Legislature(2005 - 2006)CAPITOL 17

04/08/2005 03:15 PM LABOR & COMMERCE

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03:24:38 PM Start
03:25:25 PM Confirmation Hearing(s)
03:27:13 PM Board of Marital and Family Therapy
03:27:29 PM State Board of Registration for Architects, Engineers, and Land Surveyors
03:28:30 PM Alaska Labor Relations Agency
03:28:54 PM Board of Psychologist and Psychological Associate Examiners
03:29:27 PM Regulatory Commission of Alaska
03:35:14 PM HB29
05:01:11 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Heard & Held
Governor's Board Appointments
Bills Previously Heard/Scheduled
HB  29-HEALTH CARE INSUR./ COMP HEALTH INS. ASSN                                                                              
3:35:14 PM                                                                                                                    
REPRESENTATIVE KOTT  announced that  the final order  of business                                                               
would  be HOUSE  BILL NO.  29, "An  Act relating  to health  care                                                               
insurance and to the  Comprehensive Health Insurance Association;                                                               
and providing for an effective date."                                                                                           
3:35:37 PM                                                                                                                    
REPRESENTATIVE ROKEBERG  explained that the  Alaska Comprehensive                                                               
Health  Insurance Association  (ACHIA), established  in 1993,  is                                                               
Alaska's  high  risk  pool  that's   required  under  the  Health                                                               
Insurance Portability and Accountability  Act (HIPAA).  This high                                                               
risk  pool   provides  health  insurance  for   those  who  can't                                                               
otherwise obtain  insurance, and  it restricts their  premiums to                                                               
150  percent  of the  average  health  insurance premium  in  the                                                               
state.    Although ACHIA  is  a  much-needed program,  under  its                                                               
current structure it only affects  those health insurance covered                                                               
lives  that  are  underwritten  for  individual  or  small  group                                                               
policies.  All the larger insured  covered lives in the state are                                                               
exempt from payment of the  assessments, which are carried out by                                                               
the  pool periodically.   For  example, the  estimated assessment                                                               
for fiscal  year (FY) 2004  was $5  million.  Therefore,  not all                                                               
the people  who could avail  themselves of ACHIA are  paying into                                                               
the pool.                                                                                                                       
3:38:38 PM                                                                                                                    
REPRESENTATIVE ROKEBERG  informed the committee that  when former                                                               
Governor Knowles  allowed the  bargaining units  of the  state to                                                               
leave the  common pool  of state employees,  many of  those folks                                                               
and the  state were exempt from  paying into the high  risk pool.                                                               
At  that time,  the  high  risk pool  lost  $400,000 annually  in                                                               
assessment  money.   The  aforementioned loss  had  to be  spread                                                               
amongst the  insurers and  smaller employers.   Therefore,  HB 29                                                               
intends  to  obtain greater  equity  in  spreading the  cost  [of                                                               
ACHIA].  Representative Rokeberg noted  that there is a committee                                                               
substitute   (CS)  and   two  amendments   for  the   committee's                                                               
consideration.  He  pointed out that the CS is  drafted such that                                                               
it  covers  retirees, even  those  in  the  state programs.    He                                                               
announced that  he will  offer a  conceptual amendment  to remove                                                               
all retirees from  this coverage.  He explained  that the purpose                                                               
of HB 29 is to spread the cost  to those who can benefit from the                                                               
program  and the  retirees don't  need this  coverage due  to the                                                               
insurance they  have.   He then  referenced a  document entitled,                                                               
"Analysis  of  Change  in  the  Assessment  Formula",  which  was                                                               
provided  by the  Division  of  Insurance.   The  revised page  5                                                               
illustrates  a  difference, of  which  he  wanted members  to  be                                                               
aware.   For  example, it  shows that  under HB  29 the  State of                                                               
Alaska will be  assessed at $1.47 million, but  it would decrease                                                               
to  $277,000  with the  adoption  of  the amendment  [eliminating                                                               
retirees from this].                                                                                                            
3:40:47 PM                                                                                                                    
REPRESENTATIVE  ROKEBERG  moved to  adopt  CSHB  29, Version  24-                                                               
LS0191\I, Bullock, 3/17/05, as the working document.                                                                            
REPRESENTATIVE  GUTTENBERG   objected  in   order  to   hear  the                                                               
differences encompassed in  Version I.  Upon  realizing that this                                                               
was  the  first  hearing  of  HB  29,  Representative  Guttenberg                                                               
withdrew  his objection.   Therefore,  Version I  was before  the                                                               
The committee took an at-ease from 3:42 p.m. to 3:43 p.m.                                                                       
3:43:20 PM                                                                                                                    
REPRESENTATIVE   ROKEBERG   moved   that  the   committee   adopt                                                               
Conceptual Amendment  1, which would  remove state  retirees from                                                               
the provisions  of HB 29.   There being no  objection, Conceptual                                                               
Amendment 1 was adopted.                                                                                                        
CECIL  BYKERK, Executive  Director,  Alaska Comprehensive  Health                                                               
Insurance Association,  informed the  committee that he  has been                                                               
involved with  ACHIA since  its inception  in 1992.   Originally,                                                               
the program started out to  specifically take care of uninsurable                                                               
individuals.    However,  in  1996/1997  the  federal  government                                                               
passed HIPAA, through which the  state is now required to provide                                                               
a  mechanism  that provides  for  continuity  and portability  of                                                               
coverage  for  those  coming out  of  the  employer  marketplace.                                                               
Individuals whose  coverage is terminated are  eligible to enroll                                                               
in ACHIA without serving any preexisting condition requirements.                                                                
3:46:47 PM                                                                                                                    
MR.  BYKERK pointed  out that  about  two years  ago the  federal                                                               
government  established the  Trade  Adjustment  Act (TAA),  which                                                               
provides  similar ability  for displaced  workers or  workers for                                                               
companies  whose pension  plan  is  being taken  care  of by  the                                                               
Pension  Benefit  Guarantee  Corporation (PBGC).  Therefore,  the                                                               
ACHIA eligibility  group has  grown over the  years such  that it                                                               
totals about 500  people who work the program.   However, ACHIA's                                                               
assessment base, as  was mentioned by the sponsor, is  one of the                                                               
things that hasn't  grown.  The premiums, which are  a bit higher                                                               
than  standard  premiums, are  capped  at  150 [percent]  of  the                                                               
standard  premium   in  the  marketplace.     From  an  actuarial                                                               
perspective  the cost  of the  individuals  in the  pool is  much                                                               
