Legislature(2013 - 2014)FBX LIO Conf Rm
08/27/2013 10:00 AM House ADMINISTRATIVE REGULATION REVIEW
| Audio | Topic |
|---|---|
| Start | |
| Affordable Care Act | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
ADMINISTRATIVE REGULATION REVIEW COMMITTEE
August 27, 2013
10:03 a.m.
MEMBERS PRESENT
Representative Lora Reinbold, Chair
Senator Hollis French
MEMBERS ABSENT
Senator Cathy Giessel, Vice Chair
Representative Mike Hawker
Representative Geran Tarr
Senator Gary Stevens
OTHER LEGISLATORS PRESENT
Representative Tammy Wilson
Representative Steve Thompson
Representative Scott Kawasaki
COMMITTEE CALENDAR
AFFORDABLE CARE ACT
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
ROBERT F. GRABOYES, Ph.D., Senior Fellow for Health and
Economics
National Federation of Independent Business (NFIB)
Washington, D.C.
POSITION STATEMENT: Offered a PowerPoint presentation relating
the concerns of small businesses regarding the ACA.
SALLIE STUBECK, Director
Human Resources
Risk Management Division
Fairbanks North Star Borough
Fairbanks, Alaska
POSITION STATEMENT: Provided statistical information showing
the affects to date of the ACA on the Fairbanks North Star
Borough.
JOY HUNTINGTON, Consultant
Tanana Chiefs Conference
Fairbanks, Alaska
POSITION STATEMENT: Offered information regarding the Alaska
Native Health Board.
BRANDON BIDDLE, Policy Analyst
Alaska Native Health Board (ANHB)
Anchorage, Alaska
POSITION STATEMENT: Had his testimony paraphrased by Joy
Huntington.
REPRESENTATIVE PETE HIGGINS
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Talked about the ACA, in terms of its
timing and effects on Alaska, as well as the need for more
information.
MATTHEW TURKSTRA, Manager
Legislative Affairs
National Federation of Independent Business (NFIB)
Washington, D.C.
POSITION STATEMENT: Talked about effects of the ACA on small
businesses.
BRYCE WARD, Mayor
City of North Pole
North Pole, Alaska
POSITION STATEMENT: Discussed effects of the ACA on the City of
North Pole.
REPRESENTATIVE PAUL SEATON
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Showed studies that suggest a connection
between preventative treatment and lowered cost of services
during the discussion of the ACA.
FRED BROWN, Executive Director
Health Care Cost Management Corporation of Alaska (HCCMCA)
Anchorage, Alaska
POSITION STATEMENT: Responded to points made during previous
testimony.
ACTION NARRATIVE
10:03:09 AM
CHAIR LORA REINBOLD called the Administrative Regulation Review
Committee meeting to order at 10:03 a.m. Representative
Reinbold was present at the call to order. Senator French
arrived as the meeting was in progress. Other legislators
present were Representatives Kawasaki, T. Wilson, and Thompson.
^Affordable Care Act
Affordable Care Act
10:05:16 AM
CHAIR REINBOLD announced that the only order of business was
consideration of the Affordable Care Act.
CHAIR REINBOLD stated the purpose of the hearing was to give
people the opportunity to discuss possible impacts of the
Affordable Care Act (ACA). She offered her understanding that
currently there are 20,000 pages of regulations related to the
ACA, and that number is projected to increase to 50,000. She
emphasized the importance of understanding the effects of the
federal Act on Alaska.
10:06:51 AM
ROBERT F. GRABOYES, Ph.D., Senior Fellow for Health and
Economics, National Federation of Independent Business (NFIB),
offered a PowerPoint presentation [hard copy included in the
committee packet] relating the concerns of small businesses
regarding the ACA. He said one of the problems with the ACA is
that the rules keep changing, and NFIB members are concerned
about compliance, even with the best of intentions. Dr.
Graboyes directed attention to page 2 of the PowerPoint,
entitled, "So far," and noted that the 1099 provision was
repealed; the "CLASS Act" was abandoned; and cooperatives ("co-
ops") have been terminated. High-risk pools, which Dr. Graboyes
said were an important way to bring people with preexisting
medical conditions "into insurance," were undersubscribed, and
the budget on them was broken, so people had to be turned away.
He said the auto-enrollment provision, W-2 reporting, and
nondiscrimination requirements were delayed.
DR. GRABOYES said the ability of employees to pick and choose
among competing policies is desirable, but in 2014, the "shop
exchanges" were delayed, which he said NFIB considers a major
failure. The training for the navigators' program was slashed,
which could possibly result in "people with no substantial
background in insurance being thrown into the forefront of
guiding people through the system." Dr. Graboyes said the
annual and lifetime caps were delayed, which affect premiums
next year. He said the employer mandate was delayed, and he is
concerned whether the health data of 3 million Americans will be
secure. He referred again to the navigators as people who are
"just barely within the system" to whom millions will be giving
private information, including social security numbers. He said
the data, which "runs this whole thing," is shrouded in mystery.
