Legislature(2015 - 2016)BILL RAY CENTER 208
05/26/2016 08:30 AM House FINANCE
Note: the audio ![]()
and video ![]()
recordings are distinct records and are obtained from different sources. As such there may be key differences between the two. The audio recordings are captured by our records offices as the official record of the meeting and will have more accurate timestamps. Use the icons to switch between them.
| Audio | Topic |
|---|---|
| Start | |
| HB374 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 374 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| + | TELECONFERENCED |
HOUSE FINANCE COMMITTEE
FOURTH SPECIAL SESSION
May 26, 2016
8:37 a.m.
8:37:45 AM
CALL TO ORDER
Co-Chair Thompson called the House Finance Committee
meeting to order at 8:37 a.m.
MEMBERS PRESENT
Representative Mark Neuman, Co-Chair
Representative Steve Thompson, Co-Chair
Representative Dan Saddler, Vice-Chair
Representative Bryce Edgmon
Representative Les Gara
Representative Lynn Gattis
Representative David Guttenberg
Representative Scott Kawasaki
Representative Cathy Munoz
Representative Lance Pruitt
Representative Tammie Wilson
MEMBERS ABSENT
None
ALSO PRESENT
Fred Parady, Deputy Commissioner, Department of Commerce,
Community, and Economic Development; Lori Wing-Heier,
Director, Division of Insurance, Department of Commerce,
Community and Economic Development; Representative Paul
Seaton; Representative Louise Stutes.
SUMMARY
HB 374 REINSURANCE PROGRAM; HEALTH INS. WAIVERS
HB 374 was HEARD and HELD in committee for
further consideration.
Co-Chair Thompson reviewed the agenda for the day.
8:38:27 AM
HOUSE BILL NO. 374
"An Act relating to a reinsurance program for
residents who are high risks and insurer assessments
to cover the costs of the reinsurance program;
relating to application for state innovation waivers
for health care insurance; relating to definitions of
'residents who are high risks' and 'covered lives';
and providing for an effective date."
8:38:27 AM
Co-Chair Neuman MOVED to ADOPT the proposed committee
substitute for HB 374, Work Draft (29-GH2126\E). There
being NO OBJECTION, it was so ordered.
Co-Chair Thompson indicated he would not be moving the bill
out in the current meeting.
8:39:33 AM
FRED PARADY, DEPUTY COMMISSIONER, DEPARTMENT OF COMMERCE,
COMMUNITY, AND ECONOMIC DEVELOPMENT, introduced himself.
LORI WING-HEIER, DIRECTOR, DIVISION OF INSURANCE,
DEPARTMENT OF COMMERCE, COMMUNITY AND ECONOMIC DEVELOPMENT,
introduced himself.
Mr. Parady relayed that the bill before the committee was a
simple fix for a complex problem.
Representative Gattis asked how the situation arose.
Ms. Wing-Heier responded that Alaska was not alone in the
issue. The Affordable Care Act had a presented some unique
challenges to the insured market. She explained that some
very sick people had entered the market with high claims.
The insurers paid out claims that had exceeded the premiums
that had come in. She stated that, in some cases, the
insurers had paid out up to $1.20 for every $1.00
collected. She shared that AETNA and Assurant left Alaska,
which left only two carriers in the state. She shared that
MODA had recently given notice that they would pull out of
the individual market in 2017, leaving only one carrier in
the state. In some states, carriers had announced that they
would not write in all areas of the particular state. She
shared that Premera had declared that they would not write
in the eastern part of the state. Alaska would not have an
insurance company for the citizens of Alaska if Premera had
given similar notice to Alaska. She stressed that Premera
could declare that they would not cover Alaska, which would
result in no back up for insurance.
8:43:50 AM
Representative Gattis wondered whether the people addressed
in the bill were not covered before the Affordable Care
Act.
Ms. Wing-Heier replied that there were some who had not
purchased insurance, but the Alaska Comprehensive Health
Insurance Association (ACHIA) was already in place. Some
people could not afford the ACHIA premiums, so they were
uninsured. Upon adoption of the Affordable Care Act, those
people bought insurance, because some people qualified for
subsidies for their premiums. She explained that ACHIA was
limited to very specific conditions that allowed access to
ACHIA. She stressed that, under the Affordable Care Act,
insurance was guaranteed issue.
