Legislature(2003 - 2004)

04/01/2003 02:55 PM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                  HOUSE FINANCE COMMITTEE                                                                                       
                       April 01, 2003                                                                                           
                          2:55 PM                                                                                               
TAPE HFC 03 - 42, Side A                                                                                                        
TAPE HFC 03 - 42, Side B                                                                                                        
CALL TO ORDER                                                                                                                 
Co-Chair Williams called the House Finance Committee meeting                                                                    
to order at 2:55 PM.                                                                                                            
MEMBERS PRESENT                                                                                                               
Representative John Harris, Co-Chair                                                                                            
Representative Bill Williams, Co-Chair                                                                                          
Representative Kevin Meyer, Vice-Chair                                                                                          
Representative Mike Chenault                                                                                                    
Representative Eric Croft                                                                                                       
Representative Richard Foster                                                                                                   
Representative Mike Hawker                                                                                                      
Representative Reggie Joule                                                                                                     
Representative Carl Moses                                                                                                       
Representative Bill Stoltze                                                                                                     
Representative Jim Whitaker                                                                                                     
MEMBERS ABSENT                                                                                                                
ALSO PRESENT                                                                                                                  
Joel Gilbertson, Commissioner,  Department of Health & Social                                                                   
Services; Bob  Labbe, Deputy  Director, Department  of Health                                                                   
and   Social   Services;  Chip   Wagoner,   Alaska   Catholic                                                                   
PRESENT VIA TELECONFERENCE                                                                                                    
Stacy Kraley, Assistant Attorney General, Department of Law                                                                     
HB 172    "An Act relating to eligibility requirements for                                                                      
          medical  assistance for certain children,  pregnant                                                                   
          women,  and persons  in a  medical or  intermediate                                                                   
          care  facility;  and  providing  for  an  effective                                                                   
          CSHB 172  was REPORTED out of Committee  with a "do                                                                   
          pass"  recommendation  and a  previously  published                                                                   
          (#1)  fiscal  impact note  from  the Department  of                                                                   
          Health and Social Services.                                                                                           
HOUSE BILL NO. 172                                                                                                            
     "An  Act   relating  to  eligibility   requirements  for                                                                   
     medical  assistance   for  certain  children,   pregnant                                                                   
     women,  and persons  in a medical  or intermediate  care                                                                   
     facility; and providing for an effective date."                                                                            
Co-Chair  Harris MOVED  to  ADOPT the  Committee  Substitute,                                                                   
Work Draft  23-GH128\D, Lauterbach, 3/31/03.   Representative                                                                   
Croft OBJECTED.                                                                                                                 
JOEL GILBERTSON, COMMISSIONER,  DEPARTMENT OF HEALTH & SOCIAL                                                                   
SERVICES  spoke   regarding  the  changes  included   in  the                                                                   
Committee Substitute.                                                                                                           
Commissioner Gilbertson explained  that the bill would freeze                                                                   
the income eligibility levels  of for Medicaid and Denali Kid                                                                   
Care under  the special income  limits for nursing  homes and                                                                   
Home  and Community  Based (HBC)  Services.   He stated  that                                                                   
currently  pregnant  women  and Denali  Kid  Care  recipients                                                                   
receive  eligibility at  200 percent  of the federal  poverty                                                                   
level, which is the poverty level  standard used in the FY 03                                                                   
state budget.   He noted  that this would  also lock  in cash                                                                   
dollar amounts for the various corresponding family sizes.                                                                      
Commissioner Gilbertson referred  to the savings indicated in                                                                   
the fiscal note of $716 thousand  for FY 04, with a growth in                                                                   
savings  projected over  time.   He noted  that this  savings                                                                   
would  result  from a  decrease  in  the number  of  eligible                                                                   
individuals joining  the program.  He added  that individuals                                                                   
currently  eligible  for any  of  the  programs who  did  not                                                                   
experience an  increase in income  would remain  eligible for                                                                   
the programs.                                                                                                                   
Commissioner  Gilbertson  stated   that  the  intent  of  the                                                                   
legislation  is  to  acknowledge   the  extensive  growth  in                                                                   
Medicaid program costs, and the  resulting diminished ability                                                                   
of the  State to service the  program in its  current design.                                                                   
He expressed the  Governor's message that that  the State had                                                                   
reached  its affordable  capacity [for  Medicaid].  He  noted                                                                   
