Legislature(2009 - 2010)BUTROVICH 205
03/02/2009 01:30 PM Senate HEALTH & SOCIAL SERVICES
| Audio | Topic |
|---|---|
| Start | |
| SB96 | |
| SB61 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 61 | TELECONFERENCED | |
| += | SB 96 | TELECONFERENCED | |
| += | SB 47 | TELECONFERENCED | |
SB 61-MANDATORY UNIVERSAL HEALTH INSURANCE
1:38:47 PM
CHAIR DAVIS announced consideration of SB 61.
1:39:12 PM
SENATOR HOLLIS FRENCH, sponsor of SB 61, said 123,000 working
Alaskans are without health insurance, and this bill is designed
to make it affordable for all of them. They are not as lucky as
we are to have health insurance provided to them as a job
benefit, and they lack the economic wherewithal to afford an
increasingly out-of-reach health insurance policy. He explained
that SB 61 keeps the health insurance landscape much the same as
it is now - a mix of private and government insurance and simply
makes private insurance affordable. If you have an existing
insurance policy, nothing changes; it simply reaches out to
those Alaskans without health insurance.
Some people wonder why the state should advance this bill when
it looks as if President Obama is going to fix this problem in
Washington. There are two reasons; one is that it would be
foolish to wait for Washington "to swoop into the rescue with
the other enormous problems that confront our nation." Two, it
may very well be that the solution adopted by Washington
requires states to show initiative in adopting their own state
plan that comports with a broad federal mandate. So, it's
important for Alaskans to become acquainted and familiar with
the basic building blocks of insurance reform so that we can
offer an Alaskan solution when the time comes.
SENATOR FRENCH said that SB 61 is modeled after the
Massachusetts plan that passed a little over two years ago and
that has encouraging results. Many states are pursuing similar
models. For example, Massachusetts has registered about 100,000
new entrants into the insurance market, and the dire prediction
of private employers dropping their employees from coverage has
not occurred. It has led to a decrease in the number of hospital
admissions as people get primary care instead of going to an
emergency room, and looks in general looks like it will be a
success.
SENATOR FRENCH said his staff created a web site that has tens
of thousands of hits. It has a calculator for people to use to
estimate what it would cost them for different insurance
options. The bill has enjoyed broad support from the health care
industry even though there is some trepidation from the
insurance industry and small businesses about hidden costs.
However, for many small employers there will be no cost at all.
The bill has two technical elements; one is what is known as an
individual mandate, which means that each person must get his
own insurance policy. The reason is that insurance works best
when there are more people in the pool; this will lower the cost
for everyone. It includes arrangements for young people who
don't have the insurance needs of the middle-aged.
The other side of the picture is the guaranty issue - every
person who presents themselves must be issued a policy. The
insurance industry will not be able to turn people away because
of disqualifying conditions, but with some exceptions. The idea
is that those are two sides of a coin - guaranty issue and
individual mandate. The insurance industry will get tens of
thousands of healthy people into its ranks, and in return it
will be required to insure those who have some difficulty
getting insurance.
1:46:05 PM
ANDY MODEROW, staff to Senator French, gave a sectional analysis
of SB 61. Section 1 provides the findings that go over many of
the themes that Senator French just presented. The real meat of
the bill begins on page 2, line 24, where it establishes the
program, itself.
AS 21.54.200 spells out the goals that are going to be
implemented to help fulfill some of the problems mentioned
during the finds. One is to make insurance affordable for all
residents of the state and the other is to get everybody
covered. The real structure of what the bill creates begins on
page 3, line 9, which contains the structure of the health care
board. It will be an oversight committee under the Division of
Insurance, which implements this plan. It will have 13 members
to include six individuals who focus more on the business side
of health care transactions, an insurance producer (someone who
is more in touch with the individual policies as they are issued
to the consumers), an insurance representative, two business
representatives (one from a large business and one from a small
business), two hospital representatives; from the consumer side
it has a labor organization representative, two Alaskan
physicians, a registered nurse, two consumer advocates and the
commissioner of the Department of Health and Social Services or
his designee. This last individual will cast a deciding vote if
needed.
