Interim Joint Committee on Banking and Insurance


Minutes of the<MeetNo1> 2nd Meeting

of the 2004 Interim


<MeetMDY1> September 13, 2004


The<MeetNo2> 2nd meeting of the Interim Joint Committee on Banking and Insurance was held on<Day> Monday,<MeetMDY2> September 13, 2004, at<MeetTime> 2:45 PM, in<Room> conjunction with the 114th Kentucky Bankers Association Annual Convention in Covington, Kentucky, Ballroom D of the Northern Kentucky Convention Center.  Senator Tom Buford, Chair, called the meeting to order, and the secretary called the roll.


Present were:


Members:<Members> Senator Tom Buford, Chair; Rep. Arnold Simpson, Acting Co-Chair, Senators Julie Denton, R.J. Palmer II; Representatives James Comer, Ron Crimm, Robert Damron, Mike Denham, Ted "Teddy" Edmonds, Joseph Fischer, Danny Ford, Don Pasley, Steve Riggs, Brandon Smith, Roger Thomas, Ken Upchurch, and Susan Westrom.


Guests:  Tom Miller, Executive Director, Office of Financial Institutions, Ballard Cassady, Executive Director and John Cooper, Kentucky Bankers Association, Bob Ramsey, Secretary, Personnel Cabinet, Carl Felix, Commissioner, Department for Personnel Administration, Mark Birdwhistell, and Shawn Crouch, Personnel Cabinet.


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


Tom Buford, Chair, welcomed everyone to the meeting and asked Rep. Arnold Simpson to Co-Chair the meeting due to the absence of Co-Chairman James Bruce,  since the meeting was taking place in Rep. Simpson's district.  Rep. Simpson welcomed everyone to Covington.


Ballard Cassady, Executive Director, Kentucky Bankers Association and John Cooper presented the Committee with a resolution and thanked committee members for enacting legislation in the 2004 Regular Session regarding the banking industry.


Tom Miller, Executive Director, Office of Financial Institutions, updated the committee on the status of the banking industry in Kentucky.


Bob Ramsey, Secretary, Personnel Cabinet, and Carl Felix, Commissioner, Department of Personnel Administration, provided an overview of the changes to the 2005 state employee health insurance plan.  Secretary Ramsey stated that the changes were necessary for the state to afford continued health care coverage for its workers.  He stated that by switching plans, the administration was also safeguarding taxpayer's financial interests.  He stated that the administration is committed to ensuring that public employee health insurance is there for teachers, retirees and state employees.  He stated that the administration is also committed to the citizens of the Commonwealth of Kentucky and will continue to ensure that the tax dollars paid to the Commonwealth are managed efficiently.  Secretary Ramsey stated that it would take more than $100 million for the state to continue its current health plan.


Representative Ron Crimm stated that state workers' health insurance costs have been out of control for years.  He stated that the administration did not properly present the plan and it has angered constituents.


Representative Steve Riggs asked how the decision was made to self-insure Region 1 and Region 2.  Mark Birdwhistell stated that it was in the best interest of the state and it was financially attractive.


Representative Bob Damron asked why the plan calls for one insurance carrier in each region.  He stated he was concerned about how the plan was devised and asked if the plan would raise the cost of prescription drugs for insured employees.  He stated that it looked like "...we sat down in a smoke-filled room someplace and divided up the state among the insurance companies."  Mark Birdwhistell stated that he has been a proponent of regional rating for years and this is regional rating at its best.  He stated that this was done to entice carriers and allow lower costs.  Secretary Bob Ramsey stated that the regional rating model reduced "cherry-picking" and made the request for proposal (RFP) process more competitive.


Representative Damron asked if the Health Insurance Board was involved in an advisory role with the process of procuring the bids for the plan and were they consulted on the major changes.  Secretary Ramsey stated that they can provide input, but the  RFP becomes confidential and they cannot provide that information to the board.  Representative Damron asked who made the decision to change the state's contribution to the flex spending account from $234 to $100.  Secretary Ramsey stated that it was about dollars and cents.  He stated that they consulted with health care experts before reducing the contribution.


Representative Damron asked why the cross-referencing option was taken out of this plan.  He stated that in doing so, it eliminates the contribution for one employee when those people have to take a family plan.  Carl Felix stated that the cross referencing option is not off the table, he stated that they did not have enough time to develop that option with the salary bands.


Charles Wells, Executive Director, Kentucky Association of State Employees, stated that the plan was not fair to all state workers.  He stated that some higher paid employees would be asked to subsidize employees who make less money.  Meanwhile, others who pay more in out-of-pocket expenses would be strapped to buy the insurance.  He stated that in effect Governor Fletcher has given state employees and teachers a health care plan that they cannot afford to use.


Representative Danny Ford stated that state workers' fees for their health insurance should be compared to what people pay in the private sector.  He stated that it is not right for the taxpayers to pay more taxes to supplement a better plan.  He asked Mr. Wells if he has an alternative to the plan.


Charles Wells stated that it is not fair to compare the private sector to the public sector.  He stated he would like to have an opportunity to present a plan.


With no further business, the meeting adjourned.