Legislature(2013 - 2014)SENATE FINANCE 532

04/11/2013 01:30 PM FINANCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= SB 90 SCHOOL DISTRICT EMPLOYEE HEALTH INSURANCE TELECONFERENCED
Heard & Held
-- Testimony <Invitation Only> --
+ Bills Previously Heard/Scheduled TELECONFERENCED
+= HB 129 OIL & GAS EXPLORATION/DEVELOPMENT AREAS TELECONFERENCED
Heard & Held
+= HB 71 AK REGIONAL ECONOMIC ASSISTANCE PROGRAM TELECONFERENCED
Moved SCS CSHB 71(FIN) Out of Committee
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