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OFFICERS & DIRECTORS April 26, 2005

Chairman JON SELTENHEIM The Honorable Wilma Chan United Concordia Companies, Inc. Chair, State Assembly Committee on Health Harrisburg, Pennsylvania Assembly Health Committee

Vice Chair State Capitol, Room 6005 GENE SHERMAN, DMD Sacramento, CA 95814 Starmount Life Insurance Company Baton Rouge, Louisiana Re: Hearing on Discount Health Plans

Secretary / Treasurer BRENT WILLIAMS Dear Chairwoman Chan: Dental Select Draper, Utah The National Association of Dental Plans (NADP) appreciates the opportunity to provide our comments to the Assembly Health Committee regarding discount plans, and ANTHONY A. COOK, MS, MBA specifically on HB 1091 and AB 562. Dental Care Plus, Inc. Blue Bell, Pennsylvania NADP is the largest non-profit trade association representing the dental benefits industry.

FAY DONOHUE On a national basis our members serve over 104 million of the 159 million Americans with DentaQuest dental benefits, i.e. approximately 65% of the total market. California is the largest state , for dental benefits enrollment with 30.3 million residents covered with some form of dental benefits. JOHN P. FOLEY Dental Network of America, Inc. The growth and popularity of discount dental plans is related to the scarcity of individual Oakbrook Terrace, Illinois products offered by insurance plans and growing consumer demand to control dental health 1 care costs. By creating an inexpensive vehicle to enable access to dental care, discount GAIL M. GARCIA dental plans have successfully met the demand from uninsured, underinsured, self- CIGNA Dental and Vision Care employed, retired, temporary or part-time workers.2 With an estimated 45% of Americans Plantation, Florida not having any type of dental coverage, and the dental insurance marketplace offering few, affordable dental products for individuals, discount dental plans are an attractive answer to KAREN GUSTIN, LLIF the need to reduce consumer out-of-pocket costs and increase access to care. Ameritas Life Insurance Co. Lincoln, Nebraska More than 12 million Americans have chosen discount plans for their dental needs. Statistics show that discount dental plans are increasing in their popularity, and have an KEN KEATING, CEBS anticipated growth of 7% over the next several years. With the rise in popularity come SafeGuard Dental & Vision reports of discount plans allegedly engaging in questionable business practices. Aliso Viego, California NADP agrees regulations are necessary to protect California consumers from illegitimate businesses, and applauds both AB 1091 and AB 562 as steps in the right direction. In addition, we would like to see a uniform bill that draws mutually from legislation Executive Director EVELYN F. IRELAND, CAE introduced by Assembly Members Parra and Levine. However, we would like to address National Association specific language within each bill that is of vital concern. of Dental Plans Dallas, Texas - next page -

1 Consumer Alert, CONSUMER REPORTS, May 2002, at 8-9. 2 www.nadp.org First Dental Health Sees Referral Plan Utilization Double in 6 Months, Managed Dental Care Apr. 2003, at 1. “the representative and recognized resource of the dental benefits industry”

April 26, 2005 Chairwoman Chan, page 2

AB 1091 includes important elements:

• Mandatory marketing measures that would eliminate consumer confusion. • Specific parameters in contracts with providers and members, as well as a refund guarantee, and a mandatory complaint process; offering full consumer protection.

However, we believe that AB 1091 also needs to address some very important issues. We believe that California licensed insurers and Knox-Keene plans should be allowed to offer discount programs or features without onerous added regulation; therefore we suggest clarifying that:

• Insurance carriers that are currently licensed by the DOI or the DMHC need to comply fully with the advertising and marketing requirements, but should not have to seek licensure or registration, or comply with other requirements that have already been met under other stringent regulations. • Although we agree a refund policy is essential when a discount program is offered as a freestanding program, the refund requirement should not be included when a discount feature is combined with an insured benefit or plan design (a “combined product”). Under a combined product, a member would not be able to opt out of the discount feature and still remain in the insured piece. The insured piece and the discount feature cannot be separated in terms of the fee paid for the program by the member or a customer group. This type of plan would be fully regulated as an insured offering. • In several provisions, NADP would like to suggest slight modifications to make certain that insured products with a discount feature are allowed and exempt from additional regulations. NADP would be happy to work with the Committee on the specific wording.

We are encouraged by Assembly Member Levine’s AB 562, however the bill does not include any parameters or guidelines on regulating discount plans; leaving it entirely open to interpretation. We are concerned that the regulation could be onerous and redundant for already licensed carriers, as described above.

While we will not be able to join you for the hearing today, we do hope that our comments are supportive towards a discount bill that will protect California consumers while allowing our member plans, both health insurance carriers and discount-only plans, to continue to offer the range of oral health benefit plans that meet a variety of consumer and employer needs.

NADP members are listed in Attachment A for your review, and we are always available to answer any questions. Thank you for your attention towards this important matter.

Respectfully,

Kris Hathaway Director of Government Relations National Association of Dental Plans

cc: Assembly Member Lloyd Levine Assembly Member Nicole Parra

“NADP… the representative and recognized resource of the dental benefits industry” 2

Attachment A

NADP MEMBER PLANS: Members in bold operate in California

Aetna Dental GE Wellness (Genworth) Altus Dental Insurance Company GEHA American Dental Alliance, Inc. Group Dental Service American Dental Professional Services Group Health Inc. AmeriPlan USA Corp GroupLink, Inc. Ameritas Life Insurance Corp. Guardian Life Insurance Co. of America, Inc Assurant Health Net Life Insurance Co Atlantic Dental Health Resources, Inc. Avia Dental Plan HealthPartners, Inc. Blue Cross Blue Shield NC HIP Health Plan of New York Blue Cross Blue Shield of MA Horizon Healthcare Blue Cross Blue Shield of MI Humana Dental Blue Shield of California InterDent, Inc. CIGNA Dental & Vision Care Jefferson Pilot Financial Insurance Company Citizens Security Life Insurance Co. Kaiser Pemanente Dental Care Program Community Dental Services (Smile Care) MetLife Companion Life Insurance Company National Guardian Life Insurance Co. CompBenefits Corporation PacifiCare Dental & Vision Delta Dental Plan of MI, OH, IN PacificDental Benefits, Inc. Delta Dental Plan of MO Premera Blue Cross DENCAP Dental Plans Principal Financial Group Denta-Chek of Maryland, Inc. Protective Marketing Enterprises Dental Benefit Providers, Inc. SafeGuard Dental and Vision Dental Care Plus, Inc. Security Life Insurance Company of America Dental Economics, LLC Shenandoah Life Insurance Company Dental Health Services of America Southland National Dental Network of America, Inc. Standard Insurance Company Dental Select Starmount Life Insurance Co. DentaQuest The Dental Network, Inc. Dominion Dental Services, Inc. United Concordia Companies, Inc. Educators Mutual Ins. Association of UT Wellpoint Dental Services First Dental Health Western Dental Services, Inc. Florida Combined Life Insurance Company Willamette Dental Insurance, Inc.

“NADP… the representative and recognized resource of the dental benefits industry”