Legislature(2013 - 2014)BARNES 124

04/08/2013 03:15 PM LABOR & COMMERCE


Download Mp3. <- Right click and save file as

Audio Topic
03:17:24 PM Start
03:17:40 PM HB196
04:59:18 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
*+ HB 149 WORKERS' COMP FOR STATE FIREFIGHTERS TELECONFERENCED
Scheduled But Not Heard
*+ HB 96 CHEMICALS IN CHILDREN'S PRODUCTS TELECONFERENCED
Scheduled But Not Heard
+= HB 196 SCHOOL DISTRICT EMPLOYEE HEALTH INSURANCE TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
                    ALASKA STATE LEGISLATURE                                                                                  
          HOUSE LABOR AND COMMERCE STANDING COMMITTEE                                                                         
                         April 8, 2013                                                                                          
                           3:17 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Kurt Olson, Chair                                                                                                
Representative Lora Reinbold, Vice Chair                                                                                        
Representative Mike Chenault                                                                                                    
Representative Bob Herron                                                                                                       
Representative Charisse Millett                                                                                                 
Representative Dan Saddler                                                                                                      
Representative Andy Josephson                                                                                                   
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
All members present                                                                                                             
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
HOUSE BILL NO. 196                                                                                                              
"An Act relating to group insurance coverage and self-insurance                                                                 
coverage for school district employees; and providing for an                                                                    
effective date."                                                                                                                
                                                                                                                                
     - HEARD & HELD                                                                                                             
                                                                                                                                
HOUSE BILL NO. 96                                                                                                               
"An Act relating to chemicals of high concern and to chemicals                                                                  
in children's products; and adding an unlawful act to the Alaska                                                                
Unfair Trade Practices and Consumer Protection Act."                                                                            
                                                                                                                                
     - SCHEDULED BUT NOT HEARD                                                                                                  
                                                                                                                                
HOUSE BILL NO. 149                                                                                                              
"An Act making firefighters employed by the state eligible for                                                                  
the presumption of coverage under workers' compensation for                                                                     
disability due to certain diseases."                                                                                            
                                                                                                                                
     - SCHEDULED BUT NOT HEARD                                                                                                  
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: HB 196                                                                                                                  
SHORT TITLE: SCHOOL DISTRICT EMPLOYEE HEALTH INSURANCE                                                                          
SPONSOR(s): EDUCATION                                                                                                           
                                                                                                                                
04/02/13       (H)       READ THE FIRST TIME - REFERRALS                                                                        
04/02/13       (H)       EDC, L&C                                                                                               
04/05/13       (H)       EDC REFERRAL REMOVED                                                                                   
04/05/13       (H)       FIN REFERRAL ADDED AFTER L&C                                                                           
04/05/13       (H)       BILL REPRINTED 4/5/13                                                                                  
04/05/13       (H)       EDC AT 8:00 AM CAPITOL 106                                                                             
04/05/13       (H)       <Bill Hearing Canceled>                                                                                
04/06/13       (H)       L&C AT 3:15 PM BARNES 124                                                                              
04/06/13       (H)       Heard & Held                                                                                           
04/06/13       (H)       MINUTE(L&C)                                                                                            
04/08/13       (H)       L&C AT 3:15 PM BARNES 124                                                                              
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
DEBI HANSEN, Administrator                                                                                                      
Public Employees Local 71 Trust Fund                                                                                            
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified in opposition to HB 196.                                                                       
                                                                                                                                
DENNIS MOEN, Business Manager; Trust Chair                                                                                      
Public Employees Local 71                                                                                                       
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified during the discussion of HB 196.                                                               
                                                                                                                                
MIKE ABBOTT, Assistant Superintendent of Support Services;                                                                      
Chief Executive Officer (CEO)                                                                                                   
Anchorage School District (ASD)                                                                                                 
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified in support of HB 196.                                                                          
                                                                                                                                
ANDY HOLLEMAN, President                                                                                                        
Anchorage Education Association (AEA)                                                                                           
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified during the discussion of HB 196.                                                               
                                                                                                                                
RHONDA KITTER, Chief Financial Officer (CFO)                                                                                    
NEA-Alaska Health Plan                                                                                                          
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified in opposition to HB 196.                                                                       
                                                                                                                                
LADAWN DRUCE, Vice President                                                                                                    
NEA-Alaska                                                                                                                      
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified during the discussion of HB 196.                                                               
                                                                                                                                
CARL ROSE, Executive Director                                                                                                   
Alaska Association of School Boards (AASB)                                                                                      
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified in support of HB 196.                                                                          
                                                                                                                                
BRUCE JOHNSON, Executive Director                                                                                               
Alaska Council of School Administrators (ACSA)                                                                                  
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified during the discussion of HB 196.                                                               
                                                                                                                                
MIKE BARNHILL, Deputy Commissioner                                                                                              
Office of the Commissioner                                                                                                      
Department of Administration (DOA)                                                                                              
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified during the discussion of HB 196.                                                               
                                                                                                                                
BECKY HULTBERG, Commissioner                                                                                                    
Department of Administration (DOA)                                                                                              
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified and answered questions during the                                                              
discussion of HB 196.                                                                                                           
                                                                                                                                
RICH RHODES, Superintendent                                                                                                     
Wrangell Public School District (WPSD)                                                                                          
Wrangell, Alaska                                                                                                                
POSITION STATEMENT:  Testified in support of HB 196.                                                                          
                                                                                                                                
DAVID BOYLE                                                                                                                     
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified during the discussion of HB 196.                                                               
                                                                                                                                
REPRESENTATIVE LYNN GATTIS                                                                                                      
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified on behalf of the House Education                                                               
Committee, sponsor of HB 196, which she chairs.                                                                                 
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
3:17:24 PM                                                                                                                    
                                                                                                                                
CHAIR KURT  OLSON called  the House  Labor and  Commerce Standing                                                             
Committee  meeting  to  order  at   3:17  p.m.    Representatives                                                               
Reinbold, Herron,  Saddler, Josephson, and Olson  were present at                                                               
the call to order.   Representatives Chenault and Millett arrived                                                               
as the meeting was in progress.                                                                                                 
                                                                                                                                
        HB 196-SCHOOL DISTRICT EMPLOYEE HEALTH INSURANCE                                                                    
                                                                                                                                
3:17:40 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON announced that the only order of business would be                                                                  
HOUSE BILL NO. 196, "An  Act relating to group insurance coverage                                                               
and self-insurance  coverage for  school district  employees; and                                                               
providing for an effective date."                                                                                               
                                                                                                                                
3:18:10 PM                                                                                                                    
                                                                                                                                
DEBI  HANSEN,  Trust  Administrator, Public  Employees  Local  71                                                               
Trust Fund (Local  71 Trust), testified in opposition  to HB 196.                                                               
She stated  that Local  71 represents a  group of  350 custodians                                                               
who  enjoy a  really  good health  benefit plan.    The Local  71                                                               
benefits coverage  includes an 80:20 medical  benefits plan, plus                                                               
good  dental, vision,  and  prescription  benefits, including  an                                                               
option for  members to select  a generic  plan.  She  offered her                                                               
belief that this group is  affiliated with a good union coalition                                                               
which   gives  its   members  a   wonderful  preferred   provider                                                               
organization (PPO).   One  of the main  reasons to  speak against                                                               
this bill is that currently  Local 71 Trust Fund provides medical                                                               
care flexibility.   In fact, Local 71 has been  able to customize                                                               
the health  care coverage for  its membership to  meet individual                                                               
member needs.   The Local  71 Trust Fund  provides cost-effective                                                               
choices and its members provide  input to help tailor their plan.                                                               
For  example, the  Local 71  Trust Fund  offers a  cafeteria plan                                                               
that allows the  members to choose from three  different plans so                                                               
they  are not  over insured.   Additionally,  the trust  offers a                                                               
members' only  plan.  She  offered her  belief that the  Local 71                                                               
Trust  Fund's staff  provides excellent  customer service  to its                                                               
members.  She pointed out that  English is not the first language                                                               
for  some  of the  custodians,  but  she  works hard  to  explain                                                               
benefits and  assist them in  making choices that work  for their                                                               
families.   She mentioned  that she also  works with  vendors and                                                               
explains details so  members understand their claims.   Rarely do                                                               
callers get an  answering machine, plus their  needs are promptly                                                               
addressed, she  said.  She concluded  that she would hate  to see                                                               
these  benefits disrupted  and  did  not see  any  reason to  fix                                                               
something that is not broken.                                                                                                   
                                                                                                                                
3:21:29 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE REINBOLD asked whether  the Local 71 membership is                                                               
comprised of 350 employees.                                                                                                     
                                                                                                                                
MS.  HANSEN, in  response to  Representative Reinbold,  confirmed                                                               
that  the  Local 71  Trust  Fund  represents  a little  over  350                                                               
employees.   In further response to  Representative Reinbold, Ms.                                                               
Hansen stated  that the state  contributes $1,297 per  member per                                                               
month for  health care insurance, but  she said she did  not have                                                               
the total cost of the plan.                                                                                                     
                                                                                                                                
3:22:22 PM                                                                                                                    
                                                                                                                                
DENNIS  MOEN, Business  Manager;  Trust  Chair, Public  Employees                                                               
Local  71,  said  he understood  the  smaller  school  districts'                                                               
dilemma.   He stated  that the Public  Employee's Local  71 Trust                                                               
Fund  (Local 71  Trust  Fund)  does pool  for  economy of  scale;                                                               
however, he  cautioned against placing  everyone in  one mandated                                                               
health  care group,  which  he said  is not  the  solution.   The                                                               
Public  Employees  Local 71  Trust  Fund  works hard  to  provide                                                               
quality  health  care  and  personalized  support  for  350  plus                                                               
Anchorage  School  District (ASD)  employees.    He compared  the                                                               
Local  71  Trust Fund's  health  cost  to  the state's  plan  and                                                               
concluded that  switching plans would cost  the ASD approximately                                                               
$400,000  per  year, plus  employees  would  spend an  additional                                                               
$1,068 for  the full family plan.   In addition to  cost savings,                                                               
this organization  provides a personal  connection to a  group of                                                               
people  whose  first language  is  not  English.   The  employees                                                               
appreciate being able to talk to  Ms. Hansen, he said.  The Local                                                               
71 Trust Fund  provides quality care at a  reasonable price since                                                               
the  trust serves  70,000  Alaskans through  a  health care  cost                                                               
management cooperative.  The Local  71 Trust Fund currently has a                                                               
preferred  provider  with  Alaska  Regional  Hospital,  offers  a                                                               
cafeteria  plan, and  health care  options are  tailored to  meet                                                               
individual  needs.   The group  participates in  health fairs  in                                                               
multiple   locations  across   the  state   and  recently   added                                                               
acupuncture as  a treatment.   Further, three  critical incidents                                                               
happened  recently and  the trust  provided  grief counselors  to                                                               
help  members.   Certainly,  challenges  exist.   Perhaps  school                                                               
districts with  4,500 or  more students  should manage  their own                                                               
health  care or  elect to  have the  Local 71  Trust Fund  manage                                                               
their health  care.  Smaller  school districts could opt  for the                                                               
state  plan.    In  doing  so, members  would  receive  the  best                                                               
coverage  at an  agreed to  price with  health care  options that                                                               
work best for  its members.  He  said that one size  does not fit                                                               
all and moving  to a mandate is not a  good economic or practical                                                               
solution for  the Public Employee's  Local 71 Trust Fund  for the                                                               
Anchorage School District.                                                                                                      
                                                                                                                                
