Legislature(2013 - 2014)BUTROVICH 205

04/06/2013 03:30 PM STATE AFFAIRS

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Moved SB 90 Out of Committee
-- Public Testimony <Time Limit May Be Set> --
Moved SCS CSHB 59(STA) Out of Committee
-- Public Testimony < Time Limit May Be Set> --
Moved HB 186 Out of Committee
-- Public Testimony < Time Limit May Be Set> --
+ Bills Previously Heard/Scheduled TELECONFERENCED
Moved HB 113 Out of Committee
Moved CSHCR 6(EDT) Out of Committee
Moved CSSB 48(STA) Out of Committee
        SB 90-SCHOOL DISTRICT EMPLOYEE HEALTH INSURANCE                                                                     
4:20:25 PM                                                                                                                    
CHAIR DYSON announced that the first order of business would be                                                                 
SB 90.                                                                                                                          
SENATOR MIKE DUNLEAVY, sponsor of SB 90, read from the following                                                                
sponsor statement:                                                                                                              
     The  cost of  health care  insurance for  all employees                                                                    
     has escalated  far greater than  the rate  of inflation                                                                    
     and  Alaska's   53  school  districts  have   felt  the                                                                    
     financial  pinch.  Under  Senate Bill  90,  all  Alaska                                                                    
     public school districts employees  will be covered by a                                                                    
     state-managed    group   health    insurance   program.                                                                    
     Approximately  19,000  school  district  employees  and                                                                    
     their   families,   an   estimated  total   of   47,000                                                                    
     individuals, would  be added  to the State  of Alaska's                                                                    
     Employee Health Plan.                                                                                                      
     This larger  insurance pool places the  State of Alaska                                                                    
     in a  position to  negotiate a more  favorable employee                                                                    
     health care insurance plan.  By moving school districts                                                                    
     into  an integrated  state plan,  the state  and school                                                                    
     districts   benefit  from   the  economies   of  scale.                                                                    
     Currently  each school  district  must  obtain its  own                                                                    
     insurance   coverage;   consequently,  the   level   of                                                                    
     coverage  and   the  cost   of  premiums   vary  widely                                                                    
     throughout the state.                                                                                                      
     In  addition  to  the   potential  savings  with  lower                                                                    
     insurance premiums,  two other advantages  are afforded                                                                    
     school   districts   and   the   state   through   this                                                                    
     legislation. Senate  Bill 90 will  provide standardized                                                                    
     health care coverage statewide for all school district                                                                     
     employees.  A  person who  may  elect  to move  between                                                                    
     school   districts  will   know  the   basic  insurance                                                                    
     coverage offered before the transfer.                                                                                      
     Secondly, the  need for administrative time  and effort                                                                    
     by  each  school district  to  secure  and negotiate  a                                                                    
     health insurance plan for  its employees is eliminated.                                                                    
     This  responsibility   shifts  to  the   Department  of                                                                    
     Administration,  a  department that  routinely  manages                                                                    
     insurance policies for all  state employees, and allows                                                                    
     school  districts   to  focus  on   educational  policy                                                                    
     Starting   July   1,   2014,  school   districts   will                                                                    
     transition to the new state  health care insurance plan                                                                    
     as each  school district's existing  employee contracts                                                                    
     expire.   All   school   districts  are   expected   to                                                                    
     changeover to the State of  Alaska plan within three to                                                                    
     five years.                                                                                                                
4:22:43 PM                                                                                                                    
SENATOR  DUNLEAVY   concluded  that  53  school   districts  must                                                               
negotiate their own insurance plans.  Some of those districts are                                                               
as small  as 10 students.  Alaska has a single  retirement system                                                               
for its teachers and the cost  of insurance is rising. This is an                                                               
opportunity to pool employees of  school districts to negotiate a                                                               
more  favorable  rate and  allow  school  districts to  focus  on                                                               
policy and educating children.                                                                                                  
4:24:03 PM                                                                                                                    
SENATOR COGHILL joined committee.                                                                                               
CHAIR DYSON asked who opposes this legislation.                                                                                 
SENATOR DUNLEAVY said there may  be some school districts that do                                                               
not understand  how they  would benefit  by this  legislation and                                                               
are opposed to it. NEA might be opposed to it.                                                                                  
CHAIR DYSON asked if SB 90 is optional.                                                                                         
SENATOR DUNLEAVY explained it would  be similar to the retirement                                                               
