Interim Joint Committee on Banking and Insurance


Minutes of the<MeetNo1> 4th Meeting

of the 2007 Interim


<MeetMDY1> September 25, 2007


The<MeetNo2> 4th meeting of the Interim Joint Committee on Banking and Insurance was held on<Day> Tuesday,<MeetMDY2> September 25, 2007, at<MeetTime> 10:00 AM, in<Room> Room 154 of the Capitol Annex. Representative Tommy Thompson, Chair, called the meeting to order, and the secretary called the roll.


Present were:


Members:<Members> Senator Tom Buford, Co-Chair; Representative Tommy Thompson, Co-Chair; Senators Julie Denton, Ernie Harris, Dorsey Ridley, and Dan Seum; Representatives Sheldon E. Baugh, Johnny Bell, James R. Comer Jr, Robert R. Damron, Ted Edmonds, Tim Firkins, Danny Ford, Jim Gooch Jr, J. R. Gray, Jeff Greer, Mike Harmon, Dennis Horlander, Dennis Keene, Rick Rand, Frank Rasche, Steve Riggs, John Tilley, Ken Upchurch and Susan Westrom.


Guests:  D. J. Wasson, Office of Insurance, Terry Brooks, Executive Director, Kentucky Youth Advocates.


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


The minutes of the August 30, 2007, meeting were approved.


D.J. Wasson, Office of Insurance, gave the committee an update on the ICARE Program.  Ms. Wasson stated that the ICARE Program is a pilot program designed to help small employers offer health insurance to their employees.  She stated that to be eligible an employer must: employ 2-25 people; pay at least 50 percent of the employee's premium for single coverage; and pay an average annual salary of no more than $51, 510, which is 300 percent of the federal poverty level guidelines for a family of three.  She stated that the ICARE incentive payment levels are: $40 per eligible employee per  month if the employer has not offered health insurance for the past 12 months (the monthly amount decreases by $10 each subsequent year of the program); $60 per eligible employee per month for an employer group if at least one employee has a defined high-cost condition (the monthly amount decreases by $15 each subsequent year of the program).  Ms. Wasson stated that as of September 24, 2007, ICARE has received 254 applications from 71 counties, of those, 165 employers who employee 1283 employees  in 54 counties have been approved.  She stated that 154 of the participating employers are participating in ICARE due to an employee with a high cost condition and 11 previously uninsured employer groups with 74 employees are participating.  She stated that incentive payments are made monthly, and as of September 30, 2007, ICARE has paid $322,940.00, in incentive payments.  Ms. Wasson stated that renewal notices for existing ICARE participating employers will be sent November 1, 2007.  She stated that after 6 months, the program was reviewed to determine whether any changes to the regulations needed to be made and the changes that were identified included: number of employees calculated based on full time equivalents; salary threshold calculated on a family size of 3; all small group plans deemed ICARE qualified plans; and a 120 day deadline for previously uninsured groups to apply for ICARE.  She stated that emergency regulations have been filed.


Rep. Steve Riggs asked if the Office of Insurance was looking into promoting the ICARE program more aggressively.


Ms. Wasson stated that the Office of Insurance is looking at the marketing of the ICARE program to see how to increase enrollment.


Ms. Wasson stated that included in the committee members meeting information was a copy of the 2007 Early Warning Analyst Report, for their review.


Terry Brooks, Executive Director, Kentucky Youth Advocates, addressed the committee regarding a report that was prepared by The Brookings Institute for the Kentucky Youth Advocates, entitled "The High Price of Being Poor in Kentucky".  He stated that although Kentucky is one of the cheapest places to live in the country, lower income families in the same state often pay hundreds, sometimes thousands, of dollars in higher prices for necessities compared to higher income households.  He stated that higher prices drive up the cost of government programs, inhibit economic mobility, and limit economic development.  He stated that the good news is that many of the solutions that bring down these costs are bipartisan, low cost, and effective.  Mr. Brooks stated that throughout Kentucky, lower and moderate income homebuyers are more likely to purchase high cost mortgages than higher income homebuyers.  Across the state, homeowners that live in lower income neighborhoods pay on average of $363 more for home insurance than homeowners from higher income neighborhoods.  He stated that in Kentucky lower income families are 20 % more likely to use high cost, non-bank financial services, like check cashing establishments, compared to higher income families  One reason for this is that lower income households in the state are much less likely to have a checking account, leading them to use alternatives.  He stated that even the 72% that have bank accounts often pay more for basic financial services.  He stated that Kentucky's lower income households often pay more for tax preparation services because of their higher demand for refund anticipation loans.  He stated that across the state car owners that live in lower income neighborhoods pay on average of $384 more for auto insurance than car owners from higher income neighborhoods.  Mr. Brooks stated that the report provides evidence that Kentucky's lower income consumers do not have as much information as they need to make sound financial decisions and identified three key issues to address the high costs that they face: 1) Create alternative, lower cost financial products; 2) Align support systems so that building a family's education, employment skills, and wealth building can work together; and 3) Improve consumer awareness by making institutions more accessible.


Rep. Steve Riggs stated that citizens of all ages need financial coaching so that they do not make poor financial choices.


Mr. Brooks stated that in many cases they are aware that they are not making wise choices, but do not have alternatives.


Rep. Jim Gooch stated that the report contains valuable information and hopes solutions can be found to the problems lower income citizens face.


With no further business the meeting adjourned.