Co-Chair Thompson wanted to move through the presentation.
Representative Gara shared that he had been advised that
the state could pool with other states, which may help to
drive the cost of insurance down.
Ms. Wing-Heier stated that currently the option to pool was
not possible.
Co-Chair Thompson acknowledged Representative Pruitt had
joined the meeting.
Ms. Wing-Heier introduced the PowerPoint Presentation:
"Department of Commerce, Community and Economic
Development: HB 374 - Reinsurance Program; Health Insurance
Waivers." She advanced to slide 2: "Division of Insurance":
The mission of the Division of Insurance is to regulate
the insurance industry to protect Alaskan consumers.
· The division has a statutory responsibility to
review and approve rules, forms and rates based on
an analysis of whether they are excessive,
inadequate, or unfairly discriminatory.
· The division does not have statutory authority to
deny rates because of the financial impact to the
consumer.
8:48:54 AM
Ms. Wing-Heier reviewed the timeline on slide 3: "Timeline
- Update":
· September 2014 - Premera's average increase 37.2
percent. Moda's average increase was 27.4 percent
· August 2015 - Premera's average increase was 38.7
percent. Moda's average rate increase was 39.6 percent
· October 1, 2015 - Letter received that the 2014 risk
corridor payments will be paid at 12.6 percent
requests
· May 2, 2016 - Moda announces exit from Alaska's
individual market beginning January 1st, 2017
· January 1, 2017 - State of Alaska has one insurer in
the individual market on/off the federally facilitated
exchange, impacting 23,000+ Alaskans
Ms. Wing-Heier scrolled to slide 4: "ADN to Governing;
Alaska made the News…":
Health and Human Services: Another Health Insurer
Abandons Alaska. by Laurel Andrews
Moda Health will exit Alaska's individual insurance
market next year, the company announced Monday,
leaving only one health insurance provider in the
state's market that, so far, has been defined by
drastic annual rate increases for consumers and big
losses for insurance companies.
Moda will focus on its other group and individual
plans in the state, it said in a release. It may
consider returning in the future but "the market
requires significant reform in order to be
sustainable," the company said.
The exit applies only to Moda's 14,000 customers who
have health insurance plans on the individual
marketplace. The company's other medical and dental
plans are not affected by the decision, the company
wrote.
"Obviously this is not good news," Alaska Division of
Insurance Director Lori Wing-Heier said after the
announcement.
Ms. Wing-Heier looked at slide 5: "Even the Wall Street
Journal":
By Anna Wilde Mathews and Stephanie Armour
May 15, 2016 7:47 p.m. ET
Health-insurance customers in a growing number of
mostly rural regions will have just one insurer's
plans to choose from on the Affordable Care Act's
exchanges next year, as some companies pull out of
unprofitable markets.
The entire states of Alaska and Alabama are expected
to have only one insurer on the health law's signature
online marketplaces next year, according to state
regulators. The same is expected to be true in parts
of several other states, including Kentucky,
Tennessee, Mississippi, Arizona and Oklahoma, state
regulators said.
Ms. Wing-Heier advanced to slide 6: "Washington." The
companies were losing money at least in the individual
market. The state had lost three insurers in the previous
two years.
8:52:06 AM
Ms. Wing-Heier discussed slide 7: "Three R's":
· Risk Adjustment transfers money among insurers to
adjust for the possibility that some insurers may get
more or less than their proportionate share of costly
enrollees. Risk Adjustment is only:
· Applied to the individual and small group market;
and
· Permanent program to help stabilize the costs of
the ACA
· Reinsurance is one of the taxes associated with the
ACA and is applied against health insurance policies
and employer group health plans. Proceeds are used to
provide the individual market plans with additional
subsidies for higher-cost enrollees. The program
sunsets in 2016
· Attachment point in 2014 is $45,000 but will
increase to $70,000 in 2015
· Coinsurance decreases from 80 percent in 2014 to
50 percent in 2015
· Risk Corridor provides a range for profits or losses
for insurance on the FFM. If an insurer has higher
than expected profits, the federal government will
"claw back" some of the premiums. Conversely, if an
insurer has higher than expected losses, the federal
government will pay the insurer additional subsidies
to offset those losses. This program sunsets in 2016.
Ms. Wing-Heier moved to slide 8: "We are working to keep
the market solvent."