system  where all  school  districts would  become  part of  this                                                               
pool. The goal is to have  a standardized insurance plan in order                                                               
to control costs.                                                                                                               
CHAIR DYSON asked if he said it's mandatory.                                                                                    
SENATOR DUNLEAVY said yes.                                                                                                      
CHAIR DYSON asked over what period of time.                                                                                     
SENATOR DUNLEAVY  explained that  districts will  transition into                                                               
the plan starting July 1, 2014 as their existing plans expire.                                                                  
4:25:36 PM                                                                                                                    
BECKY  HULTBERG,  Commissioner,   Department  of  Administration,                                                               
provided  information on  SB 90.  She reported  that health  care                                                               
costs are  high and one  of the  most significant issues  for the                                                               
United  States and  for  Alaska.  The rate  at  which costs  keep                                                               
growing is a significant concern.  Managing expenses becomes even                                                               
more  important with  dwindling  resources. The  bill offers  the                                                               
opportunity  to  talk about  the  management  of school  district                                                               
insurance costs.                                                                                                                
SENATOR WIELECHOWSKI joined the committee.                                                                                      
COMMISSIONER HULTBERG  related that  the state  currently manages                                                               
health  insurance plans  for 6,400  active,  and 60,000  retired,                                                               
employees, the balance of which  are covered by four union health                                                               
trusts.  The combined  annual cost  of  the plans  is about  $600                                                               
million. Both plans are self-insured  and claims are administered                                                               
by  a   third-party  administrator  who  processes   the  claims,                                                               
negotiates discounts, and receives a payment each month.                                                                        
4:28:30 PM                                                                                                                    
COMMISSIONER  HULTBERG  listed some  of  the  cost drivers  in  a                                                               
health  plan: network  discounts and  how broad  the network  is,                                                               
administrative costs, how  many high cost claimants  there are in                                                               
one year, medical inflation, and  utilization impacted by how the                                                               
plan is designed.                                                                                                               
She  related that,  currently, the  AlaskaCare employee  plan has                                                               
16,400 members  (employees and dependents).  This bill  would add                                                               
an  estimated 47,000  members to  that plan.  Theoretically, more                                                               
members covered  by a plan  can be advantageous in  several ways.                                                               
Larger numbers can be used  to achieve deeper discounts. They can                                                               
impact administrative costs for the  better. They can reduce risk                                                               
and have a positive impact on per unit cost for services.                                                                       
She  stressed the  importance of  considering that  the state  is                                                               
inheriting these employees  into the retiree plan.  The state has                                                               
a  vested interest  in lowering  costs in  two ways.  Because the                                                               
state provides  funding for education,  it has a  direct interest                                                               
in lowering  costs now,  as well  as long  term when  the members                                                               
become retirees and enter the retiree plan.                                                                                     
4:32:06 PM                                                                                                                    
COMMISSIONER HULTBERG  addressed a  key philosophical  question -                                                               
what  is the  best approach  to managing  these costs.  Right now                                                               
there is a  fragmented approach to health  care management within                                                               
school districts. She  noted that the Juneau  School District has                                                               
four different  health plans. She  suggested a  more coordinated,                                                               
integrated approach is needed.                                                                                                  
SENATOR WIELECHOWSKI asked how much  more or less a teacher would                                                               
have to pay if the bill passes.                                                                                                 
COMMISSIONER HULTBERG said it was  a difficult question to answer                                                               
because it  depends on the  district and the plan.  She cautioned                                                               
that  looking at  out-of-pocket  costs  is not  the  best way  to                                                               
evaluate a  plan. Sometimes coverage is  different between plans.                                                               
It is important to look at the actuarial value of a plan.                                                                       
SENATOR WIELECHOWSKI  stated that he  has a letter from  Local 71                                                               
that  ran the  numbers and  estimates that  the Anchorage  School                                                               
District will pay  an additional $400,000 and  each employee that                                                               
needed  the full  family plan  would pay  an additional  $1,000 a                                                               
year.  He  asked  if that  meshed  with  Commissioner  Hultberg's                                                               
COMMISSIONER  HULTBERG  replied  that  she saw  the  letter,  but                                                               
without comparing  actuarial evaluations, it's difficult  to make                                                               
