Legislature(2001 - 2002)
03/28/2002 08:04 AM House STA
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 483-PROCUREMENT OF GROUP HEALTH INSURANCE SSHB 315-GROUP HEALTH INSURANCE FOR PRIVATE GROUPS CHAIR COGHILL announced that the next order of business would be the following two bills: HOUSE BILL NO. 483, "An Act authorizing state procurement of group insurance for employees of child care facilities, entities licensed as residential child care facilities, child placement agencies, foster homes, and maternity houses, and certain adult residential and day services providers, and for employees of certain nonprofit entities; repealing a provision of the state group insurance procurement law relating to payment of dividends and clarifying a provision of that law relating to part-time employees; authorizing the commissioner of administration to adopt regulations regarding state procurement of group insurance; and providing for an effective date"; and SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 315, "An Act allowing employers that are small businesses, small nonprofit organizations, or small associations for insurance purposes to join state employee insurance coverage as a group; and providing for an effective date." CHAIR COGHILL noted that these bills will be heard together because he understood that they [may be] combined in a committee substitute (CS) for SSHB 315. Number 2311 RONNI SULLIVAN, Director, Southern Region Emergency Medical Services Council, testified via teleconference. Ms. Sullivan informed the committee that the Southern Region EMS, a 501(c)(3) nonprofit organization, is one of seven regions around the state. Southern Region EMS supports the activities of ambulance and first responder services throughout the region. There are 92 ambulance and first responder services in the region. Ms. Sullivan noted that about 75 percent of the Southern Region EMS funding is received from state grant funds. The Southern Region EMS has a staff of ten employees, eight of which are full-time employees who are eligible for benefits. The trend over the years has been increasing costs and fixed or decreasing grant funds. Furthermore, health insurance costs have risen disproportionately and perhaps even more disproportionately in small businesses with under ten employees. In the Southern Region, health insurance rates have risen by over 52 percent over the last seven years; 42 percent of that 52 percent increase occurred last year alone. MS. SULLIVAN reiterated that Southern Region EMS is a small group. Insurers really don't want to insure small groups. She said that insurers of small groups have the ability to provide [small groups] with unfair scrutiny of individual health histories. Whenever there are claims against the policy, it seems that the policy amounts increase the next period. For the most part, the state bears the burden of those increases because Southern Region EMS's grant pays for its personnel and health care costs. Ms. Sullivan noted that Southern Region EMS has tried to live within a reasonable budget and even had to drop dependent coverage due to the increased cost. Furthermore, coverage for Southern Region EMS employees only covers the employee, the deductible was raised, and the coverage was decreased. Little more can be done. Ms. Sullivan informed the committee that for eight employees she pays $7,000 a month for health care, which is unreasonably high. Unfortunately, there is no relief in sight. Without benefits, she can't keep people, she said. Ms. Sullivan said that both [HB 483 and SSHB 315] would provide an opportunity for Southern Region EMS to provide good insurance for a reasonable price while saving the state money. MS. SULLIVAN informed the committee that most emergency medical services are nonprofits, which aren't associated with their municipality. There have been problems with recruitment and retention of volunteers willing to take on the degree of responsibility [necessary]. This has also been the case with agencies within the fire service. Therefore, [these bills] would provide an opportunity for those volunteer agencies to perhaps have access to health insurance. In conclusion, she urged the committee's support of both bills whether individually or collectively. Number 2543 MARGARET LaVIGUEUR, Homer Senior Center, testified via teleconference. Ms. LaViguer agreed with Ms. Sullivan's comments. She indicated support of "this bill." BILL HOGAN, Chief Executive Officer, Life Quest Comprehensive Mental Health Services, testified via teleconference. He informed the committee that Life Quest is primarily responsible for [providing] most of the mental health needs of the residents of the Mat-Su Valley. Life Quest is funded by a mix of both state and federal grants, contracts, and fees. Over the past five years, Life Quest's health care premiums have increased by over 100 percent. Therefore, a number of years ago Life Quest was forced to drop employer-funded dependent coverage because it became too expensive. The most recent benefit cycle with its dramatic increase in premiums forced Life Quest to drop dental and vision coverage and increase deductibles. With about 110 employees, it's very difficult to find affordable health care premiums. "Our ability to attract and retain qualified, effective employees is compromised by the quality of the health care coverage we're able to provide," he pointed out. Mr. Hogan noted support of the efforts outlined in SSHB 315, which gives nonprofits such as Life Quest access to a larger insurance pool that offers the advantage of premium rates that a large pool can command. Number 2685 MARY ROSENZWEIG, Executive Director, Substance Abuse Directors Association, testified via teleconference. Mr. Rosenzweig noted that she has sent the committee her testimony. She informed the committee that the Substance Abuse Directors Association represents a little over 50 agencies and individuals across the state who provide substance abuse treatment and prevention services. The issue of health insurance has come to the surface over the past two years when [the association] conducted a survey of its membership. On average the premium increases have been about 36 percent over that two year period. However, some agencies are experiencing a 100 percent increase over the course of a year. In the two years of the survey, the average agency per employee premium has increased from $4,400 to almost $6,000. Furthermore, health insurance is taking a larger portion of the [association's] operating budget. In the two years of the survey, the health benefit average rose from 5.8 percent of the operating budget to 7.6 percent of the operating budget. Therefore, there is less money for services. These agencies haven't received any increases, inflationary increases, in more than 12 years. Since many of the agencies are providing state social services as a nonprofit grantee, this all means that the state is able to purchase less service with its dollars. She informed the committee that the association has increased deductibles and decreased the level of coverage. The association has reached the point at which recruitment and retention is a critical mass. Therefore, [such