Legislature(2001 - 2002)

04/22/2002 03:25 PM L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
HB 315 - GROUP HEALTH INSURANCE FOR PRIVATE GROUPS                                                                            
                                                                                                                                
CHAIR MURKOWSKI announced that the  first order of business would                                                               
be  SPONSOR  SUBSTITUTE FOR  HOUSE  BILL  315, "An  Act  allowing                                                               
employers   that   are    small   businesses,   small   nonprofit                                                               
organizations, or  small associations  for insurance  purposes to                                                               
join  state  employee  insurance  coverage   as  a    group;  and                                                               
providing for an effective date."                                                                                               
                                                                                                                                
Number 0076                                                                                                                     
                                                                                                                                
REPRESENTATIVE  HALCRO   moved  to  adopt   Version  22-LS1177\B,                                                               
Craver,  4/18/02,  as  the  working document.    There  being  no                                                               
objection, Version B was before the committee.                                                                                  
                                                                                                                                
REPRESENTATIVE  ROKEBERG, speaking  as the  sponsor of  SSHB 315,                                                               
informed the  committee that [Version B]  incorporates changes in                                                               
intent  language   in  the  legislation.     He  highlighted  the                                                               
following substantive change:   on page 2, line  17, the language                                                               
"stop  loss"  was  deleted  and  "lower  cost  options  including                                                               
limited benefit and high deductible" language was inserted.                                                                     
                                                                                                                                
JANET  SEITZ, Staff  to  Representative  Norman Rokeberg,  Alaska                                                               
State Legislature,  testified on  behalf of  the sponsor  of SSHB                                                               
315.  She  explained that this legislation would  allow the State                                                               
of Alaska  to obtain a  policy or  policies of group  health care                                                               
insurance  for   small  businesses   defined  as  two   to  fifty                                                               
employees,  nonprofit   organizations,  small   associations  for                                                               
insurance   purposes   as   a    group,   and   special   service                                                               
organizations.     Special  service   organizations  can   be  an                                                               
individual employed  in one of  these entities,  corporations, or                                                               
nonprofit  organizations  who  deal  with  childcare  facilities,                                                               
operating   a  residential   childcare  facility,   foster  home,                                                               
maternity  home, assisted  living  home, community-based  center,                                                               
and home  care.  She  noted that the aforementioned  entities are                                                               
all licensed by the state  and the licensing authorities to which                                                               
the bill refers.                                                                                                                
                                                                                                                                
MS. SEITZ specified that this legislation  is an effort to form a                                                               
pool  of people  who would  be able  to provide  insurance.   The                                                               
state would  put out a request  for proposals (RFP) and  thus the                                                               
state  wouldn't  self-insure  this  group  as  it  does  its  own                                                               
employees.    This would  be  offered  through private  insurance                                                               
carriers  and the  businesses and  nonprofit organizations  could                                                               
join.   As  specified in  the bill,  the entities  would have  to                                                               
submit a written request to  the department, receive confirmation                                                               
from the commissioner, and pay the premiums.                                                                                    
                                                                                                                                
Number 0311                                                                                                                     
                                                                                                                                
CHAIR  MURKOWSKI asked  if there  is  any procedure  in which  an                                                               
entity could  be rejected.   She  related her  understanding that                                                               
the application has  to be filed and those groups  defined in the                                                               
legislation would be [in the pool].                                                                                             
                                                                                                                                
MS.  SEITZ  replied  yes.    She pointed  out  that  on  page  3,                                                               
subsection (d) states  that a qualified entity  must certify that                                                               
it's going  to meet  the definition, agree  to pay  the premiums,                                                               
sign  a  statement under  penalty  of  unsworn falsification  and                                                               
fraud in order to register.                                                                                                     
                                                                                                                                
REPRESENTATIVE  ROKEBERG  pointed out  that  in  his eight  years                                                               
serving on  the House  Labor and  Commerce Standing  Committee he                                                               
has  fought to  allow private  insurance companies  to enter  the                                                               
State  of Alaska.    However,  there has  been  a  great deal  of                                                               
frustration  with regard  to the  escalation of  insurance costs.                                                               
The  affordability of  health insurance  costs for  nonprofits in                                                               
this state is  coming in to question now, which  is also the case                                                               
for small  businesses.  This  has become a very  serious problem,                                                               
he said.  Representative Rokeberg  expressed his hope that having                                                               
a larger number  of people covered and a well  designed menu with                                                               
a  potentially  higher stop  loss  deductible  and various  other                                                               
menus,  will allow  a  lower cost,  more  affordable, and  higher                                                               
quality  plan  to  be  offered.   He  noted  that  the  state  is                                                               
redefining  what  it takes  to  be  a multiple  employer  welfare                                                               
arrangement  (MEWA).   Therefore,  this  legislation attempts  to                                                               
bring together those  people who can't readily  join together and                                                               
offer them a mechanism to lower their health costs.                                                                             
                                                                                                                                
