Legislature(2013 - 2014)SENATE FINANCE 532
04/11/2013 01:30 PM Senate FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB 129 | |
| SB90 | |
| HB71 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 90 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 129 | TELECONFERENCED | |
| += | HB 71 | TELECONFERENCED | |
SENATE BILL NO. 90
"An Act relating to group insurance coverage and self-
insurance coverage for school district employees; and
providing for an effective date."
2:25:30 PM
Senator Dunleavy explained SB 90, and state that the cost
of health care insurance for all employees has escalated
far greater than the rate of inflation and Alaska's 53
school districts have felt the financial pinch. Under
Senate Bill 90, all Alaska public school districts
employees will be covered by a state-managed group health
insurance program. Approximately 19,000 school district
employees and their families, an estimated total of 47,000
individuals, would be added to the State of Alaska's
Employee Health Plan. This larger insurance pool places the
State of Alaska in a position to negotiate a more favorable
employee health care insurance plan. By moving school
districts into an integrated state plan, the state and
school districts benefit from the economies of scale.
Currently each school district must obtain its own
insurance coverage; consequently, the level of coverage and
the cost of premiums vary widely throughout the state. In
addition to the potential savings with lower insurance
premiums, two other advantages are afforded school
districts and the state through this legislation. Senate
Bill 90 will provide standardized health care coverage
statewide for all school district employees. A person who
may elect to move between school districts will know the
basic insurance coverage offered before the transfer.
Secondly, the need for administrative time and effort by
each school district to secure and negotiate a health
insurance plan for its employees is eliminated. This
responsibility shifts to the Department of Administration
(DOA), a department that routinely manages insurance
policies for all state employees, and allows school
districts to focus on educational policy issues. Starting
July 1, 2014, school districts will transition to the new
state health care insurance plan as each school district's
existing employee contracts expire. All school districts
are expected to changeover to the State of Alaska plan
within three to five years.
2:27:04 PM
DEENA PARAMO, SUPERINTENDENT, MAT-SU SCHOOL DISTRICT, MAT-
SU, testified in favor of SB 90. She shared that her school
district currently spends approximately $30 million on
health insurance benefits each year in its general
operating fund, which was roughly 15 percent of all
expenditures. With the average cost of health care
increasing by approximately 12 percent annual, the Mat-Su
Borough School District could potentially experience a $3.6
million increase, which is the equivalent of 36 teaching
positions. In an effort to preserve teaching positions and
control escalating costs, the Mat-Su Borough School
District fully supports the concept of a statewide
insurance plan.
Vice-Chair Fairclough wondered if an employee was covered
by another insurance company, the district's contracts
required them to pay into the trust, regardless of whether
the employee draws that money or not. Ms. Paramo replied
that it was not true for the Mat-Su school district, but
may be the case in the Anchorage School District.
Senator Dunleavy shared that there was a testifier online
who may be able to answer some questions.
Senator Hoffman queried the circumstances for other Alaskan
school districts to oppose the legislation. Ms. Paramo
replied that the opposition may be based on the costs that
they were currently incurring, but felt that, over time,
all the school districts would be in the same situation.
2:34:26 PM
Senator Hoffman remarked that it was difficult to hire
teachers in the rural areas of the state, and felt that
teachers may be lured away by a premium health care
package. Ms. Paramo responded that the cost in each school
district would still have an availability to provide the
additional coverage. She felt that there could be a premium
plan in the statewide plan, and the cost would be
determined by the individual school districts.
KEN FORREST, MAT-SU SCHOOL DISTRICT, MAT-SU (via
teleconference), explained that there was approximately two
years' worth of work to determine the appropriateness of
the affordability of sustainable health care plans for the
Mat-Su Borough School District employees. He stated a bid
was conducted the year prior for non-NEA health trust
coverage for classified employees, and it was a very
competitive bid. He felt that it was important to examine
alternatives, because the employer was responsible for
ensuring compliance with the minimal coverage requirements
and the part time employee requirements. He pointed out
that when a large group of employees were added to any
health care plan, the overall cost would be lowered.
Senator Olson wondered if there were any school districts
whose health care coverage costs would increase under the
legislation. Mr. Forrest replied that there may be some
school districts that were paying less, but those costs may
be equalized as the 2014 requirements were adopted.
Senator Olson felt that the bill would require the smaller
school districts to pay more for their health insurance,
because they did not have the economy of scale of Anchorage
or Mat-Su. Mr. Forrest responded that there would be an
opportunity for the larger groups to spread the costs
equitably across the state.