CHAIR OLSON  remarked that the  committee is trying  to determine                                                               
what  savings  would  or  would   not  be  enjoyed,  as  well  as                                                               
considering plan designs.                                                                                                       
                                                                                                                                
3:25:50 PM                                                                                                                    
                                                                                                                                
MIKE ABBOTT, Assistant Superintendent  of Support Services; Chief                                                               
Executive Officer (CEO), Anchorage  School District (ASD), stated                                                               
the ASD  strongly supports  efforts to  reduce health  care costs                                                               
for  employees.   He said  significant challenges  exist for  the                                                               
school district  to afford  the current costs.   In  fact, health                                                               
care cost increases  represent the most significant  risk the ASD                                                               
currently faces.   The ASD  is very pleased that  the legislature                                                               
and the  administration is willing  to consider  opportunities to                                                               
reduce costs -  if not the real  cost, the rate of  growth of the                                                               
health  care costs.   The  ASD has  worked consistently  over the                                                               
past 25  years with its  employees to develop  financially sound,                                                               
reasonably  priced health  insurance  programs.   These  programs                                                               
provide  good value  at  a  lower than  average  cost for  public                                                               
employers in  the state.   The  ASD believes  that any  change in                                                               
state  law should  ensure that  all participants  realize savings                                                               
through consolidation  and allow for  participants to opt  out or                                                               
be held harmless in the event  a larger program proves to be more                                                               
expensive.  He said he appreciates the committee's interest.                                                                    
                                                                                                                                
3:27:48 PM                                                                                                                    
                                                                                                                                
ANDY HOLLEMAN, President,  Anchorage Education Association (AEA),                                                               
said  that  AEA  represents  approximately  3,500  members.    He                                                               
expressed substantial concern  about HB 196.   He then encouraged                                                               
the  committee to  recognize the  gravity of  both the  amount of                                                               
money involved and the trust  of thousands of Alaskans who depend                                                               
on the details of their health  care coverage.  He said, "There's                                                               
no way to put  this message for my members than  to say, 'This is                                                               
a  really,  really  big,  big,  deal.'"   Even  if  changes  were                                                               
carefully  made  over  time,  it  will  still  create  a  lot  of                                                               
uncertainty,  angst, and  disruption for  many of  AEA's members.                                                               
Certainly, it might  make sense to make these  changes.  However,                                                               
if  health  care  insurance changes  are  made  suddenly  without                                                               
planning,  without  consideration  of the  details,  and  without                                                               
assurance  that  real  savings will  occur,  he  anticipated  the                                                               
backlash would  be negative.   He  acknowledged that  health care                                                               
coverage is costly  and he thinks it is reasonable  for the state                                                               
to provide  benefits at a reduced  cost, but it doesn't  mean the                                                               
process is  simple.   Health care options  and coverage  is never                                                               
easy, he  said.  He urged  the committee to move  forward on this                                                               
bill in a manner that shows  respect, wisdom, and concern for the                                                               
employees, which he  opined could not happen in  the closing days                                                               
of the  legislative session while  there are still  several other                                                               
major issues  to decide.  The  AEA believes the current  plans in                                                               
Anchorage are  competitive in cost and  provide superior benefits                                                               
to  the plans  other  agencies  or the  state  offer.   He  asked                                                               
members to hold  the bill and obtain real numbers  about cost and                                                               
coverage in  order to  have an accurate  comparison.   He further                                                               
asked  the committee  to consider  the possibilities  of multiple                                                               
offerings  to different  agencies and  employees and  include the                                                               
AEA in the  process.  He said, "Please don't  rush this, which my                                                               
understanding is it  starts out with a $100 million  ask in order                                                               
to make it happen."                                                                                                             
                                                                                                                                
3:30:08 PM                                                                                                                    
                                                                                                                                
CHAIR  OLSON asked  for  the monthly  health  insurance cost  per                                                               
month per employee.                                                                                                             
                                                                                                                                
MR. HOLLEMAN deferred to Mr.  Abbott for more definitive figures,                                                               
but offered  his belief that  the ASD  pays $1,250 per  month per                                                               
member, plus members also contribute  some out of pocket costs to                                                               
additional benefits beyond what the district provides.                                                                          
                                                                                                                                
MR. ABBOTT  reported the ASD's  contribution is $1,385  per month                                                               
per member, plus a significant employee contribution.                                                                           
                                                                                                                                
CHAIR OLSON asked whether the amount varies by bargaining unit.                                                                 
                                                                                                                                
MR. ABBOTT  replied that Anchorage has  eight separate bargaining                                                               
units, including Local 71, which  represents about 350 employees,                                                               
with an  employer contribution of  $1,235 per month.  He reported                                                               
the  AEA contribution  is $1,385  per  month, which  is also  the                                                               
contribution for the ASD's self-insurance program.                                                                              
                                                                                                                                
MR. HOLLEMAN  answered that the ASD's  responsibilities begin and                                                               
end  with the  employer's contribution  for member's  health care                                                               
premiums and  while he did not  want to trivialize this,  the ASD                                                               
does not have  any liability beyond that regardless  of any costs                                                               
incurred.  In response to  a question, Mr. Holleman answered that                                                               
AEA members contribute $150 per month or approximately $1,200-                                                                  
$1,300 per year for their health insurance plan.                                                                                
                                                                                                                                
MR.   ABBOTT   verified    the   employees'   contributions   are                                                               
approximately $100  per month or  approximately $1,200  per year.                                                               
He also pointed out teachers don't all work a 12-month schedule.                                                                
                                                                                                                                
REPRESENTATIVE SADDLER asked what the additional fees cover.                                                                    
                                                                                                                                
MR. ABBOTT replied  that the primary difference  between the NEA-                                                               
Alaska Plan Trust versus the  ASD's self-insurance program is the                                                               
level  of  the  deductibles.   The  NEA-Alaska  Health  plan  has                                                               
significantly lower deductibles, he said.                                                                                       
                                                                                                                                
3:34:03 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SADDLER asked  for clarification  that the  extra                                                               
$100 per month would reduce the amount of the deductible.                                                                       
                                                                                                                                
MR. ABBOTT responded  that the AEA sets its own  pricing with the                                                               
deductible being the most obvious  difference, although there are                                                               
likely many other differences.                                                                                                  
                                                                                                                                
MR. HOLLEMAN  answered that the AEA  does not have a  set benefit                                                               
for  the additional  contribution  amount since  all AEA  members                                                               
contribute.   The total cost  to the  plan exceeds what  could be                                                               
provided from  the bargained contribution  amount.   The employee                                                               
contribution  is added  in to  provide the  type of  coverage the                                                               
member wants.                                                                                                                   
                                                                                                                                
3:34:52 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SADDLER asked  whether  the additional  $100-$150                                                               
would buy supplemental insurance.                                                                                               
                                                                                                                                
MR.   ABBOTT  stated   that  basically   the  AEA's   premium  is                                                               
approximately  10 percent  more  expensive than  the ASD's  self-                                                               
insurance  program so  employees obtain  a different  plan.   The                                                               
plans  do not  layer  on top  of one  another;  instead, the  ASD                                                               
contributes  a monthly  dollar amount  of  $1,385, teachers  make                                                               
their  individual contributions  of $100,  arriving at  the total                                                               
plan cost  of $1,485.   As a result  the AEA builds  and provides                                                               
certain benefits, he said.                                                                                                      
                                                                                                                                
3:35:52 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE MILLETT asked  again for the per  teacher cost for                                                               
the plan.                                                                                                                       
                                                                                                                                
MR. HOLLEMAN  answered the health insurance  premium monthly cost                                                               
is $1,385 plus $100 per member per  month or $1,485 in total.  In                                                               
further response, Mr.  Holleman answered that the  total cost for                                                               
a   member  is   $1,485,  of   which  $1,385   is  derived   from                                                               
contributions by the  ASD and the additional $100  is provided by                                                               
mandatory member contributions.                                                                                                 
                                                                                                                                
3:37:08 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE MILLETT surmised then  that the [NEA-Alaska Health                                                               
Plan] Trust is paid $1,485 per month.                                                                                           
                                                                                                                                
MR. HOLLEMAN answered yes.                                                                                                      
                                                                                                                                
CHAIR  OLSON   pointed  out  that  the   contributions  made  are                                                               
regardless of benefits or losses.                                                                                               
                                                                                                                                
3:37:30 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE REINBOLD asked Mr. Holleman  for the amount of the                                                               
deductibles.                                                                                                                    
                                                                                                                                
MR. HOLLEMAN said  he was unsure.  He deferred  to Ms. Kitter for                                                               
more precise answers.                                                                                                           
                                                                                                                                
CHAIR  OLSON asked  Mr.  Holleman to  provide  a one-page  spread                                                               
sheet with coinsurance and deductibles.                                                                                         
                                                                                                                                
REPRESENTATIVE  MILLETT  asked  the NEA-Alaska  and  the  [Public                                                               
Employees] Local 71 [Trust Fund]  to also send the administrative                                                               
costs per person.                                                                                                               
                                                                                                                                
MR. MOEN agreed to do so.                                                                                                       
                                                                                                                                
3:39:03 PM                                                                                                                    
                                                                                                                                
RHONDA KITTER,  Chief Financial Officer (CFO),  NEA-Alaska Health                                                               
Plan, related opposition to HB 196.   She then explained that the                                                               
NEA-Alaska  Health Plan  was  formed in  1996  as a  self-insured                                                               
trust  for public  education employees.    The NEA-Alaska  Health                                                               
Plan represents  17,000 members  and their  dependents, providing                                                               
coverage to 16 school districts in  the state.  She indicated she                                                               
has worked for  the NEA-Alaska Health Plan since 1998  and has an                                                               
in-depth   understanding  of   the  complex   nature  of   health                                                               
insurance,  health  care  delivery  negotiations,  administrative                                                               
cost controls,  and in  providing assistance  with benefit-design                                                               
selection.   Ms. Kitter noted  she previously submitted  a letter                                                               
to the sponsor in opposition  to the bill and greatly appreciated                                                               
this opportunity  to testify.   She  expressed concern  about the                                                               
speed with  which HB 196  has been moving through  the committees                                                               
without  thorough research  into  the impact  and  risk that  the                                                               
state would acquire through this process.                                                                                       
                                                                                                                                
