Legislature(2017 - 2018)BELTZ 105 (TSBldg)
02/22/2018 01:30 PM Senate LABOR & COMMERCE
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| Audio | Topic |
|---|---|
| Start | |
| SB165 | |
| SB161 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 165 | TELECONFERENCED | |
| *+ | SB 161 | TELECONFERENCED | |
| + | TELECONFERENCED |
SB 165-COMPREHENSIVE HEALTH INSURANCE FUND
1:34:24 PM
CHAIR COSTELLO announced the consideration of SB 165.
1:34:49 PM
SENATOR ANNA MACKINNON, Alaska State Legislature, Juneau,
Alaska, sponsor of SB 165, introduced the legislation speaking
to the following sponsor statement:
In 2015, the individual health care market in Alaska
was in a precarious state. There were only two
insurers with current enrollees in individual
healthcare plans in Alaska, and each insurer was
experiencing significant losses. Average premium rate
increases in 2015 were 38.7 percent for one insurer
and 39.9 percent for the other. In 2016, one of
Alaska's only two remaining insurers gave notice that
they would be withdrawing from the Alaska individual
market effective January 2017.
The 29th Legislature passed HB 374 in 2016, which
created the Alaska Reinsurance Program, and allowed
the Division of Insurance to apply for a federal
Section 1332 state innovation waiver under the
Affordable Care Act (ACA). That legislation included a
sunset date of June 30, 2018 to ensure that the
diversion of insurance premium taxes from the general
fund was not relied upon as a long-term funding
mechanism. In July 2017, the waiver was approved by
both the Department of Health and Social Services and
the Department of Treasury based on the application
submitted by the division, which requested pass-
through funding for the Alaska Reinsurance Program.
The federal award for this waiver was approximately
$322 million over five years. The award is to be used,
in conjunction with the Alaska Reinsurance Program, to
continue to stabilize the individual healthcare market
in Alaska.
This legislation extends the sunset provision on the
Alaska comprehensive health insurance fund by six
years, from June 30, 2018 to June 30, 2024 to allow
for the continuation of the Alaska Reinsurance Program
and receipt of the federal funding.
The bill also removes the requirement that funds
collected under AS 21.09.210 (tax on insurers), AS
21.33.055 (unauthorized insurance premium tax), AS
21.34.180 (surplus lines tax) and AS 21.66.110 (annual
tax on title insurance premiums) are to be deposited
into the Alaska comprehensive health insurance fund
within the general fund.
Passage of HB374 by the 29th Legislature has resulted
in stabilization of the individual insurance market.
The Section 1332 state innovation waiver provides
funding for the Alaska Reinsurance Program, through
the Alaska comprehensive health insurance fund. Now
this legislation is necessary to ensure the continued
effectiveness of the Alaska Reinsurance Program, meet
the intent of the waiver, and receive the federal
funding.
1:36:30 PM
BRITTANY HARTMANN, Staff, Senator Anna MacKinnon, Alaska State
Legislature, Juneau, Alaska, provided the following sectional
analysis for SB 165.
Section 1: Removes the requirement for the Department
of Administration to separately account for revenue
collected under AS 21.09.210 (tax on insurers), AS
21.33.055 (unauthorized insurance premium tax), AS
21.34.180 (surplus lines tax) and AS 21.66.110 (annual
tax on title insurance premiums), and to deposit net
proceeds into the Alaska comprehensive health
insurance fund.
Section 2: Extends the sunset date of the Alaska
comprehensive health insurance fund from June 30, 2018
to June 30, 2024.
Section 3: Repeals net proceeds definition due to the
deletion of language in Section 1.
Section 4: Adds a retroactivity clause, making Section
1 of the bill retroactive to July 1, 2018 if Section 1
of the Act takes effect after June 30, 2018, and
making Section 2 of the bill retroactive to June 30,
2018 if Section 2 of the Act takes effect after June
30, 2018.
Section 5: Provides for an immediate effective date
for Section 4.
Section 6: Provides for a June 30, 2018 effective date
for Section 2. This is to correspond with the end of
the state fiscal year for accounting purposes.
Section 7: Provides for a July 1, 2018 effective date
for Sections 1 and 3.
CHAIR COSTELLO asked the reason for the immediate effective date
on the retroactivity clause in Section 4.
MS. HARTMANN deferred the question to Ms. Latham.
1:38:58 PM
ANNA LATHAM, Deputy Director, Division of Insurance, Department
of Commerce, Community and Economic Development (DCCED), Juneau,
Alaska, explained that the reason for the retroactivity clause
in Section 4 is to adhere to the terms and conditions of the
Section 1332 State Innovation Waiver that was approved for five
years.
MS. LATHAM said she also had several points to make on the bill.