REPRESENTATIVE CRAWFORD  recalled the  discussion with  regard to                                                               
[the  definition of  "association for  insurance purposes"].   He                                                               
also  recalled that  the House  State Affairs  Standing Committee                                                               
discussed  eliminating   the  upper   limit  defining   how  many                                                               
employees an entity could have  and be considered [an association                                                               
for insurance purposes].                                                                                                        
                                                                                                                                
REPRESENTATIVE ROKEBERG  related that  it would probably  work to                                                               
amend the language such that  it referred to business enterprises                                                               
with two to  fifty employees, which would be  consistent with the                                                               
state's insurance  statutes.  Then nonprofit  organizations could                                                               
be exempt from the cap.                                                                                                         
                                                                                                                                
MS.  SEITZ pointed  out that  Version B  only limits  the two  to                                                               
fifty  employees for  an association  for insurance  purposes and                                                               
businesses.   Nonprofit organizations don't have  an employee cap                                                               
included in the definition on page 4, lines 2-4.                                                                                
                                                                                                                                
CHAIR  MURKOWSKI directed  attention to  page 3,  line 15,  which                                                               
refers to  "composed of businesses or  nonprofit organizations or                                                               
both".  Therefore,  she questioned how the  employee cap wouldn't                                                               
be required for nonprofit organizations.                                                                                        
                                                                                                                                
MS.  SEITZ  pointed  out  that   page  3,  lines  14-19,  is  the                                                               
definition  of "association  for  insurance purposes".   In  that                                                               
particular  group the  combined total  can be  two, but  not more                                                               
than fifty  employees.  An  "association for  insurance purposes"                                                               
can be a group of businesses  or nonprofits or both.  However, if                                                               
an  entity is  simply a  nonprofit, then  that entity  would fall                                                               
under the definition  on page 4 that doesn't  specify an employee                                                               
limit.    In  response  to  Representative  Rokeberg,  Ms.  Seitz                                                               
reiterated  that  the  definition  on  page 3,  line  19  is  the                                                               
definition  of the  "association for  insurance purposes"  if the                                                               
groups come together.                                                                                                           
                                                                                                                                
CHAIR MURKOWSKI  interjected that  an "association  for insurance                                                               
purposes" is different than a nonprofit organization.                                                                           
                                                                                                                                
REPRESENTATIVE  HAYES inquired  as to  whether there  is anything                                                               
under the  [definition of]  "association for  insurance purposes"                                                               
that [would  allow] a self-insured  individual to join  under the                                                               
large umbrella of "association for insurance purposes".                                                                         
                                                                                                                                
MS.  SEITZ  explained that  a  business  that  wants to  join  an                                                               
"association for insurance  purposes" could be a  group of people                                                               
who  come   together  and  form  an   association  for  insurance                                                               
purposes.   Furthermore, a special services  organization that is                                                               
a single employee and meets the definition would qualify.                                                                       
                                                                                                                                
Number 0815                                                                                                                     
                                                                                                                                
GUY  BELL,   Director,  Health  Benefits  Section,   Division  of                                                               
Retirement &  Benefits, Department  of Administration,  said that                                                               
he would discuss  the process were this legislation  enacted.  He                                                               
informed the committee  that it would be  the department's intent                                                               
to  work  with  interested  groups and  a  professional  benefits                                                               
consultant to  design a  plan(s) that  would meet  the identified                                                               
needs of those groups with which  the department is working.  The                                                               
plan would be  developed by either a survey or  focus groups or a                                                               
combination  of the  two.   With  the assistance  of [the  survey                                                               
and/or the  focus groups],  the department  would develop  an RFP                                                               
for a fully insured product(s).   The best proposal would then be                                                               
selected.   There is  a process of  approval of  the participants                                                               
through  the commissioner  of  the department.    At that  point,                                                               
those  who  participate  would   pay  premiums  directly  to  the                                                               
insurance company  and the participants would  work directly with                                                               
the  insurer.   He  noted  that  the  premiums wouldn't  be  paid                                                               
through  the  State of  Alaska.    The  department would  have  a                                                               
limited  role  as a  continuing  liaison  [in plan  design]  with                                                               
nonprofits and businesses that participated.                                                                                    
                                                                                                                                