MS.  KITTER  said she  has  often  heard  concern that  the  NEA-                                                               
Alaska's  Health  Plan  is  a   union  trust  and  the  union  is                                                               
benefitting from the NEA-Alaska Health Plan.  However, the NEA-                                                                 
Alaska Health Plan is the plan sponsor for the trust, but NEA-                                                                  
Alaska  Health  Plan  is  not  linked  in  any  way  financially.                                                               
Instead,  a  separate  board of  trustees  consisting  of  public                                                               
education employees was established for  the plan.  She clarified                                                               
that there  are no financial  connections between  NEA-Alaska and                                                               
NEA-Alaska Health  Plan.   All premiums  collected are  only used                                                               
for  the health  and welfare  benefit of  the members,  she said.                                                               
This benefit,  she related, is not  to the NEA-Alaska, but  is to                                                               
the public education employees in  the state who participate with                                                               
the trust.                                                                                                                      
                                                                                                                                
MS. KITTER  offered her  belief that the  concept that  the state                                                               
can further reduce its health  insurance costs by having a larger                                                               
pool  is  flawed since  most  school  districts already  purchase                                                               
insurance through  a pooled  system.   Further, the  DOA reported                                                               
the average health insurance administration  costs are 10 percent                                                               
of  the premium.   While  national benchmarks  for administration                                                               
costs are  at 6  percent, the NEA-Alaska  Health Plan's  trust is                                                               
operating at 3 percent.   Thus the NEA-Alaska Health Plan's trust                                                               
has  successfully squeezed  the  fat out  of  the premiums  other                                                               
health  insurance   carriers  were  charging   school  districts.                                                               
Medical  inflation is  far outpacing  consumer inflation.   While                                                               
she completely understands the  frustration school districts have                                                               
about  health insurance  costs, this  bill would  merely transfer                                                               
the issue  from the local  municipal level and bring  the discord                                                               
to  the  state.    She  referred to  the  DOA  letter  from  Buck                                                               
Consultants  dated April  5, 2013,  which  indicates health  plan                                                               
management programs are  assumed to reduce the  higher claims for                                                               
school district employees.  This  assumption would imply that any                                                               
existing health plan management  program is either inefficient or                                                               
non-existent compared  to the state's  plan; however, she  is not                                                               
aware of any  health care management program the  state uses that                                                               
currently manages both cost and quality.                                                                                        
                                                                                                                                
3:42:11 PM                                                                                                                    
                                                                                                                                
MS. KITTER  referred to the  [memorandum] of April 3,  2013, from                                                               
Dan Wayne,  Legislative Counsel,  Legislative Affairs  Agency, to                                                               
Representative Lynn Gattis, in which  he says the requirement for                                                               
all eligible school  district employees be covered  by the policy                                                               
does  not accommodate  the need  for  individual choice.   If  an                                                               
employee  has  coverage  through  a  spouse's  partner  plan  and                                                               
doesn't  want   the  additional  insurance  through   the  school                                                               
district, this  bill would still  require the school  district to                                                               
incur a  cost they wouldn't  have otherwise  had.  In  short, the                                                               
NEA-Alaska Health  Plan has been  very successful in  keeping the                                                               
annual increase  of premiums to  a level lower than  the national                                                               
average and significantly lower than  Alaska's average.  The NEA-                                                               
Alaska Health Plan's  trust invests the premium  dollars and uses                                                               
those earnings to further reduce  premium costs.  Since 1996, the                                                               
NEA-Alaska  Health  Plan's trust  has  averaged  a less  than  10                                                               
percent increase in  premiums.  Last year,  the NEA-Alaska Health                                                               
Plan's trust  had a 0  percent increase, with no  additional cost                                                               
to school districts, which saved  both the district and employees                                                               
money.   Further,  the NEA-Alaska  Health Plan's  trust currently                                                               
offers  school districts  a variety  of health  insurance options                                                               
with  premiums varying  from $1,102  to $1,712  per employee  per                                                               
month.  The differing level  of premiums represents the differing                                                               
underlying benefits,  with individual group  selections available                                                               
to save money for the district and the employees.                                                                               
                                                                                                                                
3:43:39 PM                                                                                                                    
                                                                                                                                
MS.  KITTER reported  that Anchorage  educators  have selected  a                                                               
benefit plan that  is higher than the cost of  the monthly school                                                               
district  contribution of  $1,385  per employee  per  month.   In                                                               
fact, the  educators have  chosen to  pay the  additional premium                                                               
from  their paychecks  in order  to choose  a benefit  level that                                                               
meets their  needs.  She pointed  out the ASD is  protected since                                                               
it has  no risk associated to  claims and has capped  its monthly                                                               
contribution amount.   Therefore,  the employees  as a  pool have                                                               
offered  to  pay  for  the additional  benefits  to  receive  the                                                               
benefits they want.   However, this bill  would require employees                                                               
to reduce  their benefits  and pay more  for their  medical care.                                                               
As  Superintendent  Rob   Thomason,  Petersburg  School  District                                                               
(PSD), reported  in his earlier  testimony, the PSD was  facing a                                                               
40 percent  increase with AETNA's political  subdivision pool and                                                               
requested a  quote from  the NEA-Alaska Health  Plan trust.   Mr.                                                               
Thomason  reported that  the NEA-Alaska  Health Plan's  trust was                                                               
able  to save  the school  district $450,000,  including $250,000                                                               
from the potential  increase from AETNA as well  as providing the                                                               
same benefit coverage at $200,000 less annually.                                                                                
                                                                                                                                
MS. KITTER suggested,  at a minimum, a study  should be conducted                                                               
to  get a  more accurate  understanding of  the financial  risks.                                                               
Similar legislation was proposed  in Wisconsin and Montana, where                                                               
school districts  are insured  through a  local trust.   However,                                                               
after   comprehensive   studies   were  conducted   the   results                                                               
consistently  showed that  moving all  school district  employees                                                               
into a single  state health insurance plan  was cost prohibitive.                                                               
She  said she  strongly believes  the state  should not  impose a                                                               
mandate  that  has  not been  thoroughly  studied  and  actuarial                                                               
assessed.   In conclusion, the  risk and benefit analysis  to the                                                               
state has not  been adequately defined.  This is  not the time to                                                               
adopt similar approaches as with  health care reform, which was a                                                               
"sign it now" and "read it later" package.                                                                                      
                                                                                                                                
3:45:36 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  MILLETT  asked  whether   the  employees  pay  an                                                               
additional $150 per month.                                                                                                      
                                                                                                                                
MS. KITTER answered that the  NEA-Alaska Health Plan trust covers                                                               
16 employee  groups and  the additional  monthly premium  cost in                                                               
Anchorage for employee contributions is $150.                                                                                   
                                                                                                                                
REPRESENTATIVE  MILLETT asked  whether the  employee contribution                                                               
amounts vary.                                                                                                                   
                                                                                                                                
MS. KITTER answered that the  school district negotiates with the                                                               
employees the  contribution level  as well as  the benefit-design                                                               
selection and all eight plans offered are being used.                                                                           
                                                                                                                                
REPRESENTATIVE MILLETT asked  whether individual school districts                                                               
could opt out or if they are mandated to provide coverage.                                                                      
                                                                                                                                
MS. KITTER  answered that  individual school  districts negotiate                                                               
with the associations.  In  the majority of the school districts,                                                               
the employees have the option to sign  a waiver to opt out of the                                                               
plan,  but  in one  school  district  employees are  required  to                                                               
demonstrate  proof of  other coverage.    Other school  districts                                                               
limit coverage  to one  family member benefit,  so if  two family                                                               
members are employed by the  school district, the school district                                                               
would only provide one policy.                                                                                                  
                                                                                                                                
3:46:56 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE MILLETT  asked whether the supplemental  costs are                                                               
mandated or if employees can take the standard package.                                                                         
                                                                                                                                
MS. KITTER  answered that the $1,330  premium is not part  of the                                                               
bargaining  agreement   between  the  school  district   and  the                                                               
associations.   Some  districts pay  100 percent  of the  cost of                                                               
health  insurance  based  on  a  premium-design  plan  they  have                                                               
chosen.  Other school districts  contribute a flat dollar amount,                                                               
regardless of  the benefit-design  plan chosen.     The liability                                                               
for many school  districts is limited to what  the districts have                                                               
negotiated;   however,  other   school  districts   contribute  a                                                               
percentage of the premium with  the balance paid by the employee.                                                               
In those instances, the member  chooses the plan design that fits                                                               
his/her  needs  in the  individual  district,  which is  truly  a                                                               
benefit the [employees] enjoy.                                                                                                  
                                                                                                                                
3:48:00 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE MILLETT  asked whether  the $150  amount Anchorage                                                               
teachers' pay is mandatory or optional.                                                                                         
                                                                                                                                
MS. KITTER  responded by  clarifying that  the ASD  contributes a                                                               
monthly  premium  amount of  $1,385.    The  AEA has  chosen  the                                                               
benefit-design plan  that costs  more than the  school district's                                                               
contribution per  employee.  Thus  ASD employees can opt  to have                                                               
the coverage through the NEA-Alaska  Health Plan trust and pay an                                                               
additional $150 monthly premium from  their paycheck or waive the                                                               
plan's  coverage by  showing the  member has  additional coverage                                                               
available elsewhere, and thereby not incur any additional cost.                                                                 
                                                                                                                                
REPRESENTATIVE  MILLETT related  a  scenario in  which  she is  a                                                               
single teacher with no other insurance.   In such a scenario, she                                                               
surmised that  single teacher would have  to pay the $150  to the                                                               
[NEA-Alaska Health Plan's] trust.                                                                                               
                                                                                                                                
MS.  KITTER  agreed,  but clarified  that  [the  $150  additional                                                               
coverage if  there is no  proof of other insurance]  applies only                                                               
to the ASD's  employees.  These parameters were  requested by the                                                               
school district, she further clarified.                                                                                         
                                                                                                                                
3:49:08 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOSEPHSON  recalled  earlier testimony  from  the                                                               
Petersburg superintendent  [Mr. Thomason]  who testified  that he                                                               
liked  HB 196.    When it  was pointed  out  that the  Petersburg                                                               
School   District   would   not    obtain   any   benefits,   the                                                               
superintendent said  he still  liked the  bill for  other [school                                                               
districts].   He asked whether  the PSD school  district actually                                                               
saved $140,000 by joining the [NEA-Alaska Health Plan] trust.                                                                   
                                                                                                                                
MS.  KITTER  answered   yes.    She  said  she   spoke  to  PSD's                                                               
superintendent,  Rob  Thomason, to  clarify  his  position.   She                                                               
related Mr. Thomason's comments,  such that he really appreciated                                                               
the  NEA-Alaska  Health  plan  trust.   He  estimated  the  PSD's                                                               
savings  at   $450,000.    However,   she  said   Mr.  Thomason's                                                               
frustration   stems  from   the  conversation   regarding  health                                                               
insurance.  She  recalled the PSD's previous  carrier, AETNA, had                                                               
a  40   percent  increase  which  caused   considerable  concern.                                                               
Additionally,  the PSD  was concerned  about not  having a  local                                                               
pharmacy to  address their needs,  which the district felt  was a                                                               
necessity.  She offered her belief  that if the committee were to                                                               
speak to Mr. Thomason today,  he would report that the NEA-Alaska                                                               
Health  Plan trust  had  taken  care of  the  PSD's  issues.   In                                                               
further   response  to   Representative  Josephson,   Ms.  Kitter                                                               
responded that the  NEA-Alaska [Health Plan trust]  was formed in                                                               
1996 by  three of the  largest school  districts in the  state in                                                               
order to negotiate  their own benefits for a flat  amount.  Thus,                                                               
separating  out [health  care benefits]  would  allow the  school                                                               
district to negotiate wages with  the NEA separately.  In further                                                               
response,  Ms. Kitter  agreed  each of  the  54 school  districts                                                               
typically  bargain   for  health  care  coverage   so  they  have                                                               
different plans and different insurance coverage.                                                                               
                                                                                                                                