First is that the request to extend the sunset date of the
Alaska comprehensive health insurance fund for six years is
based on indications that the Centers for Medicare and Medicaid
Services may extend the five-year 1332 waivers for an additional
year. She also pointed out that since House Bill 374 was enacted
in 2016, premium taxes have been deposited into the
comprehensive health insurance fund. Prior to that all premium
taxes collected by the Division of Insurance were deposited into
the general fund. Should SB 165 pass, new premiums will be
collected and deposited into the general fund. The third point
is that the federal government is paying for about 90 percent of
the reinsurance program. The terms and conditions of the waiver
include the requirement that the [legislature] enact legislation
to authorize the reinsurance program beyond the state fiscal
year. The state must also appropriate sufficient funds on an
annual or other appropriation basis for the Alaska Reinsurance
Program (ARP) to operate as described in the state waiver
application. The state must convey copies of its authorization
and the appropriation and other relevant legislation to the U.S.
Department of Treasury and the U.S. Department of Health and
Human Services within two days of passage.
The federal waiver and the reinsurance program is contingent on
this fund extension.
SENATOR GARDNER asked what surplus lines means.
MS. LATHAM explained that those are types of insurance that take
on more risk. The brokers also pay the premium taxes directly.
There are two types. Foreign surplus lines are domiciled in the
U.S. and file annual statements with the National Association of
Insurance Commissioners. Alien surplus lines only file
statements with the NAIC who is responsible for their
regulation. Lloyds of London is an example
1:42:38 PM
SENATOR MEYER commented that the division appears confident that
the money will continue for the next five or six years.
MS. LATHAM said her confidence is based on the approval and the
terms and conditions of the waiver. The division received
verification of the $58 million award to fund the program for
2018.
SENATOR MICCICHE asked if the extension is through December 31,
2022.
MS. LATHAM said that is correct.
CHAIR COSTELLO reminded the committee that it had some
familiarity with this program. Director Lori Wing-Heier gave an
update on it recently and the legislature passed the bill in
2016.
SENATOR MICCICHE said he asked the question because SB 165
allows the sunset to extend from June 30, 2018 through June 30,
2024 and the authorization is two years short. He asked if DHSS
would need to reapply for the additional two years.
MS. LATHAM said the dates are confusing because insurance
premiums are determined based on program years and the payments
for the premium are through a calendar year. The federal fiscal
year ends in October for federal appropriation and the state
fiscal year is for the state match of the appropriation. The
division is requesting an extension of the fund through 2024.
1:45:16 PM
SENATOR STEVENS asked her to talk about the $25 million the
state received from Premera.
MS. LATHAM explained that the $25 million award was due to
Premera making more profit than anticipated. Through an MOU the
division directed Premera to award the $25 million to the
reinsurance program so that premiums would be lower for all
individuals in the individual market. Awards like that are not
anticipated going forward.
1:46:26 PM
At ease
1:46:53 PM
CHAIR COSTELLO reconvened the meeting. Finding no one who wished
to comment on SB 165, she closed public testimony and looked to
the will of the committee.
1:47:27 PM
SENATOR MEYER moved to report SB 165, version D, from committee
with individual recommendations and attached fiscal note(s).
CHAIR COSTELLO announced that without objection, SB 165 moves
from the Senate Labor and Commerce Standing Committee.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 165.PDF |
SL&C 2/22/2018 1:30:00 PM |
SB 165 |
| SB165 Sponsor Statement.pdf |
SL&C 2/22/2018 1:30:00 PM |
SB 165 |
| SB165 Sectional Analysis.pdf |
SL&C 2/22/2018 1:30:00 PM |
SB 165 |
| SB 165 CMS Letter Approving Alaska's State Innovation Waiver.pdf |
SL&C 2/22/2018 1:30:00 PM |
SB 165 |
| SB165-DOA-DOF-02-15-18.pdf |
SL&C 2/22/2018 1:30:00 PM |
SB 165 |
| SB165-DCCED-DOI-02-16-18.pdf |
SL&C 2/22/2018 1:30:00 PM |
SB 165 |
| SB 161.PDF |
SL&C 2/22/2018 1:30:00 PM |
SB 161 |
| SB 161 - Sponsor Statment.pdf |
SL&C 2/22/2018 1:30:00 PM |
SB 161 |
| SB 161 Legal Memo Exemptions 01-22-18.pdf |
SL&C 2/22/2018 1:30:00 PM |
SB 161 |
| SB 161 Legal Memo Temporary Permits, Exemptions 01-26-18.pdf |
SL&C 2/22/2018 1:30:00 PM |
SB 161 |
| SB 161 - Letter of Support - Alaska Dental Society.pdf |
SL&C 2/22/2018 1:30:00 PM |
SB 161 |
| SB 161 - Letter of Support - Alaska State Board of Dental Examiners President.pdf |
SL&C 2/22/2018 1:30:00 PM |
SB 161 |
| SB161-DCCED-CBPL-02-16-18.pdf |
SL&C 2/22/2018 1:30:00 PM |
SB 161 |