2:39:55 PM
STEVE ATWATER, SUPERINTENDENT, KENAI PENINSULA SCHOOL
DISTRICT (KPBSD) (via teleconference), spoke in support of
SB 90. He stated that during FY 12 KPBSD spent $21,247,476
on employee health care costs. This compares to Si
3,053,373 spent for employee health care costs in FY 08.
The cost per employee was $11,813 in 2008 and it was
$17,204 in 2012. This increase came despite cost savings
efforts within the district, and illustrates the need to
reduce health care costs in the district. He stressed that
the larger pool of participants would experience a greater
cost savings, because of the economies and scale and
leveraged purchasing afforded by the increased volume. Such
savings would allow the district to continue to focus their
efforts and resources directly on the instruction of the
students, instead of choosing which services or programs
would be reduced.
DR. ROB THOMASON, SUPERINTENDENT, PETERSBURG SCHOOL
DISTRICT, PETERSBURG (via teleconference), testified in
support of SB 90. He remarked that health insurance was a
very complex topic, but felt that economies of scale and an
increased pool of participants made statistical and
economic sense at a time of declining financial resources.
He remarked that the employees, students, and programs were
stressed due to increased health care costs.
2:49:09 PM
CARL ROSE, EXECUTIVE DIRECTOR, ALASKA ASSOCIATION OF ALASKA
SCHOOL BOARDS (AASB), testified in support of SB 90. He
remarked that AASB had recently aligned themselves with
Resolution 4.8, which was a resolution related to health
care costs and medical insurance. He stated that the effect
of the Affordable Care Act was not fully understood, so
AASB called upon the governor, legislature, and congress to
eliminate the unintended consequences harmful to school
districts. He felt that there were many school district
employees who were currently content, but pointed out that
there could be negative effects of the Affordable Care Act.
He remarked that that the anticipated negative effect would
require health insurance payments to go toward people who
did not currently hold health insurance.
Senator Olson noted that Mr. Rose had a statewide
perspective and wondered the number of school district
employees that would be covered would change. Mr. Rose
replied that he felt that he was only addressing the
current employee number, and AASB was basing their
projections on those numbers.
Senator Olson queried if school districts would more if
they had a smaller number of employees. Mr. Rose responded
that AASB attempted to address the economies of scale
through the foundation formula and area cost differential
in terms of real dollars. He furthered that the pool was
intended to level the marketplace between the large and
small school districts.
Senator Olson queried a level-out date for health care cost
equity state-wide. Mr. Rose replied that he could not
project that far out, and that his membership felt there
would be an increase immediately, but not in the long-term.
Senator Olson noted that there were many school district
with IHS beneficent employees. He wondered if those
employees would be affected. Mr. Rose deferred to experts
in the area and related that he was referring in general to
the school districts. He stressed that AASB saw a general
cost savings, but understood that the cost would vary by
district.
Senator Olson wondered if AASB would be in favor of a non-
mandatory health insurance plan. Mr. Rose responded that
one of the aspects of the legislation was mandatory health
care and medical insurance coverage.
2:59:26 PM
Vice-Chair Fairclough remarked that the state covered the
cost of health care for many of the small school district
through the base student allocation (BSA) and the
distribution of funds. She stressed that the state was
paying up to 70 percent for some districts' health care
cost increases.
BRUCE JOHNSON, EXECUTIVE DIRECTOR, ALASKA COUNCIL OF SCHOOL
ADMINISTRATORS (ACSA), JUNEAU (via teleconference),
testified in support of SB 90. He stressed that the cost of
health insurance was a major factor in every school
district's budget. He pointed out that the total cost of
health insurance across the 53 school districts totaled
nearly $300 million with anticipated ongoing increases due
to the Affordable Care Act and continued increased costs
for health services. He explained that the total cost
included school districts and employee contributions to
health insurance. He recognized the value of and supported
a health work force, and he stressed that he did not want
to minimize the importance of quality health insurance
coverage and the promotion of wellness. He stressed that
health insurance costs would continue to strain school
district budgets and would limit the funds that could be
directed toward the classroom.
Senator Dunleavy queried the groups that ACSA represented.
Mr. Johnson responded that ACSA represented the
superintendents, elementary school principals, secondary
school principals, and school business officials.
