Legislature(2005 - 2006)

05/07/2005 05:45 PM FIN

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
     CS FOR HOUSE BILL NO. 106(FIN)                                                                                             
     "An Act  establishing the senior  care program and relating  to                                                            
     that program;  creating a fund for the provision  of the senior                                                            
     care program;  repealing ch. 3, SLA 2004; and  providing for an                                                            
     effective date."                                                                                                           
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
6:02:01 PM                                                                                                                    
JOEL  GILBERTSON,  Commissioner,  Department  of Health  and  Social                                                            
Services, explained  that this bill, which is sponsored  by Governor                                                            
Frank  Murkowski,   would   strengthen  the   Senior  Care   Program                                                            
implemented  the previous  year.  The purpose  of  "the Senior  Care                                                            
Program  is to  provide  assistance  for  the cost  of prescription                                                             
medicine  to  low  income  seniors  in the  State".  He  noted  that                                                            
prescription  drugs are not  currently provided  for by the  federal                                                            
Medicare program, and absent  the Senior Care Program, seniors would                                                            
be required  to pay out of pocket  or purchase supplemental  medical                                                            
insurance policy.  The initial Alaska  Senior Care Program  provided                                                            
$120 a  month equating  to $1,440  a year, to  seniors living  below                                                            
135-percent  of  poverty  level.  A  prescription  drug  subsidy  is                                                            
provided to  seniors living between  135-percent and 150-percent  of                                                            
Commissioner  Gilbertson  stated that  HB 106  would accomplish  two                                                            
things.  First, it  "would extend  the cash  assistance benefit  for                                                            
those  seniors living  below  135-percent  of poverty.  That  income                                                            
threshold"  is approximately $16,000  a person or $21,600  a couple.                                                            
In addition a qualifying  single individual could have liquid assets                                                            
of up to $6,000;  $9,000 for a couple.  The cash assistance  program                                                            
would assist qualifying  seniors until they transition on to the new                                                            
Medicare  Part D Prescription  Drug Benefit  Program anticipated  to                                                            
become available in early 2006.                                                                                                 
Commissioner  Gilbertson  communicated  that  "the bill  would  also                                                            
extend  the prescription  drug assistance  to  seniors between  135-                                                            
percent  and 175-percent  of  poverty. The  household  income for  a                                                            
person living  at the 175-percent of poverty level  would be $20,900                                                            
for an individual  and $28,053 for a couple. When  the Medicare Part                                                            
D benefit becomes available,  any senior wishing to participate must                                                            
enroll in the program which  would "have a premium and a deductible,                                                            
separate  and distinct and  in addition to  their existing  premiums                                                            
and deductibles  that they pay for  Medicare". The premium  would be                                                            
$35 a  month or  $670 a year,  and the  deductible  would be $250  a                                                            
month for  seniors living  between the  135-percent and 175-percent                                                             
poverty level;  those living below 135-percent of  the poverty level                                                            
would be federally exempt  from both the premium and the deductible.                                                            
Once the Medicare Part  D program becomes available, the Senior Care                                                            
Program would continue  to assist seniors living between 135-percent                                                            
and  175-percent   in  paying  the  costs  of  their   premiums  and                                                            
Commissioner   Gilbertson   anticipated   that  the   State's   cash                                                            
assistance  program  would  continue to  serve  approximately  7,000                                                            
seniors, and  that approximately 4,000  seniors living between  135-                                                            
percent and  175-percent of  poverty would  qualify for the  State's                                                            
proposed prescription drug assistance program.                                                                                  
6:05:41 PM                                                                                                                    
Commissioner  Gilbertson stated  that a summary  of the anticipated                                                             
program expenses is provided  on page three of Fiscal Note #8, dated                                                            
May 5, 2005,  prepared by the Department's  Division of Finance  and                                                            
Management Services. The  total costs associated for those living at                                                            
135-percent   of  poverty   is  anticipated   to  be  approximately                                                             
$5,000,000  in FY 06. The  amount depicted  for FY 06 would  provide                                                            
for the  second half of FY  06 as the initial  program was  budgeted                                                            
through January  2006. The FY 07 full-year expenses  are anticipated                                                            
to be $10,000,000.                                                                                                              
Commissioner   Gilbertson  explained  that  the  expenses   for  the                                                            
assistance  that would be  provided to seniors  living between  135-                                                            
percent and 175-percent  are similarly depicted. The FY 06 half-year                                                            
expenses  would be approximately  $1,200,000.  The expenses  for the                                                            
full year of FY would be approximately $2,600,000.                                                                              
Commissioner  Gilbertson   noted  that  the  "Combined  Program  and                                                            
Administrative  Costs" summary reflected a total cost  of $6,800,000                                                            
for FY 06 and $13,000,000 for FY 07.                                                                                            
Commissioner   Gilbertson  explained   that  when  the  Legislature                                                             