greater than  the premium allowed.   The  losses, as a  result of                                                               
charging lower  premiums, are covered  by the  assessments, which                                                               
HB 29  addresses.  Currently,  the assessments are  spread across                                                               
those  individuals  who   purchase  insured  products,  primarily                                                               
individuals and small group carriers.   Therefore, it's a limited                                                               
spread with regard  to who ends up paying  for these assessments.                                                               
Mr. Bykerk  noted that large  companies avoid the  assessments or                                                               
contribute a fraction  relative to the premiums  an individual or                                                               
small group pays.                                                                                                               
3:49:28 PM                                                                                                                    
MR. BYKERK added  that HIPAA has added a feature  such that those                                                               
people who  are coming out  of plans that aren't  contributing to                                                               
ACHIA are  eligible in the  program.  Mr. Bykerk,  in conclusion,                                                               
encouraged the committee to consider HB 29.                                                                                     
3:50:16 PM                                                                                                                    
REPRESENTATIVE  ROKEBERG requested  that Mr.  Bykerk explain  the                                                               
premium costs  to the TAA people  and how it works  with the U.S.                                                               
Department of  Labor.  He  indicated that the U.S.  Department of                                                               
Labor subsidizes a part of that.                                                                                                
MR.  BYKERK answered  that  although the  regular  HIPAA and  TAA                                                               
people are  eligible immediately without having  to be certified,                                                               
the TAA people  have to be certified by the  [U.S.] Department of                                                               
Labor.   Upon certification,  the TAA people  are eligible  for a                                                               
subsidy  of  the premium,  which  is  a  subsidy portion  of  the                                                               
premium  that ACHIA  charges.   He  related his  belief that  the                                                               
aforementioned subsidy  is for  a limited  duration.   Mr. Bykerk                                                               
recalled that the subsidy is  somewhere around two-thirds and the                                                               
individual pays around  one-third, and that runs for  a few years                                                               
after which the  individual is required to pay the  balance.  The                                                               
federal government, he stated, isn't  contributing to ACHIA, save                                                               
indirectly by subsidizing the eligible individuals.                                                                             
3:52:28 PM                                                                                                                    
MR.  BYKERK, in  response to  Representative Rokeberg,  clarified                                                               
his  earlier   statement  that   the  federal   government  isn't                                                               
contributing to the fund to  help ACHIA with its losses, although                                                               
it is helping  the individuals to pay part of  their premium.  He                                                               
explained  that the  individual pays  his  or her  portion to  an                                                               
agency, which  then pays  the full  premium back  to ACHIA.   Mr.                                                               
Bykerk said that the federal  government's unfunded mandate isn't                                                               
contributing to help cover the losses the program is incurring.                                                                 
3:53:50 PM                                                                                                                    
REPRESENTATIVE  ROKEBERG related  his  understanding, "Under  the                                                               
TAA,  ... an  individual ...  can go  to basically  any insurance                                                               
carrier that they would, and then  there is the subsidy under the                                                               
federal labor law; is that correct?   But ... they only enter the                                                               
pool if they ... are high risk individuals?"                                                                                    
MR. BYKERK  related his belief  that individuals are  eligible to                                                               
enter ACHIA the  same way HIPAA eligibles are,  without regard to                                                               
whether the individual is eligible  for other coverage.  However,                                                               
he  emphasized that  individuals  would be  encouraged  to go  to                                                               
other  coverage  because a  healthy  individual  may be  able  to                                                               
purchase  coverage   cheaper.    There  is   no  requirement  for                                                               
individuals to go into the market and get declined.                                                                             
REPRESENTATIVE  ROKEBERG   commented  that  [ACHIA]  is   a  U.S.                                                               
Department of  Labor program  intended to  assist those  who were                                                               
displaced by  imports.   "This is very  important to  the working                                                               
people of Alaska," he opined.                                                                                                   
3:55:17 PM                                                                                                                    
SALLIE  STUVEK, Human  Resources Director,  Fairbanks North  Star                                                               
Borough, said that  she has concerns with this  legislation.  She                                                               
related  her  belief  that  for self-insured  plans  HB  29  will                                                               
increase the cost  to the plan.  Ms. Stuvek  said that she didn't                                                               
see any benefit to self-insured programs.                                                                                       
REPRESENTATIVE ROKEBERG  asked if those  who leave the  employ of                                                               
the Fairbanks North Star Borough can maintain their insurance.                                                                  
MS. STUVEK  replied no, adding that  Comprehensive Omnibus Budget                                                               
Reform Act (COBRA) coverage is  offered.  She mentioned that many                                                               
of  the employees  leaving borough  employment  go directly  into                                                               
retirement  and   thus  receive   coverage  through   the  Public                                                               
Employees' Retirement System (PERS).                                                                                            
3:56:56 PM                                                                                                                    
CHRISTINE SASSE, Finance Director,  City of Valdez, characterized                                                               
HB  29 as  an unfunded  mandated  because of  the requirement  to                                                               
provide  information  that  will generate  administrative  costs.                                                               
The aforementioned  will increase  costs as will  the assessment.                                                               
The only way [the City of  Valdez] can pay for those increases is                                                               
through taxes.   Currently,  [the City of  Valdez] is  limited in                                                               
its ability to  increase taxes.  Furthermore,  the PERS situation                                                               
adds   to  the   financial  attack   [the  City   of  Valdez   is                                                               
experiencing].  Moreover, the costs  [of the ACHIA program] can't                                                               
be  controlled  as  is  evidenced  by  the  increases  [in  those                                                               
utilizing]  the program.   Ms.  Sasse  opined that  [the City  of                                                               
Valdez] doesn't believe it's contributing  to the problem because                                                               
it  provides health  insurance for  both part-time  and full-time                                                               
employees.   Also,  after an  employee leaves  the employ  of the                                                               
city  he  or  she  can  choose COBRA  and  upon  retirement,  the                                                               
employee goes into the PERS  program.  Therefore, those who don't                                                               
provide insurance should be assessed, she opined.                                                                               