MR. BELL  informed the committee that  [this legislation] doesn't                                                               
contemplate a state subsidy.   The fiscal note reflects the funds                                                               
necessary  for startup  costs.   Furthermore, there  is no  state                                                               
liability for  this because  the liability would  be taken  on by                                                               
the insurance  company insuring the  health plan.   This proposed                                                               
plan would  be completely  separate from  any state  health plan.                                                               
He  explained  that  this  proposed  plan  would  effectively  be                                                               
private insurance  subject to the Employee  Retirement and Income                                                               
Security Act of 1974 (ERISA) and would be fully insured.                                                                        
                                                                                                                                
Number 0955                                                                                                                     
                                                                                                                                
REPRESENTATIVE MEYER  surmised then  that this proposed  plan may                                                               
be similar  to what the state  employees have, but may  be better                                                               
or worse depending  upon what is negotiated  between the parties;                                                               
the state won't have any involvement.                                                                                           
                                                                                                                                
MR. BELL agreed  and pointed out that when  the department issues                                                               
the RFP  it will have  specific plan  designs in mind,  which may                                                               
include an array  of options.  There will also  be a price scheme                                                               
that will be anticipated before issuing the RFP.                                                                                
                                                                                                                                
REPRESENTATIVE MEYER  related his understanding that  the savings                                                               
to  the nonprofits  or  associations  will be  in  regard to  the                                                               
ability of  various groups to  come together  as one in  order to                                                               
obtain more affordable rates.                                                                                                   
                                                                                                                                
MR.  BELL replied  yes.   By pooling,  risk is  reduced as  would                                                               
administrative  overhead,  he  said.    In  further  response  to                                                               
Representative Meyer,  Mr. Bell  confirmed that  the cost  to the                                                               
state would be  for the one staff person   overseeing the program                                                               
and some contractual services for  a benefits consultant for plan                                                               
design.                                                                                                                         
                                                                                                                                
Number 1052                                                                                                                     
                                                                                                                                
REPRESENTATIVE  HALCRO inquired  as  to whether  the $133,000  of                                                               
upfront costs would  be reimbursed over the course  of the coming                                                               
years.                                                                                                                          
                                                                                                                                
MR.  BELL  answered that  the  department  doesn't contemplate  a                                                               
reimbursement to  the general fund (GF)  for that.  The  costs in                                                               
future  years would  be a  small assessment  that the  department                                                               
would make  against the plan  in order to cover  the department's                                                               
modest ongoing costs.                                                                                                           
                                                                                                                                
REPRESENTATIVE HALCRO asked what would  happen if no one responds                                                               
to the RFP; would the $132,000 worth of work be for naught.                                                                     
                                                                                                                                
MR. BELL agreed,  but indicated that the cost could  be less than                                                               
the full  amount.  He  related his belief  that if there  were no                                                               
responses, the department  would try to determine  why there were                                                               
no responses and then put out a modified RFP.                                                                                   
                                                                                                                                
Number 1139                                                                                                                     
                                                                                                                                
REPRESENTATIVE  MEYER  inquired  as   to  how  many  people  this                                                               
legislation would cover.                                                                                                        
                                                                                                                                
MR.  BELL answered  that  potentially this  could  cover quite  a                                                               
large number of  people, although it's hard to say  how many will                                                               
participate.   In further response  to Representative  Meyer, Mr.                                                               
Bell said  that the  department believes  there should  be enough                                                               
interested people that  there should be some  interest in bidding                                                               
on the RFP.                                                                                                                     
                                                                                                                                
Number 1188                                                                                                                     
                                                                                                                                
MARY  RAYMOND,  The  Ark,  testified  via  teleconference.    She                                                               
remarked  that  this [legislation]  is  something  to be  excited                                                               
about because health insurance is  of grave concern.  Ms. Raymond                                                               
informed  the committee  that she  is a  coordinator for  a small                                                               
assisted living  home for which this  matter is of concern.   The                                                               
premiums [for the small assisted  living home] are small in light                                                               
of what individuals  receive in payments.   Ms. Raymond concluded                                                               
by thanking the  committee for this legislation,  which she hoped                                                               
would [come to fruition].                                                                                                       
                                                                                                                                