Sec. 21.54.220 on page 4, line 5, outlines the powers and duties
of this board. It has the primary oversight responsibility of
the health care clearing house and the health care fund. An
important function the board takes on (page 4, lines 10-15) is
it classifies plans that are available through the clearing
house. Part of the goal of this bill is to encourage competition
and consumer choice, and this places plans in more of an apples
to apples comparison for consumers when they go to the clearing
house to choose one. The Massachusetts Connector has three
different levels of plans; Alaska has gold, silver and bronze.
These classifications are based on the fiscal elements, such as
deductibles, co-pays, co-insurance, and out-of-pocket maximums.
The board will also recommend essential health care services
that all plans sold through the clearing house should include.
These recommendations would then be put in front of a body such
as the legislature where they could be fleshed by a committee
and discussed for possible implementation.
The financial criteria of the plans are not specified by this
bill, and a lot of people have raised concerns. The bill does
provide a very broad definition of essential health care
services and everyone will not be forced to get a $10,000 health
care plan that has $100 deductible. The only direction it
provides can be found on page 5, lines 6-8, which requires that
"a health care plan issued through the clearing house that can
protect an insured from severe financial hardship caused by the
cost of receiving care." The goal is to maximize consumer
choice, not limit it. Studies have shown that most personal
bankruptcies include a medical element.
1:50:40 PM
MR. MODEROW said the board will also provide procedures for an
annual open season where customers can change their plan
choices. This season will reduce a moral hazard of someone
buying a high deductible plan and then deciding once they get
into a car accident, which they caused and therefore their plan
must cover, from then upgrading to a low deductible plan.
The next section describes the health care clearing house on
page 5, line 12. It will be the place where Alaskans become
connected with private health care plans that suit their needs.
Two examples exist now - the Massachusetts Health Care Connector
that needs a zip code to work and another example is the Federal
Employee Health Benefits Plan System.
1:52:23 PM
SENATOR THOMAS said that Massachusetts is small state and had a
small population that wasn't covered by insurance and asked how
this would insure that Alaska's remote areas that don't even
have telephone get the clearing house information.
MR. MODEROW replied that is a great question and is part of the
reason for leaving the clearing house decision and fine print up
to the board to determine.
SENATOR THOMAS asked the difference between a licensed insurance
producer and somebody who is licensed to transact health care
insurance in the state.
MR. MODEROW replied that a producer is someone who looks and
works with individuals on the ground on the specifics of a
particular health care plan, and an insurance representative
would be more from the business side aggregate.
1:54:17 PM
LINDA HALL, Director, Division of Insurance, Department of
Commerce, Community & Economic Development, added that the
difference is that the first one is an insurance agent, and the
second is the actual insurance company.
MR. MODEROW directed attention to Sec. 21.54.240 on page 5, line
22, that created needs-based vouchers and includes the
individual responsibility clause, two major components of the
legislation that make it possible. Section (a) includes that
individual responsibility clause which outlines that all
Alaskans shall have meaningful health coverage. Sec. 21.54.240
(1)-(7) has specific examples of what will qualify to fulfill
that end - individuals who are covered under an employer plan or
other publicly funded options and IHS recipients are considered
in compliance with having health coverage. Subsection (8) is a
religious exception that allows someone who has deeply held
religious beliefs who objects to the overall program to opt out
health coverage altogether. Massachusetts has a similar
exception.
1:55:34 PM
MR. MODEROW said subsection (g) on page 7, lines 20-26, mention
that people who have health coverage under (1)-(7) or elsewhere
will not be eligible to receive needs-based vouchers to purchase
health coverage. The idea is if you are eligible for Medicaid,
that is where you get health coverage; you don't have the option
to receive money to buy an additional health coverage plan.
SENATOR PASKVAN asked what the function of the one-year minimum
requirement was on page 7, line 26.
MR. MODEROW replied the purpose of this legislation was to
reduce the impact of people moving to Alaska just to get
affordable health coverage. It is similar to the Permanent Fund
Dividend.
