Legislature(2017 - 2018)SENATE FINANCE 532

02/27/2018 09:00 AM FINANCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ SB 105 MARITAL & FAMILY THERAPY LIC. & SERVICES TELECONFERENCED
Heard & Held
+ SB 108 MEDICAL CARE/LICENSING/MEDICAL BOARD TELECONFERENCED
Heard & Held
+ SB 165 COMPREHENSIVE HEALTH INSURANCE FUND TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
SENATE BILL NO. 165                                                                                                           
                                                                                                                                
     "An  Act relating  to the  Alaska comprehensive  health                                                                    
     insurance fund; and providing for an effective date."                                                                      
                                                                                                                                
10:47:23 AM                                                                                                                   
                                                                                                                                
BRITTANY HARTMANN, STAFF, SENATOR ANNA MACKINNON, offered a                                                                     
Sponsor Statement:                                                                                                              
                                                                                                                                
     In 2015,  the individual  health care market  in Alaska                                                                    
     was  in  a  precarious   state.  There  were  only  two                                                                    
     insurers   with   current   enrollees   in   individual                                                                    
     healthcare  plans  in  Alaska,  and  each  insurer  was                                                                    
     experiencing significant  losses. Average  premium rate                                                                    
     increases in 2015 were 38.7%  for one insurer and 39.9%                                                                    
     for  the  other. In  2016,  one  of Alaska's  only  two                                                                    
     remaining  insurers  gave  notice that  they  would  be                                                                    
     withdrawing   from   the   Alaska   individual   market                                                                    
     effective January 2017.                                                                                                    
                                                                                                                                
     The  29th  Legislature passed  HB  374  in 2016,  which                                                                    
     created  the Alaska  Reinsurance  Program, and  allowed                                                                    
     the  Division  of  Insurance to  apply  for  a  federal                                                                    
     Section   1332  state   innovation  waiver   under  the                                                                    
     Affordable Care Act (ACA).  That legislation included a                                                                    
     sunset  date  of  June  30, 2018  to  ensure  that  the                                                                    
     diversion of  insurance premium taxes from  the general                                                                    
     fund  was  not  relied  upon  as  a  long-term  funding                                                                    
     mechanism.  In July  2017, the  waiver was  approved by                                                                    
     both the  Department of Health and  Social Services and                                                                    
     the  Department of  Treasury based  on the  application                                                                    
     submitted  by  the   division,  which  requested  pass-                                                                    
     through funding for the Alaska Reinsurance Program.                                                                        
                                                                                                                                
     The  federal award  for this  waiver was  approximately                                                                    
     $322 million over five years.  The award is to be used,                                                                    
     in conjunction with the  Alaska Reinsurance Program, to                                                                    
     continue to stabilize  the individual healthcare market                                                                    
     in Alaska.                                                                                                                 
                                                                                                                                
     This legislation  extends the  sunset provision  on the                                                                    
     Alaska  comprehensive  health  insurance  fund  by  six                                                                    
     years, from  June 30,  2018 to June  30, 2024  to allow                                                                    
     for the continuation of  the Alaska Reinsurance Program                                                                    
     and receipt of the federal funding.                                                                                        
                                                                                                                                
     The  bill  also  removes  the  requirement  that  funds                                                                    
     collected  under AS  21.09.210  (tax  on insurers),  AS                                                                    
     21.33.055  (unauthorized  insurance  premium  tax),  AS                                                                    
     21.34.180 (surplus lines tax)  and AS 21.66.110 (annual                                                                    
     tax on  title insurance  premiums) are to  be deposited                                                                    
     into  the Alaska  comprehensive  health insurance  fund                                                                    
     within the general fund.                                                                                                   
                                                                                                                                
     Passage of  HB374 by the 29th  Legislature has resulted                                                                    
     in  stabilization of  the individual  insurance market.                                                                    
     The  Section  1332  state  innovation  waiver  provides                                                                    
     funding  for the  Alaska  Reinsurance Program,  through                                                                    
     the  Alaska comprehensive  health  insurance fund.  Now                                                                    
     this legislation  is necessary to ensure  the continued                                                                    
     effectiveness of  the Alaska Reinsurance  Program, meet                                                                    
     the  intent  of the  waiver,  and  receive the  federal                                                                    
     funding.                                                                                                                   
                                                                                                                                
