Legislature(2017 - 2018)BELTZ 105 (TSBldg)

02/22/2018 01:30 PM LABOR & COMMERCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
*+ SB 165 COMPREHENSIVE HEALTH INSURANCE FUND TELECONFERENCED
Moved SB 165 Out of Committee
-- Public Testimony --
*+ SB 161 DENTISTRY: TEMPORARY PERMIT TELECONFERENCED
Heard & Held
-- Public Testimony --
+ Bills Previously Heard/Scheduled TELECONFERENCED
           SB 165-COMPREHENSIVE HEALTH INSURANCE FUND                                                                       
                                                                                                                                
1:34:24 PM                                                                                                                    
CHAIR COSTELLO announced the consideration of SB 165.                                                                           
                                                                                                                                
1:34:49 PM                                                                                                                    
SENATOR ANNA MACKINNON, Alaska State Legislature, Juneau,                                                                       
Alaska, sponsor of SB 165, introduced the legislation speaking                                                                  
to the following 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  percent for  one insurer                                                                    
     and  39.9  percent  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.                                                                                                                   
                                                                                                                                
1:36:30 PM                                                                                                                    
BRITTANY HARTMANN, Staff, Senator Anna MacKinnon, Alaska State                                                                  
Legislature, Juneau, Alaska, provided the following sectional                                                                   
analysis for SB 165.                                                                                                            
                                                                                                                                
     Section 1:  Removes the requirement for  the Department                                                                    
     of  Administration to  separately  account for  revenue                                                                    
     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), and to  deposit net                                                                    
     proceeds   into   the   Alaska   comprehensive   health                                                                    
     insurance fund.                                                                                                            
                                                                                                                                
     Section  2:  Extends  the sunset  date  of  the  Alaska                                                                    
     comprehensive health insurance fund  from June 30, 2018                                                                    
     to June 30, 2024.                                                                                                          
                                                                                                                                
     Section 3:  Repeals net proceeds definition  due to the                                                                    
     deletion of language in Section 1.                                                                                         
                                                                                                                                
     Section 4: Adds a  retroactivity clause, making Section                                                                    
     1 of the bill retroactive to  July 1, 2018 if Section 1                                                                    
     of  the  Act takes  effect  after  June 30,  2018,  and                                                                    
     making Section  2 of the  bill retroactive to  June 30,                                                                    
     2018 if  Section 2 of  the Act takes effect  after June                                                                    
     30, 2018.                                                                                                                  
                                                                                                                                
     Section  5: Provides  for an  immediate effective  date                                                                    
     for Section 4.                                                                                                             
                                                                                                                                
     Section 6: Provides for a  June 30, 2018 effective date                                                                    
     for Section  2. This is  to correspond with the  end of                                                                    
     the state fiscal year for accounting purposes.                                                                             
                                                                                                                                
     Section 7: Provides  for a July 1,  2018 effective date                                                                    
     for Sections 1 and 3.                                                                                                      
                                                                                                                                
CHAIR COSTELLO asked the reason  for the immediate effective date                                                               
on the retroactivity clause in Section 4.                                                                                       
                                                                                                                                
MS. HARTMANN deferred the question to Ms. Latham.                                                                               
                                                                                                                                
1:38:58 PM                                                                                                                    
ANNA LATHAM,  Deputy Director, Division of  Insurance, Department                                                               
of Commerce, Community and  Economic Development (DCCED), Juneau,                                                               
Alaska, explained  that the reason  for the  retroactivity clause                                                               
in Section  4 is  to adhere  to the terms  and conditions  of the                                                               
Section 1332 State  Innovation Waiver that was  approved for five                                                               
years.                                                                                                                          
                                                                                                                                
MS. LATHAM said she also had  several points to make on the bill.                                                               
First  is that  the  request to  extend the  sunset  date of  the                                                               
Alaska  comprehensive  health insurance  fund  for  six years  is                                                               
based on indications  that the Centers for  Medicare and Medicaid                                                               
Services may extend the five-year  1332 waivers for an additional                                                               
year. She also pointed out that  since House Bill 374 was enacted                                                               
in   2016,   premium  taxes   have   been   deposited  into   the                                                               
comprehensive health  insurance fund.  Prior to that  all premium                                                               
taxes collected by the Division  of Insurance were deposited into                                                               
the  general fund.  Should  SB  165 pass,  new  premiums will  be                                                               
collected and  deposited into the  general fund. The  third point                                                               
is that the federal government is  paying for about 90 percent of                                                               
the reinsurance program.  The terms and conditions  of the waiver                                                               
include the requirement that  the [legislature] enact legislation                                                               
to  authorize the  reinsurance program  beyond  the state  fiscal                                                               
year.  The state  must also  appropriate sufficient  funds on  an                                                               
annual or  other appropriation basis  for the  Alaska Reinsurance                                                               
Program  (ARP)  to  operate  as described  in  the  state  waiver                                                               
application. The  state must convey  copies of  its authorization                                                               
and the appropriation and other  relevant legislation to the U.S.                                                               
Department  of Treasury  and the  U.S. Department  of Health  and                                                               
Human Services within two days of passage.                                                                                      
                                                                                                                                