3:59:41 PM                                                                                                                    
REPRESENTATIVE ROKEBERG  inquired as  to how  the City  of Valdez                                                               
provides its insurance.                                                                                                         
MS. SASSE answered  that the City of Valdez  is self-insured with                                                               
stop-loss insurance.                                                                                                            
REPRESENTATIVE  ROKEBERG acknowledged  that HB  29 does  apply to                                                               
stop-loss carriers, and  therefore there would be  an increase in                                                               
the stop-loss costs.                                                                                                            
4:00:18 PM                                                                                                                    
MELODY DOUGLAS, Chief Financial  Officer, Kenai Peninsula Borough                                                               
School District, informed the committee  that the Kenai Peninsula                                                               
Borough School District has a  self-insured program.  Ms. Douglas                                                               
testified  in opposition  to HB  29.   She opined  that requiring                                                               
contributions  will discourage  entities from  establishing self-                                                               
insured programs.   Furthermore, an unintended  consequence of HB                                                               
29  may be  to  encourage  entities to  not  provide health  care                                                               
benefits at all.                                                                                                                
RICHARD  CAMPBELL,  General  Services Director,  Kenai  Peninsula                                                               
Borough, testified in opposition to HB  29 on the grounds of cost                                                               
and fairness.  Mr. Campbell  informed the committee that everyone                                                               
who  works  for the  Kenai  Peninsula  Borough is  provided  full                                                               
insurance,  no  matter how  uninsurable  in  the private  market.                                                               
Furthermore, when  folks leave the  employ of the  borough, COBRA                                                               
is  offered  at  rates  comparable to  what's  paid  for  regular                                                               
employees.   "We  not only  don't benefit  from the  existence of                                                               
this plan, I think we actually  help keep people off this type of                                                               
plan," he opined.                                                                                                               
4:02:45 PM                                                                                                                    
COLLEEN  SAVOIE,  Marsh Inc.  USA,  informed  the committee  that                                                               
Marsh  USA provides  consulting services  for a  number of  self-                                                               
funded health plans, which would be  hurt by HB 29.  Although Ms.                                                               
Savoie didn't  dispute the need  for ACHIA itself,  she specified                                                               
two  significant  problems  with  the legislation.    First,  the                                                               
proposed funding  is an unfair assessment  because it essentially                                                               
taxes employers  and other entities  that already  provide health                                                               
benefits  to   its  employees  or   members.     Echoing  earlier                                                               
testimony,  Ms. Savoie  suggested  that  the aforementioned  will                                                               
actually  discourage  employers  from providing  coverage  rather                                                               
than encourage  them to  do so.   Even if the  ACHIA tax  is paid                                                               
through a  stop-loss carrier, it will  still be passed on  to the                                                               
underlying  plan.   The  aforementioned  ultimately hurts  health                                                               
plan  participants  because  as  the  amount  of  the  assessment                                                               
increases, the health plans that  are already struggling with the                                                               
cost of  providing benefits are  going to find it  more difficult                                                               
to  continue to  provide those  benefits  to their  members.   In                                                               
fact, some  of those  employers will  drop coverage  while others                                                               
may reduce benefits or increase  employee costs.  The legislation                                                               
actually  recognizes the  aforementioned  in  that it  stipulates                                                               
that the additional  cost can't be passed on to  the employee for                                                               
participants of a State of Alaska sponsored plan.                                                                               
MR. SAVOIE said that the  second significant problem she has with                                                               
HB 29 is  that it appears to impose  a significant administrative                                                               
burden  for  those  entities  that must  comply.    For  example,                                                               
members  of self-funded  governmental plans  that have  purchased                                                               
stop-loss coverage would  be captured twice, and  it appears they                                                               
would  still  have  to comply  with  the  reporting  requirement.                                                               
Although it seems  that each individual will be  counted once for                                                               
assessment purposes, it's  unclear as to how each  person will be                                                               
counted.  Ms. Savoie concluded  by specifying that she is opposed                                                               
to  HB  29  because  it's already  difficult  and  expensive  for                                                               
employers  to   provide  health  coverage  to   their  employees.                                                               
Furthermore,  HB  29  has  the potential  to  increase  both  the                                                               
administrative and financial burden.                                                                                            
4:05:19 PM                                                                                                                    
MS.  SAVOIE, in  response to  Representative Rokeberg,  specified                                                               
that she  is concerned about  the self-funded  governmental plans                                                               
that are  considered members.  However,  for assessment purposes,                                                               
it appears that each covered  participant should only be assessed                                                               
once.     If  the  self-funded  government   purchases  stop-loss                                                               
insurance, would the  tax be paid by the stop-loss  carrier or by                                                               
the self-funded governmental plan, she  asked.  She further asked                                                               
who  would  determine  the aforementioned.    Even  after  that's                                                               
determined,   she   said   it  appears   that   the   self-funded                                                               
governmental plan  will still have  to comply with  the reporting                                                               
REPRESENTATIVE  ROKEBERG  related   his  understanding  that  Ms.                                                               
Savoie's  concern regarding  double assessment  was corrected  in                                                               
Version  I.   Representative  Rokeberg recalled  that Ms.  Savoie                                                               
indicated  that it's  unfair  to  do what's  proposed  in HB  29.                                                               
However, he pointed  out that the covered  lives under individual                                                               
and small group  plans are paying 100 percent  of the assessment,                                                               
and thus  the intention of  HB 29  is to spread  those assessment                                                               
costs throughout all people in the state with insurance.                                                                        
MR.  SAVOIE  agreed that  it's  also  unfair  for those  who  are                                                               
covered under  fully insured  plans to have  to pay  this burden.                                                               
The fundamental  problem, she  opined, is  that it  would require                                                               
employers,  whether   fully  insured  or   self-funded  providing                                                               
benefits  through stop-loss  insurance,  to pay  for benefits  of                                                               
individuals other than their covered participants.                                                                              
REPRESENTATIVE ROKEBERG interjected, "But  that's what the people                                                               
