Legislature(2001 - 2002)

03/25/2002 03:20 PM L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
HB 290-COMPREHENSIVE  HEALTH INSURANCE ASS'N                                                                                  
                                                                                                                                
VICE  CHAIR HALCRO  announced that  the first  order of  business                                                               
would be  HOUSE BILL NO. 290,  "An Act relating to  membership in                                                               
the Comprehensive Health Insurance Association."                                                                                
                                                                                                                                
Number 0047                                                                                                                     
                                                                                                                                
REPRESENTATIVE  KOTT moved  to adopt  Version 22-LS1150\J,  Ford,                                                               
2/28/02,  as the  working document.   There  being no  objection,                                                               
Version J was before the committee.                                                                                             
                                                                                                                                
REPRESENTATIVE ROKEBERG,  Alaska State Legislature,  testified as                                                               
the sponsor  of HB  290.   He explained that  HB 290  changes the                                                               
method  of  spreading the  premium.    Under the  current  Alaska                                                               
Comprehensive  Health Insurance  Association  (ACHIA), the  small                                                               
number   of  private   health   insurance  companies   underwrite                                                               
individual and  very small group  plans that aren't  eligible for                                                               
the Employee Retirement and Income  Security Act of 1974 (ERISA).                                                               
These private health insurance companies  make the $3 million per                                                               
annum assessments based  on the amount of premiums  they write in                                                               
the state.  Version J changes  the methodology to a covered lives                                                               
method of  spreading the costs  of the ACHIA program  and defines                                                               
major medical  benefits in order  to capture a broader  degree of                                                               
people.    Representative  Rokeberg  directed  attention  to  the                                                               
Division of Insurance's March 13,  2002, document entitled, "CSHB
290 (Version J) Analysis of Change in Assessment Formula."                                                                      
                                                                                                                                
Number 0233                                                                                                                     
                                                                                                                                
KATIE CAMPBELL,  Actuary L/H,  Division of  Insurance, Department                                                               
of  Community  &  Economic   Development  (DCED),  testified  via                                                               
teleconference.   Ms. Campbell  explained that  Version J  does a                                                               
couple of things.  As mentioned  by the sponsor, the major change                                                               
is the  change from a premium  base to a number  of covered lives                                                               
base.   Version  J also  increases  the membership  of the  ACHIA                                                               
program  to  include  any  self-funded  plans  as  allowed  under                                                               
federal law.   To the  extent that  plans can be  accessed, those                                                               
plans  would  be  members  of  the  ACHIA  program.    Also,  the                                                               
definition of  major medical was expanded  a bit from what  is in                                                               
current law.   She pointed out that the March  13, 2002, document                                                               
from the division illustrates how  the formula would change.  She                                                               
directed attention to  page 4 of the document,  which includes an                                                               
example  of  the impact  of  the  new  formula  for some  of  the                                                               
insurers  and  members of  ACHIA.    This example  utilizes  data                                                               
captured in 2000.  The caveat  is that the information is only as                                                               
good as  the information provided  by the insurers.   She pointed                                                               
out that Premera Blue Cross  is the largest insurer and currently                                                               
pays about 50  percent of the assessment.  If  the formula [base]                                                               
is changed  to the number  of covered lives, it's  disbursed more                                                               
broadly because  the State of  Alaska is covered under  the ACHIA                                                               
program  and thus  will pick  up a  fairly large  portion of  the                                                               
assessment, and  therefore it's distributed  more broadly  by the                                                               
insurers because of  the larger number of  insured lives compared                                                               
to the premium the insurer would write.                                                                                         
                                                                                                                                
REPRESENTATIVE ROKEBERG  highlighted the change in  the CS that's                                                               
related to  the ability  to make an  assessment against  the stop                                                               
loss insurance  that the  self-insureds sometimes  purchase; this                                                               
method allows  the risk to be  spread through a larger  number of                                                               
people.  Representative Rokeberg  informed the committee that the                                                               
State  of Alaska  isn't an  ERISA  group, the  state didn't  join                                                               
ACHIA   because  they   became  self-insured.     However,   this                                                               
legislation would bring the state back in.                                                                                      
                                                                                                                                