that future  cost containments and efficiencies  would occur.                                                                   
He stated that  the legislation was an effort  to contain the                                                                   
growth of  the programs without  causing hardship  to program                                                                   
recipients.    He maintained  that  this  was a  modest  cost                                                                   
containment measure  of eligibility.   He emphasized  that to                                                                   
continue to have  a strong Medicaid program,  efforts must be                                                                   
made to curtail program expansion.                                                                                              
Commissioner  Gilbertson  commended  the  programs'  success,                                                                   
noting  that a  high level  of outreach  resulted in  greater                                                                   
participation (26 thousand) in the Denali Kid Care program.                                                                     
In response to  an earlier question by  Representative Croft,                                                                   
Commissioner Gilbertson  noted that the Work  Draft addressed                                                                   
a drafting  error in the original  bill (page 4, line  27) in                                                                   
reference to  the cash dollar  amounts for eligibility.   The                                                                   
section  was corrected  to refer  to  a pregnant  woman as  a                                                                   
family  of two,  in  accordance  with federal  standards,  to                                                                   
ensure prenatal care.                                                                                                           
Representative Croft WITHDREW his objection.                                                                                    
There being NO OBJECTION, the Work Draft was ADOPTED.                                                                           
Representative  Croft asked about  the effects of  not having                                                                   
proper  medical care  during pregnancy.   He  inquired as  to                                                                   
studies done in this area.                                                                                                      
Commissioner  Gilbertson responded  that he  did not  possess                                                                   
that information currently.   He pointed out that  if a woman                                                                   
was  not covered  by Medicaid,  it did  not necessarily  mean                                                                   
that she  was not  receiving pre-natal care.   He  noted that                                                                   
studies have  shown a correlation  between prenatal  care and                                                                   
healthy births.   He  added that  other health care  services                                                                   
were  also provided  outside  of the  Medicaid  program.   He                                                                   
pointed  out   that  the   public  health  program   provided                                                                   
assistance and  advice for pregnant  women separate  from the                                                                   
Medicaid program and this bill.                                                                                                 
Representative  Croft  asked  if  investment  in  a  prenatal                                                                   
program had produced fiscal savings.                                                                                            
Mr.  BOB LABBE,  DEPUTY DIRECTOR,  DEPARTMENT  OF HEALTH  AND                                                                   
SOCIAL SERVICES  noted that a  study had not  been undertaken                                                                   
to measure  those effects.   He  recalled a similar  national                                                                   
Commissioner Gilbertson  also pointed out that  not all costs                                                                   
associated  with Medicaid  coverage for  this class  were for                                                                   
prenatal  care.    He  noted that  standard medical  services                                                                   
were also provided.                                                                                                             
Representative  Stoltze commented on  the cash dollar  limits                                                                   
of eligibility.                                                                                                                 
Representative Hawker  asked if Alaska's limits  were already                                                                   
higher than the standard federal poverty level.                                                                                 
Mr. Labbe responded  that Alaska's levels were  adjusted from                                                                   
100 percent to 125 percent compared to the lower 48.                                                                            
Representative Hawker observed  that our level of 200 percent                                                                   
was actually  based  on a level  25 percent  higher than  the                                                                   
rest of  the country,  making it 250  percent of  the federal                                                                   
base level.   He  asked how Alaska's  adjustments to  poverty                                                                   
levels compared with other states.                                                                                              
Commissioner  Gilbertson stated  that Alaska  was in  the mid                                                                   
range  of  comparison.   He  noted  that  Alaska was  at  the                                                                   
highest standard  possible (200 percent), in  order to access                                                                   
the  enhanced  federal  medical   assistance  percentage  for                                                                   
Denali Kid Care.   He noted that Alaska received  an enhanced                                                                   
federal  medical  assistance  percentage  with a  roughly  70                                                                   
percent  match.     He  summarized  that  Alaska   was  fully                                                                   
implemented to the highest level possible.                                                                                      
Co-Chair Harris  referred to the  fiscal note and  observed a                                                                   
general  fund  match  savings  of  $259,300,  compared  to  a                                                                   
budgetary decrement  of $223,000.   He asked why  the numbers                                                                   
were not consistent.                                                                                                            
Representative  Hawker   (Health  and  Social   Services  Sub                                                                   
Committee  Chairman) clarified  that  the number  in the  sub                                                                   
committee  recommendation  was  a preliminary  estimate,  and                                                                   
that  the number  in the  fiscal  note was  revised and  more                                                                   
Commissioner   Gilbertson  noted  that   a  portion   of  the                                                                   
additional  savings was  due to  the fact that  the bill  was                                                                   