an  assessment about  the better  value. She  gave an  example of                                                               
plan differences.                                                                                                               
SENATOR WIELECHOWSKI  said, as someone who  represents Anchorage,                                                               
he would  have a  difficult time  explaining how  he voted  for a                                                               
bill that  will cost the  school district and families  more when                                                               
he has not heard complaints from anyone about the current trust.                                                                
COMMISSIONER HULTBERG pointed  out that in order  to evaluate the                                                               
impact  on Anchorage,  it would  be  important to  look at  other                                                               
plans in  the whole district.  In some  cases a district  may pay                                                               
more, but some  may pay less. She suggested looking  at the total                                                               
impact of the bill.                                                                                                             
CHAIR  DYSON  asked  if  other  jurisdictions  had  done  similar                                                               
4:38:15 PM                                                                                                                    
MIKE BARNHILL,  Deputy Commissioner, Office of  the Commissioner,                                                               
Department of  Administration, answered questions relating  to SB
90. He  related that Indiana  did implement  such a plan,  but he                                                               
did not have any information about it yet.                                                                                      
SENATOR  WIELECHOWSKI  asked if  vendors  would  have to  compete                                                               
through the state procurement process.                                                                                          
COMMISSIONER HULTBERG said yes, but  it is a difficult process to                                                               
manage. The current RFP for  a third party administrator has been                                                               
very difficult to manage under the state procurement code.                                                                      
SENATOR  COGHILL  inquired  if   the  third  party  administrator                                                               
agreement would fit into this bill's plan.                                                                                      
COMMISSIONER  HULTBERG  said  the  RFP  process  has  yet  to  be                                                               
completed. If  SB 90 passes,  the administration would  likely go                                                               
back into the  process with additional information  about the new                                                               
pool.  The idea  has been  discussed,  but no  decision has  been                                                               
CHAIR DYSON asked if SB  90 originated from the administration or                                                               
with Senator Dunleavy.                                                                                                          
4:40:07 PM                                                                                                                    
COMMISSIONER  HULTBERG replied  that the  concept was  brought to                                                               
the administration. The administration  is not taking an official                                                               
position  on the  bill,  but supports  the  concept of  insurance                                                               
CHAIR DYSON asked if there is  a time factor. He wondered if this                                                               
is the  right trail to  go down and if  there is an  advantage to                                                               
doing it now.                                                                                                                   
MR. BARNHILL  said the bill contemplates  a phasing-in procedure.                                                               
The first school districts would join  July 1, 2014, and the rest                                                               
would enter over  a two-year period. It  gives the administration                                                               
a year to get ready.                                                                                                            
CHAIR  DYSON  asked  if  "sooner   was  better  than  later."  He                                                               
summarized  that the  intent  of  the bill  would  be for  better                                                               
protection at the most effective cost.                                                                                          
MR. BARNHILL stated  that the timeframe set forth in  the bill is                                                               
workable. The administration could not do it any sooner.                                                                        
4:41:49 PM                                                                                                                    
SENATOR WIELECHOWSKI  said he was  baffled by the idea  that they                                                               
are  supporting  a  massive  state   takeover  of  the  insurance                                                               
industry when the private sector is doing it now.                                                                               
COMMISSIONER HULTBERG didn't agree with the characterization.                                                                   
SENATOR  COGHILL pointed  out that  the state  picks up  the cost                                                               
anyway. It sounds like this approach  has an economy of scale and                                                               
pooling as an advantage to those in state employment.                                                                           
COMMISSIONER HULTBERG  agreed. The  state is paying  the majority                                                               
of the  costs. She  stressed the  importance of  providing health                                                               
insurance  in a  coordinated  and integrated  manner. She  opined                                                               
that the  economy of  scale and the  negotiating power  of adding                                                               
more members could help lower costs.                                                                                            
SENATOR COGHILL inquired if the  state is taking the economies of                                                               
scale  away  from local  areas  such  as Anchorage,  Juneau,  the                                                               
Kenai, and Mat-Su.                                                                                                              
COMMISSIONER HULTBERG suggested that  the districts should answer                                                               
that question.  She emphasized that  there is  such fragmentation                                                               
among  the  plans  right  now  that it  could  be  true  in  some                                                               
CHAIR  DYSON  requested  clarification  about how  the  state  is                                                               
currently responsible and  how much the state  is subsidizing, if                                                               