Number 0524                                                                                                                     
                                                                                                                                
VICE CHAIR HALCRO  estimated that under [Version J]  the State of                                                               
Alaska's  contribution to  ACHIA would  amount to  $690,000.   He                                                               
inquired from where that money would come.                                                                                      
                                                                                                                                
REPRESENTATIVE  ROKEBERG answered  that  it could  come from  the                                                               
individual under  the current  language of  the legislation.   He                                                               
announced  that he  has  a proposed  amendment  if the  committee                                                               
wishes  to change  it  such that  the state  would  pick up  that                                                               
portion.                                                                                                                        
                                                                                                                                
VICE  CHAIR HALCRO  recalled concern  that several  of the  labor                                                               
organizations, through collective bargaining,  had the ability to                                                               
become self-insured.   He asked if  including these self-insureds                                                               
would brush up against collective bargaining.                                                                                   
                                                                                                                                
REPRESENTATIVE  ROKEBERG   replied  that  he  didn't   think  so,                                                               
although he noted that he isn't  a labor law expert.  He informed                                                               
the committee that  there are a small number  of bargaining units                                                               
that  were paying  small premium  assessments under  [the current                                                               
formula], almost 1  percent.  Under the current  draft, the state                                                               
would pay  a baseline  amount and the  individuals would  pay the                                                               
difference.  Representative Rokeberg  informed the committee that                                                               
the   calculation   against   the  260,000   lives   amounts   to                                                               
approximately $.86 a  month per covered life, which  he viewed as                                                               
a small amount to finance this important program.                                                                               
                                                                                                                                
REPRESENTATIVE ROKEBERG said:                                                                                                   
                                                                                                                                
     And contrary  to some popular  belief, even  members of                                                                    
     the State ... well not  necessarily the State, but most                                                                    
     other unions  -- the State wouldn't  apply because they                                                                    
     would  always have  our state  coverage.   But, in  the                                                                    
     instance  where other  people that  are coming  in now,                                                                    
     all  of them  would  have the  opportunities to  become                                                                    
     ACHIA members  if ... it  was such that they  could not                                                                    
     provide insurance  in an affordable manner  under their                                                                    
     existing contract.                                                                                                         
                                                                                                                                
REPRESENTATIVE  ROKEBERG emphasized  that there  are benefits  to                                                               
these  people.    Furthermore, he  reminded  the  committee  that                                                               
without [ACHIA]  the [state] would  jeopardize its  primacy under                                                               
the federal law  because of the Health  Insurance Portability and                                                               
Accountability Act (HIPAA).   Representative Rokeberg pointed out                                                               
that several other states have gone  with this method as a way to                                                               
cover  the cost  of the  pool more  equitably.   There have  been                                                               
suggestions to  use the  permanent fund  dividend (PFD)  or other                                                               
tax methods to do this.                                                                                                         
                                                                                                                                
VICE CHAIR HALCRO  inquired as to who will pay  the $690,000 that                                                               
the  state will  have  to  contribute to  ACHIA.    Is there  any                                                               
problem with what is being done with this legislation, he asked.                                                                
                                                                                                                                
Number 0857                                                                                                                     
                                                                                                                                
BOB  LOHR,   Director,  Division  of  Insurance,   Department  of                                                               
Community &  Economic Development, testified  via teleconference.                                                               
Mr. Lohr  answered that  he didn't believe  there is  any problem                                                               
with   [implementation]    of   this   legislation,    which   he                                                               
characterized as  a good  piece of legislation.   He  related his                                                               
belief that the  legislation broadens the base  of the assessment                                                               
of the  ACHIA program.   With regard to  who pays, Mr.  Lohr said                                                               
that ultimately  the employee pays because  typically an employer                                                               
for the state  is going to pass the costs  to the employee, which                                                               
is the  case with  private insurance  companies.   He highlighted                                                               
that under the  current situation, the cost is  passed through to                                                               
private  insurers only,  which  is why  1  percent is  specified.                                                               
Therefore, a program such as  encompassed in HB 290 would broaden                                                               
the base of assessment to lower  it to the range of six-tenths of                                                               
a percent.                                                                                                                      
                                                                                                                                