drafted one month  before a new standard would  be adopted on                                                                   
April 1.                                                                                                                        
Representative   Joule  referred   to   the  DHSS   budgetary                                                                   
discussions,  and asked  if  other decreases  had  eliminated                                                                   
services that would  provide a safety net for  those impacted                                                                   
by the bill.                                                                                                                    
Commissioner Gilbertson  noted that he  was not aware  of the                                                                   
elimination  of  any related  programs.   He  indicated  that                                                                   
budgetary  reductions represented  cost contained within  the                                                                   
Medicaid  program.    He pointed  out  that  refinancing  $17                                                                   
million  in general  funds previously  in  grant dollars  had                                                                   
resulted in savings to grant programs.                                                                                          
Representative  Joule  speculated  that  some  of  the  grant                                                                   
dollars might have provided services to pregnant women.                                                                         
Commissioner Gilbertson maintained  that the grant reductions                                                                   
were taken  in substance abuse  and mental health  grants and                                                                   
would not directly affect this population.                                                                                      
Representative  Joule followed  up by  noting the absence  of                                                                   
departmental  budget  impact statements  during  this  year's                                                                   
budget process.  He expressed  that this made it difficult to                                                                   
track which services and populations were impacted.                                                                             
Representative  Croft  referred to  the  second  page of  the                                                                   
fiscal  note that  listed  savings.   He  noted an  estimated                                                                   
savings in  FY 09 of $2.155  million for pregnant  women, and                                                                   
estimated that  this figure would  equal roughly  $8 thousand                                                                   
per person.   He speculated that pregnant women  and children                                                                   
represented a more cost effective group in the program.                                                                         
Commissioner  Gilbertson noted  the exponential growth  under                                                                   
the special  income standard  and stated  that 71 percent  of                                                                   
the growth  associated with  the Medicaid program  nationwide                                                                   
was  attributed  to care  provided  to seniors  and  disabled                                                                   
individuals.    He noted  that  currently  seniors  comprised                                                                   
roughly  50  percent  of  Alaska's  Medicaid  costs,  growing                                                                   
toward  the  national  percentage.   He  conceded  that  care                                                                   
provided to  pregnant women and  children was  less expensive                                                                   
than long term, facility based care.                                                                                            
Representative  Croft  asked  if  the bill  could  allow  the                                                                   
pregnant women and children category  to continue to grow and                                                                   
to  cap  the  other  categories.     Commissioner  Gilbertson                                                                   
conceded that this was possible.                                                                                                
Representative Croft speculated  that since the federal match                                                                   
rate  for  pregnant  women was  58.39  percent,  the  state's                                                                   
average  cost per  pregnant woman  was $2,500  of the  $8,000                                                                   
total cost.                                                                                                                     
Commissioner  Gilbertson  noted   that  federal  match  rates                                                                   
changed  every year,  and  had decreased  over  the past  few                                                                   
years.   He  concurred  that Representative  Croft's  figures                                                                   
would be correct if the federal match rate did not change.                                                                      
Representative  Croft calculated that  if the pregnant  women                                                                   
category were omitted  from the bill, the program  would cost                                                                   
roughly  $800 thousand  of general  funds  in FY  09, with  a                                                                   
savings  of $3  million.   He maintained  that this  category                                                                   
provided  the  most benefit  for  the least  investment,  and                                                                   
speculated that  $800 thousand could  be spent on  caring for                                                                   
even one child with birth defects.                                                                                              
CHIP  WAGONER,  ALASKA  CATHOLIC   CONFERENCE,  testified  in                                                                   
opposition  to the  bill.   He  explained  that the  Catholic                                                                   
Conference was comprised of the  three Roman Catholic bishops                                                                   
of Alaska and used to speak on public policy.                                                                                   
Mr.  Wagoner  discussed the  tradition  of  his church.    He                                                                   
pointed out  the catholic  principal of "preferential  option                                                                   
for the  poor and  vulnerable".   He quoted  from a  brochure                                                                   
prepared by  the Conference, "A  basic moral test  of society                                                                   
is  how  the  most  vulnerable  members  are  faring.    Both                                                                   
Catholic teaching  and tradition call us to put  the needs of                                                                   
the  poor and  vulnerable  first, and  to  give our  greatest                                                                   
response to those with the greatest need."                                                                                      
Mr. Wagoner  maintained that this  theme was one of  the most                                                                   
quoted  ideas  in   his  tradition.    He  pointed   out  the                                                                   