                                                                                                                                
10:48:20 AM                                                                                                                   
                                                                                                                                
Co-Chair  MacKinnon relayed  that  versions the  legislation                                                                    
had appeared before the committee  before. She said that the                                                                    
bill would  create a  stable market and  that the  state had                                                                    
experienced  a   reduction  in   premiums  because   of  the                                                                    
reinsurance program.  She shared that the  legislation would                                                                    
rededicate the revenue stream out  of the insurance fund and                                                                    
into the general  fund, resulting in a  positive fiscal note                                                                    
of approximately  $50 million,  annually. She  commended the                                                                    
work of  Lori Wing-Heier,  Director, Division  of Insurance,                                                                    
Department of  Commerce, Community and  Economic Development                                                                    
on the issue of insurance management in the state.                                                                              
10:51:01 AM                                                                                                                   
                                                                                                                                
LORI   WING-HEIER,   DIRECTOR,    DIVISION   OF   INSURANCE,                                                                    
DEPARTMENT OF COMMERCE,  COMMUNITY AND ECONOMIC DEVELOPMENT,                                                                    
said that SB 165 would  allow the department to continue the                                                                    
reinsurance   program  with   significant  federal   funding                                                                    
because of the 1332 waiver for  a period of five years, with                                                                    
a possible  additional one-year extension. She  said that in                                                                    
2016 the  legislature had been instrumental  in creating the                                                                    
program, which  had proved successful. She  stressed that to                                                                    
collect  on  anticipated  federal  funds,  the  sunset  date                                                                    
needed  to  be  either   removed  or  extended.  The  sunset                                                                    
extension would  also allow  that the  premium tax  that the                                                                    
division collected  would go  back to  the general  fund, as                                                                    
was the original intention.                                                                                                     
                                                                                                                                
10:53:34 AM                                                                                                                   
                                                                                                                                
Co-Chair    MacKinnon    solicited   the    definition    of                                                                    
"reinsurance."                                                                                                                  
                                                                                                                                
10:54:16 AM                                                                                                                   
                                                                                                                                
Vice-Chair  Bishop  expressed  appreciation  for  Ms.  Wing-                                                                    
Heier's  ability to  discuss complicated  issues in  a clear                                                                    
and simple manner.                                                                                                              
                                                                                                                                
Ms.  Wing-Heier shared  that  in the  context  of the  bill,                                                                    
"reinsurance"  meant  that  if  you were  an  individual  in                                                                    
Alaska  that  purchased  insurance  through  the  individual                                                                    
market  but  was  then  diagnosed   with  a  condition  that                                                                    
generated high  cost claims, you  would still  buy insurance                                                                    
from Premera  (because that is  the only carrier  in Alaska)                                                                    
and would never  know that your claim had been  ceded to the                                                                    
reinsurance program. The  claim is then not  paid by Premera                                                                    
but by the  state, which reduced the  overall claims expense                                                                    
for the insurer.                                                                                                                
                                                                                                                                
10:56:25 AM                                                                                                                   
                                                                                                                                
Co-Chair MacKinnon  asked why  the federal  government would                                                                    
be interested in paying the claims.                                                                                             
                                                                                                                                
Ms. Wing-Heier  responded that many Alaskan's  premiums were                                                                    
subsidized  by the  federal government,  without a  cap. She                                                                    
said that  when the large  claims could be removed  from the                                                                    
calculation, and premiums  decreased, the federal government                                                                    
would  save money.  That savings  returned to  the state  to                                                                    
fund the  reinsurance program.  Had the  reinsurance program                                                                    
not been enacted, the federal  government's premiums for low                                                                    
and  moderate-income  individuals  would have  continued  to                                                                    
increase, as would those that did not receive subsidies.                                                                        
                                                                                                                                