He said he has spoken with many of the top healthcare experts in
the country, none of whom really know if the data system will be
functional.
10:10:55 AM
DR. GRABOYES addressed information on page 3 of the PowerPoint,
entitled, "Dominoes." He said the operation of the employer
mandate is much simpler than other parts of the Act; therefore,
he questioned what it means for "the rest of it" that the
mandate cannot be up and running on schedule. He said subsidies
that were to rely heavily on employer data, will no longer have
that data in 2014, and people can claim subsidies on the honor
system. He said that may mean an unusually high number of
employees, who should have stayed on their employer plans, will
be able to "jump off." Some employers may find that their
minimum participation rates will drop below acceptable rates,
and they may not be able to offer insurance to the rest of their
employees. Dr. Graboyes questioned whether the subsidies will
go forth, and if they cannot, then effectively the individual
mandate will not be possible, because that would be asking
people to purchase something that they can no longer afford. He
said it is unknown how many Americans will pay the individual
mandate tax in lieu of coverage or how the individual mandate
will affect wages.
10:13:00 AM
DR. GRABOYES directed attention to page 4 of the PowerPoint,
entitled, "Still unanswered." He said it is still unknown which
services an insurance policy must cover, and who decides. He
stated, "The essential health benefits package is sort of in a
temporary holding pattern in the states, but eventually is
likely to revert to the federal government where the law had
originally placed it." Dr. Graboyes said there are plans to
limit the capacity of small businesses to self-insure, which
creates uncertainty. He said there is question in determining
whether businesses are small or large with respect to the
employer mandate. Further, he said it is unknown what the
employment effects of the employer mandate will be or how
expensive and time-consuming the Act's required paperwork will
be.
DR. GRABOYES turned to page 5 of the PowerPoint, entitled,
"Still More Questions." He said insurers are still dropping out
or limiting their options, and it is unknown which insurers will
still be around once the exchanges are open and fully
functional. Referring to page 6, entitled, "Entrepreneurs (and
others)," he said NFIB has seen public sector and private
sector, large and small, for profit and not for profit employers
across the country coming up with strategies to avoid the
employer mandate generalities, by cutting jobs, cutting hours,
outsourcing, disaggregating, and "dropping" family members. For
example, he said the University of Virginia just announced this
week that the spouses of employees will not be allowed to go on
the university's [insurance] plans if they can acquire insurance
elsewhere.
DR. GRABOYES addressed page 7 of the PowerPoint, entitled,
"Aggregation Problem." He said businesses have a sense that as
long as they have less than 50 full-time employees, they are
"safe." He said that is not necessarily true; there are
aggregation rules embedded in the law, which state that if a
business has parent/subsidiary relationships between smaller
businesses, they still get rolled into the mandate. He
mentioned a "brother-sister" controlled group, "depending on who
owns what." He said the most problematic is called an
affiliated services group, which is a group of small businesses,
which someone in the federal government has deemed to be
operating as one. Small businesses declared as such are
vulnerable to the employer mandate in terms of thousands of
dollars of obligations. He said, "There is nowhere people can
turn for reliable answers on these."
10:15:56 AM
DR. GRABOYES skipped to page 9 of the PowerPoint, entitled,
"Small business health insurance tax credit." He said the
credit is purported to encourage coverage and hiring. He
relayed that the federal government's web site claimed that up
to 4 million businesses may be eligible; however, NFIB, at last
count, found that only 170,000 had been able to take advantage
of the credit, with an average [credit] per business of $2,748,
which he said is not enough to encourage anyone to hire or to
offer insurance. He said the credits are "limited, punitive,
and temporary" and represent "an absolute failure to understand
how small businesses work." Dr. Graboyes noted that page 10 of
the PowerPoint lists resources on the NFIB web site, which he
welcomed committee members to visit.
10:18:41 AM
SALLIE STUBECK, Director, Human Resources, Risk Management
Division, Fairbanks North Star Borough, stated that the division
manages and coordinates benefits for the borough and school
district health plans. She said both entities' plans are self-
insured at a cost of $40 million for health and life benefits
for employees and their dependents, which equates to a staff
benefit rate applied to payroll of 28 percent for the school
district and 31.1 percent for the borough. Ms. Stubeck said the
borough has successfully maintained its plan's grandfathered
status under the ACA, and is hoping to do so through 2015, which
is the end date of its current collective bargaining agreement.
The school district plan is not grandfathered; therefore, the
required preventative services and appeals processes have been
added. Ms. Stubeck named the third-party administrator, based
in Seattle, Washington, and the benefits consultant, based in
Anchorage, Alaska, for both the borough and school district.