responsibilities   of   elected   office,  and   asked   that                                                                   
legislators   carry  forward   these  responsibilities   with                                                                   
consideration  for   the  poor.    He  asked   that  this  be                                                                   
considered with  regard to the current bill,  especially with                                                                   
regard to Denali Kid Care.                                                                                                      
Mr.  Wagoner commended  the Governor  and  the Department  of                                                                   
Health  and  Social  Services  for their  difficult  work  in                                                                   
providing  services to  the poor  and vulnerable,  especially                                                                   
since $67  million in  general funds was  needed to  meet the                                                                   
increased caseload.                                                                                                             
Mr. Wagoner  recalled that  when the  State began the  Denali                                                                   
Kid Care program in 1997, 201,713  children were in the state                                                                   
of Alaska (33 percent of the population).   He noted that the                                                                   
Department hired the Employee  Benefits Research Institute to                                                                   
estimate  the  number of  uninsured  children  that would  be                                                                   
served by  the program.   The  Institute estimated  that nine                                                                   
percent, or 18,154 children, would  be served by the program.                                                                   
He noted that  in 2002, according to the Department  of Labor                                                                   
and  Workforce  Development  comprised   33  percent  of  the                                                                   
population.   He  maintained that,  according  to the  study,                                                                   
there  should be  19,033 children  in  Denali Kid  Care.   He                                                                   
pointed  out  that  currently  49,854 children  were  in  the                                                                   
program, more than double the projection.                                                                                       
Mr. Wagoner suggested  that the legislature could  respond in                                                                   
one of three ways:  1) to recognize the value  of the program                                                                   
and pay  for caseload  increases,  2) to cap  the program  in                                                                   
some manner, or  3) to cut the program back  from 200 percent                                                                   
of the  federal poverty  level to  the Alaskan poverty  level                                                                   
minimum  of 150  percent.   He  expressed his  organization's                                                                   
support of the first option.   He pointed out that before the                                                                   
program, Alaska ranked  41  in the nation in  terms of health                                                                   
care for  children.   He also  noted that  the program  would                                                                   
strengthen  the  State's  future  request  for  an  increased                                                                   
federal matching  assistance percentage.   Finally,  he noted                                                                   
that the program was preventative,  and highlighted that over                                                                   
40  percent  of  the  children  in the  150  to  200  percent                                                                   
category are  six years of  age or less, receiving  primarily                                                                   
preventative care.                                                                                                              
Mr. Wagoner exemplified that a  family of four in the current                                                                   
program  could have  an income  of  $45,264 to  qualify.   He                                                                   
noted that  his own family of  four paid $9,200  annually for                                                                   
health insurance.  He observed  that if this amount were paid                                                                   
under this limitation, the family  in question would spend 20                                                                   
percent of its income for health insurance.                                                                                     
Mr. Wagoner suggested that other  cuts might be possible.  He                                                                   
also emphasized  the importance  of tracking  the effects  of                                                                   
the  cap  on families  over  time.    He suggested  that  the                                                                   
Committee  consider  three  options:    1) to  use  the  2003                                                                   
guidelines, vs.  the 2002 guidelines,  and 2) to  ensure that                                                                   
only those  originally in the  program, the truly  uninsured,                                                                   
were still on the  program, and 3) to add a  sunset clause to                                                                   
force the legislature to review  the effects on families.  He                                                                   
urged the Committee  to add a sunset clause,  cautioning that                                                                   
without  it, the  poor would  then  lose their  voice in  the                                                                   
Representative  Croft   asked  whether  women   might  choose                                                                   
abortion  if they were  dropped from  the program's  prenatal                                                                   
care, as well as having their  children become ineligible for                                                                   
health insurance.   He  asked if  this was  a concern  of the                                                                   
Mr. Wagoner acknowledged  that the Conference  held a concern                                                                   
over  the  issue of  abortion  and  agreed  that this  was  a                                                                   
possible outcome of the legislative cuts.                                                                                       
Co-Chair  Harris  expressed  his concern  that  requests  for                                                                   
governmental assistance seemed  to be increasing, despite the                                                                   
desire of  religious organizations  to maintain a  separation                                                                   
of  church  and  state.    He  maintained  that  reliance  on                                                                   
government  assistance  resulted  in less  responsibility  by                                                                   
parishes and individuals.                                                                                                       
Mr.  Wagoner  took exception  to  the  idea that  the  public                                                                   
contributed  less if  the government  contributed  more.   He                                                                   
pointed out  that the  Catholic Church  was the largest  non-                                                                   