10:58:15 AM                                                                                                                   
                                                                                                                                
Co-Chair  MacKinnon   asked  about  the  managed   care  for                                                                    
individuals that were high cost drivers in the system.                                                                          
                                                                                                                                
Ms.  Wing-Heier   replied  that   there  were   very  strict                                                                    
guidelines for  managed care of those  particular consumers.                                                                    
She said  that the division  worked to provide  managed care                                                                    
on every claimant that went through the program.                                                                                
                                                                                                                                
10:59:20 AM                                                                                                                   
                                                                                                                                
Senator  Stevens asked  about  the $25  million return  from                                                                    
Premera, and  whether similar returns  could be  expected in                                                                    
the future.                                                                                                                     
                                                                                                                                
Ms. Wing-Heier  did not expect  similar future  returns. She                                                                    
said that  claims had dropped  significantly in  2017, which                                                                    
had prompted Premera to contact  the division. She said that                                                                    
the  drop in  claims  had been  considered  an anomaly.  She                                                                    
explained that  when an insurance  company filed  rates with                                                                    
the  state, a  contingency  of  3 to  5  percent profit  was                                                                    
included in  the rate  filing. She  stated that  Premera had                                                                    
known  that   they  were  in  excess   of  that  contingency                                                                    
percentage.   She  furthered   that  Premera   involuntarily                                                                    
approached the  state and asked  that the money for  2017 be                                                                    
put back  into the reinsurance  program. She relayed  that a                                                                    
memorandum of  understanding was crafted, without  any fault                                                                    
on the part of Premera, that  the money would be returned to                                                                    
the state.                                                                                                                      
                                                                                                                                
11:00:55 AM                                                                                                                   
                                                                                                                                
Senator  Stevens  asked  whether  additional  insurers  were                                                                    
interested in working with Alaska.                                                                                              
                                                                                                                                
Ms. Wing-Heier replied  that she was hopeful.  She felt that                                                                    
any  reluctance was  not  because of  the  situation in  the                                                                    
state but what was happing on the federal level.                                                                                
                                                                                                                                
11:01:27 AM                                                                                                                   
Senator Stevens expressed appreciation for the information.                                                                     
                                                                                                                                
11:01:40 AM                                                                                                                   
                                                                                                                                
Senator von  Imhof asked  whether there was  a way  that the                                                                    
state could  save as much  money as possible in  the program                                                                    
just in case the waiver was not extended a second time.                                                                         
                                                                                                                                
Ms. Wing-Heier responded that the  idea had been considered.                                                                    
She thought that what was  currently being received from the                                                                    
federal  government could  carry  the program  into the  6th                                                                    
year.                                                                                                                           
                                                                                                                                
Co-Chair MacKinnon CLOSED public testimony.                                                                                     
                                                                                                                                
11:04:50 AM                                                                                                                   
                                                                                                                                
Co-Chair  Hoffman addressed  the  zero fiscal  note for  the                                                                    
Department  of  Administration  (DOA).   He  read  from  the                                                                    
analysis:                                                                                                                       
                                                                                                                                
     This bill  would extend the  repeal date of  the Alaska                                                                    
     comprehensive health  insurance fund statute  from June                                                                    
     30, 2018 to June 30,  2024 and, effective July 1, 2018,                                                                    
     would deposit  insurance premium tax revenues  into the                                                                    
     general  fund  instead   of  the  Alaska  comprehensive                                                                    
     health insurance fund. The general  fund and the Alaska                                                                    
     comprehensive  health  insurance   funds  are  existing                                                                    
     funds and  the change should require  minimal work with                                                                    
     no  significant  fiscal  impact   to  the  Division  of                                                                    
     Finance. Therefore,  the Division of Finance  submits a                                                                    
     zero fiscal note.                                                                                                          
                                                                                                                                
He spoke to the second  zero fiscal note from the Department                                                                    
of Commerce, Community and Economic Development:                                                                                
                                                                                                                                
