Links to selected topics

Planning for the Federal Health Care Reform Bill's Anticipated Changes in Alaska
National and State Agencies Benefit from Sharing Information
Interagency Working Group Assesses Impact of Health Care Reform Bill
Monitoring the Performance of Insurance Companies
Hot off the Press and Coming Your Way: Alaska Insurance Consumer Guide
Grandfathered Policies and Possible Premium Increases
Division of Insurance Has Limited Rate Approval Authorization in Alaska
Anticipated Changes in Dependent Age and Pre-Existing Condition Coverage
New Temporary High-Risk Program Starts July 1

Planning for the Federal Health Care Reform Bill's Anticipated Changes in Alaska

AHPR: I have a list of questions here and I want to narrow it down to the kinds of changes in the new federal health legislation that specifically relate to health insurance, and only to the end of the year 2011 -- in other words the next 18 months. Before I do that, I wanted to ask you a couple of general questions about your division. For example, I would like to ask what kind of planning is your division doing to get ready for these changes?
 
Hall: We are starting with an analysis of the changes and what they are. There are really two parts to the very -- I will call it massive -- federal health care reform bill. One deals [more with] the private marketplace and the other deals with public programs. Given what I do, I'm more involved in the private insurance marketplace, and how those reforms will impact insurance and insurance consumers, than the public things that really are [the purview of the Department of Health and Social Services].

AHPR: Such as Medicaid, for example.
 
Hall: Sure. I have no background in Medicaid. I have an actuary on staff and we have a section that reviews health insurance forms and programs. We are starting with an abbreviated version -- [pointing to a thick binder full of papers] this is abbreviated -- of just the insurance pieces of that legislation. The National Association of Insurance Commissioners staff are providing us with this kind of document. They put this together for us. We start with that and we have a timeline of when things go into effect, and we are looking at that timeline to judge our priorities -- what we need to do first, what we need to do second -- making sure we're not missing any pieces that we need to, that we are responsible for.

I have little file folders back here for pretty much every piece of this legislation, and we're participating in calls and in work groups, and in the national regulatory group. Katie and I both divided up which committees we wanted to be on and to be involved in. Katie Campbell is my actuary, and Katie has been with the division in excess of 10 years, probably 12 or 13 years, and she is a fellow of the Actuarial Academy. She's highly regarded nationally, so I feel very fortunate to have her, especially now. We each do a couple of committees but Katie sits on the all the actuarial committees. Back to selected topics list

National and State Agencies Benefit from Sharing Information

AHPR: These are national committees?
 
Hall: They are national. The National Association of Insurance Commissioners has a health committee but this has so many pieces that they've divided up into, I think, six subgroups to take various parts of that, so we have a staff of experts at the national organization and they work with the subgroups. We're getting the benefit of what other states are doing and other states' analyses as well as our own. As we break it down into little pieces and chip away at what we need to do we also have weekly calls with the Department of Health and Human Services in D.C. Those are scheduled every week.
 
AHPR: Scheduled specifically for Divisions of Insurance or the respective state agency?
 
Hall: Yes, and those are very interactive where they will come on and do presentations. They've done a couple of them that were strictly high-risk pools. You have an opportunity to ask questions, but you have the benefit of listening to questions that other states ask. Sometime this week we will be having an individual call, just Alaska, with a couple people from HHS [the Department of Health and Human Services] on high risk pools. There's a fair amount of interaction with our colleagues, our counterparts in other states, and with our national regulatory staff and HHS staff. I don't know if you knew that the secretary of HHS, Kathleen Sibelius, is a former insurance commissioner.

 
AHPR: I did not know that.
 
Hall: She's from Kansas, and she was the insurance commissioner there and then governor and then now she's the secretary. So she has a really good understanding of the regulatory world and how that works, and consequently I think that's been a benefit when you have someone who at least understands how we operate as regulators and what's required. The person who heads up the Office of Insurance Information and Consumer Oversight within HHS, his name is Jay Angoff, and he also is a former insurance commissioner. So we actually have people in the federal government who do understand regulation and how that works.

I think that's been helpful that the federal law actually references -- I think they counted in nine places -- responsibilities of the National Association of Insurance Commissioners [NAIC]. There is some reliance on that group for some of the technical pieces, definitions of some things that are very complicated, and I think it was an attempt to take those true regulatory things out of the political arena in some ways. I don't know that for certain, but some of them -- the issues and example I mentioned today when I spoke [earlier at a Chamber of Commerce luncheon], the medical loss ratio and what's included in that -- that is something that's given to the NAIC to put together a recommendation for that definition. That's undergoing huge amounts of debate. It's controversial, so that is one of the things that NAIC is charged with doing.

There are various committees. We're a small state and we have limited staff, but it gives us access to lots of expertise around the country. I had a call this afternoon, since I've been back, from one of my counterparts asking me, "What are you doing about X?" So we call each other, too. You develop relationships with your counterparts so it's really a network of regulators who all are trying to look at the best way to take this massive bill and break it into pieces and implement it in ways that work in their own state. There is enough flexibility, I think in some instances, to let us make adjustments for things so that it works for Alaskans. I don't have to do exactly what California does. Some pieces of it you do, [for example] the various mandates we have to do as they're written, but there are other places where there is a little more flexibility.
 