MS. STUBECK reviewed a statistical handout [included in the
committee packet]. She said through fiscal year 2013 (FY 13),
the identifiable additional costs resulting from the ACA are
approximately $3.7 million, which is about $800,000 to the
borough's plan and $2.9 million to the school district's plan.
She said there are other undetermined impacts at present, which
include: the removal of pre-existing condition limitations for
children; an updated appeals process; and limits to the
healthcare spending account. She stated that in 2014, the
borough will be paying the required tax of $63 per covered life,
which will add another $250,000 to the bottom-line cost of the
health plan. She said efforts to comply with the ACA by the
borough's benefits consultant and third-party administrator have
not increased at this time, because they are both currently
under a contract; however, the borough expects that there will
be an increase when the contract is renegotiated. Ms. Stubeck
noted that the Risk Management Division has seen a reduction in
staff time required, because of the age 26 dependent clause.
She explained that previous to the ACA, the borough's plan
required proof of college enrollment for those between the ages
of 18 and 24, which was a large administrative burden. She
concluded by noting that it was Mayor Hopkins who had asked her
to provide information to the Administrative Regulation Review
Committee.
10:22:38 AM
MS. STUBEK, in response to Representative T. Wilson, said the
borough believes it will still be able to self-insure under the
ACA, because the borough's plans are large enough. In response
to a follow-up question, she said the real concern is that 90
percent of the borough's costs are in claims, which will be the
same whether or not the borough out-sources. She said the
borough considers whether it should be self-insured or purchase
"some type of a product," but so far it has proved more
financially sound for the borough to self-insure.
10:23:50 AM
MS. STUBEK, in response to Representative Thompson, acknowledged
that the handout she provided does not look beyond 2013, and she
explained that is because the information given was based on
"what we could actually identify." She said the borough knows
there will be additional costs through 2018; the "Cadillac" tax
is of concern for most public sector plans in the state. In
response to a follow-up question, she stated that although she
cannot give a definitive amount, she knows that the increase
will be a serious impact.
10:24:49 AM
MS. STUBEK, in response to Representative Higgins, said both the
borough and the school district are proactively searching for
cost savings in response to the expected increases. She said
the borough is part of a cooperative, which tries to consolidate
buying power with its provider. The borough considers wellness
- how to keep people from getting sick. She said the borough
has concerns about how to pay for "this" and for its public
employee retirement system (PERS) liability. She relayed that
for every dollar spent in salaries, the borough is paying 66
percent in benefits, which is a huge financial burden.
REPRESENTATIVE PETE HIGGINS, Alaska State Legislature, opined
that the borough has two choices: raise taxes or make budget
cuts.
MS. STUBEK indicated that the borough has stymied growth in
other areas in order to meet its obligations.
REPRESENTATIVE HIGGINS said the state is in unchartered waters,
and he asked Ms. Stubeck if there is anything the legislature
can do to help.
MS. STUBEK referred to a legislative proposal brought forth
during the last legislative session to consolidate all the
school districts into one statewide health plan. She said if
that plan would save the municipalities' money, then it should
be considered; however, at this point, the borough's data is
showing that [the plan] would not benefit its district.
10:27:51 AM
REPRESENTATIVE THOMPSON proffered that SB 90 is the legislation
to which Ms. Stubeck referred. He said it looks like it would
save approximately $8 million for the Anchorage School District.
He ventured that if the plan increased the pool size enough, it
could also save money for the Fairbanks School District.
MS. STUBECK commented on the aggressive tactics taken already by
the borough.
10:28:36 AM
REPRESENTATIVE T. WILSON offered her understanding that the
aforementioned legislation may include an option to not
participate.
MS. STUBEK said making it optional would be beneficial, because
then each municipality could evaluate whether participation is
in its best interest.
10:29:20 AM
REPRESENTATIVE HIGGINS recognized that a popular belief is that
when the pool gets bigger, the cost will decrease; however,
because the ACA will not allow anyone with preexisting
conditions to be denied, then as the pool gets bigger, so will
the number of people to be covered, which will raise the cost of
each person's coverage.
MS. STUBEK added that the cost of going to the hospital in
Bethel or in Fairbanks will be what it is regardless of whether
the borough is self-insured or under state program.
10:31:54 AM
JOY HUNTINGTON, Consultant, stated that the Alaska Native Health
Board, established in 1968, is a member organization of the 25
cosigners of the Alaska Native Health Compact, collectively
making up the Alaska Tribal Health System.