     This legislation  extends the  sunset provision  on the                                                                    
     Alaska  Comprehensive  Health  Insurance  Fund  by  six                                                                    
     years,  from  June 30,  2018  to  June 30,  2024.  This                                                                    
     legislation  also removes  the  requirement that  funds                                                                    
     collected  under AS  21.09.210  (tax  on insurers),  AS                                                                    
     21.33.055  (unauthorized  insurance  premium  tax),  AS                                                                    
     21.34.180 (surplus lines tax)  and AS 21.66.110 (annual                                                                    
     tax on  title insurance  premiums) are to  be deposited                                                                    
     into  the Alaska  Comprehensive  Health Insurance  Fund                                                                    
     within the general fund.                                                                                                   
                                                                                                                                
11:07:11 AM                                                                                                                   
                                                                                                                                
Co-Chair  MacKinnon understood  that  the current  insurance                                                                    
receipts  that were  designated  general fund  would be  re-                                                                    
routed  into   the  general  fund.  She   wondered  about  a                                                                    
projection on the new general fund contribution.                                                                                
                                                                                                                                
Ms.  Wing-Heier relayed  that  there  was approximately  $63                                                                    
million that  would be  re-routed back  to the  general fund                                                                    
and, going  forward, all  the taxes would  go back  into the                                                                    
general fund.                                                                                                                   
                                                                                                                                
11:08:04 AM                                                                                                                   
                                                                                                                                
Co-Chair MacKinnon  wondered why  this was not  reflected on                                                                    
the fiscal note as revenue coming into the general fund.                                                                        
                                                                                                                                
Ms. Wing-Heier  said that she would  provide the information                                                                    
to the committee later.                                                                                                         
                                                                                                                                
Co-Chair MacKinnon  announced that  amendments were  due the                                                                    
following day by 5pm.                                                                                                           
                                                                                                                                
SB  165  was  HEARD  and   HELD  in  committee  for  further                                                                    
consideration.                                                                                                                  

Document Name Date/Time Subjects
SB 105 - Legislative Research - Medicaid Expansion & Behavorial Health Grants.pdf SFIN 2/27/2018 9:00:00 AM
SB 105
SB 105 - Summary of Changes, ver D to ver J.pdf SFIN 2/27/2018 9:00:00 AM
SB 105
SB 105 Sponsor Statement.pdf SFIN 2/27/2018 9:00:00 AM
SB 105
SB108 Letter of Support - Foundation Health Partners 2-7-18.pdf SFIN 2/27/2018 9:00:00 AM
SB 108
SB108 Letter of Support Cmmsr Navarre 2-2-16.pdf SFIN 2/27/2018 9:00:00 AM
SB 108
SB108 Letter of Support ASMB 2-9-18.pdf SFIN 2/27/2018 9:00:00 AM
SB 108
SB108 Power Point Presentation 2-12-18.pdf SFIN 2/27/2018 9:00:00 AM
SB 108
SSSB108 Sectional Analysis 2-13-18.cg.jmc.2.pdf SFIN 2/27/2018 9:00:00 AM
SB 108
SSSB 108 Sponsor Statment 1-22-18.pdf SFIN 2/27/2018 9:00:00 AM
SB 108
SB165 Sponsor Statement.pdf SFIN 2/27/2018 9:00:00 AM
SB 165
SB 165 CMS Letter Approving Alaska's State Innovation Waiver.pdf SFIN 2/27/2018 9:00:00 AM
SB 165
SB 165 ACHI Fund.pdf SFIN 2/27/2018 9:00:00 AM
SB 165
SB165 Sectional Analysis.pdf SFIN 2/27/2018 9:00:00 AM
SB 165
SB 105 - HSS FY18 Behavorial Health Treatment Recovery Grant Reductions.pdf SFIN 2/27/2018 9:00:00 AM
SB 105
SB 105 - Sectional Analysis.pdf SFIN 2/27/2018 9:00:00 AM
SB 105
SB 105 AAMFT Testimony 02232018 Finance.pdf SFIN 2/27/2018 9:00:00 AM
SB 105
SB 108 letter to Senator Giessel.pdf SFIN 2/27/2018 9:00:00 AM
SB 108
SB108 SS Letter of Support ASMA 2-27-18.pdf SFIN 2/27/2018 9:00:00 AM
SB 108