNo2> 2nd meeting of the Interim Joint Committee on Banking and Insurance was held on<Day> Monday,<MeetMDY2> July 28, 2003, at<MeetTime> 10:00 AM, in<Room> Room 149 of the Capitol Annex. Senator Tom Buford, Chair, called the meeting to order, and the secretary called the roll.  Representative James Bruce Co-Chaired the meeting.


Present were:


Members:<Members> Senator Tom Buford, Co-Chair; Representative James Bruce, Co-Chair; Senators Lindy Casebier, Ernie Harris, R.J. Palmer II, Albert Robinson, Larry Saunders and Tim Shaughnessy; Representatives John Adams, Sheldon Baugh, James Comer, Brian Crall, Ron Crimm, Robert Damron, Mike Denham, Ted "Teddy" Edmonds, James Gooch, J. R. Gray, Dennis Horlander, Don Pasley, Steve Riggs, Roger Thomas, Tommy Thompson, Ken Upchurch, Susan Westrom, and Rob Wilkey.


Guests:  Representative Joe Barrows; Melodie Doom-Schrader, Executive Director, Kentucky Association of Health Plans; Bill Tatum, Angell Manufacturing, and Co-Chair, Kentucky Employers Health Benefits Coalition; and, Dale Clemons, President/CEO, Apple-a-Day Wellness.


LRC Staff:  Greg Freedman, Rhonda Franklin, and Jamie Griffin.


The minutes of the June 24, 2003, meeting were approved.


Senator Buford announced that the August 26, 2003, Banking and Insurance meeting will be held at the Stockyards Bank in Louisville, Kentucky, at 10:00 a.m..


Representative Joe Barrows addressed the committee regarding House Resolution 163(HR 163).  He stated that HR 163 urged the Legislative Research Commission to assign the issue of health insurance coverage for infertility to either the Interim Joint Committee on Banking and Insurance or the Interim Joint Committee on Health and Welfare during the 2003 interim.  He stated that he hopes to have a bill drafted and ready for the committee to review in November.  He stated that he is seeking more information from various sources at this time,  as he needs more details and statistics for Kentucky, as well as other states who have already implemented coverage for infertility.  He stated that he wants to develop infertility coverage that will be fair and successful.  He stated that in the context of “family values” he feels that if the cost is reasonable it will be good public policy to pass legislation to help couples that want children and cannot afford the treatment.


Senator Tim Shaughnessy stated that this may be approached as a supplemental policy and possibly work with the state’s medical schools to do these procedures.


Senator Albert Robinson stated that he feels if another mandate is passed the money for the mandate should be found in the budget.


Melodie Doom-Schrader, Executive Director, Kentucky Association of Health Plans, addressed the committee regarding House Resolution 163.  She stated that it is inappropriate to enact high cost, high risk infertility mandates, in light of rising health care costs and the inability of many to afford extremely broad benefit packages.  Infertility mandates will only add to the already high cost of health insurance and increase the number of uninsured.  She stated a 1997 Milliman & Roberts study estimated that infertility treatment would increase annual premiums by an average of 3% to 5%.  The research defined infertility treatment to include drug therapy, artificial insemination, Gamete Intrafallopian Transfer(GITF) and In Vitro Fertilization(IVF) (benefit limited to three attempts).   The current average employer sponsored family policy costs about $7,056 a year.  Based on the Milliman & Roberts study, an infertility mandate would increase the cost of annual premiums from $225.00-$375.00 per year.  She stated that according to a 1994 study, the average cost of successful delivery using IVF was six to ten times the cost of an unassisted pregnancy delivery.  On average, the cost incurred per successful delivery with IVF increases from $66,667 for the first cycle of  IVF to $114, 286 by the sixth cycle.  For couples in which the woman is older (over 40) and there is a diagnosis of male-factor infertility, the cost rises from $160,000 for the first cycle to about $800,000 for the sixth.  She stated that a 1997 study by the Kaiser Family Foundation found that infertility treatments fail 70% to 80% of time, with some treatments resulting in less success. The risk of assisted reproductive technologies increases the risk of multiple births and increases the risk of low birth weight.    She stated that the National Center for Health Statistics estimates that infertility affects 10% of the female population aged 15 to 44 years of age.


Bill Tatum, Angell Manufacturing Company and Co-Chair of the Kentucky Employees Health Benefits Coalition, addressed the committee regarding the proposed infertility mandate for group health insurance.  He stated that he was speaking against the proposal for three reasons:  First, mandates of any kind take away choice from employers and employees; choice of what is or is not included in group health plans and free market principles give employees and employers the ability to develop plans that meet their needs and circumstances.  Second, this specific mandate is particularly problematic because of its particularly high cost potential, both directly and because of complications that arise out of infertility treatments.  Third, everything that occurs to increase group health insurance costs, including mandates, has a direct impact on increasing the number of uninsured and; increasing the number of uninsured people increases uncompensated care which in turn leads to even more cost shifting.  He stated that he is not in support of adding this mandate, and would encourage the committee to look at the existing mandates to see if the cost of these mandates are worth the societal benefit.


Senator Buford stated that if the benefit were limited to the female on the plan and had a lifetime benefit, it may be a good plan.


Dale Clemons, President/CEO, Apple-a-Day Wellness, addressed the committee regarding the Apple-a-Day Wellness Health and Wellness programs.  He stated that the program offers easy access to values when seeking health and wellness services and products.  He stated that as a stand alone benefit program or as a compliment to an insurance plan, the programs offers great value by providing individuals or groups access to value based pricing from leading health and wellness providers.  He stated that this program is not insurance, but that the providers under this program receive payment at the time of service or purchase of products.  As a result of the prompt payment and program participation, consuemrs will realize immediate savings.  He stated that the program utilizes over 525,000 participating providers nationally, which includes physicians, surgeons, specialists, acute care hospitals, retail pharmacies, dentists, vision providers, chiropractors, and hearing providers.


Senator Ernie Harris stated that he understands this program is a compliment to health insurance, that allows you to pay at the time of service at a discount rate that has been negotiated by Apple a Day.


Senator Tom Buford stated that this might benefit a state employee who cannot afford a family plan and could possibly cover a spouse and children under this program.


Carol Palmore, Secretary, Personnel Cabinet, stated that lower paid employees cannot afford family plans.  She stated that this would be a good plan for smaller employers.  She stated that this program would be difficult to coordinate with the state plans.  She stated that Mr. Clemons has started the approval process for payroll deduction for state employees who are interested in the program.


Representative Bob Damron asked the length of the contract term.  Mr. Clemons stated that they are 3 years, but they do have some that are for 1 year.  Representative Damron stated that this is similar to a purchasing coop.  He stated that it is critical that everyone understand that this is not insurance, it is a purchasing pool, and people covered under this program will be responsible for payment to the provider.


Representative Ron Crimm stated that he feels this would possibly benefit someone over 65 or who has no family coverage.  He asked if the state would endorse this program.  Secretary Palmore stated that there is a process of filling out the application for the company to be allowed to payroll deduct and it will be checked out through the Department of Insurance.  She stated that there are over 50 companies that employees use that are payroll deducted.   The state does not solicit for these companies, but accommodate for the deductions.


With no further business, the meeting adjourned at 11:45 a.m.