10:33:47 AM
BRANDON BIDDLE, Policy Analyst, had his written testimony
paraphrased by Joy Huntington. The text [included in the
committee packet] read as follows [original punctuation
provided]:
This testimony is submitted on behalf of the Alaska
Native Health Board (ANHB). Established in 1968, a
member organization of the 25 Co-signers to the Alaska
Tribal Health Compact collectively making up the
Alaska Tribal Health System.
As you are aware, the Patient Protection and
Affordable Care Act (ACA) passed into law in March,
2010. Some of the best known reforms are: barring the
denial of insurance coverage based on health status or
pre-existing condition; requiring that insurers spend
a minimum amount on health coverage for members;
limiting waiting periods before coverage begins;
requiring coverage of certain preventive benefits
without cost-sharing; and barring annual and lifetime
limits on coverage.
Important to American Indian and Alaska Native people,
the law includes the permanent reauthorization of the
Indian Health Care Improvement Act. This is a critical
piece of legislation for the health care system used
by the vast majority of American Indians and Alaska
Native people.
Before going any further, it is worth taking a couple
minutes to explain how the federal government carries
out the Trust responsibility of providing health care
to American Indian and Alaska Native people.
Established in the Constitution and given substance
through 200 years of treaties, Supreme Court
decisions, and actions by Presidential administrations
and Congress, the United States has formed what we
call the "Trust responsibility" to care for the health
and wellbeing of American Indian and Alaska Native
people.
Although this is carried out in various government
agencies and departments, it is the Indian Health
Service (IHS) that is primarily charged with
administering health care programs and services.
Importantly, the IHS doesn't function in the same
manner as the Veterans Administration or Medicare
program, in which the annual appropriation to fund
these activities is "mandatory." Instead, it
appropriates an annual amount that is "discretionary"
and not tied to any base level or formula. Based on
per capita spending, the IHS is funded at roughly half
of other federally-administered health programs.
Due to this disparity, Congress authorized IHS
facilities to recover reimbursements from Medicaid,
Medicare, Denali KidCare, and private insurers for
services provided. State grants have been important,
as well. Many of those State grant programs are
ultimately supported State with block grant and other
funding provided to the State by the Federal
government.
The Centers for Medicare & Medicaid Services (CMS)
provides a Federal Medical Assistance Percentage
(FMAP) of 51% to the State of Alaska. However, the
State of Alaska receives 100% FMAP for Alaska Native
patients who receive their care in an IHS facility - a
49% savings to the State General Fund when patients
use the ATHS.
While many IHS facilities and clinics in the Lower 48
employ federal medical professionals and bureaucrats,
over 99% of the funding the IHS would use to
administer services is "Compacted" and "Contracted"
directly to Alaska Tribes and Tribal organizations,
resulting in a level of care that is more efficient,
effective, and culturally-appropriate.
Collectively, these Contracting and Compacting Tribes
and Tribal organizations make up the Alaska Tribal
Health System (ATHS) with over 180 village-based
clinics, 25 sub-regional facilities, 6 Regional
hospitals, and the Alaska Native Medical Center
providing tertiary care - the State's only level II
Trauma Center.
In addition to the voluntary collaboration between
Tribes and Tribal organizations, the ATHS interacts in
significant and collaborative ways with all other
sectors of health care delivery. The scope of ATHS
includes not only services to American Indian and
Alaska Native people, but also services to non-Natives
in remote locations and where the a tribal health
provider has special expertise or capacity that other
sectors cannot offer.
Above all else, the ACA offers American Indian and
Alaska Native people more options for health
insurance, primarily through the Health Insurance
Marketplace and, should the state choose to adopt it,
Medicaid Expansion. Through federal subsidies in the
marketplace and expanded eligibility in Medicaid, more
American Indian and Alaska Native people will have the
option for private insurance.
Beyond the subsidies, ACA allows American Indian and
Alaska Native people to be:
· Exempt from penalty for being uninsured
· Eligible for frequent enrollment periods in the
Marketplace
· No cost-sharing for American Indian and Alaska Native
people under 300% FPL
No cost-sharing for services provided to an individual
by ATHS or Contract Health Services
o No cost-sharing if American Indian and
Alaska Native individuals enrolls in a
qualified health plan through an exchange
o Those eligible to receive services through
IHS can also enroll in the exchange
For Tribal Health Providers:
· Single enrollment form
o Medicaid, Medicaid Expansion,
[Comprehensive Health Investment
Project] CHIP, Exchanges
· New sources of funding
o Exchanges
· Covers adults younger than 65
years
· Premium assistance up to 400%
[federal poverty level] FPL
· ATHS can bill plans
· Shift Contract Health Service
costs to plans
· ATHS collects 100% of charges from plan
· No cost sharing in private sector for Alaska Native
with referral from ATHS
· Contract Health Services does not pay any portion of
care covered by plan
· ATHS Employees are exempt from fees imposed by federal
agencies to the same extent that IHS employees and
commissioned corps officers are exempt. (e.g. DEA
registration fees.)