REPRESENTATIVE JOSEPHSON  asked whether  it follows that  in some                                                               
instances  teachers in  one school  district may  have chosen  to                                                               
give up a percentage of an  increment of pay increase in exchange                                                               
for dental coverage.                                                                                                            
                                                                                                                                
MS. KITTER answered yes.                                                                                                        
                                                                                                                                
3:52:01 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOSEPHSON  said it  seems to  him today  that some                                                               
effort has been  made to compare the ASD  contributions with what                                                               
the state would  provide the specific benefit costs.   He related                                                               
a scenario  in which teacher  "X" has health  insurance coverage,                                                               
which is compared to the state's  economy plan.  He asked whether                                                               
Ms. Kitter could assess whether  the NEA-Alaska Health Plan trust                                                               
for teacher  "X" at West  High School  in Anchorage is  better or                                                               
worse than the benefits offered in the state's economy plan.                                                                    
                                                                                                                                
MS. KITTER  answered that the  teacher at West High  School would                                                               
suffer  a significant  reduction  in benefits  under the  state's                                                               
economy  plan.   In  further  response,  she clarified  that  the                                                               
teacher  would suffer  significant  reductions if  the West  High                                                               
School teacher's health insurance was under the state's plan.                                                                   
                                                                                                                                
3:52:47 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  REINBOLD  asked   for  clarification  on  whether                                                               
teachers at  West High School  would also have reductions  in the                                                               
cost of the health insurance under the state's plan.                                                                            
                                                                                                                                
MS. KITTER  answered yes.   She explained  that teachers  at West                                                               
High  School have  chosen  a richer  benefit  plan through  their                                                               
association and have agreed to pay  a higher premium out of their                                                               
paychecks, with  no impact to  the school district.   However, if                                                               
these teachers  opted for the  state's economy plan,  the premium                                                               
would   be  decreased,   but  the   [benefits]   would  also   be                                                               
dramatically decreased.                                                                                                         
                                                                                                                                
3:53:50 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE REINBOLD  asked for  the deductible for  the ASD's                                                               
contribution  of the  $1,385 plus  the teacher's  contribution of                                                               
$150 per month.                                                                                                                 
                                                                                                                                
MS. KITTER answered  that the ASD's employees have  a $100 annual                                                               
deductible, an 80:20 percent coverage plan, a $1,000 out-of-                                                                    
pocket  cap, which  includes a  $2,000 annual  dental benefit,  a                                                               
vision  benefit,  prescription  coverage,  and  a  mental  health                                                               
assistance program.                                                                                                             
                                                                                                                                
3:54:50 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE REINBOLD asked for the fund balance for the NEA-                                                                 
Alaska  Health  Plan  trust  and   whether  this  information  is                                                               
available in public records.                                                                                                    
                                                                                                                                
MS.  KITTER answered  that the  financial  statements are  public                                                               
records.   She  offered  to  forward them  along  with the  eight                                                               
different plan designs as previously requested by the committee.                                                                
                                                                                                                                
3:55:35 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  MILLETT asked  for a  comparison between  the ASD                                                               
employee's plan  and the state's  standard health  insurance plan                                                               
since ASD  employees pay an  additional $150 for  extra benefits.                                                               
She  pointed   out  that  state   employees  pay  $117   for  the                                                               
[AlaskaCare's] standard plan.                                                                                                   
                                                                                                                                
MS.  KITTER answered  she did  not have  the information  readily                                                               
available but she offered to provide it.                                                                                        
                                                                                                                                
REPRESENTATIVE  MILLETT confirmed  she  would  like a  comparison                                                               
since the  state's standard plan  may be closer to  the threshold                                                               
that  members are  willing  to  pay.   In  fact,  opting for  the                                                               
state's standard  plan may be  a cost reduction  in out-of-pocket                                                               
expenses for ASD teachers.                                                                                                      
                                                                                                                                
MS.  KITTER  responded  that the  deductible  under  the  state's                                                               
standard plan is  $250 plus an 80:20 coverage  ratio, which would                                                               
result in  an immediate $150 additional  out-of-pocket deductible                                                               
for ASD's  teachers.   While the  out-of-pocket costs  match, she                                                               
believed the dental benefits were also slightly different.                                                                      
                                                                                                                                
REPRESENTATIVE MILLETT pointed  out the DOA suggests  it might be                                                               
able to lower the deductible  or health insurance rates depending                                                               
on how many  people are in the pool.   Currently, the state can't                                                               
predict what  the plan  would equate to  if an  additional 47,000                                                               
members joined  the pool; however, it  could be a big  benefit to                                                               
teachers  if the  state  could negotiate  a  $100 deductible  and                                                               
$1,000 premium.   She asked  members to consider  that currently,                                                               
the state  has 6,500 employees  including dependents for  a total                                                               
of  16,000 lives.    She surmised  the  changes under  AlaskaCare                                                               
might be pretty significant by  significantly enlarging the pool.                                                               
She  asked  whether  the  teachers were  aware  of  the  possible                                                               
benefits of joining the state's AlaskaCare plan.                                                                                
                                                                                                                                
MS.  KITTER answered  that currently  the NEA-Alaska  Health Plan                                                               
trust offers  eight different plan-design options,  with premiums                                                               
ranging  from   $1,102  to  $1,712   per  employee,   per  month.                                                               
Therefore, some of  the plans offered are below the  level of the                                                               
state's  plans.   Additionally, each  association can  select the                                                               
benefit levels.   She said that under the NEA  Alaska Health Plan                                                               
trust  the  [school  district  employees]  appreciate  having  an                                                               
option to  annually select one  of the eight plans,  whether they                                                               
choose  to  pay  additional  premiums or  change  the  deductible                                                               
amount for medical services.                                                                                                    
                                                                                                                                
3:58:47 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  MILLETT   offered  her  belief  that   the  ASD's                                                               
employees would have  these same options under  the state's plan,                                                               
noting  that  the  legislature  has not  yet  narrowed  down  the                                                               
options the  AlaskaCare Plan can  negotiate.  She  questioned the                                                               
statement the  teachers would absolutely  not have  comparable or                                                               
better  benefits,  since  it is  possible  that  school  district                                                               
employees might actually have better  benefits if they are pooled                                                               
with  the state  plan.   She  didn't think  the  [DOA] ruled  out                                                               
offering eight  different plans, with  one being a  Cadillac plan                                                               
and the rest staggered with other options.                                                                                      
                                                                                                                                
MS.  KITTER  answered that  the  NEA-Alaska's  Health Plan  trust                                                               
analysis is based  on the current plan for  the AlaskaCare's plan                                                               
priced  at $1,330  and the  economy  plan was  referenced as  the                                                               
benefit-plan design being offered by the state.                                                                                 
                                                                                                                                
3:59:39 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOSEPHSON  related his understanding that  the NEA                                                               
and the AEA receive dues from their members.                                                                                    
                                                                                                                                
MS. KITTER said  she is not the chief financial  officer for NEA-                                                               
Alaska, which  is a  separate entity; however,  she said  that no                                                               
dues are  directed to  the NEA-Alaska  Health Plan  trust office,                                                               
just premium health care dollars are received.                                                                                  
                                                                                                                                
4:00:14 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOSEPHSON  asked  whether the  NEA-Alaska  Health                                                               
Plan  trust  takes   any  proceeds  from  members   and  gives  a                                                               
percentage to the NEA or its affiliates.                                                                                        
                                                                                                                                
MS.  KITTER answered  no.   She said  that the  NEA-Alaska Health                                                               
Plan  trust is  prohibited  from receiving  dues  and that  every                                                               
premium dollar can only be used for health and welfare benefits.                                                                
                                                                                                                                
4:00:40 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE REINBOLD  stated that  90 percent of  Alaska's oil                                                               
revenues  cover the  state's fiscal  notes.   She indicated  that                                                               
Alaska  has been  seeing a  decline  in oil  production and  many                                                               
believe the  investment is  being driven out  due to  the current                                                               
policies  on  taxes and  current  policies  on permitting.    She                                                               
understood  that Ms.  Kitter's  organization has  taken quite  an                                                               
active  role in  the discussion.   She  asked whether  Ms. Kitter                                                               
understands  that the  legislature has  reviewed a  very alarming                                                               
chart that  shows a growing  gap [between revenues  and expenses]                                                               
such  that  the  state  will  not be  able  to  meet  its  future                                                               
liability unless  changes are  made.  She  wanted to  ensure that                                                               
the [NEA's]  members understand the pressures  the legislature is                                                               
under to  resolve these issues.   She said if this  law does pass                                                               
that she wants legislators to  have the opportunity to detail the                                                               
steps the [legislature and state] have taken to meet their long-                                                                
term  fiscal  obligations  and  plans.     She  pointed  out  the                                                               
legislature is trying to make important decisions so that long-                                                                 
term sustainable ways exist to pay off future liabilities.                                                                      
                                                                                                                                
MS.  KITTER replied  that  the NEA-Alaska  Health  Plan trust  is                                                               
prohibited from  participating in the  oil tax debate.   Thus the                                                               
NEA-Alaska Health  Plan trust  has not taken  a position  on [oil                                                               
taxes].   Once again,  the NEA-Alaska Health  Plan's focus  is in                                                               
providing health insurance for members  with better outcomes, she                                                               
said.  She  expressed concern about HB 196 since  the state could                                                               
take  on a  greater  risk than  is currently  done  at the  state                                                               
level.                                                                                                                          
                                                                                                                                
4:02:21 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE REINBOLD  said she  stands corrected since  it may                                                               
be the  National Educational Association  (NEA) and not  the NEA-                                                               
Alaska Health  Plan Trust that has  been involved in the  oil tax                                                               
debate.                                                                                                                         
                                                                                                                                
MS. KITTER responded  that HB 196 is of great  concern without an                                                               
actuarial evaluation  of the  impact.   Currently, when  a school                                                               
district  purchases  health   insurance  through  the  NEA-Alaska                                                               
Health Plan trust,  the school district pays the  premium and the                                                               
trust  takes  on all  the  responsibilities  associated with  the                                                               
premium.   By transferring the  47,000 school  district employees                                                               
to the state's  health insurance plan without  knowing the health                                                               
of the  group, the  state would  assume the  risk for  the health                                                               
claims of the population.   She said the NEA-Alaska's Health Plan                                                               
trust has done a great job in the  past 18 years to stay in front                                                               
of costs and has adopted  a healthy outcomes approach rather than                                                               
to use a  cost-shifting measure.  The medical  cost inflation and                                                               
the [Patient Protection and] Affordable  Care Act (PPACA) present                                                               
factors  and  significant  overall concern  regarding  employees'                                                               
health care costs.   She highlighted the choice  as between being                                                               
reactive  to claims  or being  proactive and  assisting employees                                                               
before they  are ill.   She related her understanding  that there                                                               
has not  been an actuarial evaluation  on the cost impact  to the                                                               
state  to add  the school  district employees  to the  AlaskaCare                                                               
health insurance program.                                                                                                       
                                                                                                                                