COMMISSIONER HULTBERG  explained that the state  is a significant                                                               
contributor of  education funding, so  it has an interest  in how                                                               
those costs  are managed. Also,  the state will  inherit retirees                                                               
when they  are most expensive, but  will have no impact  on their                                                               
insurance  plan. The  state wants  some input  into their  health                                                               
status  while they  are  active employees.  Before  the bill  was                                                               
proposed, the  department was involved  in discussions as  to how                                                               
to better coordinate with districts and municipalities.                                                                         
4:46:45 PM                                                                                                                    
SENATOR  WIELECHOWSKI  noted   that  he  is  hearing   a  lot  of                                                               
statements that  this bill will save  money, but he has  not seen                                                               
any  analysis supporting  that  idea.  He said  he  does have  an                                                               
analysis  from  Local  71  regarding   his  school  district.  He                                                               
emphasized that he has not seen any support for SB 90.                                                                          
COMMISSIONER  HULTBERG  noted  that   the  health  care  that  is                                                               
currently  being provided  by  the school  districts  is part  of                                                               
state government.  It's an  issue of  which government  entity is                                                               
responsible for  providing the care,  rather than a shift  of the                                                               
provision of care from the  private sector to the government. The                                                               
definitive way to  determine if the state would save  money is if                                                               
each of the  entities provided claims data. She  pointed out that                                                               
that  won't happen.  The department  has  looked at  the pool  of                                                               
employees and  the demographics  of that  pool and  the actuaries                                                               
have done  the best job that  they can with the  information they                                                               
have. She  thought some districts  would save money under  SB 90.                                                               
She concluded that the issue of  managing costs must be looked at                                                               
as a group.                                                                                                                     
4:50:08 PM                                                                                                                    
MR.  BARNHILL  discussed the  fiscal  notes.  He began  with  the                                                               
fiscal note by the Health  Plans Administration in the Department                                                               
of Administration  that has $100  million in the FY  2014 column.                                                               
He reviewed  the mechanics  of the  bill as  a starting  place to                                                               
understanding  the  fiscal  notes.   He  related  that  the  bill                                                               
contemplates about 47,000 covered  lives coming into the existing                                                               
active   plan,  quadrupling   the  pool.   When  pooling   health                                                               
insurance, it  is good to have  a claim reserve of  three or four                                                               
months' worth of claims costs.                                                                                                  
He referred to  a document that shows FY 2012  aggregate costs of                                                               
school  district health  insurance at  about $282  million. Since                                                               
this bill  takes effect in FY  2015, the amount is  rounded up to                                                               
$300 million, with the likelihood that  it will be more. The $100                                                               
million is  what would  be needed  to establish  a three  or four                                                               
month claims reserve for the inbound employees.                                                                                 
SENATOR DYSON asked if that amount is needed every year.                                                                        
MR. BARNHILL said  no; the bill allows the department  to draw up                                                               
to $100,000  over ten years  from the Public Education  Fund. The                                                               
draw is  shown on the  fiscal note as  taking place in  one year,                                                               
but it is more likely to be  drawn over two or three years. After                                                               
10  years, the  department must  pay $100  million back  into the                                                               
fund. The  department will  send a bill  to each  school district                                                               
for their first four months of claims.                                                                                          
MR. BARNHILL  explained that the  second fiscal note is  from the                                                               
Health Plans  Administration in the Department  of Administration                                                               
for  $237,700 in  FY 2014.  It pays  for upfront  staffing costs,                                                               
communications, and  reprogramming of computers. He  related that                                                               
the services expenditures  from FY 2015 to FY 2019  are fees paid                                                               
to contractors,  such as third  party administrator  and pharmacy                                                               
benefit  manager.   The  upward  trend  reflects   the  actuarial                                                               
expectation   of   increased   population  of   school   district                                                               
employees. The payment of fees will  come out of Group Health and                                                               
Life Benefits Fund established in AS 36.30.095.                                                                                 
4:55:14 PM                                                                                                                    
MR.  BARNHILL explained  the miscellaneous  operating expenditure                                                               
of  $315 million,  which is  composed of  two parts.  The largest                                                               
part is  the $305  million portion that  consists of  the benefit                                                               
