Legislature(2007 - 2008)SENATE FINANCE 532

04/11/2008 09:00 AM FINANCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Heard & Held
Heard & Held
Scheduled But Not Heard
Heard & Held
Moved CSHB 332(FIN)(title am) Out Comte.
+ Bills Previously Heard/Scheduled TELECONFERENCED
Moved SCS HB 2(FIN) Out of Committee
Heard & Held
SENATE BILL NO. 160                                                                                                           
     "An Act  establishing an  Alaska health care  program to                                                                   
     ensure insurance coverage  for essential health services                                                                   
     for all residents of the  state; establishing the Alaska                                                                   
     Health  Care  Board  to  define  essential  health  care                                                                   
     services,  to certify  health  care  plans that  provide                                                                   
     essential  health care services,  and to administer  the                                                                   
     Alaska health  care program  and the Alaska  health care                                                                   
     fund; establishing the Alaska  health care clearinghouse                                                                   
     to administer  the Alaska health care program  under the                                                                   
     direction of the Alaska Health  Care Board; establishing                                                                   
     eligibility   standards  and   premium  assistance   for                                                                   
     persons  with  low income;  establishing  standards  for                                                                   
     accountable  health  care  plans;  creating  the  Alaska                                                                   
     health care  fund; providing  for review of  actions and                                                                   
     reporting  requirements   related  to  the  health  care                                                                   
     program; and providing for an effective date."                                                                             
SENATOR  HOLLIS  FRENCH,  Sponsor,  introduced  SB 160.    He                                                                   
stated  that Starbucks  pays more for  health insurance  than                                                                   
they pay  for coffee.   General Motors  pays more  for health                                                                   
insurance than  it does for  steel.   The reason the  bill is                                                                   
before  the  Committee  is  because  Corporate  American  has                                                                   
decided that there  needs to be something done  to reduce the                                                                   
cost of health  insurance before it drives businesses  out of                                                                   
Senator French explained  that the genesis of  the bill began                                                                   
when Mitt Romney  became governor of Massachusetts  and faced                                                                   
the loss of  millions of dollars in "dish funds",  funds that                                                                   
the federal government pays to  cover hospitals for the costs                                                                   
of  the  uninsured.    Governor   Romney  formulated  a  new,                                                                   
consumer-driven   approach  to   address  health   insurance.                                                                   
Senator  French termed  SB 160  a  consumer-driven bill  that                                                                   
allows  individuals  to  make   choices  about  their  health                                                                   
insurance.   It  is that  market  force that  will help  keep                                                                   
health insurance costs down.                                                                                                    
Senator  French  reported  that there  are  100,000  Alaskans                                                                   
without health insurance.   Over 50 percent have  jobs.  This                                                                   
bill would  use federal,  state, and  employer money  to make                                                                   
the cost of health insurance affordable.                                                                                        
Senator French  drew attention  to the controversial  aspects                                                                   
of the bill.  The first is "individual  mandate".  There is a                                                                   
call in the  bill for every single citizen  to acquire health                                                                   
insurance.  This  is necessary to spread out  the risk, which                                                                   
will lead to lower costs.  The  upside is "guaranteed issue":                                                                   
everyone who applies is guaranteed  coverage in the form of a                                                                   
9:29:19 AM                                                                                                                    
Senator French dispelled  the myths about the bill.   It does                                                                   
not require those  currently insured to change  policies.  It                                                                   
should bring policy costs down  by up to 15 percent, which is                                                                   
about equal to  the amount those who are insured  have to pay                                                                   
for those  who are not  insured.  He  gave an example  of the                                                                   
uninsured receiving  care at emergency  rooms resulting  in a                                                                   
loss of revenue to hospitals.   It was estimated that in 2007                                                                   
Providence Hospital spent $90 million on the uninsured.                                                                         
Senator  French  reported on  what  the  bill would  not  do:                                                                   
create  more   doctors  in  Alaska  or  deal   with  Medicare                                                                   
reimbursement rates.   He opined  that eventually there would                                                                   
be a solution to the problem of  the uninsured.  He requested                                                                   