AHPR: Let me just say it's very interesting to hear the amount of interaction that is going on between the state of Alaska and the feds, and even among your other colleagues across the United States -- heartening I would say, to hear that. Another kind of group effort is this inter-agency task force that I've heard mentioned a number of times in the state of Alaska, and I believe you're on that. I may not have the name correct, but could you talk about that a little bit? Back to selected topics list

Interagency Working Group Assesses Impact of Health Care Reform Bill
 
Hall: Little bit, not a lot. Anyway, I'm not sure it even has a name other than interagency task force or working group. It's something that as we saw the the massive nature of this bill and realized that it impacts various departments throughout state government, that we needed to at least start to talk about it on an inter-agency level as opposed to having silos. I take the insurance parts and do them, and HHS takes Medicaid, and [the Department of] Administration takes something, and OMB [Office of Management and Budget] wants to know about cost. We are doing it. We're not making policy decisions but we are trying to bring together the expertise in the various departments at a very high level. I'm on it, Deb [Erickson] is on it, there's a couple of other people from HHS, there's somebody from [the Division of] Retirement and benefits, and we each are looking at our own stuff and then we just kind of write a little summary and a  timeline making sure that we're not missing anything and what we have to do.

We talk among ourselves and ultimately we'll produce some kind of report for the governor which ultimately will become public. Right now, we are not making policy calls, we're just looking at what is it we need to do, what's optional, what's mandatory, and beginning to assess impact so that as a state we understand, first, we have an administrative summary of what's there, and then from there, we need and want input. We want this to be a process that people understand what's happening and what impact it may have on Alaska, and I think our goal is to probably have some public meetings and talk about that. I get e-mails from legislators about this or that, but right now it's at an administrative level, just trying to make sure we have all the pieces lined out so that we know what we have and what Alaska needs to deal with.
 
AHPR: Deb [Erickson] told me just after your talk today that she believes a report is going to be issued next month from that interagency task force.
 
Hall: That's my understanding. I don't think we have any hard timelines, but you know we're putting a lot of pressure on ourselves to do that just because we know that Alaskans do want to know what we're doing, that we're not just sitting back.
 
AHPR: That's a natural segue to my next question. Does the division have, or will the division have new resources for Alaskans to go to to find out the details and timelines of these various changes?
 
Hall: Well, I don't know that. I hadn't thought about that. I guess there would be no reason we couldn't put links at least. Let me back up -- my website is in dire need of revision. We are working on that. It's difficult to navigate. We have sections for consumers and agents and there is a lot of information there but It is not user friendly. So we're actually working on that, and that hasn't progressed nearly as quickly as I would like it to have. It has to do with finding staffing time, actually, to do that kind of thing. They generally have other jobs too, so it's hard to do that, but I hadn't thought about doing that on our website at all, and I think that is a good idea. The website that we referenced today and that Deb has referenced, I think, will have lots of timelines and things like that [Alaska's federal health care law information website at http://hss.state.ak.us/fedhealth/]. There is no reason I couldn't do that on our website, too. As I said, I hadn't thought about it. Back to selected topics list

Monitoring the Performance of Insurance Companies

AHPR: Now, moving a little bit closer to more specific questions, how will you determine if health insurers in Alaska meet the new conditions and terms in a timely and accurate manner? There is a timeline for many of these changes so at some point in time it seems to me the insurers have to meet these conditions, mandates, whatever they are. How will you know if they're doing that?
 
Hall: Probably in two ways: one, they file their forms with us. We will know if Company A, Company B, Company C, all file a form that takes out annual limits. Then we'll know that they have, but we don't get a filing from Company D, we will know that they haven't filed a new form, and we will probably assume that they haven't changed their form, which they will be required to do. We'll have an ability to follow up. The other way we know -- some of the things probably we will only know that they haven't done -- is if we get a complaint. For example, there is a policy rescission. Someone calls us, they developed cancer, and once they started treatment their health insurance company canceled their coverage. Now we don't have any way to know that kind of thing unless somebody tells us. It's not part of a form. It's not something they're going to call and say, "Oh, we're canceling policies," so we have to find them in an act that violates the law. That's somewhat true of other types of statutory violations today. The things that are forms that are required to be there, we will find through the filing of those forms with us, but others we find through complaints.
 
AHPR: It sounds like then, for that reason, complaints are really central to monitoring the performance of the insurance companies.
 
Hall: That is certainly a piece.


AHPR: I noticed on your website that there's some process or procedure that a person would follow to file such a complaint.

Hall: Absolutely. There is a big check mark box in a central place. That is one thing I think our website has done well. We have a form, a complaint form, a one-page form you can attach things to. It can be filed electronically, by mail, or people come in, and we really encourage that. You file that with us and then we have a very specific process. We go to the insurance company with this complaint, and say, "The policy holder has indicated to us that you have done X. Please explain and provide us information." It may be a whole claim file, it may be you canceled their policy, it depends on the nature of the complaint what our letter to the company [would say]. We usually give them, I think, two weeks -- it depends on the complexity -- to respond to us, and then we take that response and determine if we need more information, [and determine] if they actually have violated our statutes and regulations. Some things the policy holder may just not like, but there is no violation of either their insurance contract or of our laws.
 
AHPR: They're out of luck.
 
Hall: I will use this. It's not health insurance but it's an easier example. You didn't get paid as much as you'd like for your car after it was totaled. There is a process to do that, and [even though] that's followed, you might not be happy with it. To you, it had much more value than it really has. Probably 50 percent, at least, of the complaints we get from consumers are based on health insurance, and there are times that we have found practices through a complaint, that as we've invested more we've found a blanket violation of certain of our health insurance regulations. Then we've had the company go back, say two years, and re-process claims. That's a big step. That's a pretty big thing and we don't see that very often.

We had one recently that dealt with coverage provided in a foreign country and an exchange rate. So we get into just a wide variety of issues, but the complaint process is an important part of what we do, and it is one of the specific requirements in the federal reform bill. There is a position that you have to have, and there's a couple of different titles that are used for it, it's a "consumer assistance" or an "ombudsman." We are working hard to try to make sure that we can keep that as one of the people we already have. But there are five specific things that that position must do under the new federal law, and we already do three of them. Two of them deal more with the exchange, so we don't do those today.
 
AHPR: That doesn't kick in for a few years, I think. Back to selected topics list

Hot off the Press and Coming Your Way: Alaska Insurance Consumer Guide
 
Hall: Right, 2014. This is hot off the press, when you were talking about complaints. This is our most recent Alaska Insurance Consumer Guide. We literally just got that printed.
 