Premera gets more time to file rates as fix awaits
special session
By DJ Summers, Alaska Journal of Commerce
Posted: Wed, 05/11/2016 - 4:42pm
Addressing Alaska's broken individual health insurance
market will likely have to take place in special
session of the Legislature, and in the meantime the
state's last provider has been given extra time to
calculate its rate increase for 2017.
Premera Blue Cross - Alaska's sole remaining
individual insurance provider following the May 1
announcement by Moda Health that will depart the
market in 2017 - says it will stay in the Alaska
market next year.
"Premera is committed to the Alaska market and will
continue to offer individual coverage to Alaskans
through the federal marketplace,' said Premera
spokesperson Melanie Coon in a statement.
Premera was due to release a rate schedule on May 11,
but the circumstances will push that date back to this
summer, Coon said. Because Moda dropped from Alaska's
market, Premera, which covers 10,000 people in the
state, has a new deadline to renew premium rate
estimates to include the rates Moda charged its 14,000
customers.
"We've requested form the (Division of Insurance)
Moda's number so we can kind of sharpen our pencils,"
said Coon. "We have until July.
8:55:39 AM
Co-Chair Neuman queried an explanation of the state's
approval of the rate schedule. He wanted to better
understand how much companies had been making or losing in
Alaska.
Ms. Wing-Heier explained that it was fairly complex. She
stated that there was an actuarial memorandum; the past
losses; the population served; medical trends; the
anticipated demographic losses; expected pharmaceutical and
medical trends. She stated that the division relied on
historic data and cost projections. She stated that there
was also an examination of profit, but over the most recent
two years, the profits were less than 2 percent.
Co-Chair Thompson asked about money returned to consumers.
Ms. Wing-Heier answered that they wrote checks back to
Alaskans.
Co-Chair Neuman queried the underlying reason for the
insurance companies leaving the state. He queried the cost
of medical services.
Ms. Wing-Heier agreed that the cost of health care was
sometimes four times as much as it was in the lower 48. She
stressed that the cost, in the aggregate, was spread across
23,000 people. She explained that within that population
there were very sick people. She stated that there were
$239 million in claims in the first six months.
9:00:58 AM
Co-Chair Neuman had spoken to several doctors trying to
figure out the problem. He thought the current legislation
was just a "Band-Aid" to the problem. He wanted to address
the underlying problem, and queried ways to fix the
problem. He stated that there was money in the operating
budget to pay back the cost of pursuing a medical degree,
in order to promote more medical personnel to the state. He
remarked that because of various issues caused doctors'
costs to increase.
Ms. Wing-Heier agreed with Co-Chair Neuman. She understood
that the cost of health care must be address it, but she
did not know where to begin to address that issue. She
stated that there were various stakeholders that may assist
in examining the issue in a holistic manner. She stressed
that the problem was not only in the individual market; but
included the state employees, worker's compensation, and
other health care programs. She asserted that the cost of
health care impacted everyone. She felt that health care
costs in the state must be under control, in order to
enhance economic development. She stated that the reason
for the 1332 Waiver was to examine what could be done, to
offer a solution.
Co-Chair Neuman remarked that the issue effected many
Alaskans with or without insurance.
9:04:36 AM
Representative Wilson felt that the legislation was a way
of backfilling for the federal government.
Ms. Wing-Heier answered that she did not believe it was
backfilling for the federal government. She felt that every
state would be involved in that process, should that be the
case.
Representative Munoz wondered whether ACHIA had covered
high risk Alaskans.
Ms. Wing-Heier responded that ACHIA existed for one primary
reason, but she did not know why the small pool were not
terminated from ACHIA. She stressed that Alaska did not
have a market for high cost medications, but was available
through ACHIA. There were individuals in ACHIA who could
only access medication through ACHIA.
9:08:43 AM
Representative Munoz wondered how many of the 23,000 in the
individual market would need to shift to ACHIA, because
they may not find coverage.
Ms. Wing-Heier replied that the claims were examined based
on the most costly condition among all the 23,000
individuals. She explained that there was a top 10, top 20,
top 30, and top 40. She shared that there was an
examination of how all those claims would be seeded to
ACHIA. She stated that the top 20 was somewhere around $55
million. The first ten claims was 495 people; and the first
40 diseases was 874 people.
9:10:51 AM
Vice-Chair Saddler queried any provisions in SB 74 that
would address Medicaid expansion.