profit and church  provider of health and social  services in                                                                   
Alaska.  He  noted that the preferential option  for poor and                                                                   
vulnerable  was a common  theme of  messages to  individuals.                                                                   
He  pointed  out  that  he  was  a  founding  member  of  the                                                                   
community food bank.   He also stated that  the Church viewed                                                                   
the nation's  health and  social Services  programs  as being                                                                   
supported by  four factors:   individuals, private  entities,                                                                   
churches,  and government.   He stated  that the churches  in                                                                   
Alaska could not provide the nearly  $2 billion of health and                                                                   
social services provided  by the state.  He  pointed out that                                                                   
the  church only  comprised  ten to  fifteen  percent of  the                                                                   
State population.                                                                                                               
Co-Chair  Harris  followed  up  by  asking  if  the  churches                                                                   
predicted  less private  contribution  if  there was  greater                                                                   
governmental contribution.                                                                                                      
Mr.  Wagoner  stated  that he  would  research  the  question                                                                   
Representative Croft MOVED to ADOPT Amendment #1:                                                                               
     Insert a new section:                                                                                                      
          Sec. 5.  This Act is repealed two years after the                                                                     
     effective date of this Act.                                                                                                
Co-Chair Williams OBJECTED.                                                                                                     
Representative   Croft   maintained    that   the   amendment                                                                   
represented  the  simplest  solution to  concerns  about  the                                                                   
bill, adding a  two-year repeal that forced  reexamination of                                                                   
the issue.                                                                                                                      
TAPE HFC 03 - 42, Side B                                                                                                      
Representative  Croft speculated  that if  the situation  was                                                                   
allowed  to  continue,  it could  lead  to  unacceptably  low                                                                   
standards  of eligibility.   He  maintained  that the  repeal                                                                   
would allow plenty of time for examination of the program.                                                                      
Representative  Stoltze once again  commented on  the poverty                                                                   
levels.   He  noted  that the  eligible  income  level for  a                                                                   
family of five was nearly $53 thousand per year.                                                                                
Co-Chair Harris  maintained that  if public outcry  occurred,                                                                   
the legislature would respond.                                                                                                  
Commissioner  Gilbertson   stated  that  the   Administration                                                                   
supported the bill as written.   He noted that in two years a                                                                   
small  burden might  be  perceived.   He  maintained that  in                                                                   
future  years   it  represented   only  a  modest   level  of                                                                   
eligibility  reduction.   He observed  that  the program  had                                                                   
reached a capacity  where growing eligibility  threatened the                                                                   
quality  of the  program as  a whole.   He  proposed that  in                                                                   
order to adequately  pay providers and facilities,  the State                                                                   
must examine general eligibility.                                                                                               
Representative Croft  observed that the majority  of previous                                                                   
conversation  had pertained to  the bill  itself and  not the                                                                   
amendment.  He  pointed out that the amendment  simply stated                                                                   
a mandate  for reexamining  the impact  of eligibility  caps.                                                                   
He maintained  that if  the levels were  frozen for  the long                                                                   
term, the  effects might prove  very onerous.   He emphasized                                                                   
that   nothing   in   the   legislative    process   happened                                                                   
automatically,  and proposed  that  such  a sunset  provision                                                                   
forced important reconsideration.                                                                                               
A roll call vote  was taken on the motion to  adopt Amendment                                                                   
IN FAVOR:      Croft, Joule, and Moses                                                                                          
OPPOSED:       Stoltze, Whitaker, Chenault, Foster, Hawker,                                                                     
               Meyer, Williams, Harris                                                                                          
The MOTION FAILED (3-8).                                                                                                        
Representative  Foster   MOVED  to  report  HB   172  out  of                                                                   
Committee with the accompanying fiscal note                                                                                     
A roll call vote was taken on the motion.                                                                                       
IN FAVOR: Whitaker, Chenault, Foster, Hawker, Meyer, Moses,                                                                     
Stoltze, Harris, Williams                                                                                                       
OPPOSED: Croft, Joule                                                                                                           
The MOTION PASSED (9-2).                                                                                                        
CSHB 172 was REPORTED out of Committee with a "do pass"                                                                         
recommendation and a previously published (#1) fiscal impact                                                                    
note from the Department of Health and Social Services.                                                                         
The meeting was adjourned at 3:56 PM                                                                                            

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