He explained that under the needs-based vouchers, this year's
federal poverty level has been set at $13,530 for individuals or
$27,570 for a family of four. On page 6, line 28, subsection (c)
provides a guaranty that anyone who falls below that line will
not have to pay for the health coverage they receive. He
explained that many people who fall below the poverty line are
qualified for other publicly funded options like Medicaid. They
might have co-pays or deductibles, but this will have to protect
them from severe financial hardship in the future.
On page 7, line 3 (d) sets up a sliding scale for vouchers.
Individuals who earn from 100 to 300 percent of the federal
poverty level will get vouchers based on earnings with more
assistance going to those who earn less. On page 7, line 10 (e)
requires all who earn over 300 percent of the federal poverty
level who do not fall under one of those exceptions in (a)
acquire health coverage. They won't receive needs-based
vouchers, but they might receive specified beneficiary vouchers
which are provided for later in the bill.
On page 6, line 15, subsection (b) provides larger vouchers to
individuals who only qualify for ACHIA coverage. Subsection (f)
insures that only legal residents of Alaska will receive these
needs-based vouchers.
1:59:14 PM
Sec. 21.54.250 is where essential health care services are
defined; it requires that all health plans sold in the clearing
house include coverage for certain things such as preventative
and primary care, emergency services, inpatient services and
hospital treatment, ambulatory patient services, prescription
drug coverage and mental health services.
MR. MODEROW said on page 8, line 7, Sec. 21.54.260 begins and
relates to employer coverage and the employer levy; (a) and (b)
are included so nothing has to change in employer-based plans
should an employer want to keep those plans going the way they
are currently set up. On page 8, line 13, (c) and (d) relate to
employer levy; the rules are pretty simple. If you are a small
employer who has a payroll of less than $500,000 there is no
levy required on the payroll. For businesses with a payroll
between $500,000 and $1,000,000 there will be a 1 percent levy.
For business with a payroll greater than $1,000,000 there will
be a 2 percent levy.
He explained that there are multiple ways that this levy is not
actually levied against a payroll, and if you provide employees
with health coverage, you don't have to pay it. The definition
of being a providing employer requires that an employer either
offers to pay 33 percent of the health care premium or
successfully enrolls 25 percent of his employees. Another
element on page 8, line 29, (d) that says if an employer sets up
a Section 125 account, a way for employees to purchase health
services with pre-federal tax dollars, they are exempted from
levies entirely.
2:02:10 PM
Sec. 21.54.270 on page 9, line 5, discusses the structure of
insurance plans available in the clearing house; (a) outlines
that plans sold in the clearing house must meet the requirements
of this legislation and those under the insurance statutes in
Title 21. This insures a baseline of quality for plans.
Subsection (b) mandates that an insurance company not be able to
turn down people looking for coverage for a plan sold through
the clearing house (the guaranty part). Subsection (c) clarifies
that health insurance plans can have financial conditions such
as deductibles, co-pays and co-insurance that vary; (d)
increases the dependent age to 25 years of age or until two
years after the dependent no longer resides with the family.
Subsections (e) and (f) are new elements, and like the guaranty
provision, they are made possible by getting everyone into the
insurance pool. Both borrow from current small group insurance
regulation in statute.
On page 9, line 25, subsection (e) defines pre-existing
condition exclusions that are allowable in plans sold through
the health care clearing house. They are patterned off of the
currently applicable small group insurance statutes in Sec.
21.54.110(a) and they provide protections to individuals who
have employment-based coverage to those in the individual market
and plans sold through the clearing house. Subsection (e)(1)
requires that insurers consider no more than two years of
medical history when establishing that a preexisting condition
exists; (e)(2) prohibits the creation of a preexisting condition
only on the grounds of genetic information; (e)(3) prevents
these exclusions from extending longer than 12 months, though
depending on prior coverage that may be shortened; (e)(4)
prohibits considering pregnancy as a preexisting condition.
Subsection (f) relates to credible coverage and how that relates
to the preexisting condition exclusions under (e). Language on
page 10, line 5, requires that any pre existing condition
exclusion is reduced by periods of credible coverage if it is
applicable. This language is mostly taken from 21.54.110(b).