credit that the state will bill  to each school district for each                                                               
employee.  He noted  that $1,389  per month  per employee  is the                                                               
present  estimate of  what  the  benefit credit  will  be in  the                                                               
AlaskaCare  active  plan in  FY  2015.  That  amount is  for  the                                                               
economy plan, including the  preventative dental plan. Currently,                                                               
in  FY 2013,  that cost  is currently  $1,330. He  explained that                                                               
$305  million is  attained by  multiplying $1,389  per month  per                                                               
employees,  times   12  months,   times  18,300   employees.  The                                                               
department hopes  that, through  the increased benefit  of scale,                                                               
it will be  able to better manage health insurance  costs for the                                                               
short term.                                                                                                                     
4:57:00 PM                                                                                                                    
SENATOR WIELECHOWSKI asked Mr. Barnhill  if he had any proof that                                                               
the state  does a  better job of  maintaining costs  and securing                                                               
preferred  contracts  than   most  school  districts/trust  funds                                                               
already do.                                                                                                                     
MR.  BARNHILL  replied  that  union  and  school  district  plans                                                               
probably all do  equally well at managing  costs. The fundamental                                                               
issue is  that school  districts are  approaching $300  million a                                                               
year on health  care and the state is approaching  $300 million a                                                               
year on  health care  for its active  population and  the retiree                                                               
plan is  in access  of that  amount. He  stressed that  the state                                                               
must get these costs under control  and scale is one way that can                                                               
be done.                                                                                                                        
SENATOR WIELECHOWSKI asked  if a health care  exchange would help                                                               
get costs under control.                                                                                                        
MR. BARNHILL said he did not know.                                                                                              
SENATOR WIELECHOWSKI suggested that  a health care exchange would                                                               
do exactly what SB 90 is proposing.                                                                                             
MR. BARNHILL  said that  the issue of  health care  exchanges has                                                               
been extensively investigated  and there is debate  as to whether                                                               
it decreases costs.                                                                                                             
SENATOR WIELECHOWSKI reiterated his last question.                                                                              
MR.  BARNHILL replied  that there  is  an element  of pooling  in                                                               
health care exchanges.  He noted that the difference in  SB 90 is                                                               
that  there  would only  be  one  plan,  as opposed  to  bringing                                                               
together a variety of different insurers.                                                                                       
SENATOR  WIELECHOWSKI   inquired  if  the   administration  would                                                               
support a health care exchange.                                                                                                 
COMMISSIONER  HULTBERG  said she  would  be  happy to  take  that                                                               
suggestion and explore it further.                                                                                              
SENATOR WIELECHOWSKI said he would like that.                                                                                   
MR.  BARNHILL discussed  the final  fiscal note  prepared by  the                                                               
Division of Retirement  and Benefits. It would  add 12 additional                                                               
positions  in  order  to accommodate  the  administrative  burden                                                               
imposed  by  an additional  47,000  members,  for the  amount  of                                                               
5:00:43 PM                                                                                                                    
CARL  ROSE,  Executive  Director,  Association  of  State  School                                                               
Boards (ASSB),  testified in  support of SB  90. He  related that                                                               
ASSB has  recently passed  a resolution  relating to  health care                                                               
costs and medical  insurance. He pointed out that  the effects of                                                               
the  recently-passed  Affordable  Health Care  Act  haven't  been                                                               
realized  yet. He  said that  ASSB  is asking  the Governor,  the                                                               
legislature,  and Congress  to carefully  review the  legislation                                                               
and identify areas  of unintended consequences and  how the state                                                               
might be able to control some of the costs.                                                                                     
MR.  ROSE noted  that there  is  current data  about health  care                                                               
costs. There  are projections about  future costs  escalating. He                                                               
opined that  SB 90 is an  opportunity to address those  costs. He                                                               
pointed out  that ASSB has  had experience with pooling;  in 1986                                                               
ASSB started  a pool for  liability insurance for  rural schools.                                                               
He said the rate at that time  was $1.25 per $100 in value. After                                                               
all these  years of  pooling, the  rate has  dropped to  $.17 per                                                               
$100. He concluded that taking a  bigger pool to market allows an                                                               
organization to negotiate better terms and  now is the time to do                                                               
it because  the fragmented  approach might  lead to  losing local                                                               