REPRESENTATIVE MEYER related his  understanding then that all the                                                               
employees at  say Carr's  Safeway will pay  more into  their plan                                                               
under this legislation.                                                                                                         
                                                                                                                                
MR. LOHR  explained that such  would only  be the case  if Carr's                                                               
chooses  to use  stop  loss  insurance as  a  component of  their                                                               
strategy to  control the risk  of high cost health  insurance for                                                               
individuals.  Therefore, if the amount  of claims in a given year                                                               
exceeded  a certain  threshold,  then stop  loss insurance  would                                                               
kick in.   Without  the use  of stop  loss insurance,  the entity                                                               
wouldn't be included.  Mr.  Lohr highlighted that this method has                                                               
been found permissible under ERISA.                                                                                             
                                                                                                                                
REPRESENTATIVE  MEYER  said  that   he  hoped  [the  legislation]                                                               
doesn't penalize one group in an effort to help another.                                                                        
                                                                                                                                
MR. LOHR  responded that he didn't  believe that to be  the case.                                                               
He reiterated his  belief that the legislation  would broaden the                                                               
base of  assessment as far  as is  possible under federal  law in                                                               
order  to more  fairly  distribute the  burden  of the  uncovered                                                               
expenses of ACHIA.                                                                                                              
                                                                                                                                
REPRESENTATIVE CRAWFORD  informed the  committee that one  of the                                                               
large self-insured  unions, which  contend that  this legislation                                                               
will  double the  cost of  their stop  loss insurance  each year.                                                               
This  particular  union is  considering  dropping  its stop  loss                                                               
insurance if this  legislation passes, which would  result in the                                                               
pool getting smaller.                                                                                                           
                                                                                                                                
MR. LOHR deferred  to the numbers [provided] by  Ms. Campbell [in                                                               
the March 13, 2002, document].                                                                                                  
                                                                                                                                
Number 1130                                                                                                                     
                                                                                                                                
JOHN  GEORGE, Lobbyist,  American Family  Life Assurance  Company                                                               
(AFLAC),  began his  testimony by  informing  the committee  that                                                               
AFLAC is  a major underwriter  of supplemental  benefit insurance                                                               
policies.   He  explained that  supplemental benefits  offer very                                                               
narrow  inexpensive coverage.   He  announced AFLAC's  support of                                                               
this  legislation.   The current  formula  for ACHIA  assessments                                                               
assess insurance  companies based  on their entire  premium base,                                                               
not  just the  major medical  premiums.   The current  definition                                                               
specifies that  a Medicare supplement  policy is a  major medical                                                               
policy,  and AFLAC  writes four  of those.   The  assessments for                                                               
those are  $25,000-$30,000 a year.   Mr. George pointed  out that                                                               
the  burden of  this social  problem shouldn't  be placed  on the                                                               
backs  of the  employees of  small employers,  which is  where it                                                               
falls  because those  are the  folks who  purchase major  medical                                                               
insurance.   Mr. George related  that [AFLAC]  believes spreading                                                               
the costs of  this social problem is fair and  the right thing to                                                               
do.                                                                                                                             
                                                                                                                                
MR.  GEORGE turned  to the  Division  of Insurance's  projections                                                               
that AFLAC  writes 14,500 lives  while AFLAC believes  that 5,000                                                               
lives will fall under this  definition.  Mr. George expressed the                                                               
need to change  the definition of "major medical"  to exclude the                                                               
limited benefit policies that AFLAC  provides.  He explained that                                                               
AFLAC's  belief that  its  assessment should  be  much less  than                                                               
$30,000  a year  based  on  the four  major  medical policies  it                                                               
writes.    Mr. George  suggested  that  the definition  of  major                                                               
medical should  return to the  definition [that  already exists].                                                               
It  doesn't seem  fair  to pay  [the same  as  the major  medical                                                               
policies] for those policies that  aren't major medical policies.                                                               
Mr. George concluded by saying  that the concept of spreading the                                                               
burden across  a much  broader segment and  to include  more than                                                               
just small employers and their employees is laudable.                                                                           
                                                                                                                                