Ms. Wing-Heier replied that the private sector could
provide a fee for service. She explained that the
difference between the Affordable Care Act and the Medicaid
expansion was about the level of income.
Vice-Chair Saddler wondered whether insurance companies
should stop operating in Alaska, if they were unable to
make a profit.
Mr. Parady agreed. He stressed that no insurance company in
Alaska left 23,000 individual Alaskans with no health care
coverage and no other option available. He felt that the
bill should be considered "triage", in order to provide a
near-term fix to ensure that the state did not have zero
carriers.
Ms. Wing-Heier thought it was worth mentioning she would
expect to see changes to the Affordable Care Act, which may
alleviate some of the current issues.
9:15:13 AM
Representative Gara stated that he had urged previous
finance committee chairs to work towards a plan to reduce
high medical costs. He wondered whether the division had
the statutory authority to regulate the provider charges to
insurers.
Ms. Wing-Heier responded that the division did not have the
authority in statute to tell the provider what to charge,
unless it was so excessive that it became fraud.
Representative Gara had two examples of fraud. His wife was
a physical therapist. He remarked that there were some
physician-owned practices who pay their physical therapists
based on number of patients and number of visits. He stated
that the payment structure provided an incentive for
physical therapists to provide unnecessary care to receive
the bonuses. He wondered if that type of practice could be
regulated.
Ms. Wing-Heier responded that that may fall under the
unfair trade practices statute.
Representative Gara wanted to prevent the issue from
occurring in the first place. He wondered whether the
division have the power to prevent that type of practice.
Ms. Wing-Heier agreed to examine that issue.
Representative Gara shared that some physicians purchase
diagnostic equipment in order to make their money from the
diagnostic services. He asserted that there was an
incentive to use the diagnostic equipment more frequently
than necessary to pay off the high cost of the equipment.
9:18:38 AM
Representative Guttenberg commented that many legislatures
had been tracking the issue for several years. He mentioned
kicking the can down the road. He remarked that the
Division had the opportunity to look at a bigger picture.
He wondered how the bill addressed the cost disparity.
Ms. Wing-Heier replied that it could not be addressed at
this point. She explained that the insurance companies did
managed care, but there were no fee schedules in statute.
She remarked that when an employee or individual enters a
network, the insurance company would have preferred
provider arrangements with the intent to negotiate a fee
with the provider. She stressed that the negotiation was
between the insurer and the provider. She shared that the
division did not get involved in those discussions. She
shared that the division would be involved if the claims
were not paid. She stated that, in the waiver, if there was
an opportunity to examine network adequacy and to ensure
that the provider agreements were reaching more physicians
to reach more physicians while reducing the rates. She
stressed that, currently, the division had no participation
in the agreements.
Representative Guttenberg wondered whether the division was
aware of the insurance industries across the board
participation in price of care.
Ms. Wing-Heier replied that the payments were customary,
which set the rate for what positions were being paid in
Alaska.
Representative Guttenberg stated that people did not shop
for medical treatment. He remarked that sometimes doctors
did not know the cost of treatment.
Ms. Wing-Heier replied that the issue of transparency was
an issue in health care.
9:25:24 AM
Representative Guttenberg referred to the 1332 waiver. He
wondered if the waiver allowed for the crossing the state
line.
Ms. Wing-Heier replied that the waiver allowed one to apply
to the federal government. She explained that the
application required legislative approval or authority. She
stressed that the state was not currently moving forward
with the innovation waiver, but was moving forward with the
application process. She stressed that the process was
taking the Affordable Care Act to the state level.
9:30:02 AM
Co-Chair Neuman thought it had been an interesting
discussion. He stated that what he had not heard any
discussion on was reviewing regulations. He did expect to
see some changes in regulations. He was adamant about
regulation reform. He thought the state's own government
was the higher driver of costs.
Mr. Parady stated that within the Department of Commerce,
Community and Economic Development (DCCED) there was an
attempt to streamline medical licensing.
Ms. Wing-Heier stated that the division had communicated
that the deadline would be July 15, depending on the
legislative decision on the reinsurance bill. She stressed
that should it be passed and funded, the rates should
reflect the decision on the reinsurance for 2017.