· Allows recovery of charges from every kind of insurer
and provides tribal health programs with authority to
recover from tort-feasors on the same basis as the IHS
and other federal health care providers do.
· Exempts licensed and certified tribal health program
employees from licensure in the state where they are
practicing so long as they are licensed or certified
in some state - this is critical for reducing
workforce vacancies across ATHS.
Beyond these specific provisions, the Health insurance
Marketplace will increase access to coverage. Expanded
coverage will provide more revenue to ATHS providers for
services performed. However, there's still no requirement
that insurance carriers actually offer contracts to ATHS
providers, Even if a patient just needs a referral to a
specialist for something insurance covers but not the
health service, they have to see a second primary care
provider if their private carrier doesn't recognize their
tribal provider.
Another important provision from the ACA is a partnership
between ATHS and Veterans Affairs. Tribal programs are
now starting to receive reimbursement payments the VA for
direct care services provided to eligible veterans under
the IHS VA reimbursement agreement.
Tribes or Tribal organizations may now purchase coverage
for their employees from the Federal Employees Health
Benefits Program. It also covers eligible family members
of such employees. The Office of Personnel Management
began accepting applications from tribes in the spring of
2012.
Thank you for your time today. I appreciate your interest
in how the Affordable Care Act impacts Alaska Native
people and the Tribal Health System.
10:41:06 AM
MS. HUNTINGTON, at the request of the chair, relayed that
Brandon Biddle's e-mail is bbiddle@anhb.org, and his phone
number is (907)743-2523. She expressed her hope that in future
discussions of the issue, a member of the ANHB could be present
to answer questions.
10:43:56 AM
REPRESENTATIVE HIGGINS opined, "We have a duty to the State of
Alaska to try to keep services at a level that is acceptable."
He said the State of Washington has spent about $200 million on
exchange services and has "nobody in their exchange." He said
Alaska has not started "that process" yet. He said he has
looked at estimates ranging from $100-$200 million to "set this
up." He said he has been cautious and telling people that "this
is the law and we're going to have to deal with it one way or
the other." He said the governor has not yet decided whether or
not to offer expanded medical services for Medicaid, and he said
he cautions the governor to "just see how this works." He
relayed the federal government says it will pay 100 percent of
services for the next four years, after which it will drop down
to 90 percent. He remarked that the federal government's
services have shrunk over the years, with federal dollars
becoming smaller. He said "we" will have to pick up the cost of
Medicaid and Medicare services "when the government shrinks that
dollar again." He said he realizes that a plan must be
implemented.
REPRESENTATIVE HIGGINS shared that he had lunch with the person
implementing the plan in Washington, and she did not have all
the answers to his questions about the ACA. He relayed that he
is going to a conference related to the ACA in a month. He said
phase one was supposed to be ready by October 1, and phase 2 by
January, and President Obama delayed the October target date.
He questioned how people can move forward with a plan when there
are no answers. He opined that there are good people ready to
put a plan to together, but patience will be needed. He
acknowledged that many medical and insurance providers are
worried, especially when "the pool starts to rise." For
example, everyone with a preexisting condition will be insured.
10:49:00 AM
REPRESENTATIVE T. WILSON asked if veterans will be thrown out of
the existing federal program in to "this one" or be exempt.
REPRESENTATIVE HIGGINS offered his understanding that they are
exempt. He said it is "kind of an awkward thing where the
President and Congress [and] a lot of labor" are exempt from the
Act at this point, yet the middle class is not exempt and must
find a way to "deal with those issues."
REPRESENTATIVE T. WILSON stated for the record that the State of
Alaska will not be exempt.
REPRESENTATIVE HIGGINS confirmed that is correct.
10:50:36 AM
MATTHEW TURKSTRA, Manager, Legislative Affairs, National
Federation of Independent Business (NFIB), stated that the
effects of the ACA on small businesses would be pronounced,
whereas large businesses are governed largely by the Employee
Retirement and Income Security Act of 1974 (ERISA) and most are
self-insured, and ERISA was largely left out of the ACA. Mr.
Turkstra said NFIB feels that if a number of provisions of the
Act were modified or negated altogether, then that would lessen
the impact on small businesses. Mr. Turkstra said one of those
provisions is the employer mandate, which requires employers
with 50 or more employees to provide health insurance that meets
the minimum essential benefits standard requirement of the ACA
for their employees. He said the employer mandate is only 3.5
pages long, but the proposed regulations for it are over 144
pages in length and include 44 definitions, many of which are
unique to the Act. As a result, there are a number of
complications in dealing with the mandate. For example, Mr.