Number 1250                                                                                                                     
                                                                                                                                
MARY    ROSENZWEIG,    Director,   Substance    Abuse   Directors                                                               
Association, testified  via teleconference.  She  began by saying                                                               
that this  legislation comes  along at a  very critical  time for                                                               
those   agencies  delivering   substance   abuse  treatment   and                                                               
prevention programs  around the  state.  Ms.  Rosenzweig informed                                                               
the committee that the association  has approximately 57 programs                                                               
statewide.     That  membership  was  surveyed   with  regard  to                                                               
insurance  premiums [which  produced the  following information].                                                               
Over  a  two-year  period, insurance  premiums  on  average  have                                                               
increased  36 percent  per  employee.   The  premiums for  health                                                               
insurance  amounted   to  about  5.8  percent   of  the  agency's                                                               
operating budget  in the year  2000.   In 2002   health insurance                                                               
premiums  are  7.6  percent   of  the  [association's]  operating                                                               
budget.  Ms.  Rosenzweig said, "This means that the  state is not                                                               
getting good  value for its  dollar; it means less  services that                                                               
they're  able to  purchase for  the same  dollar."   These sudden                                                               
increases  have resulted  in reducing  the level  of benefits  by                                                               
cutting prevention  and screening programs and  dental and vision                                                               
coverage.   Furthermore,  deductibles are  increasing.   Over the                                                               
past two years deductibles have risen  from an average of $300 to                                                               
$408.   Ms.  Rosenzweig stated,  "For our  industry, we  have not                                                               
been able to increase the wage  scale in years because the payors                                                               
are not paying  any more for the services."   This industry is at                                                               
a critical time  with work force retention;  employees can't stay                                                               
where there  is no  health insurance.   Ms. Rosenzweig  urged the                                                               
committee to provide  relief and assistance that  costs the state                                                               
little.   In response to Representative  Rokeberg, Ms. Rosenzweig                                                               
agreed to provide her information to his office.                                                                                
                                                                                                                                
Number 1412                                                                                                                     
                                                                                                                                
SANDY   TURLEY,  Seaview   Community   Services,  testified   via                                                               
teleconference.     She  informed  the  committee   that  Seaview                                                               
Community  Services  is  a nonprofit  human  services  agency  in                                                               
Seward.  Ms. Turley read the following testimony:                                                                               
                                                                                                                                
     Seaview employees were covered  by Humana and so Humana                                                                    
     withdrew their  insurance coverage  from all  of Alaska                                                                    
     in 2000.  As a  small agency with 40 employees, finding                                                                    
     an alternative was difficult.   We were fortunate to be                                                                    
     eligible  to join  the United  Way  Nationwide Group  -                                                                    
     Blue Cross  Blue Shield  plan out of  Maryland.   In FY                                                                    
     [fiscal year]  '01 while  we were  on the  United Way's                                                                    
     Blue Cross Blue Shield, our  rates were the best we had                                                                    
     ever had.   The Alaska United Way  agencies were forced                                                                    
     out of the national BCBS  [Blue Cross Blue Shield] plan                                                                    
     as of  December 31, 2001,  in the middle of  our fiscal                                                                    
     year, without  expenses and revenues  already budgeted.                                                                    
     As we  begin looking  for alternatives, there  were few                                                                    
     options   and   the   rates   we   were   quoted   were                                                                    
     astronomical.   The  best rates  were 150  percent more                                                                    
     than the United  Way Blue Cross Blue Shield  rates.  We                                                                    
     worked for three  months to come up  with an affordable                                                                    
     plan.    We were  forced  to  drop dental,  prevention,                                                                    
     prescription,  mental health,  and chemical  dependency                                                                    
     coverage  in order  to  be able  to  continue to  offer                                                                    
     health  care  to our  employees  that  we could  afford                                                                    
     [and] that was within our  budget.  The additional cost                                                                    
     was  shared by  the employees  with an  increased copay                                                                    
     and by the  agency with an increased premium  cost.  We                                                                    
     could not  maintain the same level  of coverage because                                                                    
     neither agency or the employees  could bear the cost of                                                                    
     the  increase.   We had  22 employees  on insurance  in                                                                    
     December and  now, in April, we  only have 13.   We are                                                                    
     currently  at risk  of not  qualifying for  group rates                                                                    
     because of  not enough enrollees.   The rise  in health                                                                    
     care costs  and decrease  in coverage are  an immediate                                                                    
     and  serious threat  to recruitment  and retention.   I                                                                    
     fear  that dissatisfied  employees  will start  looking                                                                    
     for other jobs  with better insurance and  that we will                                                                    
     be unable to  hire new people because  our insurance is                                                                    
     just not  competitive.  As  a small agency,  losing one                                                                    
     ore  two  key positions  can  threaten  our ability  to                                                                    
     provide  services for  an entire  program.   Passage of                                                                    
     House Bill 315 is a  solution to the serious problem of                                                                    
     affordable health insurance for our agency.                                                                                
                                                                                                                                