that  are  paying  the  assessment  now  are  in  that  position.                                                               
Therefore, we're just trying to spread  the risk and the cost out                                                               
over a  larger number of  people."   He estimated that  there are                                                               
some 400,000 people now paying the assessment.                                                                                  
MR. SAVOIE opined that it would  seem fairer to assess the burden                                                               
by  spreading  it   over  all  businesses  in   Alaska  or  those                                                               
businesses  that  don't  currently   provide  benefits  to  their                                                               
REPRESENTATIVE  ROKEBERG   commented  that  HB  29   attempts  to                                                               
implement a small fix in order to help everyone in the state.                                                                   
MS. SAVOIE reiterated that her  concern is that each employer who                                                               
is  attempting to  do the  right  thing by  offering health  care                                                               
coverage is [being assessed].                                                                                                   
REPRESENTATIVE ROKEBERG  reiterated that some 400,000  people are                                                               
paying  into [ACHIA],  but  he believes  some  600,000 should  be                                                               
paying to help out this [high-risk] pool.                                                                                       
4:09:26 PM                                                                                                                    
REPRESENTATIVE  CRAWFORD inquired  as  to how  the assessment  is                                                               
figured, and asked  whether the assessment is made  per person or                                                               
per a dollar amount.                                                                                                            
REPRESENTATIVE  ROKEBERG  related   his  understanding  that  the                                                               
assessment is based upon the number of covered lives.                                                                           
REPRESENTATIVE CRAWFORD  pointed out  that many of  the different                                                               
union  health plans  aren't confined  to  the state  alone.   For                                                               
example, the ironworkers' union  covers the Pacific Northwest and                                                               
thus  many  ironworkers  come  up to  Alaska  from  Portland  and                                                               
Seattle to  work and  vice versa.   In such  cases, who  would be                                                               
considered an Alaskan, he asked.                                                                                                
4:11:28 PM                                                                                                                    
REPRESENTATIVE ROKEBERG  deferred the aforementioned  question to                                                               
Ms. Campbell.                                                                                                                   
REPRESENTATIVE KOTT  returned to the public  testimony portion of                                                               
the meeting.                                                                                                                    
MATT LARKIN, Willis  of Alaska Inc., informed  the committee that                                                               
Willis  of  Alaska Inc.  represents  over  20 self-funded  health                                                               
plans that  would be  impacted by  HB 29.   Mr. Larkin  noted his                                                               
agreement with  the testimony from  Fairbanks, Valdez,  the Kenai                                                               
Borough and its  school district, as well as from  Marsh USA Inc.                                                               
Mr. Larkin highlighted that in  Alaska there are very few options                                                               
with health insurance,  which has lead to the  evolution of self-                                                               
funding in Alaska.  With regard  to an earlier comment that large                                                               
businesses  and companies  are avoiding  the assessment  by using                                                               
self-funded plans,  he didn't believe  any of Willis  of Alaska's                                                               
clients would be considered large  businesses or companies rather                                                               
they are smaller, mid-size employers.   The [proposal embodied in                                                               
HB  29]  would result  in  making  the self-funding  option  less                                                               
attractive,  more expensive,  and  more burdensome.   Mr.  Larkin                                                               
agreed with  the notion that HB  29 is basically a  tax on people                                                               
who are  already paying  for their fair  share for  the uninsured                                                               
problem.    Therefore,  imposing   a  tax  on  these  self-funded                                                               
employer plans  makes the situation  unfair.  Although  there has                                                               
been  testimony  that  another  piece  of  legislation  would  be                                                               
necessary  to  assess  the  funding  from  employers  that  don't                                                               
sponsor the plan, Mr. Larkin opined that it would be fair.                                                                      
REPRESENTATIVE ROKEBERG  commented that it  has been the  goal of                                                               
the  legislature  and  the  House  Labor  and  Commerce  Standing                                                               
Committee to lower barriers for  entry of new health underwriters                                                               
or all  insurance carriers in the  state.  He then  turned to the                                                               
issue  of  the limited  number  of  companies writing  insurance,                                                               
particularly  health   insurance,  in  Alaska.     Representative                                                               
Rokeberg asked  whether Mr. Larkin,  as an  independent insurance                                                               
broker,  would mention  the  existence  of the  ACHIA  pool to  a                                                               
health  insurance underwriter  who  is  considering entering  the                                                               
Alaska market to write individual  and small group coverage "as a                                                               
burden or cost that they would have to bear up here."                                                                           
4:16:54 PM                                                                                                                    
MR. LARKIN  answered, "I would  say they  would have to  bear it,                                                               
but  it's the  same cost  they  would have  to bear  in 49  other                                                               
states ...."   He related  his understanding that  assessing high                                                               
risk pools  on self-funded employers hasn't  been done elsewhere,                                                               
although  the State  of New  York  has something  similar.   With                                                               
regard to why there aren't  more health care providers in Alaska,                                                               
he  opined that  it has  more  to do  with the  location and  the                                                               
population as  well as  the fact that  the provider  community in                                                               
Alaska hasn't accepted managed care.                                                                                            
REPRESENTATIVE  ROKEBERG  said that  with  HB  29 he  intends  to                                                               
create  fairness by  spreading out  [the  cost of  the high  risk                                                               
pool]  further   rather  than  concentrating  on   those  in  one                                                               
MR.  LARKIN  remarked  that Representative  Rokeberg's  logic  is                                                               
drawn from the  notion that HB 29 would level  the playing field.                                                               
Currently,  the playing  field isn't  level because  the carriers                                                               
receive much  larger discounts at facilities  than do self-funded                                                               
employer plans.  He opined  that self-funded employer plans still                                                               
exist because they are able  to run their plans more efficiently.                                                               
This assessment  levied on the carriers  can be viewed as  a cost                                                               
of doing business.  Mr.  Larkin highlighted that the carriers are                                                               
making a  profit off delivering benefits  while self-funded plans                                                               
aren't in  the business of making  a profit.  Although  one might                                                               
argue that it's simply being  passed on to the smaller employers,                                                               
to the extent  that's the case the [carrier] still  has to remain                                                               