Turkstra said businesses will have to figure out whether they
are large or small, which sounds simple, but there are a number
of calculations involved, such as calculating the number of
full-time equivalent employees. He said, "It's going to cost
businesses over $130 billion over 10 years in penalties." He
opined that that is money that could be used more productively
in wages or investments. Mr. Turkstra said there is a bill in
Congress, S. 399 and H.R. 309, the American Job Protection Act,
which is legislation that would repeal the employer mandate.
10:54:34 AM
MR. TURKSTRA said the Jobs and Premium Protection Act would
address the Health Insurance Tax (HIT), which applies primarily
to small businesses and is a fee assessed only on the fully
insured market place, which is where most small businesses buy
their health insurance. He said the fee is going to grow over
time and will be passed on directly to consumers in the form of
higher premiums for private coverage. He said one study found
that the impact would be nearly $5,000 per family over a decade.
He said NFIB's calculations show that the HIT will impact 1.7
million small businesses with 11 million employees, the self-
employed who purchase in the individual market, and 23 million
employees who are covered by their employers. Further, NFIB
estimates that by 2022, 146,000 - 262,000 private sector jobs
will be lost as a result of the HIT, 59 percent of which will
come from small businesses. He said NFIB strongly supports S.
603 and H.R. 763, which would "kill" that provision.
10:56:17 AM
MR. TURKSTRA said there is a provision in S. 1188 and H.R. 2575,
which would increase the number of hours for the definition of
full-time employee from 30 to 40 hours. He said NFIB feels that
this is a small but important change that would have mitigating
impact on small businesses as they try to calculate who is
eligible for benefits, as well as calculate "who is a large
business versus a small business."
MR. TURKSTRA said H.R. 2668, recently passed in the House of
Representatives, would have delayed the individual mandate for
one year. He indicated that NFIB's law suit against the federal
government over the implementation of the ACA largely hinged
upon this provision. He said NFIB does not believe the federal
government has the authority to mandate the purchase of health
insurance for individuals. He said NFIB was not successful in
the law suit, which was decided in the U.S. Supreme Court;
however, he said NFIB would like to see that provision delayed
so that it would "move hand in hand along with the employer
mandate, which was delayed earlier this year."
10:57:56 AM
MR. TURKSTRA, in response to the chair, reiterated the
aforementioned congressional bill names.
10:59:32 AM
MR. TURKSTRA, in response to the chair, said he does not know
offhand the percentage of jobs within small businesses. He
related that NFIB represents 350,000 small businesses, and 75
percent of those are "pass-through businesses." He said, "So,
we very much are taxed on the individual side of the code, not
the corporate side of the code." He indicated that all the
businesses are independently owned and operated, which means
that none of NFIB's members are publicly traded. He said small
businesses currently make up half the private sector work force
in America.
11:00:47 AM
REPRESENTATIVE THOMPSON expressed concern regarding the quality
and number of insurers that may remain when the exchanges open.
He said he recently read that in its home offices locale of
Connecticut, Aetna Inc. "withdrew from the pool with that
exchange because of a lot of the things that were put in by that
state." He asked if individual states are "setting up those
requests and what has to be in those" and what the impact is on
other states, in terms of large insurers.
MR. TURKSTRA deferred to Dr. Graboyes.
11:01:38 AM
DR. GRABOYES responded that in general insurers are withdrawing
from markets, narrowing markets, or narrowing offerings. For
example, he said the California exchange will not allow policy
holders to go to the best hospitals available in the state. He
offered his understanding that it was either Blue Cross or Blue
Shield, which are separate entities in California, in which only
one-fourth of the doctors in their network will be accessible
through the exchanges. He said a person could buy a plan
thinking his/her doctor accepts that insurance, only to find
three-quarters of the doctors, while they may be in the network,
are not in the particular policy. He said he thinks people will
see how severe the problems are this fall, and he predicted they
will be "pretty tough."
11:03:24 AM
MR. GRABOYES, in response to Representative T. Wilson, said in
order to qualify to be a member of the NFIB, businesses cannot
be bought or sold on a stock exchange. He explained that
technically that could include a couple giant companies in the
U.S. He said of the member businesses have 8 employees, but
some have less, and a few have up to around 1,000 employees. He
said within [the ACA] there are four or five definitions of
small businesses beyond those that already exist.
11:05:24 AM
REPRESENTATIVE HIGGINS offered his understanding that under the
ACA, "full-time" is defined as [a minimum of] 30 hours a week,
and some of his colleagues have considered dropping their
employees hours down to 25 hours a week, to make them part-time,
thereby exempting them from the requirement. He questioned
whether that may be a trend.