5:07:43 PM                                                                                                                    
BRUCE  JOHNSON,  Executive  Director, Alaska  Council  of  School                                                               
Administrators, testified  in support  of SB 90.  He said  that a                                                               
group of  superintendents proposed  this idea  because escalating                                                               
health costs  prevent them from  putting money in  the classroom.                                                               
He  voiced  concern about  the  health  needs of  employees.  The                                                               
addition of 47,000  members to the insurance  pool is significant                                                               
and  will have  the effect  of  reducing costs.  He stressed  the                                                               
difficulty small  districts are  having with very  high insurance                                                               
SENATOR WIELECHOWSKI asked if  something legally prevents schools                                                               
from pooling now.                                                                                                               
MR. JOHNSON said no. There  are many partnerships, but negotiated                                                               
agreements   make   pooling   difficult.  Most   districts   have                                                               
investigated all options.                                                                                                       
SENATOR DYSON asked  if it is a problem for  a school district to                                                               
have a variety of insurance plans.                                                                                              
MR.  JOHNSON said  he didn't  know; however,  most districts  are                                                               
small  and have  only  one  choice for  insurance.  He said  some                                                               
superintendents  talk  about  the  value   of  having  a  quality                                                               
insurance plan  in order  to attract  teachers to  districts that                                                               
have  a  hard  time  finding  employees.  He  opined  that  those                                                               
districts  could still  accomplish  that by  providing a  premium                                                               
5:11:30 PM                                                                                                                    
TOM BRICE,  Business Representative,  Alaska District  Council of                                                               
Laborers,  testified   on  SB  90.   He  deferred  to   Local  71                                                               
representatives from Anchorage to speak.                                                                                        
DENNIS MOEN,  Business Manager, Public Employees  Local 71, spoke                                                               
in opposition  to SB  90. He  related that Local  71 has  its own                                                               
medical  trust  fund, which  covers  about  350 Anchorage  School                                                               
District employees at  a savings, compared to the  state plan. He                                                               
said he was not opposed to  the idea of pooling. Local 71 belongs                                                               
to  the  Health Care  Management  Corporation  made up  of  about                                                               
50,000  members  in  Alaska  and 33,000  outside  the  state.  He                                                               
described  the  high  level  of   care  their  health  care  plan                                                               
provides.  He said  he was  opposed to  pulling Anchorage  school                                                               
employees out  of Local 71's  plan and  putting them in  a larger                                                               
CHAIR  DYSON asked  if it  is  fair to  assume that  Mr. Moen  is                                                               
opposed to SB 90.                                                                                                               
MR. MOEN said yes.                                                                                                              
5:18:09 PM                                                                                                                    
DEBBIE HANSON,  Trust Administrator,  Public Employees  Local 71,                                                               
spoke  in opposition  to  SB  90. She  said  she understands  the                                                               
benefits of  pooling for small  schools, but she  suggested there                                                               
were  other  resources available  to  those  areas, such  as  the                                                               
Health Care  Cost Coalition.  She voiced  concern about  Local 71                                                               
members  losing  the personal  level  of  service they  currently                                                               
STEVEN ATWATER, Superintendent,  Kenai Peninsula School District,                                                               
spoke in support of SB 90.  He reported that his district has not                                                               
been  able to  slow rising  health care  costs for  employees. He                                                               
said there are 3,400 total members  in their health care plan and                                                               
in 2008,  the members generated  close to $12 million  in claims.                                                               
Last year,  the total  was more  than $21  million, a  62 percent                                                               
increase in  four years. He  opined that a statewide  health care                                                               
plan would lead to savings in  health care costs to the district.                                                               
Any savings could be used to support instruction for students.                                                                  
5:21:28 PM                                                                                                                    
JACK WALSH, Bristol  Bay School District, spoke in  support of SB
90. He said  he has a small school district  which currently pays                                                               
$1,700 per employee  per month and that cost  has increased about                                                               
10 percent  per year over the  last six years. He  recognized the                                                               
benefits from being in a bigger pool and keeping costs down.                                                                    
5:25:05 PM                                                                                                                    
ROB THOMASON,  Superintendent, Petersburg School  District, spoke                                                               
in support  of SB 90. He  related that health care  is essential,                                                               
but  it  should  not  drain the  district's  resources  from  its                                                               
critical  function of  educating  kids. He  spoke  of high  costs                                                               