the Committee take  a hard look at the bill,  which he termed                                                                   
a work  in progress.   He stressed  the importance  of policy                                                                   
decisions that will be made by  the Senate Finance Committee.                                                                   
9:32:37 AM                                                                                                                    
Senator French  referred to a  chart entitled  "Alaska Health                                                                   
Care: The Framework For Change"  (copy on file.)  There is an                                                                   
Alaska  Health Care  Board,  which certifies  private  health                                                                   
care plans.  There is a fund that  holds vouchers, similar to                                                                   
the federal  plan, based  on a sliding  scale.  He  described                                                                   
the various plans  based on income level.   Certified private                                                                   
health insurance plans are made  available for purchase using                                                                   
9:34:41 AM                                                                                                                    
Senator   French   addressed   the   fiscal   notes.      The                                                                   
Administration expects  the plan to  cost $333 million  in FY                                                                   
2010.   Senator  French  thought  that  figure to  be  wildly                                                                   
overstated.  He  pointed out on page 2 of fiscal  note #1, it                                                                   
says  that "the  estimated  cost  for insurance  premiums  is                                                                   
$11,000 per  person per  year, based on  the State  of Alaska                                                                   
employee insurance  plan."  He pointed out  several errors in                                                                   
that assumption.   No one is paying $11,000  per person; that                                                                   
amount  will  cover  a  family  of four.    The  fiscal  note                                                                   
incorporates  Indian Health  Service  recipients.   The  bill                                                                   
does  not  mandate  that those  individuals  join  the  plan.                                                                   
Also, the fiscal  note does not take into account  that there                                                                   
is an enormous  amount of money being paid  for uncompensated                                                                   
care, which causes  an increase in health  insurance premiums                                                                   
of about 15 percent.                                                                                                            
9:37:13 AM                                                                                                                    
Senator Thomas  asked if  there is  a minimum requirement  of                                                                   
services and  if the  Alaska Health Care  Board would  set up                                                                   
the  policies  to be  selected  by  the uninsured.    Senator                                                                   
French said  those requirements  are found  on page 7  of the                                                                   
bill in Section  231.54.250, essential health  care services.                                                                   
It  does  not  set  the  level   of  the  deductible  or  the                                                                   
Senator  Olson  asked  if  the   program  was  all-inclusive.                                                                   
Senator  French  said  it  was  comprehensive,  just  like  a                                                                   
regular  health insurance  policy.   Senator  Olson asked  if                                                                   
Providence  Hospital  was in  favor  of  the bill.    Senator                                                                   
French  said  they  were  and  he referred  to  a  letter  of                                                                   
support.  He  further explained that hospitals  like the idea                                                                   
of health  insurance for all.   Insurance companies  are also                                                                   
in favor of such a plan.                                                                                                        
9:40:03 AM                                                                                                                    
Senator  Huggins requested  information about  Massachusetts'                                                                   
universal health  care plan.   Senator French  explained that                                                                   
over a  year ago, Massachusetts  instituted universal  health                                                                   
insurance  using the  mechanism of  the state  income tax  to                                                                   
require  insurance.   They  started with  a  base of  600,000                                                                   
uninsured and  lowered that  number by one  third.   They are                                                                   
spending about  $900 million  a year.   He said a  comparable                                                                   
cost to  Alaska for  a similar  program would  be about  $150                                                                   
million.  Other states are considering similar plans.                                                                           
Senator French  mentioned a difficulty  with that plan.   Now                                                                   
it is more difficult to see a primary care physician.                                                                           
Senator Huggins referred to Canada's  plan and the difficulty                                                                   
of getting into see a doctor.                                                                                                   
SB  160  was   heard  and  HELD  in  Committee   for  further                                                                   
AT-EASE:       9:42:43 AM                                                                                                     
RECONVENED:    9:46:53 AM                                                                                                     

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