The federal waiver  and the reinsurance program  is contingent on                                                               
this fund extension.                                                                                                            
                                                                                                                                
SENATOR GARDNER asked what surplus lines means.                                                                                 
                                                                                                                                
MS. LATHAM explained that those  are types of insurance that take                                                               
on more  risk. The brokers  also pay the premium  taxes directly.                                                               
There are two  types. Foreign surplus lines are  domiciled in the                                                               
U.S. and file annual statements  with the National Association of                                                               
Insurance   Commissioners.   Alien   surplus  lines   only   file                                                               
statements   with  the   NAIC  who   is  responsible   for  their                                                               
regulation. Lloyds of London is an example                                                                                      
                                                                                                                                
1:42:38 PM                                                                                                                    
SENATOR MEYER commented that the  division appears confident that                                                               
the money will continue for the next five or six years.                                                                         
                                                                                                                                
MS. LATHAM said  her confidence is based on the  approval and the                                                               
terms  and  conditions  of  the  waiver.  The  division  received                                                               
verification of  the $58  million award to  fund the  program for                                                               
2018.                                                                                                                           
                                                                                                                                
SENATOR MICCICHE asked  if the extension is  through December 31,                                                               
2022.                                                                                                                           
                                                                                                                                
MS. LATHAM said that is correct.                                                                                                
                                                                                                                                
CHAIR  COSTELLO   reminded  the   committee  that  it   had  some                                                               
familiarity with  this program. Director Lori  Wing-Heier gave an                                                               
update  on it  recently and  the legislature  passed the  bill in                                                               
2016.                                                                                                                           
                                                                                                                                
SENATOR  MICCICHE  said he  asked  the  question because  SB  165                                                               
allows the sunset  to extend from June 30, 2018  through June 30,                                                               
2024 and the  authorization is two years short. He  asked if DHSS                                                               
would need to reapply for the additional two years.                                                                             
                                                                                                                                
MS.  LATHAM  said  the  dates  are  confusing  because  insurance                                                               
premiums are determined  based on program years  and the payments                                                               
for the premium  are through a calendar year.  The federal fiscal                                                               
year  ends in  October for  federal appropriation  and the  state                                                               
fiscal  year is  for the  state match  of the  appropriation. The                                                               
division is requesting an extension of the fund through 2024.                                                                   
                                                                                                                                
1:45:16 PM                                                                                                                    
SENATOR  STEVENS asked  her to  talk  about the  $25 million  the                                                               
state received from Premera.                                                                                                    
                                                                                                                                
MS.  LATHAM explained  that  the  $25 million  award  was due  to                                                               
Premera making more  profit than anticipated. Through  an MOU the                                                               
division  directed  Premera  to  award the  $25  million  to  the                                                               
reinsurance  program so  that  premiums would  be  lower for  all                                                               
individuals in  the individual market.  Awards like that  are not                                                               
anticipated going forward.                                                                                                      
                                                                                                                                
1:46:26 PM                                                                                                                    
At ease                                                                                                                         
                                                                                                                                
1:46:53 PM                                                                                                                    
CHAIR COSTELLO reconvened the meeting.  Finding no one who wished                                                               
to comment on  SB 165, she closed public testimony  and looked to                                                               
the will of the committee.                                                                                                      
                                                                                                                                
1:47:27 PM                                                                                                                    
SENATOR MEYER moved  to report SB 165, version  D, from committee                                                               
with individual recommendations and attached fiscal note(s).                                                                    
                                                                                                                                
CHAIR  COSTELLO announced  that without  objection, SB  165 moves                                                               
from the Senate Labor and Commerce Standing Committee.                                                                          

Document Name Date/Time Subjects
SB 165.PDF SL&C 2/22/2018 1:30:00 PM
SB 165
SB165 Sponsor Statement.pdf SL&C 2/22/2018 1:30:00 PM
SB 165
SB165 Sectional Analysis.pdf SL&C 2/22/2018 1:30:00 PM
SB 165
SB 165 CMS Letter Approving Alaska's State Innovation Waiver.pdf SL&C 2/22/2018 1:30:00 PM
SB 165
SB165-DOA-DOF-02-15-18.pdf SL&C 2/22/2018 1:30:00 PM
SB 165
SB165-DCCED-DOI-02-16-18.pdf SL&C 2/22/2018 1:30:00 PM
SB 165
SB 161.PDF SL&C 2/22/2018 1:30:00 PM
SB 161
SB 161 - Sponsor Statment.pdf SL&C 2/22/2018 1:30:00 PM
SB 161
SB 161 Legal Memo Exemptions 01-22-18.pdf SL&C 2/22/2018 1:30:00 PM
SB 161
SB 161 Legal Memo Temporary Permits, Exemptions 01-26-18.pdf SL&C 2/22/2018 1:30:00 PM
SB 161
SB 161 - Letter of Support - Alaska Dental Society.pdf SL&C 2/22/2018 1:30:00 PM
SB 161
SB 161 - Letter of Support - Alaska State Board of Dental Examiners President.pdf SL&C 2/22/2018 1:30:00 PM
SB 161
SB161-DCCED-CBPL-02-16-18.pdf SL&C 2/22/2018 1:30:00 PM
SB 161