Number 1324                                                                                                                     
                                                                                                                                
REPRESENTATIVE  ROKEBERG   pointed  out  that  the   Division  of                                                               
Insurance's  estimates  predict  that  [under  this  legislation]                                                               
AFLAC will pay substantially more  than it's now.  Representative                                                               
Rokeberg  said he  understood  that AFLAC  would  like to  change                                                               
that.  Notwithstanding that, he  asked, would AFLAC still support                                                               
the legislation.                                                                                                                
                                                                                                                                
MR. GEORGE  clarified that the  Division of Insurance  was unable                                                               
to determine  which policies  were on an  expense base  and which                                                               
were on another base.   Mr. George reiterated AFLAC's belief that                                                               
there  are about  5,000 policies.   Still,  overall the  bill has                                                               
positive  effects.   He  announced  that  AFLAC would  offer  100                                                               
percent support if the definition  of [major medical] was changed                                                               
to   its  [existing]   definition.     In  further   response  to                                                               
Representative Rokeberg, Mr. George said  that going to a base of                                                               
covered lives is the most fair way to address this.                                                                             
                                                                                                                                
REPRESENTATIVE ROKEBERG  noted his disappointment that  there are                                                               
only 260,000 [covered lives].                                                                                                   
                                                                                                                                
Number 1419                                                                                                                     
                                                                                                                                
DON  EHTERIDGE, Lobbyist,  Alaska  State  American Federation  of                                                               
Labor  and   Congress  of  Industrial   Organizations  (AFL-CIO),                                                               
informed the  committee that the AFL-CIO's  trustees still oppose                                                               
this legislation  because most of  them view it as  an additional                                                               
cost on  their members.   In fact,  if it is  an expense  that is                                                               
passed through  to the members,  the public employee  groups will                                                               
renegotiate  the  issue.   Although  the  organization  is  fully                                                               
supportive  of  the idea,  the  organization  believes the  costs                                                               
should be  spread to  everyone in  the state,  not just  to those                                                               
fortunate enough to have insurance.                                                                                             
                                                                                                                                
REPRESENTATIVE ROKEBERG  related his understanding that  the AFL-                                                               
CIO is sympathetic, but is  concerned that there would be impacts                                                               
to  existing  contracts  as  well  as  the  future  cost  to  the                                                               
membership.                                                                                                                     
                                                                                                                                
MR. ETHERIDGE replied yes.                                                                                                      
                                                                                                                                
REPRESENTATIVE  ROKEBERG surmised  then  that  the AFL-CIO  would                                                               
suggest looking  to the general  fund or general  taxation rather                                                               
than have a premium or covered lives assessment.                                                                                
                                                                                                                                
MR. ETHERIDGE  replied yes.  He  mentioned that even $1  could be                                                               
taken from everyone's PFD in  order that everyone pays, including                                                               
those   that   aren't   insured.     In   further   response   to                                                               
Representative Rokeberg,  Mr. Etheridge confirmed  that AFL-CIO's                                                               
board  recognizes that  perhaps one  or  two of  the members  may                                                               
benefit from this  pool.  However, the  AFL-CIO's membership will                                                               
be covered by the plans that it has now.                                                                                        
                                                                                                                                
REPRESENTATIVE ROKEBERG  noted his disappointment  that organized                                                               
labor has taken this position.                                                                                                  
                                                                                                                                
VICE  CHAIR HALCRO,  determining that  there was  no one  else to                                                               
testify, closed public testimony.                                                                                               
                                                                                                                                
REPRESENTATIVE ROKEBERG noted that  the committee packet includes                                                               
two amendments.                                                                                                                 
                                                                                                                                
Number 1592                                                                                                                     
                                                                                                                                
REPRESENTATIVE ROKEBERG moved that  the committee adopt Amendment                                                               
J.2 [22-LS1150\J.2, Ford, 3/22/02], which reads as follows:                                                                     
                                                                                                                                