Ms. Wing-Heier turned to slide 9: "2017 Rate Filings":
· Premera must file rates with DOI by 7/15/16
· Rates must be approved 8/23/16
· Open enrollment begins 11/1/16
· Is then effective 1/1/17
· In order to include the reinsurance program in the
2017 rate filings, the insurer must have a two week
notice of the amount (if any) appropriated under HB374
Ms. Wing-Heier advanced to slide 10: "Section 1332
Innovation Waiver":
Alaska should explore a Section 1332 Innovation Waiver
to allow the state to withdraw from the ACA if, and
subject to many provisions, the state could provide
the same benefits to consumers without any additional
cost to the federal government. States that are
working on 1332:
· Colorado
· Minnesota
· Hawaii
· Massachusetts
Ms. Wing-Heier scrolled to slide 11: "Section 1332
Innovation Waiver."
· Provide coverage at least as comprehensive as under
the ACA
· Provide coverage and protection against excessive out-
of-pocket expenditures at least as affordable as that
provided under the ACA
· Cover a number of residents comparable to the number
who would be covered under the ACA
· Not increase the federal deficit
· Must be authorized by the State Legislature
· Developed through a public process
· A state that is granted an innovation waiver that
restricts access to premium tax credits, cost-sharing
reduction premiums or the small employer tax credit
can be paid the amounts that would have been paid to
its residents under these programs to finance its
waiver program
9:35:28 AM
Representative Wilson relayed that she was lost. She looked
at the "Claim Sheet" (copy on file). She wondered if the
state came up short of $111,000 per person.
Ms. Wing-Heier replied in the affirmative.
Representative Wilson looked at CC Set 2, and noted that
there were 58 million claims removed, and 495 claimants
removed. She stated that the company lost $111,000 per
person. She surmised that the bill was intended to make up
the $58 million.
Ms. Wing-Heier replied in the affirmative.
Representative Wilson wondered whether the state's costs
were similar, and wondered whether any of the people were
ever in the system.
Ms. Wing-Heier did not know who was in the system.
Mr. Parady furthered that the conditions covered in ACHIA
were more limited than the current considered conditions.
The overlying issue was that the high cost individuals were
driving rate increases across the individual segment at 35
to 40 percent a year.
Representative Wilson felt that the issue was because of
the federal government. She wondered if the legislation was
a lawsuit to regain some costs.
Mr. Parady stated that he would not characterize the bill
as a "clean up" of the Affordable Care Act. He stressed
that the 20,000 people in the individual market were
Alaskans. He stated that there was a prior statutory
mechanism to partially deal with high cost individuals
known as ACHIA. The Affordable Care Act's universal
coverage provision resulted in more people in the market
and were driving the cost of the entire group. He remarked
the high cost drivers in that group were 500 Alaskans in
the market of 20,000 Alaskans. He stressed that the intent
was to ensure that the insurance coverage for that group
would not "crater."
9:39:32 AM
Representative Wilson wanted to know the exact amount of
money requested. She wondered how many people would be left
without medical coverage, should the legislation not pass.
Mr. Parady explained that the number on the fiscal note was
$55 million, which roughly matched the 495 individuals. He
stressed that the $55 million was spread across only 23,000
Alaskans, which drove the premium increase of the third
year of 35 to 40 percent. He stated that the rough
calculation would cut the rate of increase by one-half. The
appropriation would also help to stabilize the market, so
the losses would not continue resulting in zero carriers.
He remarked that the bill was an initial measure to
stabilize Alaska's individual market for Alaskans. He
stressed that the root of the bill was individuals who were
paying premiums that were greater than their mortgages.
Representative Wilson commented that she was still
completely confused.
Representative Gara wondered if every other state had a
provider tax.
Ms. Wing-Heier replied in the affirmative.
Representative Gara wondered whether Alaska was the only
state that did not have a provider tax.
Ms. Wing-Heier replied that she did not know, but stated
that most state's had a provider tax.
Representative Gara noted that there were many providers
who did not make a lot of money. He asked if the
administration had considered a provider tax. He believed
those with the most money were being asked the least.
Ms. Wing-Heier replied in the negative; they had not
discussed a provider tax.
Vice-Chair Saddler stated that the bill envisioned a
healthcare authority. He wondered what would happen in the
short-term if the bill was not passed. He surmised that if
a new provision was not in place by July 1 there would be
another year of significant rate increases.
Ms. Wing-Heier agreed that if the legislation did not pass
there would be another year of significant rate increases.