AHPR: Is this also online?

Hall: I don't know if it is online or not yet. We are actually distributing those -- I'm not sure when, but sometime very soon. They will go out in the Sunday [Anchorage] Daily News.  We're going to do it in Fairbanks and we're going to do it in Juneau -- have those included.       This is all personal insurance stuff. It's not commercial business at all but there's certainly a section on health care, and there is a flyer in the middle of it about scams that are already coming up with federal health care. I haven't heard it here, but some of the states have people out selling what is called Obama healthcare insurance, and it's pathetic to see what people will take advantage of. There is a special insert in there that after we were almost done we thought it was important enough that we did a special insert.
 
AHPR: Does this reflect some of the new federal regulations?
 
Hall: Probably not. I don't think so. Other than you can't scam people.

 
AHPR: I wanted to ask you about some very specific provisions now that to my best understanding specifically relate to health insurance and are going to be in force in the next 18 months. I'm trying to focus on a fairly short time period. My understanding is that starting in September, lifetime limits on what insurance companies pay are no longer allowed. I wonder if you could explain what that means and if that's true.
 
Hall: That is true. There are two kinds of limits. There are annual limits in some policies that they won't pay more than -- and I'm going to use figures that I pull out of the air -- there may be an annual limit that the insurer will pay ... I'm going to say a half million dollars, and a lifetime limit of $1 million. Lifetime limits are prohibited as of September 2010. Annual limits are restricted in 2010 and then prohibited in 2014.

So as of September 23, the lifetime limit -- the most your health insurance company will pay ever for you -- is $1 million. That's been a very common limit, and that will go away so there will be no lifetime limit. Because it used to be if you used up your lifetime limit you could either buy another health insurance policy from a different insurer if you could find anybody to insure you after you had already used up your limit. That would be very difficult. Or you could participate in one of the high risk pools because you can't get anyone to write coverage for you anymore. With the enactment of that lifetime limit being prohibited, if you have a very serious [disease], and I will use hemophilia as a disease that I know is very expensive because I've seen that in our high risk pool. If you had a traditional insurance policy and you were a hemophiliac, that lifetime limit would cease and so they would continue to pay for the medical treatment that you needed.
 
AHPR: Without this new regulation, once somebody runs up a bill of say $1 million over the lifetime of their policy, then the insurance company would simply stop paying, it would be like suddenly not being insured anymore. Is that correct?
 
Hall: That's correct. Back to selected topics list

Grandfathered Policies and Possible Premium Increases
 
AHPR: Just using this particular regulation as kind of an example, I had a number of questions. Are there any notification requirements? For example, does the insurance company have to tell people that "in a month we are instituting these changes," or something like that?
 
Hall: I don't know. I don't remember reading that. If they make policy changes in their form, so that the changes that require form changes are in the health insurance contract, then you get a new policy and it would state the things that are different. But I don't remember seeing any notification requirement.

 
AHPR: A lot of people are going to be in the middle of an insurance policy year when this thing suddenly kicks in. Is that right?
 
Hall: Yes, and current policies are grandfathered. I'm trying to think how that would work and how these work. They are grandfathered, so they don't have to go to the new benefit levels, but they do have to comply with some of these -- even the self-insured plans have to comply with some of these.
 
AHPR: Yes, that was a question I had coming up.
 
Hall: As I said earlier today, there are things that I can't answer at this point. We're still digging.
 
AHPR: Fair enough. We are still talking about the lifetime limits, but just in general does an employee have to do anything? In other words, is there an opt-in provision by an employee who receives health insurance from the employer, or do these things just automatically kick in?
 
Hall: They automatically kick in.
 
AHPR: Let's say, all of a sudden the lifetime limit is abolished, which it will be. So will the portion of health insurance paid by an employee, in a case where they are splitting it with an employer, will that go up? Somebody who has just purchased health insurance on the open market, will their premium suddenly go up as a result of the lifetime limit being lifted?
 
Hall: It's possible. We don't know for sure what increased costs will result from what are seen as increased benefits. I have seen some calculations by insurers that they estimate some of the whole package of changes could increase premiums as much as 12 to 15 percent. But I haven't because they are not enacted and normally, when we look at filings, we look at actuarial projections. Now that these mandates will be there, the company would have to file a new rating plan if it's a prior approval rate, they would have to file a new rating plan with different projections so that it is actuarially sound.
 
AHPR: So they can't suddenly change the monthly premium without making a filing first, is that correct? Back to selected topics list

Division of Insurance Has Limited Rate Approval Authorization in Alaska

Hall: In our state, it depends on the insurance company. We only have prior rate approval or rate review authorization for specific rates with hospital and medical service corporations, and that means Premera Blue Cross. To translate that, there are two hospital medical service corporations. The other one is a vision plan, so we don't get it, but we do get and review and approve or disapprove the rates specifically for Premera Blue Cross. We don't have that specific rate approval authority for any other health insurer. We have standard rate authority that says a rate cannot be excessive, inadequate, or unfairly discriminatory.

So under that standard, if we get an inquiry for example, or information that Company B has all of a sudden raised all of their premiums 50 percent, we would have statutory authority to go to that company, ask to see their rates, their rating plan, and the actuarial justification. We can do that, but they don't have to come to us and file it and we say, "Yes, we approve that, and you can now use it." But given that Premera has approximately 73 percent of our market, we do do prior approval of a significant amount of the health insurance written today.
 
AHPR: Why is Premera different than other health insurance companies operating in Alaska, in terms of rate review?
 
Hall: They are a hospital medical service corporation. That's a statutory term. They are regulated differently.

AHPR: What does that mean?

Hall: It's a nonprofit entity. That's part of it. It's a nonprofit entity that provides medical services. I could look it up and give you the definition, but it is a specific section in our statute.
 