Number 1529                                                                                                                     
                                                                                                                                
SUSAN SCUDDER,  Executive Director, Council on  Domestic Violence                                                               
& Sexual  Assault, Department of  Public Safety  (DPS), explained                                                               
that  the  Council on  Domestic  Violence  administers state  and                                                               
federal funds to  more than 21 programs around the  state.  These                                                               
are  community-based  nonprofit  programs that  have  experienced                                                               
amazing increases in  their health insurance costs  over the past                                                               
few years.   The increases have reached the point  at which staff                                                               
positions have  been cut in order  to maintain the same  level of                                                               
health  insurance,  which  results   in  fewer  services  to  the                                                               
community.    Ms.  Scudder emphasized  the  importance  of  these                                                               
programs having  qualified staff that  can obtain benefits.   She                                                               
noted that these  jobs aren't the best paying jobs  and thus when                                                               
the benefits  are cut,  it becomes  nearly impossible  to recruit                                                               
good people for these jobs.                                                                                                     
                                                                                                                                
Number 1664                                                                                                                     
                                                                                                                                
MARIE  DARLIN,  AARP,  said  that  AARP  is  thankful  that  this                                                               
legislation has been introduced because  this has been of concern                                                               
in reviewing the long-term care  needs.  Many small organizations                                                               
are attempting  to meet [long-term  care] needs and  often [these                                                               
small organizations  are] home and  community-based care.   These                                                               
home and  community-based care organizations have  always had the                                                               
concerns  surrounding  employee  benefits.   [Without  benefits],                                                               
these  organizations   lose  employees  and   the  organization's                                                               
ability to provide  services is lost.  Therefore,  AARP urges the                                                               
committee's support of HB 315.                                                                                                  
                                                                                                                                
Number 1664                                                                                                                     
                                                                                                                                
MARGIE BAUMAN testified via teleconference  and noted that she is                                                               
the owner and  sole employee of her own business.   She suggested                                                               
that on  page 3, line 26,  subparagraph (C) be changed  such that                                                               
legitimate owners  of small businesses  who have  only themselves                                                               
as an employee can be included.   She informed the committee that                                                               
the  insurance carrier  that held  the group  professional policy                                                               
with which  she participated dropped  the entire group  after the                                                               
company was  found not to  be in compliance with  insurance laws.                                                               
She noted  that although she is  in good health, no  one wants to                                                               
insure her [because]  she has had cancer and her  doctor has done                                                               
additional testing and may want to  again.  Therefore, she has no                                                               
insurance  and  when she  goes  to  the  hospital she  pays  "top                                                               
dollar"  because she  isn't represented  by an  insurance company                                                               
that  has a  deal  with  the hospital.    Furthermore, the  state                                                               
comprehensive plan is cost prohibitive  for her.  Ms. Bauman said                                                               
that she  wants a health care  plan in which she  can participate                                                               
and pay her  fair share of the costs.   In conclusion, Ms. Bauman                                                               
pondered why  this legislation hasn't  garnered any  comments and                                                               
testimony from hospitals and medical organizations.                                                                             
                                                                                                                                
REPRESENTATIVE  ROKEBERG pointed  out that  if Ms.  Bauman joined                                                               
with  someone  who performs  similar  work,  then the  two  could                                                               
become an association and qualify to join.                                                                                      
                                                                                                                                
Number 1793                                                                                                                     
                                                                                                                                
JACK  McRAE, Senior  Vice President,  Blue Cross  Blue Shield  of                                                               
Alaska, testified via  teleconference.  Mr. McRae  noted that the                                                               
company  is very  sympathetic to  the large  rate increases.   He                                                               
said he would  address the insurance carrier that  left the state                                                               
and the  large increases  due to  that insurance  carrier leaving                                                               
the  state.   He  related  his  understanding that  an  insurance                                                               
carrier came  into the  state and  sold a  product that  wasn't a                                                               
licensed  product in  the state.   Furthermore,  the product  was                                                               
priced on  a national  basis rather than  looking at  health care                                                               
costs in Alaska.   That combination of not being  licensed in the                                                               
state and the costs of health  care in Alaska would have resulted                                                               
in that  carrier having  to increase  its rates  substantially in                                                               
order to  stay in the  state.  When  that carrier moved  out, the                                                               
nonprofits had  to come to  other carriers in Alaska  which price                                                               
the product  as it would  be for any other  group in Alaska.   He                                                               
attributed much of  that large increase to the  [fact] that there                                                               
was  a  carrier   that  had  under  priced  a   product  for  the                                                               
marketplace  and  when the  insurance  was  rewritten, the  price                                                               
became consistent with the marketplace in Alaska.                                                                               
                                                                                                                                