competitive because of the self-funded market in the state.                                                                     
4:18:50 PM                                                                                                                    
MR. LARKIN said, "To the  extent that we diminish the self-funded                                                               
... employer plan as an option,  we simply strengthen the hand of                                                               
the cartel ... of the health insurance carriers."                                                                               
REPRESENTATIVE ROKEBERG noted his disagreement.   He asked if Mr.                                                               
Larkin would  advise any  of his clients  with an  individual who                                                               
had separated from  service, exhausted COBRA benefits,  and had a                                                               
preexisting condition to turn to ACHIA.                                                                                         
MR.  LARKIN replied  yes,  if  there was  no  other option  after                                                               
exhausting  COBRA benefits  and  the  individual couldn't  obtain                                                               
coverage on an individual basis.   He charged that at that point,                                                               
the  fully insured  carriers would  also advise  such clients  to                                                               
turn to  ACHIA because  an individual  can't utilize  ACHIA until                                                               
being declined from two fully insured carriers.                                                                                 
4:19:59 PM                                                                                                                    
MIKE GALLAGHER, Business  Manager & Secretary/Treasurer, Laborers                                                               
International  Union of  North America  Local  341, informed  the                                                               
committee  that Local  341 represents  about 2,200  members.   He                                                               
noted that he  is also a trustee on the  Alaska Laborers Health &                                                               
Welfare plan.   Mr. Gallagher said  that he opposes HB  29, which                                                               
he  characterized as  an unfair  tax.   He pointed  out that  all                                                               
health plans  in the  state are  struggling because  of increased                                                               
costs.  This proposal will  be unfair to employers because that's                                                               
to  whom  this  will  be  passed.    Mr.  Gallagher  related  his                                                               
understanding  that  [HB  29 would]  tax  employers  who  provide                                                               
insurance  today.     However,  that  isn't   fair  because  many                                                               
employers  don't provide  any insurance  to  their employees  and                                                               
don't pay  anything.  Although  he said that he  supported ACHIA,                                                               
everyone should  pay for  it rather than  just those  who provide                                                               
insurance.    He suggested  that  those  not providing  insurance                                                               
should pay  this tax  and perhaps  an even  larger tax  than that                                                               
proposed in HB 29.                                                                                                              
REPRESENTATIVE ROKEBERG  clarified that he is  attempting to have                                                               
everyone  pay for  ACHIA.   With  regard to  the  fact that  some                                                               
states have  chosen to  fund programs such  as this  with general                                                               
fund  revenues.   If there  was a  statewide type  tax, he  would                                                               
advise the GF  to pick up the difference and  thus everyone would                                                               
pay for it.  Representative  Rokeberg informed the committee that                                                               
at least three  states do the aforementioned.  In  fact, HB 29 is                                                               
patterned after the State of Oregon's similar mechanism.                                                                        
4:22:47 PM                                                                                                                    
ROSEMARIE  KALAMARIDES,  Administrator, Alaska  Teamster-Employer                                                               
Welfare Trust, informed the committee  that there are about 8,000                                                               
covered  lives  in  the aforementioned  plan.    Ms.  Kalamarides                                                               
related  Alaska Teamster-Employer  Welfare Trust's  opposition to                                                               
HB  29 because  it will  increase  stop-loss costs.   She  echoed                                                               
earlier  testimony  that  those   employers  and  unions  already                                                               
providing insurance  are already paying  too much.   For example,                                                               
the union funds  are asking employers to  pay between $5.00-$6.00                                                               
an  hour per  employee,  which  is a  high  cost  that will  only                                                               
increase.    Ms.  Kalamarides suggested  considering  what  other                                                               
states, such as California and  Hawaii, are doing.  She explained                                                               
Hawaii's "play or pay plan"  in which [large] employers who don't                                                               
provide health  coverage pay into  a [high risk] pool,  which she                                                               
opined would be much fairer than  HB 29.  Ms. Kalamarides pointed                                                               
out  that union  contractors in  the state  are facing  increased                                                               
costs.   In fact,  in some  cases the  teamsters are  deciding to                                                               
forego wage increases in order  to fund health benefit increases.                                                               
Therefore,  they are  being asked  to pay  more.   She emphasized                                                               
that  those  employers  providing  health care  coverage  end  up                                                               
paying  for the  coverage  of  those employers  who  don't.   She                                                               
suggested  that if  those employers  who  don't provide  benefits                                                               
did, then they would be funding  this pool.  In fact, she further                                                               
suggested  that the  aforementioned would  provide a  larger pool                                                               
than under  the current  proposal.   She asked  if any  review of                                                               
such had taken place.                                                                                                           
4:25:35 PM                                                                                                                    
REPRESENTATIVE  ROKEBERG, turning  to  Ms. Kalamarides'  question                                                               
regarding the mechanisms  of other states, said  that such hasn't                                                               
been reviewed and is worthy of review.                                                                                          
4:27:25 PM                                                                                                                    
JOHN  GEORGE, Lobbyist,  American Family  Life Assurance  Company                                                               
(AFLAC),   commended  Representative   Rokeberg  for   trying  to                                                               
[develop] a  solution.  He  said that although  HB 29 may  not be                                                               
the only solution or the  perfect solution, it would certainly be                                                               
an advance over  the current situation.  Mr.  George informed the                                                               
committee that  AFLAC only writes  a few policies in  Alaska that                                                               
qualify as health  insurance, but the company is  required to pay                                                               
an  assessment based  on  the  entire premium  it  writes in  the                                                               
state.  Therefore, AFLAC's health  policy premium is about $7,500                                                               
and   its   assessment   amounts   to   about   $88,000.      The                                                               
aforementioned,  per   AFLAC's  opinion,   doesn't  seem   to  be                                                               
appropriate.   Mr. George related  that the basic concept  of the                                                               
sponsor is  to spread the costs  [of the high risk  pool] among a                                                               
larger group.  He mentioned  that [ACHIA] isn't a welfare program                                                               
but rather a  social program and thus it's  appropriate to spread                                                               
the cost  through a  larger group.   As  has been  related, these                                                               