AHPR: Moving on to other questions, these regulations such as abolishing lifetime limits, do these also include self-insured companies or organizations?

Hall: They do, but I can't give you a lot more information. I don't know how, which of them do apply, and at what time. I'm not sure they're on the same timeline for applicability.

AHPR: I'm assuming your answer would be the same for say a labor or labor/employer health trust?
 
Hall: Yes. Those are all entities that are governed under ERISA [Employee Retirement Income Security Act], and because they're governed under ERISA we don't have any oversight, so it's not something I have spent a lot of time on in the bill.
 
AHPR: I didn't know, for example, if the new federal regulations transferred some of the authority over those to the state regulator.
 
Hall: No. Back to selected topics list

Anticipated Changes in Dependent Age and Pre-Existing Condition Coverage
 
AHPR: Just to touch on a few more of the very specific things that to the best of my understanding are going to be implemented in the next 18 months, one is family plans. Would you please discuss the changes regarding adult child coverage until 26. And then the no denial of coverage for pre-existing conditions for children under 19.
 
Hall: The coverage for dependent children up to age 26 goes into effect in September, although Secretary Sibelius has written letters probably to every major insurance company asking that they implement that sooner. As I said today, most have complied with that. I think the thought process being that if they're going to do it in September, they might as well do it now, to try to be cooperative. But what that means is if you have a 22-year old who just graduated from college, doesn't have a job yet, is still dependent, but is not, say, a full-time student, which would toss them out today -- usually it's 22 or 23, and full-time student and be dependent, but now they're not a full-time student anymore but they really haven't started their first job -- they would be able to remain on your insurance policy as the parent.
 
AHPR: All you have to do is keep on paying.
 
Hall: Correct. You still have to pay. There is no requirement that you go back and notify them, "Oh, we took your 22-year old off your policy because they reached our age limit." But they can come in and say, "I still do want to cover my dependent," and they're still a dependent even though you hesitate to call them a child at 23 or 24. Different companies, even today, have different cutoffs for that age limit. Some are 22, 21, some are 23. We've discussed that, even in Alaska, whether we want that. There was a bill, I believe Sen. Davis had sponsored a bill to provide coverage up to age 26, so that's not probably a huge change for insurance companies.
 
AHPR: What about the new regulation, no denial of coverage for a pre-existing condition for children under 19?

Hall: Basically what that means is that if you have a child and you buy health insurance as a family, and your child has some type of pre-existing condition, that would mean they don't get coverage for that condition. Usually that's not forever, but you have to be treatment-free for so many months, or maybe for the first year. That would be prohibited going forward. That's also temporary from whenever that's effective, which I believe is in September, until 2014. In 2014 then the whole pre-existing denial of coverage is prohibited.
 
AHPR: In other words, adults kick in at that time?
 
Hall: Correct.

 
AHPR: Just based on stories I have heard, I want to ask if even if there is no technical denial of coverage for pre-existing conditions, can an insurance company quadruple the premiums as a way of forcing such a person out of being insured with a pre-existing condition? After this passes can they do that?
 
Hall: I don't think they can do that today. They could not write coverage because of a pre-existing condition today, but they couldn't charge a premium. Remember the standard that I described earlier? It can't be inadequate, excessive, or unfairly discriminatory. What that phrase means, and we use it in all lines of insurance today, is if you have groups of people with like characteristics, then they should be charged a like premium. So you would be charged a premium for others with the same risk characteristics. If we found somebody who, all of a sudden whose premium was tripled, that would be something we would look at. Under even our current statutes. But no, I think as we look at whatever the term means, this is as of yet undefined, "unreasonable premium increases," and that's in the bill that's being tossed around a lot, whatever that means, and it means different things to different people. In the same way I find people looking for "affordable coverage," and I'm like, "well, whatever that means." What's affordable to one person is not affordable to another. "Unreasonable increases" are supposed to be reported to the Department of Health and Human Services, but there is no definition for "unreasonable" today. There was a huge rate increase by Anthem, and that's generated a lot of media attention.
 
AHPR: A 39 percent increase, as I recall.
 
Hall: Yes, and so that was, just on the face, looked like that was unreasonable. They are looking at things like that, but you don't usually find an individual condition then resulting in a huge rate change. The only place you really find that would be like in life insurance. You have a different rate for a smoker or something, but to keep people out of the market by changing that, I really don't think that happens today, much less under this law. No, it clearly would not happen.
 
AHPR: Moving on to another specific change, I understand that starting next year there will be changes in long-term care insurance. Could you just discuss those changes a bit?
 
Hall: Well, I don't know that they are changes. I can really only discuss that in pretty broad terms because it's not something that's in effect for the next six months I'm concentrating on.
 
AHPR: Oh yes, but it deals with insurance for long-term care, is that correct?
 
Hall: Yes. It must be a federal plan of some kind, to buy in, just pay a certain amount of money per month and it takes you five years to vest, so they are really trying to encourage people to buy in at an early age and accumulate money because you aren't eligible for benefits of that money for five years. And after that, you've created a pot of money that then can go toward the benefits that come back. And I don't know much more than that, other than it's operating on a pooling type of arrangement where you can buy in.
 
AHPR: Would that be regulated by your office?
 
Hall: I think that's regulated with Medicaid, but I could be wrong. That's another one of those "I don't know." There is a lot to learn still, about some of these, and the farther out the effective date of some of them are, the less we're concentrating on those right now. Back to selected topics list

New Temporary High-Risk Program Starts July 1
 
AHPR: You've mentioned this a number of times, the new temporary high risk program. Could you talk a little bit about that? Who is eligible? What would it cost? That kind of thing.