3:05:19 PM
RHONDA KITTER, CHIEF FINANCIAL OFFICER, NEA ALASKA HEALTH
PLAN, ANCHORAGE (via teleconference), testified against SB
90. She referred to a letter of opposition (copy on file).
The NEA-Alaska Health Plan (Trust) was formed in 1996
as a self-insured health trust for the benefit of
public education employees. We serve over 5,800
members and including their dependents provide direct
services to over 17,000 individuals. The Trust has
worked collaboratively with both school districts,
employers and bargaining associations to create
benefit options that meet the needs of those members.
Through the Trust we are able to provide:
- Eight different medical plan designs
- Two different dental plan designs
- Vision and prescription benefits
- Member (employee) assistance programs
- Orthodontia coverage
Each association/school district has the option of
selecting any of the plan design offerings and the
associated deductible/out-of-pocket combination. Often
the choice is made according to the benefit level
although many choose to select a plan based upon its
premium. Individual school districts have different
approaches in attracting and retaining quality
employees to their area. The Trust affords them this
opportunity in selecting the plan design that fits
their needs.
For the past 15 years the Trust has averaged a less
than 10 percent increase annually in premiums. As a
non-profit entity, all monies collected by the Trust
must be only utilized for the health and welfare
benefits of the members. In addition to our lower than
average annual health plan cost increases, the Trusts
administrative costs are only 3 percent, national
benchmarks are 6 percent with several fully insured
products averaging closer to 20 percent. To state it
another way, 97 cents of every premium dollar
collected goes towards paying for the health care
received by the members of the Trust. I would
challenge any carrier to match that low administrative
fee.
Last year the Trust had a zero percent rate increase
in its premium. This was a substantial savings for
many of Alaska's school districts who were faced with
the public news of high double digit increases
expected due to ACA.
We work closely with the school districts in helping
their employees understand their benefits and our
office in Anchorage is a point of contact for members
experiencing difficulties with claims and
understanding their benefits. The level of customer
service provided to both the members and their
employers is important to the Trust. We are able to
remove grievance issues from the employers as well as
the administrative burden of keeping up with health
care reform.
As one of the largest self-insured trusts in Alaska we
are able to negotiate very favorable contracts with
providers in Alaska as well as our contracts with
specialists outside of Alaska.
In addition over the last year the Trust has:
- Audited our pharmacy vendor to assure they are in
compliance performance standards
- Did a complete assessment of our disease management
program to measure its effectiveness
- Identified a need for a new vendor to address
behavioral health issues
- Are addressing the cost of air ambulance services
- Piloted a surgical travel benefit
- Are piloting a bio-metric screening program to
better manage the population's health
- Are aggressively applying data analytics in order to
understand what member health issues we should be
focused on
- Are responding to the changing needs of the members
as healthcare evolves in Alaska
- Seeking to pilot preferred relationships with
medical providers that measure cost and quality
The Trust is always assessing its costs and service to
its members and as a result modifies the plans on an
annual basis. In this environment any health plan that
is restrained so that it can only address its costs
every three years at the bargaining table or through a
lengthy procurement process cannot be efficient,
effective and affordable.
A number of consultants have expressed concern that a
State Government take-over of insurance industry,
third party administration service seems a little at
odds with policy prescriptions in favor of private
sector free enterprise
The comments from the sponsor suggest that the State
would negotiate with carriers. This implies that the
State might enter into a fully-insured contract on
behalf of the school districts. This would do nothing
but add costs to the programs as new PPACA taxes are
going to much more aggressive for fully-insured plans
than self-funded programs.
If the State intends to self-fund this plan then it
would become the sponsor. The State already sponsors a
plan for its employees and retired members. There is
nothing to suggest that the State has done a more
effective job at maintaining costs and securing
preferred contracts that would be better than what
most school districts already enjoy.
The State, should it become a sponsor, would have to
allow vendors to compete through a restrictive and
antiquated procurement process. Healthcare is changing
and buying care or more importantly buying services is
not the same as buying pencils. The NEA Health Plan is
nimble and can respond to the changing needs of the
healthcare concerns of our members without being tied
to the bureaucratic processes that the State must
comply with. The current TPA bid that the State is
involved with has already gone on four months longer
than anticipated.
We oppose SB 90 and HB 196, the mandate to purchase
health insurance through the State of Alaska. The
Trust provides school districts with cost effective
plan designs, provides low administrative services
leaving more premium for benefits, provides local
knowledgeable customer service, provides aggressive
contract negotiations and has demonstrated
successfully since 1996 that we are able to work with
our members to control costs and improve their health.
Nothing in the SB 90 or HB 196 demonstrates the
ability for the State to have a positive impact on
controlling healthcare spending, improve on measurable
health of participants, or increase customer service
quality.