2:05:45 PM
Page 10, lines 5-9, describe plans that count as credible
coverage under the bill; these are essentially any plan that
count as credible coverage under small group rules plus any plan
sold through the health care clearing house; it also includes
Medicaid recipients. It requires that a pre-existing condition
exclusion must be reduced from the maximum of 12 months by the
length of continuous credible coverage an individual had before
they acquired new coverage through the health care clearing
house. It requires that any type of plan that fulfills the
individual mandate under AS 21.54.240 of this legislation will
count as credible coverage in addition to plans that fit the
definition under AS 21.54.120 (current small group regulation).
Language on page 10, lines 9-12, outlines that the term
"continuous" means that a 90-day break in coverage prior to an
enrollment date in a clearing house plan will not be counted as
continuous. Lines 14-15 allow for waiting periods if they are
applicable for a health plan; the State of Alaska has a waiting
period where new employees have to wait until coverage kicks in,
and that is still allowable despite this new language. Mr.
Moderow said (e) and (f) insure that people aren't penalized
when they switch from one benefit plan to another in the health
care clearing house whether it be due to a change to their
employment, their financial situation or family status. Many
other states include similar protections for consumers and in
Alaska these requirements currently do exist in the small group
market.
2:07:18 PM
SENATOR THOMAS said that insurance coverage usually runs month
to month, and a 90-day period could start or end in the middle
of any particular month. Was there some reason for using 90 days
versus using calendar months?
MR. MODEROW answered they patterned this off the small group
statutes and didn't consider using a calendar month. He would
look into it for him, though. Other states use days or years.
MR. MODEROW said Sec. 21.54.280 on page 10, line 16, establishes
the health care fund and describes the specified beneficiary
vouchers. The health fund will be a separate trust fund of the
state and will include state money and appropriations, any
federal dollars and the employer levy. This fund will be used to
pay out the sliding scale vouchers.
MR. MODEROW said subsection (b) describes another source of
funding that can come into the fund, but these will not be used
for the needs-based vouchers. These are specified beneficiary
vouchers which give an employer the option of providing a set
number of dollars to their employees to purchase health benefit
plans. Last year they heard testimony from business owners who
wanted to contribute something to an employee's health benefits,
but they couldn't sponsor an entire plan. This will give them an
accountable way to give dollars to their employees to use for
the purchase of health coverage.
Sec. 21.54.290 on page 11, line 7, discusses disputes and
appeals and the process that can go through. Page 11, line 16
relates to reporting and provides for an annual report by the
health care board that includes statistics relating to how the
program is performing and it has other topics that should be
discussed annually to be presented to the legislature and other
bodies related to electronic health records, S-chip programs,
effective mandated benefits and other things.
MR. MODEROW said Sec. 21.54.310 says that any regulations will
be established under the Administrative Procedure Act.
2:10:43 PM
SENATOR THOMAS asked if they got the idea of people contributing
to plans from the Massachusetts plan.
MR. MODEROW replied that Massachusetts has something like that,
but this was requested last year by the owner of Snow City Café
whose owner actually contributes dollars to her employees'
health care.
SENATOR THOMAS asked if the 2 percent of gross payroll for the
sliding scale vouchers goes to the health care fund.
MR. MODEROW answered yes.
CHAIR DAVIS announced the beginning of public testimony.
2:12:23 PM
MARIE DARLIN, AARP Capital City Taskforce, supported SB 61. AARP
wanted to get something started that would address the problem
of those without insurance. They are also concerned that access
to affordable coverage is getting increasingly difficult to get
particular before people are covered by Medicare in the 50-64
age group; even those with Medicare have trouble finding a
physician. She submitted a letter with questions that AARP was
asking, and said they would be following the bill and hope for
progress this year.
CHAIR DAVIS said she also was particularly concerned about that
age group as well and that she would have a subcommittee looking
at some of these issues.
2:15:55 PM
BEVERLY SMITH, Christian Science Committee on Publication for
the State of Alaska, wanted to make sure the committee had
accurate information regarding spiritual healing as practiced in
Christian Science so that this cost effective and reliable form
of health care is not overlooked or restricted in the state's
health care reform efforts in SB 61. In this regard, she said,
it is important to preserve peoples' choice to pursue spiritual
means for the prevention and cure of disease including Christian
Science treatment and care and this legislation can be an
important avenue for doing so. She thanked the sponsors for
including the opt-out provision; however, to meet the health
care needs of all Alaskans, they feel health care reform
legislation should include coverage for spiritual care similar
to state and federal government plans which currently do so.