under Aetna  and changing to  NEA Health  Trust where they  saw a                                                               
savings of $200,000. He said  that Petersburg has a high employee                                                               
contribution  rate of  20 percent  so  rate increases  negatively                                                               
affect the  district and the  employee. The cost per  employee is                                                               
about $1,650  with the district  paying 80 percent. There  are 68                                                               
covered employees and their families.  He said it is difficult to                                                               
fund insurance increases without considering cutting staff.                                                                     
5:28:39 PM                                                                                                                    
DEENA PERAMO,  Superintendent, Mat-Su  School District,  spoke in                                                               
support of  SB 90.  She related that  the Mat-Su  District spends                                                               
$30  million  each  year  on  health  care  out  of  its  general                                                               
operating fund.  The average cost  is increasing by  12 annually.                                                               
This year  health care  cost $1,702  per employee.  She concluded                                                               
that  the district  must lower  the  growth rate  of health  care                                                               
expense because the current path  is unsustainable. She discussed                                                               
the advantages of having a large statewide pool.                                                                                
5:32:31 PM                                                                                                                    
WILLIE ANDERSON,  Uniserve Director, NEA Alaska,  testified on SB
90. He  requested that the committee  hold SB 90 until  Monday so                                                               
the Trust can  testify. The Trust represents  12 school districts                                                               
around the state.                                                                                                               
SENATOR  DYSON stated  that  he would  move SB  90  on to  Senate                                                               
Finance where it would get another public hearing.                                                                              
MR. ANDERSON referred to written testimony NEA has provided.                                                                    
CHAIR DYSON set SB 90 aside until later in the meeting.                                                                         
        SB 90-SCHOOL DISTRICT EMPLOYEE HEALTH INSURANCE                                                                     
6:15:22 PM                                                                                                                    
SENATOR  DYSON  brought  SB  90 back  before  the  committee  and                                                               
summarized earlier testimony.                                                                                                   
6:19:24 PM                                                                                                                    
SENATOR  MIKE DUNLEAVY,  sponsor,  SB 90  summarized that  health                                                               
care is  not something school  officials look forward  to dealing                                                               
with at the local level. He  related that the 53 school districts                                                               
are  an extension  of the  State of  Alaska and  depend on  state                                                               
money.  He concluded  that  if  SB 90  passes,  it  will be  less                                                               
expensive for the state and better for school districts.                                                                        
SENATOR COGHILL commented that the  input from local districts on                                                               
their unique  challenges and service capacity  are very different                                                               
across the state.  He expressed hope that  Senator Dunleavy would                                                               
look for ways to mechanize that.                                                                                                
CHAIR  DYSON requested  that Senator  Wielechowski summarize  his                                                               
ideas about SB 90.                                                                                                              
SENATOR WIELECHOWSKI moved to adopt Conceptual Amendment 1.                                                                     
SENATOR COGHILL objected for discussion purposes.                                                                               
SENATOR  WIELECHOWSKI explained  that  the conceptual  amendment,                                                               
which  may require  some technical  drafting  changes, creates  a                                                               
health care exchange  for the state of Alaska. It  will go a long                                                               
way toward doing what SB 90  proposes. It will give consumers, as                                                               
well as  small businesses  and trust funds,  the ability  to pool                                                               
resources and lower the price of insurance.                                                                                     
6:23:53 PM                                                                                                                    
SENATOR COGHILL countered that the  health care exchange has been                                                               
debated.  He opined  that  the  purpose of  the  amendment is  to                                                               
fragment the population  and then re-congregate them  under a new                                                               
system.  He  said  that  SB  90 says  the  state  already  has  a                                                               
fragmented system and  the competition is the  ability to compete                                                               
in larger areas.  He said he understands the benefit  of a health                                                               
care  exchange, but  maintained  that  it does  not  fit well  in                                                               
Alaska, generally, and does not fit well in SB 90.                                                                              
SENATOR  GIESSEL said  she  is also  against  the amendment.  She                                                               
stated   that  the   Alaska  Health   Care  Commission   and  the                                                               
commissioner  of health  evaluated the  health care  exchange and                                                               
found it to be cost prohibitive and not beneficial for Alaska.                                                                  
SENATOR COGHILL  credited Senator  Wielechowski for  bringing the                                                               
idea to the debate. He maintained his objection.                                                                                
A roll call  vote was taken. Senator Wielechowski  voted in favor                                                               
