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June 2, 2000     (512) 463-0300

Joint Interim Committee on Health Care Mandates Meets in Capitol Extension

AUSTIN --The Texas Joint Interim Committee on Health Care Mandates met for the second time on Friday, June 2, 2000, in a hearing at the State Capitol Extension.

The joint committee met to hear invited testimony regarding health care mandates. The committee was created during the 76th Legislative Session, Regular Session, through the implementation of House Bill (HB) 1919. HB 1919 establishes a legislative review of mandated health care benefits that must be provided by health benefit plans. The Texas Department of Insurance is assisting the committee in conducting their study.

The first invited testimony was given by Mark W. Holt, M.D., who discussed the effects that health insurance's policies have on children's vaccinations. Dr. Holt said some insurance companies are not covering chickenpox vaccines.

The second invited testimony was given by Stephen Sims from Foundation One Insurance Services, LC, in Dallas, who presented a new insurance product for employees. The insurance service designed a new plan focused on medium to large companies, offered to employees who cannot afford regular coverage. Effective mostly with part time and temporary workers, the employee pays $15 a week or $33 for a family. The insurance offers set payments, independently of the amount and cost of the health procedures. It pays $500 a day for hospitalization up to 30 days, $20 for prescriptions, and $50 for doctors' visits with up to 5 visits a year. Approved in more than 30 states, and not subject to state mandates, Sims says the coverage is easy to understand and use. They are marketing it nationally beginning January 1, 2001. It covers almost everything covered by other plans, and is given with no questions asked. Sims says they cover uninsured employees who in the past had to go to county hospitals or charity clinics, bearing long waits and inadequate service.

Other representatives providing testimony included Mike Kellen from FORTIS, Mark D. Wernicke from Humana, Betty DeLargy from United Healthcare, Pati McCandless from UniCare, Kay Simonton from Blue Cross Blue Shield, and Peter K. Reilly representing Aetna U.S. Healthcare and Prudential Healthcare. They testified about their companies' methodology and data collection. Members of the committee wanted to establish the incidence of the health mandates on the price charged by the insurance companies. The legislators worry that their mandates, although necessary, could lead to employers being unable to provide an affordable health insurance. Questioned repeatedly by Senator Nelson and Representative Gallego, the committee's co-chairs, the witnesses expressed the difficulty of establishing how government mandates affect health policy prices. Some of the witnesses testified that they do not have enough resources to compile the data. Other explained that policy prices are based on aggregates, and that to see the effect of one mandate in the total price would be as difficult as assessing how much the cost of a pickle affects the price of a hamburger. And still others expressed that if the insurance company does not already cover a new mandate by the Legislature, then the price of the plan will go up. Nelson pointed to her personal experience and that of Lt. Governor Rick Perry, who often meets with small business persons around the state; Nelson said they hear again and again that insurance costs are eating up small businesses' profits.

Dianne Longley from the Texas Department of Insurance gave the members an update on cost benefit analysis. Cliff Mitchell from the Texas Association of Insurance Officials gave a report on mandates workgroups. These workgroups include individuals from health and insurance organizations, currently meeting among themselves and with their stakeholders. Mitchell plans to continue reporting their findings to the joint committee.

Representative Gallegos gave examples of the profits made by some health insurance companies, where the total amount charged for the policies greatly surpasses the paid claims. At the same time, too many employees refuse their employers' coverage because they cannot afford it.

Senate committee members include Senators Jane Nelson of Flower Mound, serving as co-chair, Gonzalo Barrientos of Austin, John Carona of Dallas, Frank Madla of San Antonio, and Steve Ogden of Bryan.

House members include Representatives Pete Gallego of Alpine serving as co-chair, Kip Averitt of McGregor, Craig Eiland of Dickinson, Patricia Gray of Galveston, and John Smithee of Amarillo.

There was no public testimony in today's hearing. The joint committee recessed, subject to the call of its chairs.

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