4:04:14 PM                                                                                                                    
                                                                                                                                
LADAWN DRUCE,  Vice President, NEA-Alaska, speaking  on behalf of                                                               
Ron Fuhrer, President, NEA-Alaska, who  is also the chair for the                                                               
NEA-Alaska Health Plan's Trust that  Ms. Kitter just spoke about.                                                               
He has  been a  trustee of  the NEA-Alaska  Trust Plan  since its                                                               
inception in  1996 and understands  the complex nature  of health                                                               
insurance and  the need to  balance premiums and benefits.   This                                                               
bill, HB  196, and its  companion bill,  SB 90, have  been moving                                                               
quickly  through  committees  without  receiving  proper  vetting                                                               
needed to assure they would  not create an adverse financial risk                                                               
to  the  State  of  Alaska.     As  a  trustee,  Mr.  Fuhrer  has                                                               
participated  in many  meetings in  which decisions  are made  on                                                               
whether or not  to enroll a new employee group.   These decisions                                                               
have not  been made  lightly and include  a three-year  look back                                                               
into  the  experience of  the  employee  group.   She  said  that                                                               
providing  health   insurance  is  about  managing   risk.    She                                                               
questioned whether  the committee understands the  risk the state                                                               
will incur if  HB 196 passes, noting the fiscal  note ranges from                                                               
$100-$300 million, which  has yet to be vetted.   Currently, when                                                               
school  districts purchase  insurance  through the  trust or  any                                                               
carrier  the   risk  is  transferred,  which   means  the  school                                                               
districts have paid their maximum  liability for coverage.  Thus,                                                               
[under  the  bill]  if  claims  exceed  the  funding  the  school                                                               
districts carry none of the risk  since the risk will reside with                                                               
the state.                                                                                                                      
                                                                                                                                
MS. DRUCE said  that at a minimum a study  should be conducted to                                                               
obtain  a  more accurate  understanding  of  the financial  risk.                                                               
Similar legislation  has been proposed  in Wisconsin,  where many                                                               
school  districts are  insured  through  the Wisconsin  Education                                                               
Association (WEA)  trust; however,  when studies  were conducted,                                                               
the results  consistently showed that moving  all school district                                                               
employees  into a  single state  health insurance  plan was  cost                                                               
prohibitive.   As a private  organization, the  NEA-Alaska Health                                                               
Plan's trust  collects premiums and  invests them, which  in turn                                                               
are used to  help reduce the trust's costs.   Last year the trust                                                               
was able to provide a  zero percent increase to its participating                                                               
school districts.  It was able to  do this while at the same time                                                               
spending $.97 of each $1 collected  on health care.  In fact, the                                                               
NEA-Alaska's  Health  Plan  trust   spends  $.03  per  dollar  on                                                               
administrative  costs.   Further,  the  NEA-Alaska Health  Plan's                                                               
trust has  been a nimble organization  and a good steward  of its                                                               
financial resources.   Due  to its  size the  NEA-Alaska's Health                                                               
Plan trust  is able  to negotiate  very favorable  contracts with                                                               
providers in Alaska as well as  with specialists in the Lower 48.                                                               
Additionally, the NEA-Alaska's Health  Plan trust has implemented                                                               
or piloted programs  that work to save  costs, including surgical                                                               
travel  benefits,  biometric  screenings, and  seeking  preferred                                                               
relationships  with  medical  providers  that  measure  cost  and                                                               
quality.   Unlike the [NEA-Alaska's  Health Plan] trust,  the DOA                                                               
has  testified  that  its  administrative  costs  are  nearly  10                                                               
percent.    In  addition,  the   state  does  not  have  as  much                                                               
flexibility as  the NEA-Alaska's Health  Plan trust and  can only                                                               
address its  cost every  three years at  the bargaining  table or                                                               
through a  lengthy procurement process,  which is  not efficient,                                                               
effective, or affordable.                                                                                                       
                                                                                                                                
4:07:42 PM                                                                                                                    
                                                                                                                                
MS. DRUCE offered  an example, such that  the current third-party                                                               
administrator's  (TPA)  bid that  the  state  is negotiating  has                                                               
already been  underway for four  months longer  than anticipated.                                                               
She said  the state has had  three TPA's in the  past four years.                                                               
She suggested that  going with one size fits  all would eliminate                                                               
the ability of the 50-plus  school districts to evaluate the plan                                                               
that  best  fits their  needs.    She  stated that  rural  school                                                               
districts  are  different from  urban  school  districts.   Thus,                                                               
rural  school districts  may  want to  offer  more benefits  than                                                               
those in the state's economy plan  since it is a tool for hiring.                                                               
The state should not impose a  mandate that has not been studied,                                                               
one in which  the risk and benefit analysis to  the state has not                                                               
been adequately defined, she said.                                                                                              
                                                                                                                                
4:08:26 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  MILLETT  asked  whether the  NEA-Alaska's  Health                                                               
Plan trust will provide census  data to conduct an actuary study.                                                               
In other  words, would  the trust  be willing  to share  its data                                                               
with the state.                                                                                                                 
                                                                                                                                
MS. DRUCE deferred to Ms. Kitter.                                                                                               
                                                                                                                                
REPRESENTATIVE MILLETT  asked who the  guarantor of the  trust is                                                               
if the NEA-Alaska Health Plan's  Trust goes insolvent or fails in                                                               
any  way,  in other  words,  she  asked  who  would pick  up  the                                                               
financial responsibility.                                                                                                       
                                                                                                                                
MS.  KITTER  agreed the  NEA-Alaska  is  willing to  provide  its                                                               
census for  the population base.   Additionally, the NEA-Alaska's                                                               
Health    Plan   sponsor,    NEA-Alaska,   has    the   fiduciary                                                               
responsibility  if funds  are insufficient  to  cover any  claims                                                               
since it is not the school district or state's liability.                                                                       
                                                                                                                                
4:09:42 PM                                                                                                                    
                                                                                                                                
CARL  ROSE,  Executive  Director, Alaska  Association  of  School                                                               
Boards (AASB),  testified in favor of  HB 196.  He  referred to a                                                               
resolution recently  passed by  the AASB  related to  health care                                                               
costs  and  medical  insurance, which  speaks  about  the  recent                                                               
federal health  care act, PPACA,  and the unknown impact  it will                                                               
have  on  Alaska.    This   resolution  asks  the  governor,  the                                                               
legislature, the Congress to carefully  review the legislation to                                                               
determine if any  unintended consequences exist or if  it will be                                                               
harmful  to  school  districts,   and  requests  the  legislature                                                               
continue to address  ways to look at health care  costs.  He said                                                               
the PPACA is  an unknown and will not be  fully implemented until                                                               
2014.   The premise is  that people  who have insurance  will pay                                                               
for people  who don't  have insurance, which  simply says  to the                                                               
AASB that the cost of insurance will go up.                                                                                     
                                                                                                                                
Mr. ROSE said except for  energy and transportation costs, school                                                               
districts have  been held static  for the  past four years.   The                                                               
issue  of   cost  containment  falls   squarely  in   the  school                                                               
district's lap,  he said.  The  AASB has evidence that  costs are                                                               
increasing  and  while  he  does  not have  any  issue  with  the                                                               
testimony given,  no one can  predict what  the costs will  be in                                                               
the future  although he  anticipated costs will  rise.   He asked                                                               
the  legislature, the  governor,  and the  Congress  to give  the                                                               
school  districts   a  hand  with   this  should   an  unintended                                                               
consequence occur.                                                                                                              
                                                                                                                                
MR. ROSE concluded  by offering the AASB's support  for this bill                                                               
since all avenues  need to be exhausted.  He  reiterated the AASB                                                               
anticipates  the   costs  will   rise,  noting   tremendous  cost                                                               
increases  have  been  experienced  in the  past  10  years  even                                                               
without the PPACA  so he is concerned about the  future.  He said                                                               
anyone  who  is  comfortable  with the  current  coverage  should                                                               
consider  what the  coverage  will  look like  in  three to  five                                                               
years, which he predicted will look very different.                                                                             
                                                                                                                                
4:12:35 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  HERRON noted  Mr.  Rose has  had experience  with                                                               
insurance pools and  asked whether it should be  limited to state                                                               
or to a nonprofit.                                                                                                              
                                                                                                                                
MR. ROSE  stated that  in 1986, the  health insurance  costs were                                                               
$1.25 per  hundred since  insurance was  not available  for rural                                                               
Alaska.   By 1992,  the losses for  his organization  totaled $40                                                               
million and property  insurance rates dropped from  $1.25 to $.22                                                               
per hundred.   He  emphasized this  is what  pooling did  for his                                                               
organization.  Since  then, the company has  divested itself from                                                               
the  Alaska  School  Insurance Company  (ASIC)  and  created  the                                                               
Alaska Public Entities  Insurance (APEI).  He  explained the APEI                                                               
offers property,  casualty, and  workers' compensation  and costs                                                               
have been contained.   While these costs are  not associated with                                                               
medical  insurance, the  APEI believes  that pooling  works.   He                                                               
offered that the whole concept  behind pooling is that the larger                                                               
number  of  people  in  the marketplace,  the  better  chance  to                                                               
negotiate and leverage favorable rates.                                                                                         
                                                                                                                                
CHAIR OLSON remarked it is called the law of big numbers.                                                                       
                                                                                                                                
4:14:27 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HERRON assumed Mr. Rose  would support the bill if                                                               
it was offered by the state or a nonprofit pool.                                                                                
                                                                                                                                
MR. ROSE  answered that the goal  of the resolution is  to reduce                                                               
costs, educate children,  and keep dollars in the  classroom.  He                                                               
said he supports HB 196 and is willing to review any derivative.                                                                
                                                                                                                                
4:15:11 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOSEPHSON recalled  his  comment that  increasing                                                               
the pool  size would be  good so  wouldn't it follow  that taking                                                               
"free money" from  the government and adding Medicaid  would be a                                                               
good thing.                                                                                                                     
                                                                                                                                
Mr. ROSE said he did not have an opinion.                                                                                       
                                                                                                                                
CHAIR OLSON remarked this is not pertinent to the bill.                                                                         
                                                                                                                                
REPRESENTATIVE JOSEPHSON  asked for the reason  a state insurance                                                               
pool would be a good thing but other pools are not.                                                                             
                                                                                                                                
MR. ROSE  clarified that  he believes pooling  is a  good concept                                                               
and  he  is  a  member  of  a  pool  for  property  and  casualty                                                               
insurance.   He thinks that  the larger the  group is to  take to                                                               
market helps the pool leverage better insurance rates.                                                                          
                                                                                                                                