organizations] are seeking relief, which [SSHB 315] will provide with little cost to the state. In conclusion, Ms. Rosenzweig urged support of [SSHB 315]. Number 2822 FRANK KEEN, Health Insurance Broker, testified via teleconference. He said that he sees the increasing health care costs in Alaska every day and thus he encouraged the committee to do what it can to improve accessibility [to affordable health insurance], especially for organizations that hire lower compensated employees who can't afford health insurance. Mr. Keen noted his opposition to any adverse action on the current Denali Kid Care program. He explained that many of the employers that he serves have employees and dependent children who wouldn't have any coverage without the availability of Denali Kid Care. He identified the biggest problem in Alaska as the lack of competition. Mr. Keen recalled earlier comments regarding discrimination against smaller employers, which he says exists. Therefore, he said he believes that the state should take action to prohibit discrimination against smaller employers. Number 2928 FRED JENKINS, Executive Vice President, United Way of Anchorage, testified via teleconference. The United Way of Anchorage provides funding for 48 nonprofit health and human service agencies based in Anchorage. Mr. Jenkins said that he felt confident in saying [for those 48 nonprofits] that anything the legislature can do to make health insurance more affordable would be very helpful. Mr. Jenkins explained that the obstacle to affordable health insurance is probably not the fault of the industry but rather it's that the insurance system doesn't work well in Alaska. The reason the insurance system doesn't work well in Alaska is partially because of the small pool of potential insureds as well as some of the characteristics of the population that "we're trying to insure." However, the lack of affordable health insurance is an obstacle to nonprofits having a stable workforce. In November, Mr. Jenkins did a survey of the 48 funded nonprofits with which he works. He offered to submit [the results] in writing. TAPE 02-33, SIDE B MR. JENKINS related [from the findings of his survey] that premium costs averaged $6,000 per employee, which can only rise. United Way of Anchorage experienced a 40 percent increase in its insurance coverage this year. Mr. Jenkins announced that he would support any integration of SSHB 315 and HB 483 [with the addition of] the category for special service organizations to the bill. He encouraged the committee not to limit access to the plan to organizations who have large numbers of employees. Many nonprofits have large employee bases because they operate multi-site childcare or residential treatment facilities that have to be staffed on a 24-hour basis. However, the number of employees in an organization's base isn't an indicator of their ability to afford insurance. MR. JENKINS informed the committee that Dennis McMillan, President, United Way of Anchorage, has worked closely with the Departments of Health & Social Services, Administration, and Commerce & Economic Development in order to develop solutions to this problem. However, the major factor in accessing insurance is affordability. Any help that the legislature can offer in that vein would be appreciated. CHAIR COGHILL noted that the committee substitute (CS) that will be adopted soon does include the special service organizations. Number 2875 CANDACE WINKLER, Associate Executive Director, Child Care Connection, testified via teleconference in support of amending SSHB 315 as proposed. Ms. Winkler informed the committee that a four-year-old recently illustrated the child care crisis when that child asked the question, "Mommy, who's going to be my teacher today?" This child had three teachers in six months. As an advocate for children and child care providers, Ms. Winkler was disturbed by that comment. The turnover rate [for child care providers] is 49 percent. She attributed the high turnover rates to inadequate pay and lack of benefits. Most child care providers earn between $16,000-$19,000 a year. Half of all child care providers are living below the poverty level and less than a third of them have health insurance. MS. WINKLER emphasized that child care providers are important to Alaska's economy. Currently, two-thirds of families with children have two working parents. Furthermore, 65 percent of mothers with children under six are working. Ms. Winkler highlighted the importance child care providers have on the future of the children with which they have contact. Currently, there are approximately 5,000 child care workers in Alaska. Ms. Winkler said: For us to be able to provide consistent, quality care to kids, it's important for us to be able to retain staff members who have the experience in child development. We can only do that by making their lifestyle healthier by providing them with access to health insurance. And by promoting the health of the child care providers, we're wisely investing in those who care for and refine Alaska's children. Please do what you can to support this bill and to support the people who are working on the front lines to raise our kids. CHAIR COGHILL apologized that the committee wouldn't be able take further testimony today. Number 2725 REPRESENTATIVE FATE moved to adopt CSSSHB 315, LS1177\O, Craver, 3/27/02, as the working document. There being no objection, Version O was before the committee. CHAIR COGHILL announced that he wouldn't close public testimony today. Number 2678 REPRESENTATIVE NORMAN ROKEBERG, Alaska State Legislature, testified as the sponsor of SSHB 315. He explained that Version O adopts the concept of special service organizations and thus allows people who are sole proprietors to participate. The bill contains a litany of groups covered and defined. He pointed out that Section 5 changes the effective date from July 2003 to January 3, 2003, due to the significant demand for this bill. Section 4 changes the small business organization size requirement of 300 eligible employees to 50 eligible employees. He explained that he has spent the last eight years trying to create an environment in which private insurance underwriters can enter the state. Therefore, he is sensitive to the group that will be created and the type of competition there will be with the private sector. This bill creates a new group that will be under a private plan. Therefore, it avoids the mingling of private people with state employees, which could jeopardize the governmental exemption under the Employee Retirement and Income Security Act of 1974 (ERISA). The provisions of the bill provide a bidding process under the private sector. CHAIR COGHILL noted that he will be inquiring as to the [make up] of the pool; its access; and [interaction] with other insurance areas under ERISA. Number 2517 REPRESENTATIVE WILSON, sponsor of HB 483, said she was pleased that Representative Rokeberg was willing to look at both bills and consider what could be done for those in the special services organizations. She expressed her pleasure in the merging of the two bills. [HB 483 and SSHB 315 were held over.]
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