     Page 1, line 2, following "Association":                                                                                 
         Insert "; and providing for an effective date"                                                                       
                                                                                                                                
     Page 4, following line 12:                                                                                                 
          Insert new bill sections to read:                                                                                     
        "*  Sec. 9.   The  uncodified  law of  the State  of                                                                  
     Alaska is amended by adding a new section to read:                                                                         
          TRANSITION.  (a)  Until January 1, 2003, the                                                                          
     Comprehensive   Health   Insurance  Association   shall                                                                    
     determine member  assessments under  AS 21.55.220(c) as                                                                    
     that  provision existed  before the  effective date  of                                                                    
     this Act.                                                                                                                  
          (b)  Notwithstanding AS 21.55.220(f), enacted by                                                                      
     sec.  6  of  this   Act,  information  required  to  be                                                                    
     reported under  AS 21.55.220(f), enacted  by sec.  6 of                                                                    
     this Act,  must initially  be reported to  the director                                                                    
     of insurance by September 30, 2002.                                                                                        
        *  Sec. 10.   The  uncodified  law of  the State  of                                                                  
     Alaska is amended by adding a new section to read:                                                                         
          TRANSITION:  REGULATIONS.  The director of                                                                            
     insurance may immediately  proceed to adopt regulations                                                                    
     necessary to  implement the changes  made by  this Act.                                                                    
     The    regulations   take    effect   under    AS 44.62                                                                    
     (Administrative  Procedure  Act),  but not  before  the                                                                    
     effective date of the statutory change.                                                                                    
        * Sec. 11.  This  Act takes effect immediately under                                                                  
     AS 01.10.070(c)."                                                                                                          
                                                                                                                                
The committee took an at-ease from 3:50 p.m. to 3:54 p.m.                                                                       
                                                                                                                                
REPRESENTATIVE CRAWFORD objected.                                                                                               
                                                                                                                                
REPRESENTATIVE ROKEBERG explained  that the amendment establishes                                                               
a transition period and requires  that all the reporting required                                                               
by this must report to the  director of the Division of Insurance                                                               
by September 30,  2002, in order to determine  the correct amount                                                               
of covered lives.  He  noted that the current mandatory insurance                                                               
reports have deadlines in April.                                                                                                
                                                                                                                                
REPRESENTATIVE CRAWFORD withdrew his objection.                                                                                 
                                                                                                                                
There being no objection, Amendment J.2 was adopted.                                                                            
                                                                                                                                
REPRESENTATIVE ROKEBERG  turned attention  to Amendment  J.1 [22-                                                               
LS1150\J.1, Ford, 3/22/02].  He  explained that under the current                                                               
draft employees  would pay about  $.96 a month or  potentially $2                                                               
per family  a month.   Amendment  J.1 would  result in  the state                                                               
"eating it" [paying  it] and thus those costs are  shifted to the                                                               
general fund.  This amendment would create a fiscal note.                                                                       
                                                                                                                                
Number 1708                                                                                                                     
                                                                                                                                
REPRESENTATIVE ROKEBERG moved that the committee adopt Amendment                                                                
J.1, which reads as follows:                                                                                                    
                                                                                                                                