Senator Dunleavy wondered if NEA was against the bill or
the speed at which the bill was progressing. Ms. Kitter
responded that NEA was against the speed at which the bill
was progressing, because she felt that there had not been
sufficient notification to the employees or sufficient
research on the impact of the legislation.
Co-Chair Meyer handed the gavel to Co-Chair Kelly.
Senator Dunleavy surmised that NEA was not against the
bill, but the speed at which the bill was examined. Ms.
Kitter agreed.
Co-Chair Kelly handed the gavel to Vice-Chair Fairclough.
Vice-Chair Fairclough remarked that the state was currently
experiencing a revenue shortfall, and the legislature hoped
for a positive financial future. She wondered if each
district had individual contracts with NEA. Ms. Kitter
responded that the NEA health trust offered a combination
of eight different health plans, two different dental
plans, and the option to purchase orthodontia. She
furthered that, under a matrix formula, there were thirty
different available plan designs. She explained that the
economy, standard, and premium plans were the three
different plans that were offered under the State of Alaska
"My Care, Alaska Care" formula.
3:19:21 PM
Vice-Chair Fairclough wondered if the costs to the thirty
plans had increased over the years. She remarked that
various school districts had testified about substantial
increases since 2000. Ms. Kitter replied that medical
inflation was driving the cost of health care upward, but
she remarked that the NEA Health Trust maintained a less
than 10 percent increase on an annual basis.
Vice-Chair Fairclough inquired if the benefits had
increased on the negotiated contracts. Ms. Kitter responded
that the benefit increases to NEA members were federally
mandated. She remarked that the plans were not under
grandfather status. She furthered that the negotiations
with the community and the providers significantly
decreased the annual increases.
Senator Bishop wondered if the admin fee was 3 percent. Ms.
Kitter responded in the affirmative. She furthered that the
3 percent went toward non-claim activity, and specifically
pointed out that 97 percent went to direct health, medical,
prescription, dental, and vision claims.
Senator Dunleavy wondered if NEA was prepared to release
its claims data in order to help the legislature make a
final, informed decision. Ms. Kitter responded that NEA
would be providing the requested data. She clarified that
NEA was against the speed at which the bill was
progressing, because they were not able to make a
legitimate response on the validity of the outcome of the
bill.
3:24:30 PM
Senator Dunleavy restated his question, and wondered if the
NEA would release claims data, in order to determine what
is best for Alaska. Ms. Kitter replied that she would take
that question to the trustees, who were meeting the
following day.
Senator Dunleavy wondered when he would be able to get a
response. Ms. Kitter responded that she would supply a
response by Friday evening.
Vice-Chair Fairclough surmised that NEA would be managed
under the Affordable Care Act, and wondered if NEA had
filed an exemption petition on the basis of a non-profit
organization. Ms. Kitter replied that NEA did not have the
option of being exempt from the Affordable Care Act.
Vice-Chair Fairclough handed the gavel to Co-Chair Meyer.
Senator Dunleavy remarked that many testifiers spoke in
support of the legislation, and wondered if she had more
information to those testifiers that they may not
understand about the legislation. Ms. Kitter replied that
she understands the frustration regarding what some
consider the high cost of health insurance. She stressed
that individuals had the option to pay for lower cost
health insurance, and opted not to.
Senator Dunleavy surmised that some of the individuals had
opted to not purchase lower cost health insurance, thus the
high cost of insurance was an optional issue that could be
dealt with by the school districts. Ms. Kitter replied that
there were many different plan designs available, and the
school districts had the option to shop for different plan
designs to provide for their employees.
3:28:53 PM
Vice-Chair Fairclough wondered if NEA received
contributions from school districts or plan participants on
district employees that were not covered by the trust. Ms.
Kitter responded that the NEA trust did not directly
receive waiver funds for the school district employees who
had waived off the plan. She believed there were several
school districts that agreed to provide funding for the
individuals who had waived; and that funding was then used
to offset the premiums that were paid for the individuals
who had enrolled in the plan.
Vice-Chair Fairclough surmised that all premiums go to the
trust, and all funds received were used to benefit the
employees inside of the trust receiving benefits. Ms.
Kitter agreed.
Vice-Chair Fairclough surmised that the NEA did not receive
waiver funds. Ms. Kitter agreed, and furthered that the NEA
did not receive a direct payment of waiver funds. She
shared that the Anchorage School District allocates waiver
funds to a separate pool, and then utilize the pool to
offset the costs of the enrolled individuals.