4:16:29 PM                                                                                                                    
                                                                                                                                
BRUCE  JOHNSON,  Executive  Director, Alaska  Council  of  School                                                               
Administrators   (ACSA),   stated   the   ACSA   represents   the                                                               
principals,  superintendents, and  business officials.   He  said                                                               
his  members  are  not  in   the  insurance  business  since  the                                                               
organization  exists  to  educate  children.    He  characterized                                                               
[obtaining  health  insurance] as  flying  somewhat  blind.   The                                                               
escalating cost  of health insurance  is causing members  to urge                                                               
the ACSA to take action since  the costs are not sustainable.  He                                                               
referred  to  Mr.  Thomason's  testimony,   noting  the  PSD  was                                                               
initially able to  bring down their costs, but  now anticipates a                                                               
15 percent cost increase next year.   He said the ACSA would like                                                               
to  see costs  evened  out  and one  way  to  accomplish this  is                                                               
through  a  larger  pool.    He  said  the  ACSA  values  quality                                                               
insurance for  its members  and does not  intend to  minimize the                                                               
employee's health insurance.   He stated that  the ACSA currently                                                               
directs nearly  $300 million in  school district funds  at health                                                               
insurance and  would like  to get  the best  value possible.   He                                                               
concluded  that the  ACSA  is very  interested  in exploring  the                                                               
concept in HB 196.  In  fact, the five big districts brought this                                                               
issue to  the legislature in  late January or early  February, he                                                               
said.   In response  to a  question, he  clarified that  the $300                                                               
million figure  was derived  from a  survey the  school districts                                                               
reported,  which  reported  the   amount  ranged  from  $280-$300                                                               
million.                                                                                                                        
                                                                                                                                
4:19:24 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOSEPHSON asked  whether the  five larger  school                                                               
districts  have analyzed  the impact  of joining  forces with  49                                                               
other  school districts,  some  of which  are  in remote  locales                                                               
where  costs are  high, such  as  for Medivacs  to Dutch  Harbor,                                                               
which run $1,000 round trip.                                                                                                    
                                                                                                                                
MR. JOHNSON  responded the  ACSA defers to  the state  to examine                                                               
this on  their behalf, plus  the concept  is that the  larger the                                                               
pool, the better  off all school districts will be  over the long                                                               
term, even if it doesn't work in the short term.                                                                                
                                                                                                                                
4:20:30 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HERRON  asked whether insurance pooling  should be                                                               
limited to the state or if nonprofit pool should be created.                                                                    
                                                                                                                                
MR.  JOHNSON  said  he  did   not  know;  however,  the  ACSA  is                                                               
interested in all options that  will minimize increased costs for                                                               
health insurance.                                                                                                               
                                                                                                                                
CHAIR OLSON remarked  that the PPACA is the  700-pound gorilla in                                                               
the room.  Everyone in this room  will be covered or taxed due to                                                               
gold-plated  plans  and   not  because  of  the   coverage.    He                                                               
anticipated  increased  costs and  once  the  federal law  is  in                                                               
place, a whole new series of issues will arise.                                                                                 
                                                                                                                                
4:21:54 PM                                                                                                                    
                                                                                                                                
MIKE BARNHILL,  Deputy Commissioner, Office of  the Commissioner,                                                               
Department of Administration (DOA),  offered to review the fiscal                                                               
notes and to address some of  the comments.  He indicated the DOA                                                               
asked Buck Consultants  to consider an actuarial  study, which is                                                               
currently  possible  since  the state's  active  school  district                                                               
employees  are also  active in  the Public  Employees' Retirement                                                               
System  (PERS)   and  the  Teachers'  Retirement   System  (TRS).                                                               
Therefore,  the  DOA  has  specific  information  on  the  school                                                               
district  employees based  on  demographics;  however, the  state                                                               
does not  have any claims  data on  the employees, which  will be                                                               
necessary  in  order  to  evaluate the  relative  health  of  the                                                               
population.                                                                                                                     
                                                                                                                                
4:23:44 PM                                                                                                                    
                                                                                                                                
MR. BARNHILL reported based on  the demographic information, Buck                                                               
Consultants  reports  the  school  district  employees  are  more                                                               
heavily female, slightly older than  the current active employees                                                               
and  estimates adding  the employees  would increase  health care                                                               
costs from  2 to  3 percent  more than  the current  active state                                                               
employees.                                                                                                                      
                                                                                                                                
4:24:41 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  MILLETT advised  that  she is  interested in  the                                                               
NEA-Alaska Health Plan  trust's medical claims to  share with the                                                               
actuary.                                                                                                                        
                                                                                                                                
MS. KITTER said  she would need clarification on  the claims data                                                               
request from the NEA-Alaska Health Plan's trustees.                                                                             
                                                                                                                                
MR. BARNHILL turned  to the $100 million  fiscal note, explaining                                                               
the DOA would  need some money to start to  establish the reserve                                                               
to pay health care claims as they arrive.                                                                                       
                                                                                                                                
4:26:36 PM                                                                                                                    
                                                                                                                                
MR.  BARNHILL  referred   to  the  fiscal  note   from  the  DOA,                                                               
Centralized Administration Services,  Health Plans Administration                                                               
dated  4/5/13,  for  $237,000  in  FY  14.    He  explained  this                                                               
represents  the  anticipated  administrative costs  the  division                                                               
would  incur in  the next  fiscal  year in  order to  accommodate                                                               
inbound   school  district   employees   in   FY  15,   including                                                               
reprogramming costs,  computers, publications,  and communication                                                               
costs.   The costs  are anticipated  to increase  in FY  15, when                                                               
employees would  arrive from  school districts.   He  pointed out                                                               
the services line  starts at $9.8 million and  increases to $13.1                                                               
million, which  represents vendor and contractor  costs the state                                                               
pays to administer claims.  These  costs are based on per member,                                                               
per month charge currently incurred  in the active pool, which is                                                               
trended up to  reflect population growth.  He referred  to the FY                                                               
15  miscellaneous column  at $315  million  with two  components,                                                               
calculated by  multiplying the projected benefit  per employee by                                                               
the  population of  the school  district pool,  multiplied by  12                                                               
months.   Buck  Consultants estimated  the calculation  at $1,389                                                               
per  month  per employee  by  18,300,  multiplied by  12  months.                                                               
However, the  figure may  be a  bit inflated for  FY 15  since it                                                               
assumes all  employees would  be transferred  but under  the bill                                                               
employees can continue  to transfer to the  health insurance pool                                                               
in FY 16.                                                                                                                       
                                                                                                                                
4:28:34 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SADDLER  asked  for  clarification  on  the  $315                                                               
million.                                                                                                                        
                                                                                                                                
MR. BARNHILL  explained the  two components  of $305  million and                                                               
$10 million.   He  reiterated the  calculation of  $1,389 x  12 x                                                               
18,300 equals $305  million, which is the amount  the state would                                                               
bill  the   school  districts  on   an  annual  basis.     Again,                                                               
practically speaking  the state would  not receive all  18,300 in                                                               
FY 15.   He repeated the  calculation, noting the fund  source is                                                               
statutory   designated  program   receipts.     In  response   to                                                               
Representative Saddler, Mr. Barnhill confirmed the calculation.                                                                 
                                                                                                                                
4:30:52 PM                                                                                                                    
                                                                                                                                
MR. BARNHILL explained  the second component of  the $315 million                                                               
is  the $10  million.   He explained  the group  health insurance                                                               
pool  would  require  $100  million in  funding  to  establish  a                                                               
reserve, which  would be repaid.   This would be  accomplished by                                                               
billing  each  school  district  for the  first  four  months  of                                                               
claims.  The school districts have  up to 10 years to repay these                                                               
costs,  which will  be  passed through  to  the public  education                                                               
fund.  This mechanism provides  $10 million in receipts authority                                                               
to collect the repayments and pass them through, he said.                                                                       
                                                                                                                                
REPRESENTATIVE  SADDLER asked  whether  that  would be  reflected                                                               
under services.                                                                                                                 
                                                                                                                                
MR. BARNHILL answered  that it is reflected in  "Fund Source 1108                                                               
Statutory Designated Program Receipts",  for two components, $305                                                               
million and $10 million totaling  $315 million.  He explained the                                                               
"Fund Source  1017" as  the fund  source used  to pay  the third-                                                               
party administrative fees, referred  to earlier.  He acknowledged                                                               
discussions have  subsequently been  held that  characterized the                                                               
fiscal note as being gigantic.   He agreed the figures are large,                                                               
but noted  they would be  paid by someone.   In FY 12  the school                                                               
districts  had  $282  million  in   health  care  costs  so  it's                                                               
reasonable  to assume  an estimated  growth to  $305 million,  he                                                               
said.  In  any event, the health care expenditures  will be made,                                                               
regardless  [of whether  it is  under AlaskaCare  or the  current                                                               
NEA-Alaska's  Health Plan  trust, the  Local 71  trust, or  other                                                               
association plan].  At issue is  whether the state can save money                                                               
by consolidating the health insurance into one pool.                                                                            
                                                                                                                                
4:33:11 PM                                                                                                                    
                                                                                                                                
MR.  BARNHILL turned  to  the  third fiscal  note  from the  DOA,                                                               
Division  of Retirement  and  Benefits (DRB)  dated  4/7/13.   He                                                               
explained  this  fiscal  note   would  add  the  staff  positions                                                               
necessary to  implement the pool.   The original fiscal  note had                                                               
$964,000 for FY 14, but  in actuality the division wouldn't staff                                                               
up until after the first of the  year, so the fiscal note was cut                                                               
in half.   He  stated the  costs going forward  fund the  same 12                                                               
positions,  including   accountants,  technicians,   call  center                                                               
staff, and an appeals specialist.                                                                                               
                                                                                                                                
4:34:22 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  MILLETT recalled  the Local  71 previously  noted                                                               
the  necessity for  bilingual staff  and asked  whether the  call                                                               
center would have bilingual staff.                                                                                              
                                                                                                                                
MR.  BARNHILL   answered  he  was  unsure   that  the  department                                                               
currently provides foreign language  assistance, which would need                                                               
to  be   provided  to  the   extent  that   non-English  speaking                                                               
beneficiaries exist.                                                                                                            
                                                                                                                                
4:34:56 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE REINBOLD  asked for the total  liability to school                                                               
districts annually.                                                                                                             
                                                                                                                                
MR. BARNHILL  referred to documents in  members' packets provided                                                               
by the  Alaska Association of School  [Business Officials], which                                                               
represent  the  best  estimates  and   lists  the  FY  12  health                                                               
insurance expenses at $282 million.                                                                                             
                                                                                                                                
4:35:37 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  REINBOLD   asked  whether  this  bill   would  be                                                               
shifting costs.                                                                                                                 
                                                                                                                                
MR.  BARNHILL answered  yes, that  initially the  costs would  be                                                               
shifted  since  health  insurance   claims  paid  by  the  school                                                               
districts would be  paid by the state.  The  state would bill the                                                               
school districts, which  would initially be about  the same since                                                               
it will take  time before savings would  occur through leveraging                                                               
down the administrative costs.                                                                                                  
                                                                                                                                