established the  Senior Care Program, it forward-funded  the Program                                                            
through the  first half of FY 06.  A surplus of approximately  eight                                                            
million  dollars is expected  to be  in that account  on January  1,                                                            
2006; therefore  there would be no need for additional  general fund                                                            
dollars in  FY 06. It is projected  that $1,249,000 of that  surplus                                                            
would be carried  forward into FY 07. This would be  married up with                                                            
an  $11,962,600  general  fund request  to  fund  the entire  FY  07                                                            
program expenses.                                                                                                               
Commissioner  Gilbertson  stated  that  further  details  about  the                                                            
Senior  Care program  are provided  in a Department  handout  titled                                                            
"Comparison of  Qualifications and Benefits Beginning  January 2006"                                                            
[copy on file].                                                                                                                 
Commissioner  Gilbertson reiterated  that other than a prescription                                                             
drug  discount card  and the  availability  of a  prescription  drug                                                            
subsidy to some  low-income seniors, "seniors are  not receiving any                                                            
prescription  drug assistance  from  the federal  government.  It is                                                            
anticipated that  a lot of confusion would occur this  year and into                                                            
the year  2006  in regards  to the new  federal  drug benefit.  This                                                            
legislation  would assist in eliminating  some of the confusion  and                                                            
burden on seniors.                                                                                                              
Commissioner  Gilbertson noted  that a program  termination  date of                                                            
June 30,  2007 is  specified in  the bill. In  addition, any  excess                                                            
funds remaining  in the Program's account at that  time would revert                                                            
back to the general fund.                                                                                                       
6:09:33 PM                                                                                                                    
Co-Chair Wilken  asked whether the federal poverty  level for Alaska                                                            
is the basis for this legislation.                                                                                              
Commissioner Gilbertson  stated that this legislation recognizes the                                                            
Alaska  poverty  level, which  is  a 25-percent  increase  over  the                                                            
federal national  poverty  level. In other  words, a 175-percent  of                                                            
the  national  poverty level  for  the contingent  states  would  be                                                            
recognized at a 200-percent level in Alaska.                                                                                    
Co-Chair  Wilken  asked  whether  an  individual's   Permanent  Fund                                                            
Dividend   (PFD)   check  is   factored   into   their  eligibility                                                             
JOHN SHERWOOD,  Department of Health and Social Services,  responded                                                            
that the  PFD is  not factored into  the calculation.  Unless  it is                                                            
required by federal statute, the PFD is "disregarded".                                                                          
Senator Olson  noted that that policy "would be consistent"  for all                                                            
hold-harmless provisions relating to public assistance programs.                                                                
Senator Olson  asked whether the $1,200,000  balance anticipated  to                                                            
be  available on  January  1, 2006  could be  used  to increase  the                                                            
monthly payment amount.                                                                                                         
Commissioner  Gilbertson  responded  that  $6,800,000  of the  eight                                                            
million dollars  that would  be available on  January 1, 2006  would                                                            
fund the remainder  of FY 06 program expenses. The  balance would be                                                            
carried forward  into FY 07 to assist  in paying that fiscal  year's                                                            
expenses.  An  additional  $12,000,000  in general  funds  would  be                                                            
required  to fund  total  FY 07  expenses.  "The entire  Trust  fund                                                            
account would be depleted at the completion of this program."                                                                   
Senator Olson acknowledged.                                                                                                     
Co-Chair  Wilken moved  to adopt  committee substitute  Version  24-                                                            
GH1090\I as the working document.                                                                                               
Co-Chair Green clarified  that Version "I" was the document to which                                                            
Commissioner Gilbertson's comments applied.                                                                                     
[NOTE: While the Version  "I" was not formally adopted, that was the                                                            
implied intent of the Committee.]                                                                                               
Co-Chair Green voiced that  furtherance of this bill would allow the                                                            
Senior Care program to  continue to provide assistance to seniors in                                                            
need, uninterrupted.                                                                                                            
Co-Chair  Wilken  moved  to  report the  bill  from  Committee  with                                                            
individual recommendations and accompanying fiscal notes.                                                                       
There  being no  objection, SCS  CS HB  106(FIN)  was REPORTED  from                                                            
Committee with four May  5, 2005 fiscal notes from the Department of                                                            
Health and Social  Services as follow: $163,900 fiscal  note #5 from                                                            
the Division  of Health Care Services;  $59,000 fiscal note  #6 from                                                            
the Division of Senior  and Disabilities Services; $6,614,400 fiscal                                                            
note #7  from the  Division of  Public Assistance;  and zero  fiscal                                                            
note #8 from the Division of Finance and Management Services.                                                                   
AT EASE 6:12:32 PM / 6:15:39 PM                                                                                             

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