MR. McRAE  expressed concern  with regard  to the  state becoming                                                               
involved in personal  health care.  Many of  the individuals have                                                               
the ability  to become associations.   As a matter of  fact, Blue                                                               
Cross  Blue Shield  writes quite  a few  associations in  Alaska.                                                               
Mr. McRae also  expressed concern with regard to  the state being                                                               
a  conduit for  the RFP.   He  posed a  situation in  which [Blue                                                               
Cross  Blue  Shield]  contracts   with  a  company  that  becomes                                                               
insolvent  and  there are  claims  that  need  to  be paid.    He                                                               
inquired  as to  who  would  pay for  those  claims.   Would  the                                                               
premium be  collected from  the state because  the state  was the                                                               
conduit for the RFP, he asked.                                                                                                  
                                                                                                                                
MR.  McRAE informed  the committee  that Blue  Cross Blue  Shield                                                               
isn't afraid  of competition,  but legislation  such as  SSHB 315                                                               
could  impact  carriers  wanting  to  come  to  Alaska  and  sell                                                               
products.    Mr.  McRae  concluded by  stating  Blue  Cross  Blue                                                               
Shield's supports the concept of  the association business, which                                                               
seems to be a viable approach.   He reiterated the question as to                                                               
whether  the state  wants to  become  involved as  a conduit  for                                                               
insuring private entities.                                                                                                      
                                                                                                                                
Number 1938                                                                                                                     
                                                                                                                                
REPRESENTATIVE  ROKEBERG   asked  whether   there  would   be  an                                                               
insolvency  situation  if  there  is a  third  party  underwriter                                                               
actually underwriting the group.                                                                                                
                                                                                                                                
MR. McRAE answered  that it would be possible,  although he noted                                                               
that he didn't have [Version B] before him.                                                                                     
                                                                                                                                
REPRESENTATIVE  ROKEBERG  interjected  that Version  B  specifies                                                               
that [the  RFP] goes  out to  a private  sector underwriter.   He                                                               
related his  belief that [under  the current language]  the state                                                               
wouldn't be liable.   With regard to expectations  [of low cost],                                                               
Representative Rokeberg noted  his agreement with Mr.  McRae.  In                                                               
regard  to associations,  Representative  Rokeberg  asked if  Mr.                                                               
McRae was  referring to  MEWAs or any  other type  of association                                                               
that's allowed.                                                                                                                 
                                                                                                                                
MR.  McRAE related  his belief  that  Blue Cross  Blue Shield  of                                                               
Alaska  writes  other types  of  associations  other than  MEWAs.                                                               
Whenever  pooling occurs,  there are  winners and  losers because                                                               
some will have a lower rate  that will increase while others will                                                               
have a higher rate that will decrease.                                                                                          
                                                                                                                                
REPRESENTATIVE  ROKEBERG  asked  if  that would  be  due  to  the                                                               
experience of the employee.                                                                                                     
                                                                                                                                
MR. McRAE  clarified that  in theory the  experience of  the pool                                                               
should be  different than that  of the individuals.   However, if                                                               
there  is one  group that's  a fairly  high risk  group, then  it                                                               
would be rated  higher and pay a larger premium  than would a low                                                               
risk  group.    When  those  two groups  are  put  together,  one                                                               
[group's rate] increases and one [group's rate] decreases.                                                                      
                                                                                                                                
REPRESENTATIVE   ROKEBERG  inquired   as   to  the   underwriting                                                               
difference  if there  was a  group of  child care  workers and  a                                                               
group of drug and alcohol counselors.                                                                                           
                                                                                                                                
MR. McRAE  said that he  wasn't qualified to answer  an actuarial                                                               
question.                                                                                                                       
                                                                                                                                
CHAIR  MURKOWSKI  related her  understanding  that  Mr. McRae  is                                                               
concerned with  the state being the  conduit for the RFP  and the                                                               
possibility of the state having some liability in that regard.                                                                  
                                                                                                                                
MR. McRAE replied yes.                                                                                                          
                                                                                                                                