Vice-Chair Fairclough wondered where that money was
directed. She understood that the money offset premiums,
and felt that the NEA should have that money. Ms. Kitter
responded that the Anchorage School District and NEA agreed
that the district would fund for all eligible employees.
The money for employees who chose not to take coverage was
set aside into a separate waiver pool in the district. On a
monthly basis, the school district utilizes a portion of
the funds to pay the premiums that would normally be held
by the employees. Anchorage School District employees did
not have a deduction from their payroll check for the
summer months through December. She furthered that the
money that was previously accounted for in waiver funds,
became the premium that employees portion of enrolled
individuals.
Vice-Chair Fairclough surmised that the Anchorage School
District was still collecting money from the state, and the
district set that money aside to pay the premiums to NEA.
Ms. Kitter replied that Vice-Chair Fairclough's summation
reflected Ms. Katter's impression.
3:33:13 PM
DOUG SWANSON, BUSINESS MANAGER, ALASKAN PUBLIC EMPLOYEES
ASSOCIATION, testified against SB 90. He stated that for
the current benefit year, July 2012- June 2013, the
Anchorage School District has paid $1,235 per employee per
month to the Trust to provide health coverage. Employees
who selected coverage under the Trust's full family health
plan option, which is similar to the State's Select
Benefits Standard Plan and includes dental and vision
coverage, School District employees pay $125 per employee
per month. In comparison, this year the State of Alaska
paid $1,330 per employee per month for its employees. In
order to obtain family medical, dental, and vision coverage
similar to the PE7I plans, employees paid $214 per month.
If the Public Employees Local 71 bargaining unit of
Anchorage School District were covered under the State of
Alaska plan this benefit year at the State of Alaska rates,
the School District would have paid an additional $400,000,
and each employee who needed the full family plan would
have paid an additional $1,068 for the year. While cost is
a meaningful consideration, we believe that customer
service is important, as well. We are able to craft our
health plan to address the issues which are meaningful to
our employees. For example, we were among the Alaska health
plans to offer health fairs to our covered members, and
provide them with free and low cost inoculations and
preventive blood testing. We maintain a Trust office in
Anchorage, and Anchorage School District employees are able
to meet with our Trust staff in person to discuss
enrollment or benefit issues. This has proven invaluable,
especially when working with employees and families for
whom English is a second language. It also relieves their
employer.
Senator Dunleavy wondered if Mr. Swanson would support the
legislation, if the data reflected a cost savings. Mr.
Swanson replied that he would support cost savings.
SB 90 was HEARD and HELD in committee for further
consideration.
3:43:16 PM
AT EASE
3:44:56 PM
RECONVENED
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 90 Copper River Support Letter.pdf |
SFIN 4/11/2013 1:30:00 PM |
SB 90 |
| SB 90 Copper River2 Support Letter.pdf |
SFIN 4/11/2013 1:30:00 PM |
SB 90 |
| SB 90 Cordova Support Letter.pdf |
SFIN 4/11/2013 1:30:00 PM |
SB 90 |
| SB 90 Opposition Northern Economics2.pdf |
SFIN 4/11/2013 1:30:00 PM |
SB 90 |
| SB 90 Sitka Support Letter.pdf |
SFIN 4/11/2013 1:30:00 PM |
SB 90 |
| SB 90 Sitka2 Support Letter.pdf |
SFIN 4/11/2013 1:30:00 PM |
SB 90 |
| SB 90 Sopport - MacManus.doc |
SFIN 4/11/2013 1:30:00 PM |
SB 90 |
| SB 90 St Marys Support Letter.pdf |
SFIN 4/11/2013 1:30:00 PM |
SB 90 |
| SB 90 Unalaska Opposition.pdf |
SFIN 4/11/2013 1:30:00 PM |
SB 90 |
| SB 90 Yukon Koyukuk Support Letter.pdf |
SFIN 4/11/2013 1:30:00 PM |
SB 90 |
| HB 129 CSHB 129 Weissler Testimony.pdf |
SFIN 4/11/2013 1:30:00 PM |
HB 129 |
| HB71 Work Draft Version P 041113.pdf |
SFIN 4/11/2013 1:30:00 PM |
HB 71 |
| SB 90 Opposition Letter Packet 2.pdf |
SFIN 4/11/2013 1:30:00 PM |
SB 90 |
| 12102013 SFC Hay Report.pdf |
SFIN 4/11/2013 1:30:00 PM |
SB 90 |