     Page 4, following line 12:                                                                                                 
          Insert new bill sections to read:                                                                                     
        "* Sec. 9.  AS 39.30.095(b) is amended to read:                                                                       
          (b) After obtaining the advice of an actuary, the                                                                     
     commissioner  of  administration  shall  determine  the                                                                    
     amount    necessary   to    provide   benefits    under                                                                    
     AS 39.30.090, 39.30.091, and  39.30.160 and, subject to                                                                    
     (e)  and (g)  of this  section, shall  set the  rate of                                                                
     employer  contribution  and employee  contribution,  if                                                                    
     any.  With  money  in the  fund,  the  commissioner  of                                                                    
     administration   shall   pay  premiums,   claims,   and                                                                    
     administrative  costs  required   under  the  insurance                                                                    
     policies  in effect  under AS 39.30.090  and 39.30.160,                                                                    
     or  required   under  self-insurance   arrangements  in                                                                    
     effect under AS 39.30.091.                                                                                                 
        * Sec. 10.  AS 39.30.095(e) is amended to read:                                                                       
          (e)  Notwithstanding (b) of this section and                                                                      
     subject to  (g) of this  section, the rate  of employer                                                                
     contribution  to  provide hospital,  surgical,  dental,                                                                    
     audiovisual,  and  other  medical care  benefits  under                                                                    
     AS 39.30.091  is $515  monthly beginning  July 1, 2000;                                                                    
     $575 monthly  beginning July 1, 2001; and  $630 monthly                                                                    
     beginning  July 1, 2002,  for  the following  employees                                                                    
     and officials:                                                                                                             
               (1)  employees in the executive branch of                                                                        
     the  state  government,   including  the  governor  and                                                                    
     lieutenant  governor,   who  are   not  members   of  a                                                                    
     collective  bargaining   unit  established   under  the                                                                    
     authority   of   AS 23.40.070   -   23.40.260   (Public                                                                    
     Employment Relations Act);                                                                                                 
               (2)  officials and employees of the                                                                              
     legislative branch of state government under AS 24;                                                                        
               (3)  employees in the judicial branch of                                                                         
     state  government,  including   magistrates  and  other                                                                    
     judicial officers, who are not  members of a collective                                                                    
     bargaining  unit   established  under   AS 23.40.070  -                                                                    
     23.40.260 (Public Employment Relations Act).                                                                               
        * Sec. 11.  AS 39.30.095  is amended by adding a new                                                                  
     subsection to read:                                                                                                        
     (g)    In  setting  the  rate  of  contribution  by  an                                                                    
     employer  and  employee  under  (b)  and  (e)  of  this                                                                    
     section, the  commissioner may  increase the  amount of                                                                    
     the  employer contribution  under (e)  of this  section                                                                    
     and may exceed  the amount set in  that subsection, but                                                                    
     may   not  increase   the   amount   of  the   employee                                                                    
     contribution  if   the  amount  necessary   to  provide                                                                    
     benefits  under AS 39.30.090  and 39.30.160,  or for  a                                                                    
     self-insurance    arrangement    under    AS 39.30.091,                                                                    
     increases  as a  result  of an  assessment against  the                                                                    
     state  as   a  member   of  the   Comprehensive  Health                                                                    
     Insurance Association under AS 21.55.220."                                                                                 
                                                                                                                                
REPRESENTATIVE MEYER objected.                                                                                                  
                                                                                                                                
REPRESENTATIVE ROKEBERG  reiterated that  Amendment J.1  would be                                                               
paid by the state rather than the individual employee.                                                                          
                                                                                                                                
REPRESENTATIVE CRAWFORD  related his belief that  the legislation                                                               
attempts to bring in everyone.                                                                                                  
                                                                                                                                
REPRESENTATIVE ROKEBERG clarified that  Amendment J.1 speaks only                                                               
to the  state [employees].   He pointed out that  the legislature                                                               
can  establish the  terms and  conditions of  the health  program                                                               
established  by the  state government.   This  decision would  be                                                               
made by a private employer as well.                                                                                             
                                                                                                                                
VICE  CHAIR  HALCRO surmised  that  Amendment  J.1 would  include                                                               
those  who aren't  covered by  collective bargaining,  members of                                                               
the executive, legislative, and executive branches.                                                                             
                                                                                                                                
Number 1789                                                                                                                     
                                                                                                                                
REPRESENTATIVE CRAWFORD  specified that his concern  is in regard                                                               
to the  self-insureds who have  already bargained for  a contract                                                               
and already receive a set amount from the employers.                                                                            
                                                                                                                                
REPRESENTATIVE  ROKEBERG  suspected  that those  employers  would                                                               
have to pay for [the increase] until the end of the contract.                                                                   
                                                                                                                                
REPRESENTATIVE  CRAWFORD  predicted  that all  the  employers  he                                                               
deals  with  will say  that  they  bargained for  an  established                                                               
amount per  hour and  that's all  they will  pay.   Therefore, he                                                               
predicted that  it would come  out of  the pool of  premiums that                                                               
are available.   He said he wasn't sure how  [the money] could be                                                               
obtained from the employers until the end of the contract.                                                                      
                                                                                                                                