4:36:30 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  MILLETT asked  when  the cost  savings under  the                                                               
bill would be realized.                                                                                                         
                                                                                                                                
MR.  BARNHILL again  referred to  the  consultant's letter,  from                                                               
Buck Consultants  dated April 5,  2013, in members' packets.   He                                                               
stated that  the state  will try to  sustain the  monthly benefit                                                               
cost of $1,389.                                                                                                                 
                                                                                                                                
4:37:13 PM                                                                                                                    
                                                                                                                                
BECKY  HULTBERG,   Commissioner,  Department   of  Administration                                                               
(DOA), stated  the question is  complex since the cost  of health                                                               
insurance is  determined by numerous  factors, including  use and                                                               
plan design, which has not  been discussed much in committee, but                                                               
is relevant  to the  conversation.  She  explained that  the plan                                                               
design  and medical  claims can  contribute significantly  to the                                                               
cost  of the  health plan.   She  characterized this  as somewhat                                                               
buried in the design of the plans.                                                                                              
                                                                                                                                
4:38:00 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  MILLETT  asked  about preventative  health  care.                                                               
She  asked whether  AlaskaCare provides  health  fairs for  state                                                               
employees.                                                                                                                      
                                                                                                                                
COMMISSIONER HULTBERG  answered yes.   She said  the state  has a                                                               
vested interest in  the health and health care  of its employees.                                                               
First,  the  state, through  its  contributions  to education  is                                                               
funding a  significant portion  of the  $282 million  being spent                                                               
for  health   care  insurance  for  school   district  employees.                                                               
Second,  which is  the  bigger financial  interest,  is that  the                                                               
state pays  for health care for  its retirees.  She  reported the                                                               
current unfunded liability is $12  billion of which $4 billion is                                                               
directly related  to health care.   Thus  the state has  a vested                                                               
interest in ensuring the current  employees are healthy since the                                                               
state will pay the bill now and later, too.                                                                                     
                                                                                                                                
4:39:19 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  MILLETT  asked if  the  DOA  would negotiate  the                                                               
union  contracts  and  whether   health  care  is  a  contractual                                                               
agreement that is negotiated.   She wondered if it would simplify                                                               
the  state's negotiations  by taking  over  health insurance  and                                                               
making it more reasonable, regardless  of whether the new plan is                                                               
better,  worse or  exactly the  same as  the NEA-Alaska's  Health                                                               
Plan trust.                                                                                                                     
                                                                                                                                
COMMISSIONER HULTBERG  answered yes; the state  negotiates health                                                               
care.    She  said  that   the  state  typically  negotiates  the                                                               
contribution  to health  care,  although  the general  government                                                               
unit  (GGU)  had  some complex  language,  which  was  simplified                                                               
through  the  negotiation  process.   However,  she  offered  her                                                               
belief that some  school districts negotiate benefits.   She said                                                               
she wished  that the  employees that are  currently in  the union                                                               
health trust  were part of the  state's plan since it  would give                                                               
the  state  more  leverage and  bargaining  power;  however,  she                                                               
recognized that  these benefits  are part  of the  process worked                                                               
out at the negotiating table.                                                                                                   
                                                                                                                                
4:40:56 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  CHENAULT  referred  to   the  DOA's  Division  of                                                               
Retirement and Benefits fiscal note.   He asked whether the costs                                                               
are spread out for new employees  or if costs would be spread out                                                               
to all employees.                                                                                                               
                                                                                                                                
MR.  BARNHILL  answered  the  fiscal   note  is  limited  to  new                                                               
employees and not existing employees.                                                                                           
                                                                                                                                
4:41:33 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  CHENAULT  asked whether  all  NEA  would have  to                                                               
subscribe to  the insurance provided  by the  NEA-Alaska's Health                                                               
Plan [Trust] fund.                                                                                                              
                                                                                                                                
CHAIR OLSON related that question was previously answered.                                                                      
                                                                                                                                
REPRESENTATIVE  CHENAULT  related  his understanding  that  there                                                               
were 452 waivers out of 3,500 employees.                                                                                        
                                                                                                                                
4:42:45 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE MILLETT  asked for clarification that  everyone in                                                               
the active NEA-Alaska's Health Plan  trust will eventually become                                                               
a retiree in the state plan.                                                                                                    
                                                                                                                                
COMMISSIONER  HULTBERG  answered  yes;  so  long  as  the  school                                                               
district employees  were vested in  the TRS and are  eligible for                                                               
health care.                                                                                                                    
                                                                                                                                
4:43:28 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOSEPHSON  said it  strikes him  that if  PPACA is                                                               
successful and a  federal exchange is created  with new entrants,                                                               
including  Medicaid funding,  it will  be difficult  to ascertain                                                               
five years from  now what contributed to any  cost containment if                                                               
this bill passes.                                                                                                               
                                                                                                                                
COMMISSIONER  HULTBERG responded  that she  could research  this,                                                               
but she is  not optimistic that the state will  see reduced costs                                                               
through the  PPACA.  In  fact, the  DOA's experience to  date has                                                               
been increased costs.   She suggested the state  could review the                                                               
documentation, but she does not  anticipate [the state] will have                                                               
a better  experience due to the  PPACA; instead it will  have the                                                               
opposite effect on the state's plan.                                                                                            
                                                                                                                                
MR. BARNHILL offered his belief that  one can connect the link of                                                               
causation.  For example, if  the state has a current relationship                                                               
with a  provider or a set  of providers without any  discount for                                                               
services,  but through  the  pool is  able  to obtain  sufficient                                                               
volume  to obtain  a 10-25  percent discount,  the state  will be                                                               
able  to make  the  connection to  say HB  196  helped the  state                                                               
obtain a better deal.                                                                                                           
                                                                                                                                
4:45:14 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE REINBOLD asked whether his  view is that this bill                                                               
is about  public funds  for public  employee health  benefits and                                                               
not necessarily about  the [PPACA], which is  basically a mandate                                                               
on the private sector.                                                                                                          
                                                                                                                                
COMMISSIONER HULTBERG answered that  some provisions of the PPACA                                                               
apply   to  the   state's  active   employee   plan,  which   has                                                               
grandfathered status  under the  PPACA.  If  the state  loses its                                                               
grandfathered  status,  which  most   large  plans  believe  will                                                               
happen, then  a whole new  set of mandates  will apply.   Thus it                                                               
does affect  the state  in terms  of costs.   The state  has seen                                                               
increased costs  already and  she anticipated  that if  the state                                                               
loses  its grandfathered  status,  the state  will see  increased                                                               
costs.                                                                                                                          
                                                                                                                                
MR.  BARNHILL   reported  that  the   call  center   covers  four                                                               
languages, including Russian, Ukrainian, Spanish, and Filipino.                                                                 
                                                                                                                                
4:46:41 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOSEPHSON  recalled the  DOA's prior  testimony is                                                               
that it  took no position  on the  bill; however, it  sounds like                                                               
the department is "warming" to the bill.                                                                                        
                                                                                                                                
COMMISSIONER HULTBERG answered that  the department has not taken                                                               
an  official position  on HB  196, but  the concept  of insurance                                                               
pooling  and adding  to the  existing pool  could help  the state                                                               
mitigate  cost escalation.   She  reiterated that  the department                                                               
has  no   official  position,  but  conceptually   believes  that                                                               
insurance pooling has merit.                                                                                                    
                                                                                                                                
4:47:20 PM                                                                                                                    
                                                                                                                                
RICH  RHODES,  Superintendent,  Wrangell Public  School  District                                                               
(WSD),  stated that  WSD is  a strong  supporter of  group health                                                               
insurance  coverage  and has  worked  hard  to contain  costs  by                                                               
increasing deductibles  to $1,000  per individual and  $3,000 per                                                               
family.  All  school district members share in the  costs and any                                                               
increases  to  the  health insurance  plan,  which  is  currently                                                               
approximately  $44 monthly  with  a  monthly cap  of  $200.   The                                                               
health  insurance premiums  have  been held  to  $28,000 for  the                                                               
family plan, $16,000  for an adult with child, and  $9,000 for an                                                               
individual teacher.   However, these costs do not  include a 17.5                                                               
percent increase to the premium policy this year.                                                                               
                                                                                                                                
MR. RHODES  said the WSD believes  a large state pool  would help                                                               
maximize efficiency  and cost.   He  said that  maximizing travel                                                               
and  housing   allocations  with  state   contracts,  competitive                                                               
contracts   with   service   providers,  as   well   as   focused                                                               
incentivized  wellness   plans  are  all  options   that  provide                                                               
positive  results and  lower the  overall  premium cost.   It  is                                                               
commonly  understood  that participating  in  a  large pool  will                                                               
spread  out losses  thereby  reducing the  impact  of spikes  and                                                               
peaks  of  a  small  group.    Health  care  issues  are  equally                                                               
significant for  private, state,  and local government,  he said.                                                               
In order to be proactive and  not reactive, the state must make a                                                               
change to the  current practices.  Each year  the school district                                                               
holds  its  breath  trying  to  determine  the  health  insurance                                                               
increases.  While the school  district [did not have an increase]                                                               
last year,  this year the increase  was 17 percent.   These costs                                                               
represent  nearly  10 percent  of  the  WSD's budget,  which  are                                                               
significant,  and  unpredictable.   For  example,  this year  the                                                               
school  district consolidated  its  superintendent and  principal                                                               
position to  reduce ongoing costs.   He said the  WSD appreciates                                                               
that  HB  196  make a  bold  step  to  address  the issues.    In                                                               
conclusion, he offered the WSD's support for HB 196.                                                                            
                                                                                                                                
4:49:46 PM                                                                                                                    
                                                                                                                                
DAVID BOYLE  said he appreciated  the school  districts' comments                                                               
in  support of  HB 196.   He  said the  cost of  health insurance                                                               
represents a  large percentage of  a school  district's operating                                                               
budget, it  is imperative  that the  legislature address  ways to                                                               
reduce  costs  to  improve  the state's  education.      However,                                                               
several ways exist to decrease  costs to the taxpayer, the state,                                                               
and  the school  districts.   First, the  school districts  could                                                               
shift more of the premiums  to members.  Second, school districts                                                               
could combine  with other  groups or  join the  state's insurance                                                               
plan.  Third, school districts  could increase competition, which                                                               
is difficult  at best in  Alaska's distorted medical market.   He                                                               
recalled  the committee  heard  testimony  from the  NEA-Alaska's                                                               
Health Plan  trust that the  trust saves school  districts money.                                                               
Certainly,  this claim  needs to  be verified.   For  example, he                                                               
referred to the  letter from the NEA-Alaska's  Health Plan, which                                                               
read, as  follows: "Last year the  trust had a zero  percent rate                                                               
increase  in its  premium."   However, the  problem with  that is                                                               
that the  NEA-Alaska's Health  Plan trust did  not return  any of                                                               
the  premiums to  school districts  or their  members.   Further,                                                               
public records aren't  available.  The public money  spent by the                                                               
more than 50  school districts is not accountable  to the public.                                                               
The [state] needs  to know the administrative  costs and overhead                                                               
costs or the  state and local taxpayers are  writing blank checks                                                               
with  little,  if  any,  accountability.     He  recommended  the                                                               
committee obtain  more information before  acting on HB 196.   He                                                               
further  recommended  that  the   committee  make  a  legislative                                                               
request   to  the   NEA-Alaska's  Health   trust  fund   for  the                                                               
information.   This is about  transparency and  accountability to                                                               
the state,  school districts, and  local taxpayers, he said.   He                                                               
asked members  to trust but  verify.   He clarified that  the ASD                                                               
contributes its  portion of  premiums, approximately  $1,450, for                                                               
its members  who choose  not to  participate in  the NEA-Alaska's                                                               
Health Plan trust,  even though these members are  not covered by                                                               
the plan.                                                                                                                       
                                                                                                                                