Hall: I can talk a lot about it, but probably not what it will cost yet. The temporary high risk pool is the mechanism that the legislation sets up to give access to health insurance to anybody that wants it today. I think 31 states have high risk pools, as Alaska does. We have the ACHIA [Alaska Comprehensive Health Association] pool, but this is a separate pool that will be funded by the feds. There is $5 billion set aside for the operation and administrative costs and claim costs, and each state has been allocated a piece of that $5 billion -- kind of based on their current high risk pool.

Alaska's allocation was $13 million, and it's temporary because it only lasts until the end of 2013, when the exchanges go into effect on January 1 of 2014. Then, in theory, everybody will be able to buy coverage through the exchange. That's why it's a temporary entity being created. There are certain eligibility requirements -- you cannot have had insurance for the prior six months, you have to be a citizen or in this country legally -- each state beyond that pretty much can put their own eligibility requirements if they determine to do the pool at all. The high risk pool is an option. It's one of the optional things in the bill. If the state or state's contractor doesn't do that, then the feds will do it. We can do it, or the Feds will do it for us. We're still in the decision-making process. That will be a decision the governor makes.
 
AHPR: This kicks in next year, one way or the other?
 
Hall: This kicks in July 1.
 
AHPR: Oh, very soon.
 
Hall: That's why I know a lot of about it, because I'm working very diligently on this. As I said, whether we participate or not will be a decision made by the governor. That's really a policy decision. We are working to analyze benefits and risks to the state. We signed, I actually signed with the authorization of the governor's office, the first letter that Secretary Sibelius sent out asking states to show their intent to proceed to do a state pool. We are in that process of filling out a response to a solicitation which would put the parameters under which we would operate, or have probably our high risk pool operate, a second, totally separate, separately-funded pool for this temporary period of time.

The premiums are controlled by the statute. They can't be more than 100 percent of the average health insurance premium in the state, so it's still very expensive because health insurance is expensive. There is a cap on what the premiums can be and there are other kinds of stipulations, but basically it's the mechanism to allow access to health care. It doesn't make it more affordable, but there's $13 million sitting out there for us to use for our state if we choose to do so, if we think there is more benefit for Alaskans than risks, and that's what we're analyzing right now to make recommendations to the governor.

AHPR: My recollection about ACHIA is that it has also some sort of cap on it?
 
Hall: By statute the premiums can be up to 150 percent of the standard market premium. Today they're probably 135 percent, so ACHIA has a higher premium than this pool would have. That is one of the risks that we see, or one of the, I would call "inequities," but it's built into the statute.
 
AHPR: We're right at the end. Are there any more special provisions you are aware of kicking in during the next 18 months that affect health insurance, that we have not talked about that should be mentioned, or that you would like to mention?
 
Hall: I don't think so. I'm looking through my list of market reforms and the other things I've mentioned, the pool, the exchange, the consumer assistance. I don't think so. You've done well.

 
AHPR: And finally, the last question. Do you have any last thoughts or comments that you would like to leave with the readers of Alaska Health Policy Review? It's your opportunity to say anything.
 
Hall: Probably the only thing I would say is that this is such a major revision of how we pay for health care that I would encourage people to learn all they can so that they are familiar with it, they understand what they're entitled to, what restrictions there are -- and I always like to get one last, you know -- call the division of insurance if you have questions. That's really important to me. We don't have a good way to get out the fact that we exist, and I think we have resources that can be very helpful to Alaskans if they knew we were here. I've actually received letters from consumers saying that, "I had no idea you existed, and I didn't know where to turn for help until I found you." The more we can make them aware, that's why we are doing the consumer guide again. So, I have to get that in, and I don't have really anything else that I can think of.
 
AHPR: Thank you very much for taking the time to do this. Our Alaska Health Policy Review does go out to several hundred policy people and also practitioners, and so the word will get out at least to that extent. Thank you
 
Hall: Good. Thank you. Back to selected topics list

Back to top

Early warning! In fall 2010, AHPR Editor Lawrence Weiss, will teach HS 690 Alaska Health Policy, a class offered by the Master of Public Health Program at UAA. This course is open to persons who are not in the MPH program with permission of the department. It will be entirely online so you can do most of it at 2 a.m. in your jammies if you like.

The focus will be on health-related public policy in Alaska. The educational style will be fast-moving, highly interactive, and intellectually challenging. The curriculum will explore what health policy is, what impact it has on day-to-day practical operation of health care, how it is created, who influences it, and how national policies may affect health policy in Alaska.

Teleconferenced guest speakers will include some or all of the following: state legislators, lobbyists, program administrators, and advocates. Main source materials will include selections from approximately 1,800 pages of back issues of Alaska Health Policy Review, and a variety of relevant websites and other online resources. Students will conduct a high priority health policy analysis with practical application in Alaska, and will have the opportunity to have it reviewed for possible publication in Alaska Health Policy Review.

Sound interesting? Contact Katie Frost, ankrf@uaa.alaska.edu, administrative assistant in the UAA Department of Health Sciences. Ask her to put you on the "interested" list for HS 690 Alaska Health Policy so you can learn more about it and have the opportunity to sign up later this year. This class will be interesting, fun, and a great opportunity to network with like-minded health policy wonks!

Back to top

 

Barb Angaiak is president of NEA-Alaska (National Education Association - Alaska) and has been a trustee of the NEA-Alaska Health Plan for five years. The Health Plan is a member-owned form of health insurance which replaces commercial health insurance. It has some important and interesting features we thought you would want to know about. NEA-Alaska represents approximately 13,000 active members and about 1,500 retirees who are also members. NEA-Alaska members are not only teachers; the membership also includes the cooks, the custodians, the maintenance workers, the secretaries, the teacher aides, and the learning assistants in just about all the communities in the state. We managed to squeeze in an interview with Angaiak on March 10, 2010, to discuss the details of the NEA-Alaska Health Plan and health trust. Since there are many health trusts in Alaska that insure tens of thousands of Alaskans and their families, we thought it would be a good idea to explore one in greater detail. Note that this transcript has been edited for clarity and length.