REPRESENTATIVE  ROKEBERG  remarked, "We'd  pass  a  law and  they                                                               
would have to pay."  He  said he didn't think the employers could                                                               
assess  the employees  if in  a sharing  basis under  an existing                                                               
contract.                                                                                                                       
                                                                                                                                
REPRESENTATIVE  CRAWFORD  asked  if Representative  Rokeberg  was                                                               
going to amend the language in order to assess the employers.                                                                   
                                                                                                                                
REPRESENTATIVE ROKEBERG  reiterated that Amendment J.1  does that                                                               
for the State of Alaska, which  is the only group the legislature                                                               
can legally control.                                                                                                            
                                                                                                                                
REPRESENTATIVE CRAWFORD surmised then  that the legislature can't                                                               
assess  employers through  legislation, other  than the  State of                                                               
Alaska.                                                                                                                         
                                                                                                                                
REPRESENTATIVE ROKEBERG disagreed and said  that is what is being                                                               
done [with this legislation].   However, whether to pass the cost                                                               
on to employees is the decision of the employer, he suspected.                                                                  
                                                                                                                                
REPRESENTATIVE  CRAWFORD  expressed the  need  to  know how  that                                                               
would be handled  because if an employer has a  contract then the                                                               
employer is only liable for that until the end of the contract.                                                                 
                                                                                                                                
REPRESENTATIVE   ROKEBERG   specified,   "He's  liable   to   his                                                               
employees, but not to the State of Alaska if we pass this bill."                                                                
                                                                                                                                
Number 1891                                                                                                                     
                                                                                                                                
REPRESENTATIVE MEYER related his view  that this is a direct cost                                                               
of doing business.  He posed a  situation in which the owner of a                                                               
rental  car business  decides to  pass on  the increased  cost in                                                               
insurance to the consumer via increased rental costs.                                                                           
                                                                                                                                
REPRESENTATIVE  ROKEBERG   agreed  with   Representative  Meyer's                                                               
analysis.                                                                                                                       
                                                                                                                                
REPRESENTATIVE  MEYER remarked  that Representative  Rokeberg has                                                               
been opposed to such in the past.                                                                                               
                                                                                                                                
REPRESENTATIVE ROKEBERG  said that unless the  funding source for                                                               
ACHIA is changed, the entire program is going to be jeopardized.                                                                
                                                                                                                                
REPRESENTATIVE  MEYER  inquired  as   to  the  fiscal  note  were                                                               
Amendment J.1 to pass.                                                                                                          
                                                                                                                                
REPRESENTATIVE  ROKEBERG estimated  that  the  fiscal note  would                                                               
amount to $690,000  per the Division of  Insurance, which assumes                                                               
inclusion of all the retirees.                                                                                                  
                                                                                                                                
REPRESENTATIVE  MEYER  said  he could  appreciate  Representative                                                               
Rokeberg   protecting  the   state  membership.     However,   he                                                               
questioned why other memberships shouldn't be protected as well.                                                                
                                                                                                                                
REPRESENTATIVE ROKEBERG  related that the legislature's  arm only                                                               
extends so far.                                                                                                                 
                                                                                                                                
Number 2006                                                                                                                     
                                                                                                                                
A  roll call  vote was  taken.   Representatives Kott,  Rokeberg,                                                               
Hayes,  and  Halcro voted  for  the  adoption of  Amendment  J.1.                                                               
Representatives Meyer and Crawford  voted against the adoption of                                                               
Amendment J.1.   Therefore, Amendment  J.1 was adopted by  a vote                                                               
of 4:1.                                                                                                                         
                                                                                                                                
REPRESENTATIVE HAYES  requested an explanation in  regard to what                                                               
the amendments actually accomplish.                                                                                             
                                                                                                                                
