Legislature(1999 - 2000)
03/17/2000 03:25 PM House L&C
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 345-STATE EMPLOYEE HEALTH INSURANCE CHAIRMAN ROKEBERG announced the next order of business would be HOUSE BILL NO. 345, "An Act relating to state employee health insurance." CHAIRMAN ROKEBERG commented that this bill was introduced more or less as an informational piece of legislation to bring the topic before the public. He had no intention of moving the bill that day. The intention of the bill is to make the public aware that the Administration has made a policy to involve the rights to health insurance to the various bargaining units. He is not certain of the impacts, but he thinks some public discussion is necessary. CHAIRMAN ROKEBERG said he is concerned that the breaking up the size of the pool will have a negative impact on actuarial benefit costs to the remaining members of the pool. There are also other problems with 2,000 to 3,000 uncovered employees in the state that are not represented by bargaining units. He believes there might some benefit to breaking down the size of the pool. The proposed committee substitute (CS) for HB 345, Version G, points out in section 4 that there is no effect on the current contracts. The proposed CS indicates that the Department of Administration keep self-insured pool as large as possible to lower the costs, maintain those bargaining units that have independence now, and pay their portion of the Alaska Comprehensive Health Insurance Association [ACHIA]. Number 1024 REPRESENTATIVE HALCRO made a motion to adopt as a work draft Version G of HB 345 [1-LS1364\G, Cramer, 3/17/00]. There being no objection, Version G was adopted. Number 1056 ALISON ELGEE, Commissioner, Department of Administration, came forward to testify on HB 345, Version G. She stated that the department understands what the chairman is attempting to do in terms of spreading the cost of the ACHIA pool to more participants. However, the department is opposed to asking state employees to participate in ACHIA in the present self- insured environment. MS. ELGEE explained that self-insured programs are not presently subject to ACHIA participation. In effect, the bill taxes state employees because, under the collective bargaining agreement currently, the financial participation has been capped on the side of the State. Anything the department does to increase the cost of the health insurance program is being borne by state employees who pay the difference out of pocket. It is estimated that the cost of returning the state participation in ACHIA would be about $500,000 per year, which amounts to approximately $50 paid per employee in addition to what they already contribute. MS. ELGEE said state employees contribute a wide range of things under the existing contracts. Many people pay close to $200 per month for their health insurance coverage. As an alternative, the department suggests direct appropriation to subsidize the program. MS. ELGEE turned attention to Section 3 of Version G. She said she interpreted the original proposal differently. The department is not particularly concerned about the a perfect- sized pool for its self-insured environment. This is because there is a range of options available in terms of protecting the state from undue risk. There are two extremes: the completely self-insured environment or a totally insured product that would be bought on behalf of employees. There are a variety of in- between options with regard to buying stop-loss coverage for protection. Number 1229 CHAIRMAN ROKEBERG asked when the last payment was made before the state became self-insured. MS. ELGEE replied that the state began the self-insurance program in July of 1997. Prior to that, the state picked up the entire the cost of health insurance for state employees. The implications of their participation in ACHIA were not felt by the employees, but were borne by the state. CHAIRMAN ROKEBERG said he thinks Ms. Elgee is probably right. Number 1314 DON ETHERIDGE, Lobbyist for Alaska State AFL-CIO, came forward to testify on HB 345, Version G. He pointed out the effective date [July 1, 1999] is the main problem. The AFL-CIO has many tentative contracts that are up for ratification right now. He does not know if any of them have this option included. He thinks this would be shooting down the negotiations that have just been concluded. In response to a comment from Chairman Rokeberg, he clarified that he does not know what the contracts that have been negotiated say. He indicated he has heard rumors that there is a possibility that some of the contracts have the option of doing this. He knows the effective date would shoot down any of the negotiated contracts. CHAIRMAN ROKEBERG agreed with that analysis. MR. ETHERIDGE said ways of curtailing health costs for the state and for the membership are being looked into. The formation of health care coalitions are being investigated. This would help reduce costs. Non-covered employees would not be left hanging. There is a provision that is being looked at that would bring these people under the coalition. The main objective is to reduce costs in order to maintain the current benefits without lowering the benefits or raising prices. REPRESENTATIVE HALCRO referred to Ms. Elgee's testimony that the additional cost to each employee would be $50 per month. He asked Mr. Etheridge if he has done any research on that. MR. ETHERIDGE replied no. CHAIRMAN ROKEBERG wondered, "If the AFL-CIO health care coalitions are able to get lower costs and save the state employees, isn't that because they have PPO [preferred provider organization] type or managed care type contracts?" MR. ETHERIDGE responded, "That is what we presently have, yes, sir." CHAIRMAN ROKEBERG asked why the state does not enter into managed-care contracts on the PPO with health care providers in Alaska. MR. ETHERIDGE replied, "Politics." After Chairman Rokeberg asked him to elaborate, he stated: If the doctor in your neighborhood is left out of it, and it's a state contract that's out there, he's going to be over there beating on your door, screaming and hollering that "Hey, I want to be part of this." You tell him, "Well, lower your prices to meet what's going on." And he says, "Well, I can't do that." Are you going to be the one coming back to the committee saying, "Well, he's out" just because he's one of my constituents? ... And that's a lot of what it is. With the labor coalition, we can do that, because we don't have to worry about the political ramifications if we say no. CHAIRMAN ROKEBERG asked: So, if we change this bill and said the state shall enter into preferred provider agreements where feasible, that tertiary care hospitals, that would probably lower the costs up here, because that's what you guys do. MR. ETHERIDGE said that is correct. CHAIRMAN ROKEBERG indicated HB 345 would be held over.
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