4:52:08 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON  reported that Rhonda Kitter,  NEA-Alaska Health Plan                                                               
trust advised him the trustees  will meet Friday evening and will                                                               
follow up on the committee's request for further information.                                                                   
                                                                                                                                
4:52:38 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  LYNN GATTIS,  Alaska State  Legislature, speaking                                                               
on behalf of the sponsor,  the House Education Standing Committee                                                               
which she  chairs, commented that the  [NEA-Alaska's Health Plan]                                                               
trust doesn't  typically inform the school  districts until April                                                               
on premium costs, which creates  a budgeting issue for the school                                                               
districts as  they try  to budget  for the  following year.   She                                                               
offered her  hope that the  state will let school  districts know                                                               
earlier [if HB 196 passes.]   She commented that the $300 million                                                               
has been  discussed.   She asked  members to  do the  math, since                                                               
that   represents  approximately   25  percent   of  the   school                                                               
foundation formula funding.  She said,  "It's a lot of money that                                                               
we talk about that we spend."                                                                                                   
                                                                                                                                
4:53:44 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GATTIS, in  response  to Representative  Saddler,                                                               
clarified  that  the various  trusts  do  not inform  the  school                                                               
districts  of any  [health  insurance  premium] increases  [until                                                               
April].   She reiterated the intent  of HB 196 is  to pool public                                                               
school district  employees with state  employees for  health care                                                               
coverage.   She  predicted this  will  in turn  reduce costs  and                                                               
unburden school  districts since  53 school districts  with their                                                               
own  independent  plans  or  with multiple  plans  are  just  not                                                               
efficient.   She  said with  health  insurance costs  continually                                                               
rising,  the  state must  look  for  a  solution outside  of  the                                                               
fractured efforts  of school districts  going to market  on their                                                               
own.  She offered her belief  this problem cannot be solved by an                                                               
individual school district.                                                                                                     
                                                                                                                                
REPRESENTATIVE GATTIS shared the following  facts.  She said that                                                               
over  half of  the states  in  the U.S.  have some  type of  pool                                                               
between state and local employees  and at least 19 states include                                                               
public school employees.   She referred to a  handout in members'                                                               
packets,  entitled, "Health  Cost  Containment and  Efficiencies,                                                               
June  2010."   In  response to  Representative Herron's  previous                                                               
question at a prior meeting,  she reported that the Alaska Public                                                               
[Entity Insurance  (APEI)] is neutral  on this bill.   The APEI's                                                               
executive director, Jeff Bush, indicates  that," ... pools are an                                                               
effective  way  to reduce  insurance  costs."   She  offered  her                                                               
belief that some people speaking  against HB 196 have a financial                                                               
interest in making  sure nothing changes.   Many school districts                                                               
don't have access to claims  information from NEA-Alaska's Health                                                               
Plan trust.  These are public  funds - public benefits for public                                                               
employees -  and the  state needs accountability  and a  means to                                                               
reduce costs while  maximizing benefits.  In fact, this  is not a                                                               
union issue,  but an  issue of state  government finding  ways to                                                               
become  more  efficient with  the  public  funds.   She  recalled                                                               
Commissioner   Hultberg's   earlier   testimony   reminding   the                                                               
committee that  pooling the public school  teachers together with                                                               
the  state's health  insurance plan  makes a  lot of  sense.   In                                                               
fact, when  public school teachers  retire, they will  come under                                                               
the state's umbrella  of health insurance.   She reminded members                                                               
that school  districts testified in  support of HB 196  and while                                                               
the nuances of the plans are  not comparable, savings will be had                                                               
and these savings will go right back to the classroom.                                                                          
                                                                                                                                
4:56:04 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  HERRON  commented  that insurance  pools  request                                                               
quotes from brokers  and the industry for the  upcoming year, but                                                               
often  these quotes  are not  received until  May.   He suggested                                                               
that the  sponsor ask Jeff  Bush, APEI, if  this is the  same for                                                               
insurance.   He  further recalled  it  is typically  late in  the                                                               
fiscal year  when quotes are  obtained from  individual insurance                                                               
companies.                                                                                                                      
                                                                                                                                
REPRESENTATIVE GATTIS agreed to ask  the question and report back                                                               
to the committee.                                                                                                               
                                                                                                                                
4:56:47 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOSEPHSON remarked  that  HB 196  is not  without                                                               
some merit.  He referred  to Representative Gattis's comment that                                                               
school  districts don't  know what  adjustments will  be made  on                                                               
health care insurance  premiums.  He pointed  out the legislature                                                               
doesn't have information on the  school district budgets, such as                                                               
how  much money  the school  districts will  receive or  how many                                                               
teachers can be  retained even though it is the  teachers who are                                                               
being  insured.    He  acknowledged  the  timing  on  the  health                                                               
insurance  premium  information  may   be  accurate,  the  school                                                               
districts must contend with mystery after mystery.                                                                              
                                                                                                                                
REPRESENTATIVE  GATTIS agreed  that  the legislature  is part  of                                                               
that mystery.  In further  response to Representative Josephson's                                                               
question on  how the legislature  knows the cost savings  will go                                                               
back to the  classroom, Representative Gattis said  she has heard                                                               
legislators   comment   that   any   savings,   including   pupil                                                               
transportation savings  or savings  on book purchases,  and other                                                               
savings can go directly back to  the classroom.  On the one hand,                                                               
the assumption is  that when school districts  are not purchasing                                                               
fuel  or insurance,  the  cost  savings can  go  directly to  the                                                               
classroom.  On  the other hand, if the cost  savings are not had,                                                               
the money is not available for the classrooms, she said.                                                                        
                                                                                                                                
4:58:12 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE REINBOLD  recalled hearing an earlier  quote about                                                               
the constitution and using the  resources for the maximum benefit                                                               
of the  people.  She said  she believes that money  is a resource                                                               
and the  state needs  to use  it for the  maximum benefit  of the                                                               
people.  She further said it  is only prudent for the legislature                                                               
to  look  at  ways  to  streamline  and  be  more  efficient  and                                                               
accountable.   She pointed out  the funds in question  are nearly                                                               
$300 million per year.   She applauded the [sponsor's] efforts to                                                               
bring the  bill forward.   She hoped  the committee  would review                                                               
this bill  appropriately since it  has long-term benefits  to the                                                               
state.    Therefore,  the  state  could  pay  off  its  long-term                                                               
liabilities.  She  cautioned that the state is  getting itself in                                                               
a  situation in  which it  cannot pay  off the  long-term [debt].                                                               
She predicted  that the  impact [of HB  196] on  long-term health                                                               
care  benefits will  be realized  in the  future.   She applauded                                                               
everyone who  is working to do  so for the state's  employees and                                                               
teachers.                                                                                                                       
                                                                                                                                
[HB 196 was held over.]                                                                                                         
                                                                                                                                
4:59:18 PM                                                                                                                    
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no  further business before the  committee, the House                                                               
Labor and  Commerce Standing Committee  meeting was  adjourned at                                                               
4:59 p.m.                                                                                                                       

Document Name Date/Time Subjects
HB96 Ver A.pdf HL&C 4/8/2013 3:15:00 PM
HB 96
HB96 Sponsor Statement.pdf HL&C 4/8/2013 3:15:00 PM
HB 96
HB96 Sectional Analysis.pdf HL&C 4/8/2013 3:15:00 PM
HB 96
HB96 Supporting Documents - Article Fox News 1-11-10.pdf HL&C 4/8/2013 3:15:00 PM
HB 96
HB96 Supporting Documents - Article Fox News 12-21-12.pdf HL&C 4/8/2013 3:15:00 PM
HB 96
HB96 Supporting Documents - Article CS Monitor 6-11-10.pdf HL&C 4/8/2013 3:15:00 PM
HB 96
HB96 Supporting Documents - Article EPA 1 1-1-13.pdf HL&C 4/8/2013 3:15:00 PM
HB 96
HB96 Supporting Documents - Article EPA 2 2-14-11.PDF HL&C 4/8/2013 3:15:00 PM
HB 96
HB149 ver A.PDF HL&C 4/8/2013 3:15:00 PM
HB 149
HB149 Sponsor Statement.PDF HL&C 4/8/2013 3:15:00 PM
HB 149
HB149 Sectional Summary.PDF HL&C 4/8/2013 3:15:00 PM
HB 149
HB149 Supporting Documents-Letter Alaska Correctional Officers Association 3-21-2013.pdf HL&C 4/8/2013 3:15:00 PM
HB 149
HB149 Supporting Documents-Letter Public Safety Employees Association 3-21-2013.PDF HL&C 4/8/2013 3:15:00 PM
HB 149
HB196 Fiscal Note-DOA-DRB-4-07-13.pdf HL&C 4/8/2013 3:15:00 PM
HB 196
HB196 Supporting Documents-Letter Deena Paramo 4-5-2013.pdf HL&C 4/8/2013 3:15:00 PM
HB 196
HB196 Supporting Documents-Letter Michael Johnson Copper River 4-6-2013.pdf HL&C 4/8/2013 3:15:00 PM
HB 196
HB96 Fiscal Note-DEC-SWM-04-08-13.pdf HL&C 4/8/2013 3:15:00 PM
HB 96
HB96 Fiscal Note-DHSS-EPI-2-14-13.pdf HL&C 4/8/2013 3:15:00 PM
HB 96
HB96 Opposing Documents-Letter-AK State Chamber 4-8-13.pdf HL&C 4/8/2013 3:15:00 PM
HB 96
HB149 Fiscal Note-UA-Sysbra-4-06-13.pdf HL&C 4/8/2013 3:15:00 PM
HB 149
HB149 Fiscal Note-DOLWD-WC-3-21-13.pdf HL&C 4/8/2013 3:15:00 PM
HB 149
HB196 Supporting Documents-Healthcare plan overview JSD 4-8-2013.pdf HL&C 4/8/2013 3:15:00 PM
HB 196
HB196 Supporting Documents-Letter Jeff Bush APEI 4-82013.pdf HL&C 4/8/2013 3:15:00 PM
HB 196
HB196 Supporting Documents-Healthcare plan overview ASD 4-8-2013.pdf HL&C 4/8/2013 3:15:00 PM
HB 196
HB196 Supporting Documents-Healthcare plan overview CSD 4-8-2013.pdf HL&C 4/8/2013 3:15:00 PM
HB 196