people are paying 150 percent of  the premium of a regular health                                                               
insurance  policy.    Although [ACHIA  provides]  a  subsidy,  it                                                               
certainly isn't  welfare because the  individual is doing  his or                                                               
her part as well.                                                                                                               
4:30:07 PM                                                                                                                    
MR. GEORGE opined  that health insurance is expensive  and no one                                                               
wants to pay more.  However,  everyone who has a health insurance                                                               
policy is already  paying more, and had no choice  in the matter.                                                               
He further opined  that those folks are being  assessed more than                                                               
their fair share.  With regard  to the notion that HB 29 proposes                                                               
an unfunded mandate,  he agreed because no one wants  to fund it.                                                               
In  fact, he  didn't believe,  when  placed on  the ballot,  that                                                               
voters would  support paying for  it.    Mr. George  then pointed                                                               
out  that  people  who  buy health  insurance  policies  from  an                                                               
insurance carrier already  pay a premium tax, which  is passed on                                                               
to   the  policyholder.     However,   self-insured  unions   and                                                               
municipalities  don't pay  a premium  tax.   With  regard to  the                                                               
savings that self-insured entities  show, he attributed those, in                                                               
part, to the fact that they  aren't subject to the regulations or                                                               
the 2.7 percent premium tax to which insurers are subject.                                                                      
4:32:03 PM                                                                                                                    
REPRESENTATIVE  GUTTENBERG related  his belief  that most  of the                                                               
people [in  the high  risk pool] will  come from  [entities] that                                                               
don't offer health insurance.   The [ACHIA plan] subsidizes those                                                               
who don't want to offer health  insurance to their employees.  He                                                               
pointed out that those with  health insurance are paying not once                                                               
but  twice  for  these  uninsured  individuals.    Representative                                                               
Guttenberg said  that he  didn't know  why the  legislature isn't                                                               
addressing those companies that don't offer health insurance.                                                                   
MR.  GEORGE acknowledged  that the  aforementioned is  a possible                                                               
solution,  and  if  such legislation  were  introduced  it  would                                                               
provide something else to talk about.                                                                                           
4:34:24 PM                                                                                                                    
REPRESENTATIVE   ROKEBERG  refuted   Representative  Guttenberg's                                                               
statement  that   the  problem   is  with  those   [employees  of                                                               
employers]  who  aren't paying  for  health  insurance who  enter                                                               
ACHIA.   Representative Rokeberg pointed  out that ACHIA  is only                                                               
provided  for  those who  will  pay  for  the high  premium,  and                                                               
furthermore these individuals have  to have been refused coverage                                                               
from two carriers.  He  emphasized that [ACHIA] covers people who                                                               
want to pay, but can't  obtain coverage.  Representative Rokeberg                                                               
clarified that  HB 29 is not  intended to reform the  health care                                                               
insurance system in the state or country.                                                                                       
REPRESENTATIVE  GUTTENBERG informed  the  committee  that in  his                                                               
union  and other  trade unions  there  is no  exemption for  high                                                               
risk,  rather  the  employee  joins   [the  union]  and  receives                                                               
coverage.   However, other employers  [won't] employ  a high-risk                                                               
REPRESENTATIVE   ROKEBERG   interjected    that   the   high-risk                                                               
individual then can seek coverage from ACHIA.                                                                                   
REPRESENTATIVE CRAWFORD posed a  situation in which an individual                                                               
had  a  condition that  kept  him  or  her from  getting  private                                                               
insurance.   However, it would  seem that individual,  if working                                                               
for McDonald's, would  be insurable.   He asked  if that would be                                                               
4:37:41 PM                                                                                                                    
REPRESENTATIVE ROKEBERG  reminded the committee that  in order to                                                               
participate in ACHIA one must be  able to pay the higher premium.                                                               
Therefore,  ACHIA isn't  necessarily for  individuals with  lower                                                               
income  or  employees  of   small  businesses  without  insurance                                                               
coverage, except  that those people  could afford to  purchase an                                                               
individual policy.   He pointed  out that the pool  actually pays                                                               
for the  difference between the  premium the individual  pays and                                                               
the actual cost, which is substantial.                                                                                          
4:38:35 PM                                                                                                                    
MR.  LARKIN interjected  that  frequently  individuals with  high                                                               
medical claims don't  have to pay the cost for  ACHIA because the                                                               
treating physician  understands that the individual  doesn't have                                                               
insurance,   and  therefore   will  pay   the  premium   for  the                                                               
individual.  In  other words, the individual's  medical bills are                                                               
so  high that  the  cost  for the  [ACHIA]  premium is  miniscule                                                               
compared to  the individual's  need for  treatment, and  thus the                                                               
provider will cover  that.  The provider  does the aforementioned                                                               
for COBRA premiums as well.                                                                                                     
4:39:34 PM                                                                                                                    
MR. GEORGE pointed  out that there are a lot  of small businesses                                                               
that can't afford  to pay for health insurance  for the employees                                                               
for which  they can barely  pay.   He suggested that  any further                                                               
burden on these  small businesses could put them  out of business                                                               
and result  in more  unemployment.   Furthermore, he  wasn't sure                                                               
that there are enough large employers to assess.                                                                                
REPRESENTATIVE ROKEBERG  related his  understanding that  a small                                                               
business that can  afford to have health insurance  is paying the                                                               
ACHIA assessment through its underwriters,  while the large self-                                                               
insureds,  such  as  BP, ConocoPhillips  Alaska,  Inc.,  and  the                                                               
Teamsters  Union, aren't  [paying  the  ACHIA assessment  through                                                               
their underwriters].                                                                                                            
MR. GEORGE agreed, adding that  individuals who need the coverage                                                               
but whose employer  can't afford it, leave the  individual to pay                                                               
for it out of his or her own pocket.                                                                                            
4:41:16 PM                                                                                                                    