CHAIR  MURKOWSKI  echoed  Representative Rokeberg's  belief  that                                                               
[Version B] addressed his concern.                                                                                              
                                                                                                                                
Number 2088                                                                                                                     
                                                                                                                                
WILLIAM  CRAIG,  Alaska  Independent  Blind;  Alaska  Information                                                               
Radio  Reading  Education  Service,  explained  that  the  Alaska                                                               
Information  Radio  Reading  Education Service  reads  papers  to                                                               
blind  people over  a special  radio  band in  the Anchorage  and                                                               
Fairbanks  areas.    This  organization  employs  10-15  disabled                                                               
people.   Mr.  Craig said  that although  the organization  isn't                                                               
necessarily  seeking  lower  cost insurance,  this  [legislation]                                                               
would allow the organization to  provide better insurance than it                                                               
currently  provides.   Under the  insurance the  organization has                                                               
now employees frequently have to  wait six months before using it                                                               
and  there's a  high  deductible.   Furthermore, aging  employees                                                               
face  increased insurance  costs, including  the deductible.   He                                                               
pointed  out that  as a  small group,  the organization  finds it                                                               
difficult to find  insurance that is priced at  a reasonable cost                                                               
and provides a reasonable plan.                                                                                                 
                                                                                                                                
CHAIR  MURKOWSKI, upon  determining that  no one  else wished  to                                                               
testify, closed public testimony on SSHB 315.                                                                                   
                                                                                                                                
Number 2160                                                                                                                     
                                                                                                                                
REPRESENTATIVE ROKEBERG informed the committee  that he has a few                                                               
small amendments.   He moved that the  committee adopt conceptual                                                               
Amendment 1, which read:                                                                                                        
                                                                                                                                
     Page 2, line 20                                                                                                            
          After "a policy"                                                                                                      
          Insert "or politics"                                                                                                  
                                                                                                                                
There being no objection, conceptual Amendment 1 was adopted.                                                                   
                                                                                                                                
Number 2187                                                                                                                     
                                                                                                                                
REPRESENTATIVE ROKEBERG moved that  the committee adopt Amendment                                                               
2, which read:                                                                                                                  
                                                                                                                                
     Page 4, line 31                                                                                                            
          Delete:  "January 1, 2003"                                                                                            
          Insert:  "July 1, 2002"                                                                                               
                                                                                                                                
REPRESENTATIVE ROKEBERG recalled Mr.  Bell's testimony that, upon                                                               
passage,  the department  would  perform a  poll  and attempt  to                                                               
develop something.   Therefore, the earlier  effective date would                                                               
provide the  department with six  months to organize  the program                                                               
and potentially be in place at the first of the year.                                                                           
                                                                                                                                
REPRESENTATIVE HAYES objected for the  purpose of discussion.  He                                                               
inquired as to  why an immediate effective date  wouldn't be used                                                               
because even  an effective  date of  July 1,  2002, might  be too                                                               
late due to when the legislation is actually signed.                                                                            
                                                                                                                                
REPRESENTATIVE  ROKEBERG said  that  secondary [effective  dates]                                                               
are usually at the first of  the fiscal year which coincides with                                                               
the new fiscal year for the state.                                                                                              
                                                                                                                                
REPRESENTATIVE  HAYES  expressed  concern  that  the  legislation                                                               
might not  be signed  until after  July 1,  2002.   Therefore, an                                                               
immediate effective date would seem to make more sense.                                                                         
                                                                                                                                
REPRESENTATIVE ROKEBERG said that  he would consider an immediate                                                               
effective  date   as  a  friendly   amendment  to   Amendment  2.                                                               
[Therefore, the  Amendment 2  was changed  such that  "January 1,                                                               
2003" was replaced with an immediate effective date.]                                                                           
                                                                                                                                
There  being no  objection  to  Amendment 2  as  amended, it  was                                                               
adopted.                                                                                                                        
                                                                                                                                
Number 2300                                                                                                                     
                                                                                                                                
REPRESENTATIVE   ROKEBERG   moved   that  the   committee   adopt                                                               
conceptual Amendment 3, which read:                                                                                             
                                                                                                                                
     Page 3, line 16,                                                                                                           
     Delete "and"                                                                                                               
                                                                                                                                
     Page 3                                                                                                                     
     Delete lines 17-19                                                                                                         
                                                                                                                                