She had no reason to expect that 2017 would not bring
another high increase.
Vice-Chair Saddler wondered how many.
Ms. Wing-Heier replied not many. She could not imagine that
in 2018 there would be insurance throughout the state
unless something was done.
9:45:29 AM
Vice-Chair Saddler wondered whether individuals with
chronic conditions attracted to Alaska to take advantage of
the state's insurance program.
Ms. Wing-Heier replied in the negative.
Co-Chair Thompson wondered what would occur should Premera
decide to not offer coverage in the rural area.
Ms. Wing-Heier replied that the state would not have to set
up an exchange, she asked how the state would ask many
Alaskans to have no medical coverage. She stated that it
would cost around $200 million to set up an exchange.
Co-Chair Thompson asked if the funds go to the general
funds.
Mr. Parady stated that he was correct.
Co-Chair Thompson remarked that this was the reason that
the bill would not be leaving the current committee
meeting.
9:52:55 AM
Representative Edgmon referred to Section 3 of the bill. He
noted that it was difficult to not draw some parallels
between the legislation and SB 74. He remarked that the
issue overlaid a number of state agencies, and had
statewide impacts as a whole. He wondered if the director
was listed because of current statute. He asked if the
commissioner should be in charge of the decisions.
Ms. Wing-Heier referred to Title 21 and relayed that it
referred to the director.
Representative Edgmon surmised that the division was likely
to have to come back to the legislature.
Mr. Parady commented that the Director of Insurance did
have authority. He noted that the Commissioner of Insurance
was elected in several other states.
Representative Edgmon wondered how the reporting worked for
the division.
Ms. Wing-Heier stated that the Division of Insurance
provided an annual report to legislators every year.
Representative Edgmon asked why the issue had not been
brought forward sooner.
Mr. Parady stated that he thought it had to do with Moda
bowing out.
Co-Chair Thompson was shocked that there was previously a
zero fiscal note, and suddenly would tap the general fund
by $55 million.
Mr. Parady replied that the bill language stated that it
"may appropriate", and acknowledged that the bill had no
effect until appropriation.
Representative Edgmon queried the definition of high risk
residents. He wondered if that definition was tied to the
Affordable Care Act's definition.
Ms. Wing-Heier replied that it was done to comply with the
guaranteed issue provision of the Affordable Care Act, so
anyone could seed claims to ACHIA.
Representative Edgmon wondered whether medical reasons
included behavioral health issues.
Ms. Wing-Heier replied in the affirmative.
9:58:57 AM
Representative Guttenberg referred to SB 74 in Section 6,
which dealt with efficiencies that Department of Health and
Social Services (DHSS) was supposed to present planning
efforts to coordinate driving costs downward, and herd
efficiencies across all entities involved with delivering
services. He stressed that the problem with the rising cost
of delivering health care was the largest component in the
budget. He queried a cabinet level focus on the issue.
Mr. Parady responded in the affirmative. He explained that
the Health Care Authority included the commissioner of
Administration, the commissioner of the Department of Labor
and Workforce Development; the commissioner of Department
of Commerce, Community and Economic Development; and was at
the highest levels of the administration.
Representative Guttenberg wondered if the bill initiated
those meetings.
Mr. Parady replied that those meetings had previously
occurred, were ongoing, and were melding under the current
authority.
Representative Munoz referred to the premium tax receipts
referred to in the fiscal note. She wondered whether the
tax receipts were on private policies, and if so, whether
it was the 23,000 individual policies.
Mr. Parady responded in the negative. He explained that it
would be across all lines of insurance.
Vice-Chair Saddler asked if ACHIA was working from the
actuary stand point.
Ms. Wing-Heier replied that ACHIA was working, except that
it did not extend to everyone. There was a limited set of
people who qualified for ACHIA.
Vice-Chair Saddler remarked that giving individual market
dynamic distortion. He felt that the financial impacts of
the Affordable Care Act were expensive.
Representative Wilson looked at the "Claims Data" (copy on
file). She looked at CC Set 4, and wondered why the $78
million was not on the fiscal note.
Mr. Parady looked at CC set 2, and remarked that the bill
would take the 20 highest cost drivers, and seed them to
ACHIA. He stated that the appropriation would require ACHIA
to pay those costs. He remarked that the effect would not
require them in the rate filing, because they would not be
paid by the insurance company. He stated that the
definition of the appropriation was given by the
legislature, which would limit the costs that were seeded
to ACHIA.