Links to selected topics

NEA-Alaska Health Plan: The Best Service at the Least Cost
Trustees Determine Policy and Allocate Funds
Health Plan Trustees Consider Member Recommendations for Coverage
Advocates for Quality Care and Wellness Programs
Planning for the Future
Focus on Helping Members Understand and Use Benefits

NEA-Alaska Health Plan: The Best Service at the Least Cost

AHPR: Please tell us, what is NEA-Alaska? Who does it represent? How many members does it have and where are they? Just a general overview
 
Angaiak: Sure. NEA-Alaska is a teacher and education support professional union. We represent school employees in our public schools in Alaska. We are in almost every community in the state. We have just about 13,000 active members, and we have about 1500 retirees who are also members. We are the people who not only teach, but provide education support services to the schools. We are the cooks, the custodians, the maintenance men, the secretaries, the teacher aides, the learning assistants -- in just about all the communities in the state.
 
AHPR: What is the NEA-Alaska Health Plan? For example, how is it structured and governed? How long has it been in existence?
 
Angaiak: Sure. The NEA-Alaska Health Plan was set up as a health trust in 1996. It was formed to assist school district employees who were our members and were running into increasing costs -- exorbitant increases every year -- for their health care. They were being asked to assume more and more of the cost of their health care. The school districts were trying to work through private insurance companies and third-party administrators that were raising prices at phenomenal amounts, and our members said, "Isn't there anything we can do about it?" So NEA-Alaska, as the plan sponsor, helped create the health trust. The health trust was established initially with just a few of our local organizations, Anchorage being the biggest one. But we have since added to that, and we have quite a few different groups now.
 
We are a nonprofit, and as such give the very best service that we can to our members at the least cost that we can afford. Our increases have been much more moderate compared to what other insurance companies are charging. We can do that because we really are working for the benefit of our members. Our governance structure is that NEA-Alaska is the plan sponsor, but the health trust has its own board of trustees. There are seven trustees. The NEA-Alaska president and the NEA-Alaska vice president serve as the chair and vice chair of the trust board.
 
There are four elected trustees that are elected by the membership to reflect what the member interests are. We currently have two from Anchorage, one from Delta, and one from the Mat-Su who are elected. There is one more seat on the board that is appointed by the plan sponsor, NEA-Alaska, so we have a seven-member board. We have a staff in the health trust office, and we have a chief financial officer who oversees the contracts that we have, oversees the payments that we might need to make adjustments on. We do have a contract with a third party administrator, EBMS [Employee Benefit Management Services, Inc.], out of Billings, Montana. We also have a claims analyst, Hope Chavez, who takes care of the incoming requests from members, inquiries, appeals that might come forward, and she handles those kinds of things.

The executive director of NEA-Alaska is the plan administrator. She has oversight over our plan staff, in making sure that they are taking care of things appropriately and meeting with all of our consultants and third party administrators, and making sure that things are moving in the way that the plan sponsor needs them to be.

 
AHPR: Just to be clear, how is the health trust different than, for example, if NEA-Alaska just decided to purchase commercial health insurance to cover the members?
    
Angaiak: If we were to just purchase health insurance, it would be a difficult thing for us to do, because the arrangement we have with our school districts is that the employer pays a certain percentage, and that is negotiated through bargaining to provide benefits to their employees, including health insurance coverage. And in some contracts we have an agreement that the employees pay a portion of the cost, and in some, the school district pays the full cost. It depends on what's been bargained at the table.
 
AHPR: Full cost meaning premiums, not necessarily co-payments, deductibles, that kind of thing?
 
Angaiak: Right, just the actual premium payment.  
 
AHPR: I'm assuming that the health trust actually provides health insurance coverage for more than just 13,000 members?
 
Angaiak: The health trust does not cover all of our members. The health trust exists, and is available to any of our local associations if they choose to come into the trust, along with the employer. There has to be a mutual agreement that this is the direction that they want to go. Some districts are satisfied with the rates that they receive from whatever insurance company they are dealing with -- Blue Cross Blue Shield, Great West -- there are a lot of them out there. It has to be an active movement on the part of our members and the employer, to come into the trust.
 
We currently cover, I believe, about 5,500 employees under the umbrella of their local association. They have an agreement with the district, and the school district pays the money as they would with an insurance company, but they pay it to the trust, and therefore that money then covers the cost of insuring their employees. I believe we have about 15,000 lives that are currently covered by the trust.
 
AHPR: So that would be like family members, and so forth?
 
Angaiak: Correct, and dependents, right. Back to selected topics list

Trustees Determine Policy and Allocate Funds
 
AHPR: Who actually controls the plan assets? We must be talking about huge amounts of money here.
 
Angaiak: It is a large amount of money. You have to keep in mind that it's essentially flow-through money, because it's used specifically for the purpose of taking care of our health care needs. The trustees make determinations as to how the money is going to be allocated. We do have reserve funds that we make sure we take good care of. Should there ever be some sort of catastrophe or some situation that comes up and we have obligations out there, we have to make sure that we are careful to plan to have money to be able to cover any potential claims that might come in that have to be taken care of. So we do have a reserve allocated specifically for those kinds of situations. And the trustees make the determination on how the funds get allocated, and what the policies are going to be, around how we follow through with the management of the money.
 
AHPR: You said the plan was developed in 1996, I think?
 
Angaiak: Correct.

 
AHPR: And prior to that, how were the health care needs of members and their families handled?
 
Angaiak: Prior to the trust, each district was handled in the same way that the districts that are not in the trust are handled now. Some pay a premium amount for their employees, and they just have a contract with a private insurance carrier. There are a number of school districts in the state that are what is termed "self-insured," which means that they pay for the actual cost. They don't pay a set amount of premium. What they pay is based on the experience.
 