REPRESENTATIVE ROKEBERG  explained that [conceptual  Amendment 3]                                                               
would eliminate the confusion with  regard to what an association                                                               
is and  the distinction with  regard to the number  of [employees                                                               
required for an association for insurance purposes].                                                                            
                                                                                                                                
CHAIR MURKOWSKI objected for the purpose of discussion.                                                                         
                                                                                                                                
TAPE 02-62, SIDE B                                                                                                              
                                                                                                                                
CHAIR MURKOWSKI  related her understanding that  an "association"                                                               
is a nonprofit organization that  has no limitation on the number                                                               
[of  employees]   while  a  business   does.     Furthermore,  an                                                               
"association" is comprised  of either a business  or nonprofit or                                                               
both.                                                                                                                           
                                                                                                                                
REPRESENTATIVE ROKEBERG agreed.                                                                                                 
                                                                                                                                
CHAIR  MURKOWSKI  asked  if that  would  alleviate  Ms.  Bauman's                                                               
concern.                                                                                                                        
                                                                                                                                
REPRESENTATIVE  ROKEBERG  replied  no   and  explained  that  Ms.                                                               
Bauman,  as an  individual [owner  and employer],  would have  to                                                               
[form an] association with someone else.                                                                                        
                                                                                                                                
CHAIR MURKOWSKI asked  if there is a concern  that an association                                                               
could have 1,000 people and become problematic.                                                                                 
                                                                                                                                
REPRESENTATIVE ROKEBERG  said, "The  more the merrier,  it should                                                               
lower costs."                                                                                                                   
                                                                                                                                
CHAIR  MURKOWSKI removed  her objection.   There  being no  other                                                               
objection, conceptual Amendment 3 was adopted.                                                                                  
                                                                                                                                
Number 2253                                                                                                                     
                                                                                                                                
REPRESENTATIVE  HALCRO expressed  concern  that  by the  division                                                               
absorbing a  $132,000 fiscal note,  the [legislature]  is, again,                                                               
expecting state government to do  something for free.  Therefore,                                                               
he expressed the need for  the legislation to include a mechanism                                                               
in which to recapture the $132,000.                                                                                             
                                                                                                                                
REPRESENTATIVE  ROKEBERG  remarked  that   he  tended  to  agree.                                                               
However,  most  of  those  [impacted  by  this  legislation]  are                                                               
nonprofits  that  are  directly  or indirectly  impacted  by  the                                                               
state's  various  budgets,  including the  general  fund  budget.                                                               
Therefore, the case  for a modest contribution up  front could be                                                               
made.   He  indicated  that  [he would  suggest  that] the  House                                                               
Finance Committee review recapturing  the cost without having too                                                               
much negative impact.                                                                                                           
                                                                                                                                
REPRESENTATIVE  HALCRO  noted  that  his  aforementioned  concern                                                               
isn't  enough  for  him  to object  to  moving  the  legislation.                                                               
However, he  recommended that the House  Finance Committee review                                                               
the possibility of mitigating [the fiscal note].                                                                                
                                                                                                                                
REPRESENTATIVE MEYER  mentioned that many of  the individuals who                                                               
can't  obtain insurance  may have  some  serious health  problems                                                               
that could have  been avoided had these individuals  been able to                                                               
see a  physician earlier.  People  in such situations may  now be                                                               
on Medicare.   Therefore, the $96,000 a year that  this will cost                                                               
the state  isn't of too much  concern because of his  belief that                                                               
there should be a reduction  in cost elsewhere.  He characterized                                                               
the legislation as  a good bill offering help to  some people who                                                               
desperately need it.  However,  he hoped that the expectations of                                                               
these people are realistic.                                                                                                     
                                                                                                                                
REPRESENTATIVE  ROKEBERG informed  the committee  that there  are                                                               
still discussions  with the Mental  Health Trust [Fund]  in order                                                               
to take on the [initial cost].   The ongoing $95,000 would be for                                                               
the administrative costs.                                                                                                       
                                                                                                                                
REPRESENTATIVE  HAYES  announced  that   he  has  a  conflict  of                                                               
interest because of his employment in the insurance industry.                                                                   
                                                                                                                                
Number 2101                                                                                                                     
                                                                                                                                
REPRESENTATIVE  MEYER moved  to  report CSSSHB  315, Version  22-                                                               
LS1177\B,  Craver,  4/18/02, as  amended  out  of committee  with                                                               
individual  recommendations and  the  accompanying fiscal  notes.                                                               
There being no  objection, CSSSHB 315(L&C) was  reported from the                                                               
House Labor and Commerce Standing Committee.                                                                                    
                                                                                                                                

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