Legislature(2005 - 2006)BELTZ 211
03/31/2005 01:30 PM LABOR & COMMERCE
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* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
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.