Previous to the trust, it was like any other employer-employee relationship where the employer agrees to provide health insurance coverage and there either is full coverage paid for by the employer, or the employee pays a certain amount of that cost.
 
AHPR: And that was negotiated with each different school district?
 
Angaiak: Yes.
 
AHPR: It sounds to me like you're implying that the plan for the members is working better, for the most part, than it would be at the level of any separate school district.
 
Angaiak: It depends a lot on the experience of the members in whatever school district they're in, but in general, we have been able to keep our costs running at a nine or ten percent increase each year in the cost of coverage versus up to 26, 28, 30 percent that the private insurance carriers charge. That is our goal, that's our mission, that is the statement that we continually live by -- we are trying to make sure that our members have the greatest benefit for the least amount of expense. That's the bottom line for us, and that's what we try to do all the time. Back to selected topics list
 
Health Plan Trustees Consider Member Recommendations for Coverage

AHPR: What happens when a member disagrees with plan interpretation? For example they think the plan ought to pay more or they think the plan ought to pay for something the plan doesn't want to?
 
Angaiak: There are a couple of things that can happen. First, we do have an appeals process. If they have submitted a claim that has been denied, the first level of appeal is directly to our third party administrator to have it reviewed, have a more careful look taken. Sometimes there is a miscoding. Sometimes there's a misinterpretation of the policy or misunderstanding on the part of the member, so we try to get it taken care of in that way. If the member is dissatisfied with the result of the third party administrator first level appeal result, then they can bring it to the health trust. We have a second-level appeals committee consisting of trustees and consultant and trust staff.
 
We meet and we discuss the merits of the case. Everything is redacted as far as name and identifier of the member, and we use a pretty clean process. We have the staff prepare the materials for us that includes the appeal, what took place, all the documentation, and a copy of the policy that we have that relates to that particular issue. We meet face-to-face, we talk about it, and we review it. We consider whether it matches with what our policy says or not, and we make a decision. Ultimately then, the member gets a notification from the plan administrator that says, "Your second-level appeal has been approved" or "denied."
 
Beyond that, the trustees also take into consideration any communication that we get from members. We look at concerns that might arise if we get something from a local [unit of the union], like a health committee in a particular local may make a request of us that we look into making adjustments. We have done that regularly. We have done things like increased the coverage for frames for glasses, for instance. We had a request for some medical equipment that was of a commercial quality -- and there was written documentation and evidence that that particular type of medical equipment, versus what we were authorizing to be paid for-- was really a better value in the long run. The trustees take those things very seriously and consider them, and we have made adjustments to our plans based on that.

 
AHPR: And just to reiterate, this is a nonprofit trust, so there is no issue of profits being generated?
 
Angaiak: Correct. We do have investments, but as I said, those are strictly in place to cover any future liability that we may have. It's not intended to be a profit-making organization.
 
AHPR: Is there also insurance so if there's a huge unanticipated expense in a year, that some outside insurance is maintained and kicks in?
 
Angaiak: I think you're referring to stop-loss?
 
AHPR:  Yes, stop-loss.
 
Angaiak: Yes. When I first came on as a trustee, we had an outside company that provided that stop-loss coverage. We are now in a stable financial situation to the point where we are able to cover our own stop-loss coverage. Back to selected topics list
 
Advocates for Quality Care and Wellness Programs

AHPR: Does the plan have any mechanism, or make any effort to control or influence the quality of health care that is being paid for?
 
Angaiak: We do advocate for good quality care, for sure. We have systems in place that help get information out to our members to help them know what to look for in a provider, [and help them to know] what kinds of programs are available through their coverage with us. We have an online system where they can talk directly with a nurse, they can get recommendations on physicians, and they can get information on how to lower their pharmacy costs. They get mailings on nutrition, on health care, and I think we just got one not too long ago that went out regarding diabetes. We have a website that is very, very usable and helpful.
 
AHPR: Does the plan have any aspects to it that promote prevention? For example, does the plan pay for or otherwise encourage anti-smoking programs, weight loss, vaccinations, colorectal screening, that kind of thing?
 
Angaiak: We do, and we encourage wellness programs to be developed. We're not directly involved right now, but in Anchorage there is a wellness program being developed through the Anchorage School District and the Anchorage Education Association. We are consulting with them on it to make sure that they are getting all the information they need, and getting help with figuring out what the plan is going to look like and how it's going to be utilized.
 
AHPR: Can you give our readers some notion about what kind of premiums members pay? It sounds like it's kind of a mixed bag, depending on your negotiations with the school district.
 
Angaiak: It is very dependent on the contract because at the bargaining table there may be some combination of either the employer pays 100 percent, the employer pays a certain dollar amount, and the employee picks up the difference depending on what the amount per member is for that year. Sometimes the district will say, "Well, we're going to pay this total amount of dollars for everybody in the group, and you have to pay whatever it turns out to be is the balance." It just depends on what happens at the bargaining table in that particular school district.

 
AHPR: From the point of view of the plan, do you have some sort of average figure, like total payouts divided by the number of members equals X? You know, $6000 a year, $8000, anything like that?
 
Angaiak: We don't really calculate it in that exact way. We do a calculation each year on what the utilization is, what the experience has been, what anticipated costs are. Sometimes there is a higher utilization during some months of the year. For example, we know that -- and this is probably true for all insurance carriers -- that they get more claims on dental care in the last two months of the year than they do the rest of the year. Why? Because people are in a calendar year arrangement so they are trying to make sure that they use their benefit before the end of the year, and then it starts again in January.  
 
Also, because we are representing school employees we know that a lot of our folks will do a lot of preventative care and optional scheduling kinds of things during the summer, so we get a lot of claims that come in July and August. It's very up and down throughout the year. So we calculate all of those things and factor them into when we do our rate setting. We, like I said, have been very careful to try to keep our costs to what we think is a reasonable cost to make sure that we're covering what we need, to make sure that the trust is healthy and functioning the way that it should be, but also keeping costs down. We are not trying to make a profit. Back to selected topics list

Planning for the Future
 
AHPR: As you look at the big picture, what are the challenges facing the plan in coming years?
 