To accomplish this, she requested that they incorporate an
amendment that includes a definition of "essential healthcare
services as used in Sec. 21.54.250 that says "shall be
interpreted to include non-medical healthcare services provided
by a religious non-medical provider is defined in AS
21.07.250(15)." This definition says "religious non-medical
provider" means a person who does not provide medical care, but
who provides only religious non-medical treatment or nursing
care for an illness or injury.
MS. SMITH also provided an attachment called "Access to
Spiritual Care" which sets forth the explanation for including
religious non-medical care in SB 61. It says that prayer-based
healing has been a mainstay in American life for years; it has
remained some people's primary means of health care because they
trust its effectiveness, its completeness and its reliability.
Having the option to choose is important to many more. She said
Christian Science is a method of spiritual care that is
accessible to everyone. She said that Christian Science doctors
provide the prayer and nurses take care of daily physical needs
while the patient prays for healing.
2:20:41 PM
MS. SMITH said she identified two areas where statutory
provisions may be needed to achieve public access to spiritual
care. One is that it should be covered by insurance, and two is
that religious non-medical care should be accommodated in
managed care insurance plans, which Alaska is already pursuing.
If people are finding cures through spiritual means without
large health care costs, it should be encouraged.
2:21:50 PM
PATTY BOILY, representing herself, Homer, Alaska, said she has
worked in health care as a certified coding specialist for
physician-based offices for 25 years, and that she hasn't been
insured since June 2008, and prior to that she had ACHIA, but it
became too expensive - at $10,000 per year plus 20 percent.
MS. BOILY said she supported SB 61. She supported a universal
single payer system, but didn't see that happening soon; so she
thought it was time for the State of Alaska to do something.
People who are not insured can't afford to pay their bills, so
either they go through bankruptcy or they go through the poverty
programs at the hospitals.
She related that her son who is now 28 years old had to have
urgent open heart surgery about a year ago. He had no history of
heart problems; it happened suddenly. Alaska Medicaid doesn't
have anything for single adults that don't have dependent
children. He was able to get preemptively disabled by Social
Security, which made him eligible for Medicaid that picked up
all his bills. But now that the surgery is over and he is no
longer disabled, he no longer has Social Security or Medicaid.
He still needs to have an $1,800 echocardiogram, which he has no
money for, and he is now uninsurable. She strongly encouraged
them to get this bill passed.
2:25:44 PM
CHAIR DAVIS said she agrees that Alaska has to do something, and
gave her hope that the federal government would address
situations like her son's this year.
2:26:38 PM
CHAIR DAVIS, seeing no further testimony, closed the public
hearing. She asked for volunteers for a subcommittee and if
Senator Ellis would be willing to work on it.
SENATOR ELLIS responded that he is a supporter of the bill as it
is.
CHAIR DAVIS said that may be so, but there are some issues that
need to be addressed.
2:28:59 PM
SENATOR ELLIS said he would be happy to serve on a subcommittee;
Senator Paskvan volunteered as well.
SENATOR THOMAS asked what the penalty is for not purchasing
insurance.
2:30:22 PM
MR. MODEROW replied that it isn't specified, but Senator French
said he didn't anticipate throwing people in jail for not having
health care coverage. This issue would be addressed in
regulations.
SENATOR THOMAS asked as more people get into that system, would
that increase the number of physicians who would take
Medicaid/Medicare patients.
MR. MODEROW replied that Massachusetts found that the time it
took to get in to see a primary care physician actually
increased after their plan increased coverage. This was
partially caused by the fact that there were new customers able
to afford primary care for the first time. It reduced the number
of people whose needs were not cared for in the first place.
2:31:56 PM
CHAIR DAVIS said she would pass all the information on to the
subcommittee and get back to the sponsor to schedule the next
meeting. [SB 61 was held in committee.]
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