REPRESENTATIVE ROKEBERG  explained that the amendments  provide a                                                               
transition  period  and shift  the  cost  of  this to  the  state                                                               
administration  versus to  the state  employees.   He noted  that                                                               
this  legislation  will  probably  receive  a  fiscal  note  now.                                                               
Representative Rokeberg  emphasized that  he introduced  the bill                                                               
to  generate discussion  with regard  to the  needs of  ACHIA and                                                               
what needs to be done in  Alaska [in order] to ensure that Alaska                                                               
has an  insurance program that works  in this state.   Without an                                                               
insurer of  last resort many  won't have insurance.   He stressed                                                               
that the federal  government requires that Alaska  have some sort                                                               
of  single-payer  type system  like  ACHIA,  and without  such  a                                                               
program the state would lose  primacy in the regulation of health                                                               
insurance in  the state.  In  conclusion, Representative Rokeberg                                                               
asked for the committee's support of the bill.                                                                                  
                                                                                                                                
REPRESENTATIVE HAYES  informed the committee  that he may  have a                                                               
conflict [of  interest] because  his company  may be  impacted by                                                               
this legislation.                                                                                                               
                                                                                                                                
Number 2137                                                                                                                     
                                                                                                                                
REPRESENTATIVE  CRAWFORD  applauded Representative  Rokeberg  for                                                               
attempting  to do  this,  which  he believes  needs  to be  done.                                                               
However,  there are  a  number  of employers  who  choose not  to                                                               
provide  insurance  and   who  will  not  be   impacted  by  this                                                               
legislation.    Representative  Crawford expressed  the  need  to                                                               
bring in  those employers who  aren't providing insurance.   With                                                               
regard to  contracts already  in effect,  Representative Crawford                                                               
said he  didn't see how any  extra charge could be  passed [on to                                                               
anyone] until the  end of the contract.   Therefore, he predicted                                                               
this would  be an area waiting  for lawsuits.  He  questioned how                                                               
things would proceed when there is an existing contract.                                                                        
                                                                                                                                
REPRESENTATIVE MEYER echoed  Representative Crawford's sentiments                                                               
with  regard to  Representative Rokeberg's  work on  this matter.                                                               
He suggested that  perhaps the simplest way to deal  with this is                                                               
to withdraw $1 from each  individual's PFD.  Representative Meyer                                                               
pointed out that businesses have been  hit hard this year with an                                                               
increase in the  minimum wage and unemployment  compensation.  He                                                               
expressed concern that  employers will be reluctant  to pass this                                                               
cost on to their employees and thus  will pass the cost on to the                                                               
consumers.  Therefore,  there is the potential to  raise the cost                                                               
of  goods  in  the  state.    He  reiterated  that  he  applauded                                                               
Representative  Rokeberg's  efforts,  but  mentioned  that  [this                                                               
legislation] doesn't seem to be the appropriate vehicle.                                                                        
                                                                                                                                
VICE  CHAIR  HALCRO  remarked,   "We're  treading  on  some  very                                                               
dangerous  ground  here."   He  pointed  out that  labor  unions,                                                               
through  collective bargaining,  have  been  given permission  to                                                               
self-insure and [through this legislation]  the state is going to                                                               
become  involved  in  their policy.    Furthermore,  adoption  of                                                               
Amendment  J.1   basically  exempted  the  legislature   and  its                                                               
employees,  the executive  branch, and  the judicial  branch from                                                               
paying this out of their own  checks and thus the state will have                                                               
to come up with $690,000.                                                                                                       
                                                                                                                                
The  committee took  a brief  at-ease at  4:11 p.m.  in order  to                                                               
return the gavel to Chair Murkowski.                                                                                            
                                                                                                                                
Number 2319                                                                                                                     
                                                                                                                                
REPRESENTATIVE  HALCRO  moved to  report  CSHB  290, Version  22-                                                               
LS1150\J,  Ford,  2/28/02,  as  amended  out  of  committee  with                                                               
individual  recommendations  and  the accompanying  fiscal  note.                                                               
There being  no objection,  CSHB 290(L&C)  was reported  from the                                                               
House Labor and Commerce Standing Committee.                                                                                    
                                                                                                                                

Document Name Date/Time Subjects