MR. TURKSTRA said it seems like there are anecdotes daily about
another employer using that strategy. He said the exchanges are
not yet up and running, the law has not been implemented fully,
and the biggest question may be how large the insurance premiums
will be on the exchanges; therefore, it is difficult to make any
kind of assessment as to how [the ACA] will "affect the full-
and part-time distinction." He pointed out that the Act bases
calculations for full-time employee status on 130 hours or more
per month, not 30 hours per week. He said, "That's for
calculating ... whether or not you're a large or small
business." He said there is a different definition for
calculating a full-time equivalent employee, which is the number
of hours per part-time employees totaled and divided by 120
hours. He said, "That's just two different definitions of a
full-time employee within just the one provision right there."
He said that makes it challenging for small business
administrators. He mentioned a well-publicized letter from a
number of unions and a resolution passed in Nevada suggesting
that the union would be able to advocate for increasing the
definition of full-time employee from 30 to 40 hours, because
"they" are concerned "this" could have an effect on the 40-hour
work week, creating a situation in which people do not have
enough hours of work. He said NFIB sees this as a potential
consequence of the law and is working on a solution through SB
1188 and H.R. 2575, which "increase the definition to 40 hours
per week for a full-time employee."
CHAIR REINBOLD asked Mr. Turkstra to submit to the committee a
copy of his presentation.
MR. TURKSTRA replied that he would make certain the committee
has the bills for which NFIB is advocating.
11:10:41 AM
BRYCE WARD, Mayor, City of North Pole, said the City of North
Pole has been looking into the ACA to determine its
ramifications. He relayed that the city is self-insured, with
approximately 42 employees - below the 50 employee mark - which
allows the city to maintain its grandfathered status; however,
the Act has added to the city's costs, particularly the
individual cost of $60-$70 per person. He indicated that the
city's consultant has concerns as to whether the fee will
diminish as "they" are saying it will. He echoed Representative
Higgins' remark that there are two choices: to raise taxes or
to make [budget] cuts. He said it has been difficult for those
in Interior Alaska to maintain current services, without raising
taxes, which is not popular, but this [Act] raises costs to
small businesses. He opined that there are better ways to
address the issue.
11:13:44 AM
REPRESENTATIVE PAUL SEATON, Alaska State Legislature, asked
Mayor Ward if both the borough and city are self-insured.
MAYOR WARD said the city is, and offered his understanding that
the borough is, as well.
REPRESENTATIVE T. WILSON offered her understanding that the City
of Fairbanks is not self-insured.
11:15:08 AM
FRED BROWN, Executive Director, Health Care Cost Management
Corporation of Alaska (HCCMCA), said HCCMCA covers 175,000
people in Alaska and the Pacific Northwest, within approximately
38 entities, including boroughs, municipalities, school
districts, self-funded employers, and ERISA or other employer-
sponsored health benefit plans. He said the ERISA and Taft-
Hartley funds, which are members, are not happy with certain
features of the ACA; $63 per covered life is of concern, because
it results in a reduction in the amount of benefits available to
their members. He said union benefit trust funds are concerned
about the 30-hour work week. He said James Hoffa, the president
of the Teamsters, and others have pointed out that "this erodes
the notion that we have [an] opportunity to provide full-time
work, 40 hours of work, for our nation." Mr. Brown stated that
a person of low income who participates in an exchange has
access to a subsidy, while someone who receives health benefits
through a Taft-Hartley trust fund does not have access to the
subsidies. He said in many respects, the unions are placed at a
disadvantage.
11:17:39 AM
MR. BROWN said despite the delay in implementation of the
employer mandate, many members are concerned there will be
pressure to cover their part-time or seasonal employees during
the months they will be working on a full-time basis. He talked
about the Cadillac tax, the 40 percent penalty that will occur
beginning 2018 at a rate of $10,200 for individuals or $27,500
for family coverage. He warned that that could be catastrophic
for Alaska, which is already at a higher level for medical
coverage, because with inflation that cost could go
exponentially higher. Regarding SB 90, he said HCCMCA already
does pooling to gain access to better value and quality health
care for its members; however, he opined that all pooling is
beneficial. He ventured that the City of Anchorage may save
money, but not necessarily the City of Fairbanks, given the
quality of its performance as purchasers of health care
coverage.
MR. BROWN, in response to the chair, explained that the Taft
Hartley trust fund is established between a union and an
employer through collective bargaining. In the course of the
process, the employer would appoint three or four members to
become trustees, and the union would appoint three or four
members. Together, the trustees would receive the contributions
made under the collective bargaining agreement to the trust fund
from the employer over the life of the contract and establish
the plan by which the benefits would be administered and
provided to the employee.
11:21:27 AM
MR. BROWN, in response to Representative Thompson, said
virtually all the trade unions in Alaska have Taft-Hartley trust
funds. Some cities have their own trust fund. He offered
examples. Technically, he noted, many of the state trust funds
are not ERISA by definition, but are administered by using ERISA
patterns.
