Legislature(2005 - 2006)BELTZ 211

03/31/2005 01:30 PM LABOR & COMMERCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
*+ SB 142 REGIONAL SCHOOL BD LAND/BLDG OWNERSHIP TELECONFERENCED
Heard & Held
*+ SB 139 EXTENSIONS OF OCCUPATIONAL BDS/AGENCIES TELECONFERENCED
Scheduled But Not Heard
*+ SB 108 INSURANCE TELECONFERENCED
Heard & Held
Bills Previously Heard/Scheduled
Including But Not Limited to:
= SB 147 SPORT FISHING FACILITY REVENUE BONDS
Moved SB 147 Out of Committee
= SJR 11 REPEAL TELECOMMUNICATIONS TAX
Scheduled But Not Heard
= SB 130 WORKERS' COMPENSATION
Moved CSSB 130(L&C) Out of Committee
                        SB 108-INSURANCE                                                                                    
                                                                                                                                
CHAIR CON BUNDE announced SB 108 to be up for consideration.                                                                    
                                                                                                                                
LINDA  HALL,  Director,  Division  of  Insurance,  Department  of                                                               
Community & Economic  Development (DCED), said the  purpose of SB
108  is   to  make  regulation   of  insurance   more  efficient,                                                               
consistent and good  for consumers. She went  through a sectional                                                               
analysis that was available in the committee's packets.                                                                         
                                                                                                                                
2:55:54 PM                                                                                                                    
She said two sections of  the bill have created some controversy.                                                               
One deals  with service contracts and  products called guaranteed                                                               
auto protection. It  is the intent of the  Division of Insurance,                                                               
which  currently has  authority  to regulate  products under  its                                                               
very  broad definition  of insurance,  to promulgate  regulations                                                               
allowing recognition  of unique products  that are on  the market                                                               
that don't fit  a traditional definition of  insurance. She would                                                               
like to  be able to  look at  those products and  have regulatory                                                               
oversight  that allows  more flexibility  than the  definition of                                                               
insurance has today.                                                                                                            
                                                                                                                                
MS.  HALL said  she  has  been working  with  Senator Seekins  to                                                               
resolve  this   and  feels  it   can  be  resolved  to   all  the                                                               
stakeholders' interests.                                                                                                        
                                                                                                                                
The second  section that has  caused some  interesting discussion                                                               
is section 28. She explained:                                                                                                   
                                                                                                                                
     There  is a  provision  for the  division  to set  some                                                                    
     minimum   standards  for   what's  called   self-funded                                                                    
     governmental plans.  Basically, we're talking  here are                                                                    
     not    the    political    subdivisions;    it's    not                                                                    
     municipalities,   it's  not   school  districts.   This                                                                    
     specifically speaks  to the Union Health  Trust. Today,                                                                    
     statutory  language  gives  the Division  of  Insurance                                                                    
     authority to look at various  entities and to determine                                                                    
     if  they  are  not  regulated by  another  entity  that                                                                    
     oversees   or  licenses   plans  that   provide  health                                                                    
     coverage,  they  will fall  under  Title  21. If  those                                                                    
     entities  fall  under Title  21  today,  they would  be                                                                    
     regulated as insurers.                                                                                                     
                                                                                                                                
     In  March   2004,  at  the   request  of  one   of  the                                                                    
     unions....[to]  make  a  determination whether  we  had                                                                    
     regulatory oversight. I sent  letters to all five union                                                                    
     health   trusts  asking   for  information   about  who                                                                    
     regulated  them....   I  already  have   received  some                                                                    
         responses to those. We are seeking additional                                                                          
     information to make that preliminary determination.                                                                        
                                                                                                                                
     This section seeks to clarify our statutory oversight                                                                      
     and to set some minimum standards....                                                                                      
                                                                                                                                
CHAIR BUNDE  interrupted to say  that he had concerns  and wanted                                                               
her  to come  back at  a  future date  and give  the committee  a                                                               
detailed response.                                                                                                              
                                                                                                                                
MS. HALL  replied that she would  be happy to do  that. Also, she                                                               
said,  "It's important  that there  be an  objective analysis  of                                                               
what money  is needed to pay  benefits to make sure  that benefit                                                               
money is actually there when it's needed."                                                                                      
                                                                                                                                
CHAIR BUNDE announced that the bill would be held.                                                                              
                        SB 108-INSURANCE                                                                                    
                                                                                                                                
CHAIR CON BUNDE announced SB 108  to be back up for consideration                                                               
and apologized for not taking public testimony earlier.                                                                         
                                                                                                                                
COLLEEN SAVOIE,  Public Employees  Local 71,  opposed SB  108. It                                                               
imposes  unnecessary and  costly  regulation and  burdens to  the                                                               
trust health  plans that were established  through the collective                                                               
bargaining  process to  provide benefits  to state  employees. It                                                               
would  require the  trust  to file  actuarial  reports and  other                                                               
documents.  A Department  of Health  and  Social Services  (DHSS)                                                               
actuary  estimated that  it would  cost a  minimum of  $40,000 to                                                               
$50,000 per year  assuming the actuary was  already familiar with                                                               
the plan.  Administrative costs and  legal fees would  be related                                                               
to the filings as well.                                                                                                         
                                                                                                                                
There is a requirement for  a fidelity bond covering the trustees                                                               
in an  amount not less  than 10 percent  of the benefits  paid in                                                               
the preceding  year. In the case  of a larger trust,  such as the                                                               
FDA, that could mean a bond of  as much as $6.4 million, which is                                                               
an unusually large bond and it may be difficult to obtain.                                                                      
                                                                                                                                
MS.  SAVOIE  said  the  fiscal note  provides  for  one  customer                                                               
service specialist, but the number  of filings this bill requires                                                               
would need more.                                                                                                                
                                                                                                                                
CHAIR  BUNDE said  he  has  passed her  written  concerns to  the                                                               
director  and those  would  be  addressed in  detail  in a  later                                                               
hearing.                                                                                                                        
                                                                                                                                
MS. SAVOIE  emphasized that  the reason  trusts are  concerned is                                                               
because  every  dollar  that goes  towards  administration  is  a                                                               
dollar that is not used for benefits.                                                                                           
                                                                                                                                
FRANK  PUSCHAK, Anchorage,  said he  is  a trustee  for a  health                                                               
plan, but  he is speaking  for himself.  He said the  trusts were                                                               
set up because the state didn't  want to deal with them any more.                                                               
Sections 28  and 29 would  put them  under control of  the state,                                                               
but the trustees would be doing  all the work. SB 108 would cause                                                               
unnecessary  regulation and  burden. He  was also  confused about                                                               
what  government plans  are covered  in the  bill; he  thought it                                                               
could apply to the State of Alaska and municipalities, too.                                                                     
                                                                                                                                
CHAIR  BUNDE thanked  him and  closed public  testimony. He  said                                                               
those concerns would be addressed before acting on the bill.                                                                    

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