KATIE  CAMPBELL,  Life/Health  Actuary,  Division  of  Insurance,                                                               
Department  of   Commerce,  Community,  &   Economic  Development                                                               
(DCCED),  turned to  Representative  Crawford's earlier  question                                                               
regarding how  this proposal would  work if there  were employers                                                               
in another state  that employed Alaskan workers.   She likened it                                                               
to the situation that the  insurance company has when insuring an                                                               
out-of-state  employer with  a number  of Alaska  employees.   In                                                               
such  a case,  the [employer]  is  only assessed  for the  Alaska                                                               
employees not  for all  the employees  in the  plan.   In further                                                               
response  to Representative  Crawford, she  said that  she didn't                                                               
know  of an  exact  formula  to determine  which  employee is  an                                                               
Alaskan, but  she said that  where the employee considers  his or                                                               
her primary residence would be  reviewed.  Ms. Campbell clarified                                                               
that  this  legislation doesn't  apply  to  self-funded or  self-                                                               
insured plans [nor]  the large nongovernmental union  plans.  She                                                               
further  clarified  that  Version  I  merely  assesses  stop-loss                                                               
insurers  and insurance  companies.   If  the stop-loss  insurers                                                               
pass that  on to  the employers, then  that's how  [the employer]                                                               
would end up paying a share.                                                                                                    
4:43:36 PM                                                                                                                    
REPRESENTATIVE CRAWFORD  specified that  the concern was  that if                                                               
[a company]  had stop-loss insurance,  then it would  be required                                                               
to pay  [the assessment].   When one  refers to "very  large", he                                                               
said he wasn't  sure what that meant.  He  informed the committee                                                               
that  altogether,  the  Pacific Union  Ironworkers  number  about                                                               
3,000 of which  less than 300 reside in Alaska.   The two options                                                               
[the  Pacific  Union Ironworkers]  have  discussed  have been  to                                                               
either  eliminate   the  stop-loss   insurance  or   drop  Alaska                                                               
ironworkers from the Pacific  Northwest.  Representative Crawford                                                               
then  recalled Mr.  George's testimony  which related  that AFLAC                                                               
was  assessed $88,0000  with  premiums of  $7,500.   However,  he                                                               
opined that the premiums were actually $7.5 million.                                                                            
MS.  CAMPBELL  then explained  that  AFLAC  writes a  substantial                                                               
amount of other types of  business besides medical.  For example,                                                               
AFLAC  writes  disease-specific  policies  and  those  are  being                                                               
assessed  as if  they  were a  medical policy.    With regard  to                                                               
Representative  Crawford's correction,  Ms. Campbell  related her                                                               
understanding that Mr.  George was saying that  AFLAC has $7,500,                                                               
for example, of major medical  premium and that qualifies them as                                                               
a member.   However, under the current assessment  formula and no                                                               
matter what  kind of health  insurance type business  they write,                                                               
AFLAC is assessed on everything - not just the $7,500.                                                                          
4:46:39 PM                                                                                                                    
REPRESENTATIVE CRAWFORD  expressed curiosity  with regard  to how                                                               
this  would work  if the  ironworkers were  going to  be assessed                                                               
$88,000 and the cost spread among 150 ironworkers.                                                                              
REPRESENTATIVE ROKEBERG  deferred to Ms. Campbell  and asked that                                                               
she address  the range of  cost per  covered life and  what would                                                               
constitute an ERISA-exempt organization.                                                                                        
MS.  CAMPBELL  related  her  understanding   that  no  state  can                                                               
regulate  self-funded employer  plans and  union plans  under the                                                               
Taft Hartley Act.   The state can regulate  it's own governmental                                                               
plans.   She specified  that the state  can't regulate  union and                                                               
self-funded single  large employer  type plans,  such as  that of                                                               
REPRESENTATIVE ROKEBERG commented that  some of the entities "we"                                                               
are trying to get  to, we can't get to; and  the labor unions are                                                               
probably exempt under ERISA.                                                                                                    
MS. CAMPBELL  agreed that [the  state] cannot regulate  or assess                                                               
the union  plans, only  the stop-loss  carriers can  be assessed.                                                               
Therefore, to the extent that  the union plans purchase stop-loss                                                               
insurance, the state can regulate  stop-loss insurance and assess                                                               
stop-loss  carriers.    In  further  response  to  Representative                                                               
Rokeberg, Ms. Campbell confirmed  that the aforementioned is true                                                               
even for nongovernmental union organizations.                                                                                   
4:49:03 PM                                                                                                                    
MS. CAMPBELL,  in regard to  the range of incidence,  pointed out                                                               
that she  has an  analysis illustrating the  impact on  the stop-                                                               
loss carriers.   The assessment of the  stop-loss carriers, under                                                               
Version  I  with the  amendment  not  including State  of  Alaska                                                               
retirees, as  a percentage  of premium  being paid  for stop-loss                                                               
coverage would be about 4.5.                                                                                                    
4:50:02 PM                                                                                                                    
MS.  CAMPBELL, in  further response  to Representative  Rokeberg,                                                               
informed the  committee that all  of the stop-loss  insurers that                                                               
have  reported on  the [division's]  survey would  be assessed  a                                                               
total of  about $1.9 million  for all of the  stop-loss insurers.                                                               
The  aforementioned represents  about  4.5  percent of  stop-loss                                                               
premiums.  Ms.  Campbell related that the  stop-loss insurers are                                                               
paying  in assessment  is  about 1.2  percent  of their  premium.                                                               
Therefore, HB  29 would  result in  an increase  to approximately                                                               
4.5 percent of premium.                                                                                                         
REPRESENTATIVE  ROKEBERG asked  if the  division tried  to relate                                                               
this  to  an   individual  covered  life  cost  in   any  of  the                                                               
categories.  He  recalled that about three years ago  there was a                                                               
similar bill for  which he recalled [the  individual covered life                                                               
cost] was about $0.96.                                                                                                          
REPRESENTATIVE CRAWFORD  surmised then that [an  entity] can look                                                               
at its current  stop-loss cost and take 3.5  percent, which would                                                               
be the additional [cost] under HB 29.                                                                                           