MR. BROWN, in response to the chair, reiterated his comments
regarding the Cadillac tax.
11:24:49 AM
The committee took an at-ease from 11:25 a.m. to 11:42 a.m.
11:42:32 AM
CHAIR REINBOLD brought the Joint Administrative Regulation
Review Committee back to order.
11:42:59 AM
REPRESENTATIVE SEATON observed that during previous
presentations, two options were discussed: to raise taxes or to
cut programs. Representative Seaton suggested a third option
would be to lower the cost of the services that are provided.
For example, when self-insured municipalities and school
districts are able to cut down the cost of their services, then
that reduces the cost of the health care [coverage] they
provide. Representative Seaton said he would discuss the four
papers he provided to the committee.
REPRESENTATIVE SEATON directed attention to a handout regarding
a Vitamin D project in New Zealand, which resulted in a savings
of over a half million dollars, after the number of seniors
using Vitamin D supplements was increased from 15 percent to 74
percent. That change further resulted in a 32 percent reduction
of residential care residents going to the emergency room for
falls and related fractures and a 41 percent reduction in the
hospitalizations from those fractures.
REPRESENTATIVE SEATON pointed to another handout he provided,
regarding low serum 25-hydroxy Vitamin D in risk of upper
respiratory tract infections in children and adolescents. He
said it is a Canadian study, which found that those children
with less than 30 Nano gram per milliliter [of Vitamin D] in
their blood had a 50 percent increase hazard ratio of
contracting an upper respiratory tract infection, and those
below 20 Nano grams per milliliter were 70 percent more likely
to contract an upper respiratory tract infection. He said the
Nenana Learning Center conducted a Vitamin D intervention study,
which resulted in a 27 percent reduction in absences due to
illnesses. He remarked on the goal of having a healthy
population.
REPRESENTATIVE SEATON mentioned another study he provided to the
committee, regarding a 2012 study of patients with type II
Diabetes among patients undergoing coronary angiography. The
findings, published in 2013, showed a 40 percent decrease in
fasting blood count numbers in those diabetics who had adequate
Vitamin D. The data highlighted the need for well-conducted,
randomized control studies to effectively assess whether
adequate Vitamin D doses can prevent the onset of diabetes. If
such studies prove the efficacy of Vitamin D in the prevention
of diabetes, then the potential benefits from strategies to
increase Vitamin D levels in the population would likely be
large.
REPRESENTATIVE SEATON brought attention to some graphs. One,
produced this month, shows the results of a large, randomized
control study of Vitamin D supplementation. He said the graph
on the left shows that 8.5 out of 1,000 people in the U.S. will
contract diabetes. He indicated that the 2,200 participants had
an average level of 48 Nano grams per milliliter and had a 90
percent decrease in the incidence of diabetes within one year.
He emphasized the impact of diabetes within Native and non-
Native populations of Alaska. Representative Seaton reiterated
the idea that lowering the cost of services is another option
for the state.
11:50:29 AM
REPRESENTATIVE SEATON, in response to the chair, restated that
New Zealand conducted a Vitamin D study, and noted that Frasier
Health, the largest residential senior provider in British
Columbia, conducted a two-year study where people took 20,000 IU
per week; however, he offered his understanding that there is no
mandate by any country that the people of the country take
[Vitamin D]. He said the goal is to the lower the cost of
health care. He said the legislature passed House Joint
Resolution 5 in 2011, which looked at the costs and benefits of
"supplementing," and after that "they took away the necessity of
a copay or deductible on Vitamin D tests for all state
employees, because they looked at the cost savings that could be
incurred."
CHAIR REINBOLD asked Representative Seaton to confirm he is
saying that any state employee or whoever is covered by the
state can get a Vitamin D test.
REPRESENTATIVE SEATON answered that is correct. He added, "Not
only can we get it, we can get it without ... co-pay ... or
without deductible at the state health fairs or ... the annual
physical if the doctor asks that it goes in that way." He said
that was done in response to data from a Canadian study showing
that Vitamin D supplementation resulted in a 25 percent
reduction in the total cost of health care and the saving of
37,000 lives per year. He related that House Concurrent
Resolution 5 asked the governor to "go to a prevention and
disease model for health care."
11:55:07 AM
CHAIR REINBOLD emphasized the importance of prevention.
11:55:39 AM
CHAIR REINBOLD ascertained that there was no one else who wished
to testify.
11:55:47 AM
CHAIR REINBOLD mentioned a letter forwarded by Senator French,
which would become part of the public record.
11:56:11 AM
CHAIR REINBOLD announced that public testimony would be left
open throughout the multiple hearings across the state.
11:56:34 AM
ADJOURNMENT
There being no further business before the committee, the
Administrative Regulation Review Committee meeting was adjourned
at 11:57 a.m.
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