of  Conceptual Amendment  1 and  Senators  Giessel, Coghill,  and                                                               
Chair  Dyson   voted  against   it.  Therefore,   the  Conceptual                                                               
Amendment 1 failed by a 1:3 vote.                                                                                               
SENATOR DYSON related that the  administration said that if SB 90                                                               
does not pass,  the department would start to staff  up, and will                                                               
have  only  spent  a  couple hundred  thousand  dollars  by  next                                                               
SENATOR WIELECHOWSKI said he would object to moving SB 90.                                                                      
SENATOR  COGHILL  moved  to  report SB  90  from  committee  with                                                               
individual recommendations and attached fiscal notes.                                                                           
SENATOR WIELECHOWSKI objected.                                                                                                  
He stated that he was sympathetic  to the issue of high insurance                                                               
costs in  Alaska. He  said he  was also  sympathetic to  the idea                                                               
that there is a legislative  process that looks deeply into these                                                               
issues. He maintained  that SB 90 is one of  the largest bills he                                                               
has had an  opportunity to vote on. He noted  there has only been                                                               
less than one  hour of testimony and the fiscal  note is for $1.5                                                               
billion. He  said it is an  enormous change in public  policy for                                                               
Alaska; it  will affect  the lives of  40,000 Alaskans.  It takes                                                               
away  local control  and forces  one insurance  company on  every                                                               
community in the state.                                                                                                         
He  related that  he asked  the Department  of Administration  if                                                               
there was  any evidence that  the state  can do this  better than                                                               
the  current system  and  he  was not  provided  with a  positive                                                               
answer. He said  there is no evidence that the  state can do this                                                               
cheaper. The  only evidence  that was presented  was by  Local 71                                                               
who said  that SB 90  would increase  the cost for  the Anchorage                                                               
School District by over $400,000 a year.                                                                                        
He maintained that  the bill creates a dozen  new state positions                                                               
and  affect tens  of thousands  of Alaskans.  He emphasized  that                                                               
government is not supposed to work  this way and he said he can't                                                               
support  SB  90, a  radical  policy  shift  and a  massive  state                                                               
government takeover of private insurance programs.                                                                              
CHAIR DYSON  said he  was sympathetic  to several  issues Senator                                                               
Wielechowski raised.                                                                                                            
SENATOR DUNLEAVY  responded that  insurance is  a burden  for the                                                               
local  school  districts  to administer.  The  school  district's                                                               
primary  purpose is  to educate  kids,  not administer  insurance                                                               
6:31:31 PM                                                                                                                    
SENATOR WIELECHOWSKI  stated that  empirical evidence  shows that                                                               
the  cheapest  way  to  do  insurance is  single  payer.  If  the                                                               
Department  of Administration  would conduct  an analysis  of the                                                               
single payer system that was run  by the state and it showed that                                                               
it was  substantially cheaper,  he asked  Senator Dunleavy  if he                                                               
would support legislation to that effect.                                                                                       
SENATOR DUNLEAVY  said that was  a hypothetical situation  and he                                                               
could  not answer.  He  said as  an  administrator, school  board                                                               
president, and a  senator, he still believes it is  wrong to deal                                                               
with insurance at  the local level; instead, the  focus should be                                                               
on kids.                                                                                                                        
A roll call vote was  taken. Senators Coghill, Giessel, and Chair                                                               
Dyson  voted in  favor  of  reporting SB  90  from committee  and                                                               
Senator  Wielechowski  voted against  it.  Therefore,  SB 90  was                                                               
reported from the Senate State  Affairs Standing Committee with a                                                               
3:1 vote.                                                                                                                       

Document Name Date/Time Subjects
SB 90 - Sponsor Statement.pdf SSTA 4/6/2013 3:30:00 PM
SB 90
SB 90 - Version A.pdf SSTA 4/6/2013 3:30:00 PM
SB 90
SB 90 - Sectional Analysis.pdf SSTA 4/6/2013 3:30:00 PM
SB 90
SB 90 - Alaska Employee Health Plan.pdf SSTA 4/6/2013 3:30:00 PM
SB 90
SB 90 - AASB Teacher Survey.pdf SSTA 4/6/2013 3:30:00 PM
SB 90
SB 90 - AASB Classified Employee Survey.pdf SSTA 4/6/2013 3:30:00 PM
SB 90
SB 90 - AASB Administrator Survey.pdf SSTA 4/6/2013 3:30:00 PM
SB 90
SB 90 - FY12 Health Costs Data by ALASBO.pdf SSTA 4/6/2013 3:30:00 PM
SB 90
SB 90 - PE71 Letter.pdf SSTA 4/6/2013 3:30:00 PM
SB 90
HB 186 Sponsor Statement.pdf SSTA 4/6/2013 3:30:00 PM
HB 186
HB0186A.PDF SSTA 4/6/2013 3:30:00 PM
HB 186
HB186-DPS-APSC-03-29-13.pdf SSTA 4/6/2013 3:30:00 PM
HB 186
SB 90 - Fiscal Note DOA-DRB-4-05-13.pdf SSTA 4/6/2013 3:30:00 PM
SB 90
SB 90 - Fiscal Note DOA-HPA-4-05-13 (1).pdf SSTA 4/6/2013 3:30:00 PM
SB 90
SB 90 - Fiscal Note DOA-HPA-4-05-13.pdf SSTA 4/6/2013 3:30:00 PM
SB 90
SB 90 - Fiscal Note EED-K12-4-5-13.pdf SSTA 4/6/2013 3:30:00 PM
SB 90
SB 90 - Kenai Support Letter.pdf SSTA 4/6/2013 3:30:00 PM
SB 90
SB 90 - Mat-Su Support Letter.pdf SSTA 4/6/2013 3:30:00 PM
SB 90
SB 48 - CS SB 48 STA Version U.pdf SSTA 4/6/2013 3:30:00 PM
SB 48
SB 90 Copper River Letter of Support.pdf SSTA 4/6/2013 3:30:00 PM
SB 90
SB 90 - NEA-Alaska Health Plan Opposition.pdf SSTA 4/6/2013 3:30:00 PM
SB 90
SB 90 - NEA-Alaska Opposiiton.pdf SSTA 4/6/2013 3:30:00 PM
SB 90
HB 59 - Support Letter.pdf SSTA 4/6/2013 3:30:00 PM
HB 59