MS.  CAMPBELL   clarified  that  the  stop-loss   premiums  would                                                               
increase by about 3.5 percent  of an entity's current total cost.                                                               
In regard  to Representative  Rokeberg's question  [regarding the                                                               
individual covered  life cost],  Ms. Campbell  said that  a rough                                                               
calculation specifies  that it would  be about $1.60 a  month per                                                               
covered person for those plans with stop-loss coverage.                                                                         
REPRESENTATIVE ROKEBERG  expressed interest in honing  in on that                                                               
information because it  may put things into  perspective for some                                                               
4:52:55 PM                                                                                                                    
REPRESENTATIVE  ROKEBERG  referred  to  page 5  of  the  document                                                               
entitled,  "HB  29 Analysis  of  Change  in Assessment  Formula".                                                               
The document relates  that Premera Blue Cross  has 83,000 covered                                                               
lives with a current share of  62.01 percent and a current amount                                                               
assessed at  $3,100,000.  If HB  29 were to pass,  the assessment                                                               
for  Premera Blue  Cross would  drop to  32.8 [percent]  or about                                                               
$1.5 million.   Therefore,  there is  a potentiality  of lowering                                                               
the cost  to those in  that category by  spreading the cost.   He                                                               
then asked if the aforementioned would be a correct assessment.                                                                 
[MS. CAMPBELL] indicated that it would be correct.                                                                              
REPRESENTATIVE  ROKEBERG asked  if, before  the union  trusts and                                                               
the state employees  stepped out, the state was  paying in excess                                                               
of $400,000 into ACHIA.                                                                                                         
MS.  CAMPBELL recalled  that  in  1997 [ACHIA]  had  about a  $30                                                               
million premium base.   Although she couldn't  remember the exact                                                               
portion of  the assessment, she said  she believes Representative                                                               
Rokeberg is correct.                                                                                                            
REPRESENTATIVE ROKEBERG  clarified that  the whole  state [became                                                               
self-insured] and  even the  noncovereds became  self-insured and                                                               
moved  out from  under  the  ACHIA assessment.    He related  his                                                               
understanding that under HB 29 the  fiscal note to the state will                                                               
be in the amount of $277,000.                                                                                                   
4:54:57 PM                                                                                                                    
MS. CAMPBELL agreed that would be the approximate cost.                                                                         
REPRESENTATIVE ROKEBERG  said that although one  can characterize                                                               
HB 29 as a  tax, it's a tax on a greater number  of people.  "But                                                               
we do have  a provision in here that any  makeup you can't charge                                                               
it back to the [state] employee, is that correct," he asked.                                                                    
4:55:23 PM                                                                                                                    
MS. CAMPBELL agreed, specifying that  it was the AS 39 provisions                                                               
in HB 29.                                                                                                                       
REPRESENTATIVE   ROKEBERG  stated   that  HB   29  is   important                                                               
legislation,  although it  may  not  be the  entire  answer.   He                                                               
expressed  interest   in  hearing  from  small   governments  and                                                               
organized labor with regard to  suggestions to solve this growing                                                               
dilemma.  He noted his agreement  with the notion that there is a                                                               
major problem in  this country with increasing  health care costs                                                               
and  the cost  of insurance.   Representative  Rokeberg requested                                                               
that Ms.  Campbell explain  the terms  of the  HIPAA requirements                                                               
and the state's alternative.                                                                                                    
4:56:35 PM                                                                                                                    
MS. CAMPBELL  informed the committee  that in 1996  the president                                                               
signed  the law  requiring portability  of health  coverage among                                                               
employers and established guarantee  issue requirements.  The law                                                               
requirement  means   that  coverage  had  to   be  guaranteed  to                                                               
employees  who  left employment  [no  matter]  the reason.    The                                                               
qualified  high risk  pool  was  one of  the  mechanism that  the                                                               
federal government allowed  states to use.   She highlighted that                                                               
anyone  who comes  into  the  state's pool  is  guaranteed to  be                                                               
accepted  and doesn't  have to  sit out  any type  of preexisting                                                               
condition  waiting  period.    If the  state  hadn't  adopted  an                                                               
alternative  mechanism, the  insurance carriers  would've had  to                                                               
offer  different individual  plans that  would have  to guarantee                                                               
REPRESENTATIVE ROKEBERG  opined that with the  guaranteed benefit                                                               
option people  wouldn't have  to have  insurance until  they were                                                               
sick, and then they could run out and purchase insurance.                                                                       
4:58:51 PM                                                                                                                    
MS.  CAMPBELL  said  that  there  have  been  attempts  to  place                                                               
constraints  around that.   The  insurance companies  were having                                                               
problems writing  in this  [high risk]  market because  if people                                                               
with health conditions could always  be guaranteed coverage, then                                                               
they  could  wait  until  a condition  arose  and  then  purchase                                                               
REPRESENTATIVE ROKEBERG interjected  that then insurance wouldn't                                                               
work because  there wouldn't be  any monies  to pay for  it until                                                               
there  was   an  incident  for  which   coverage  was  necessary.                                                               
Therefore, by  default the state  has a  high risk pool  to offer                                                               
when there is no other viable tool.                                                                                             
4:59:36 PM                                                                                                                    
LINDA  HALL,  Director,  Division  of  Insurance,  Department  of                                                               
Commerce,  Community, &  Economic Development  (DCCED), commented                                                               
that  she supports  Representative  Rokeberg's  plan because  the                                                               
ACHIA plan is  critically important to consumers  who need health                                                               
coverage.  She then commended  Ms. Campbell for her diligent work                                                               
with applications  for federal grants.   In fact, last  year [the                                                               
division] was  awarded in excess  of $500,000 in a  federal grant                                                               
that was applied  toward funding the ACHIA plan.   Therefore, the                                                               
division is  also looking for  other ways  to bring in  funds for                                                               
5:00:46 PM                                                                                                                    
REPRESENTATIVE KOTT announced that HB 29 would be held over.                                                                    

Document Name Date/Time Subjects