10:05:43 AM
Representative Wilson surmised that it would be a loss to
insurance companies. She asserted that the $20 million loss
would still allow the insurance companies to break even or
experience a gain with the removal of the group.
Mr. Parady responded that there was a two-pronged approach.
He explained that there was an appropriation to lessen the
rate increase, but there will be a rate filing that would
reflect rates that were not excessive and must be adequate.
He noted the 40 percent rate increase three years,
resulting in an over double over three years. He remarked
that the rate increase would moderate, but the people would
have their coverage.
Ms. Wing-Heier indicated that people would continue to get
insurance, and everyone paid the same rate regardless of
level of sickness. She stated that the sick person's claim
go out, and hopeful slow the rate of increase of both
premiums.
Representative Wilson wondered what would happen to the
people who were not a part of the 23,000.
Ms. Wing-Heier stated that those individuals were not a
part of the discussion.
Representative Wilson understood that it was not part of
the discussion but that was her concern. She remarked that
some of her constituents' premiums had increased so
significantly that they chose not to pay for insurance. She
stressed that there was a portion of the population who
would not be helped by the legislation.
Ms. Wing-Heier replied that insurance had an individual
market, small group, and large group. The small group,
which was rated, did not see the rate increases of the
individual market. She stressed that the small group was
performing fairly well. She shared that the rates had
increased, but had not increased like the individual
market. She shared that she had not seen the three time 40
percent rate increases. She stressed that the group was not
in a "death spiral." She remarked that there was also
competition in the small group; and it was a larger pool.
She reiterated that the individual market was in the "death
spiral."
Representative Wilson queried the difference between a
small group and an individual market.
Ms. Wing-Heier explained that a small group was under 50
employees. The individual market had no employee sponsor.
Co-Chair Thompson still did not understand why the bill was
being brought forward with a $55 million fiscal note. He
wondered why the issue was not addressed in the budgeting
process.
Mr. Parady replied that the original version of the bill,
there was a contemplation of a per person, per member
charge of $20, which would have spread the cost over a wide
range of Alaskans. That proposal would have funded the
amount. He stated the provision encountered resistance,
because there would be a budgetary increase to some groups.
He stressed that removing the funding mechanism defaulted
to an appropriation approach. He remarked that an
alternative may be an insurance tax, or legislative
discretion.
Co-Chair Neuman stated that if Alaska was going to set up a
high risk pool.
Mr. Parady answered that the Affordable Care Act required
providers to offer coverage to every American, there was no
incentive.
10:13:06 AM
Co-Chair Neuman wondered if there was an analysis regarding
an increased financial risk to the state by the insurance
companies' desire to drop the higher costs further.
Ms. Wing-Heier replied that the state would only pick up
the appropriation actuarially. She shared that the top 20
was approximately $55 million.
Representative Gara felt that any problem with bill
introduction should be addressed. He wondered whether the
administration would be amendable to add the survivors of
first responders' legislation into the bill.
Co-Chair Thompson replied that he did not believe that
would occur in the committee.
Representative Gara stressed that he was a member of the
committee, and wanted that particular legislation.
Co-Chair Thompson set aside the bill.
HB 374 was HEARD and HELD in committee for further
consideration.
Co-Chair Thompson reviewed the agenda for the following
day. He relayed that the meeting was recessed to a call of
the chair [Note: the meeting never reconvened].
ADJOURNMENT
10:16:14 AM
The meeting was adjourned at 10:16 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 374 CS WORKDRAFT FIN vE.pdf |
HFIN 5/26/2016 8:30:00 AM |
HB 374 |
| HB374 ver E - Sectional Analysis.pdf |
HFIN 5/26/2016 8:30:00 AM |
HB 374 |
| HB374 Transmittal Letter.pdf |
HFIN 5/26/2016 8:30:00 AM |
HB 374 |
| HB374 Supporting Documents - Power Point Presentation.pdf |
HFIN 5/26/2016 8:30:00 AM |
HB 374 |
| HB374 Supporting Documents - Claims Data.pdf |
HFIN 5/26/2016 8:30:00 AM |
HB 374 |
| HB 374 NEW FN DCCED 5-25-16.pdf |
HFIN 5/26/2016 8:30:00 AM |
HB 374 |