Angaiak: There are a couple of big challenges coming up. One is, we just have an ongoing need to make sure that we are monitoring new regulations about what must be covered by our plan. There are a number of things that have been added to the coverage that we have included in our plans, over the last few years, that continue to grow. We have to be really vigilant about making sure we're paying attention to those things, and just the increase in the large cases -- the higher number of cases where there is a catastrophic kind of disease, or something that -- you can't anticipate everything. We do have stop-loss coverage, but we worry about the number of cases that we're seeing where people have really intense needs. The other thing that I think is a challenge is just in Alaska we have some limitations on what kind of care is provided here, what's available, how many providers. There is definitely a crisis in the number of providers that are available, that are accepting patients, that are doing the things that we need them to do. So that's a huge challenge.

 
AHPR: Is one of the issues perhaps the demographic shift among your membership? Are they getting older? Or, maybe they are not...
 
Angaiak: Well the population in the state is currently getting older. There's no doubt about that. Many of our members, when they get older, are fortunate at this point in time to still be able to retire through the state system and have pretty good coverage. The new members coming in won't have that because of the problems with the defined benefit retirement. It's all tied together, but in general the population is getting a little bit older.
 
AHPR: I brought that up because they may have greater needs for health care; and therefore, they might be more expensive as a whole as your membership ages.
 
Angaiak: Sure, absolutely.
 
AHPR: Something I should know and don't know, is whether the NEA-Alaska Health Plan is regulated by the state or not?
 
Angaiak: All plans are somewhat regulated because the plans have to comply with certain regulations that are in state statutes. We are a private nonprofit, so to the extent that the state regulates any insurance coverage, yes we are.
 
AHPR: I bring that up because, for example, if a business were self insured, my understanding is they would not be regulated by the state in any way, versus a commercial insurer which is pretty heavily regulated by the state.
 
Angaiak: Well, not to put too much emphasis on this, self-insured employers contract with a third party administrator to handle their claims and all of those kinds of things. Those third-party administrators have to comply with whatever the state regulations are, as far as what they offer in their plans and how they determine their coverage. We have to follow that as well.
 
AHPR: I see. So if the state has a new state mandate, for example some kind of new screening or something that all commercial insurers have to have, you have to adopt that?
 
Angaiak: Correct. Back to selected topics list

Focus on Helping Members Understand and Use Benefits
 
AHPR: Just a couple more questions. What changes to the plan in the coming years are envisioned by the trustees, to the extent that you can answer that?
 
Angaiak: It is hard to know for sure, but some of the things that we have dealt with more recently I can share with you. One of the issues that came up not long ago was that there are members who are patients in clinical trials for new therapies, new chemicals that are shown to be promising, possible new drugs. We made a change so that we could cover the regular kinds of things that would be done, even if the person wasn't in a clinical trial.
 
One of the trustees happens to be a registered nurse and is a nurse here in the Anchorage School District. She will often bring us ideas about things, concerns that people have that come to her, and all of the trustees have those kinds of things coming to them. We don't set out on a path of, "Well, this is what we are going to be doing," but rather we are nimble enough that we can adjust when members say to us, "Hey, this is happening, this is coming, what can we do about it?" So we have been able to adjust our coverage, and our plans, to meet those needs. 

 
AHPR: I have no more prepared questions other than my last question which is: In closing is there anything you would like to say to the readers of Alaska Health Policy Review?
 
Angaiak: Sure, a couple of things.
 
AHPR: Please do!
 
Angaiak: You asked about wellness earlier, and that is something that the trustees have been interested in, and we are looking to make sure that we do everything we can to help our members understand the benefits that they have in the plan, and why it's important to get medical care when they need it, but also to do as much as they can in the area of prevention. That is a real focus for the things that we're doing in terms of sending out information, making sure that people are aware of their benefits, helping with whatever aspect of health care we can -- to be sure that people understand their benefits and are utilizing them. It was kind of surprising to find out how many members have coverage but don't use it. In some ways that can be detrimental because you may not discover that there's a problem until it's well down the road. With a little advanced notice, perhaps it could have been prevented altogether or at least minimized. That's something that the trustees care a great deal about, to help make sure that we are getting the information out there to our members.
 
AHPR: Thank you so much for a very informative interview. Back to selected topics links

Back to top

Alaska Health Policy Review is sent to individual and group subscribers for their exclusive use. Please contact us for information regarding significant discounts for multiple subscriptions within a single organization. Distributing copies of the Alaska Health Policy Review is prohibited under copyright restrictions without written permission from the editor; however, we encourage the use of a few sentences from an issue for reviews and other "Fair Use."

We appreciate your referral of colleagues to akhealthpolicy.org in order to obtain a sample copy. The Alaska Center for Public Policy holds the copyright for Alaska Health Policy Review. Your respect for our copyright allows us to continue to provide this service to you.

For all related matters, please contact the editor, Lawrence D. Weiss, at health.policy.review@gmail.com.

Back to top

 

Lawrence D. Weiss, PhD, MS, Editor
Kelby Murphy, Senior Policy Analyst
Kalia Yeagle, Administrative Assistant
Jacqueline Yeagle, Newsletter design and editing

 
Back to top

The Review is issued electronically, weekly during the regular legislative session and monthly the rest of the year.
 
A standard 12-month subscription to the Alaska Health Policy Review is available for $850. Please inquire about discount rates for multiple recipients in the same organization, legislators, and small nonprofit organizations.
 
Don't miss an issue! Send orders, comments, and inquiries to Lawrence D. Weiss at health.policy.review@gmail.com, or call (907) 276-2277.

Back to top