Legislature(1993 - 1994)
03/24/1993 03:00 PM HES
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HOUSE HEALTH, EDUCATION AND SOCIAL SERVICES STANDING COMMITTEE March 24, 1993 3:00 p.m. MEMBERS PRESENT Rep. Cynthia Toohey, Co-Chair Rep. Con Bunde, Co-Chair Rep. Gary Davis, Vice Chair Rep. Al Vezey Rep. Harley Olberg Rep. Bettye Davis Rep. Irene Nicholia Rep. Tom Brice, arrived later MEMBERS ABSENT Rep. Pete Kott COMMITTEE CALENDAR *HB 217: "An Act relating to Native corporation dividends and other distributions due to minors in state custody." PASSED WITH INDIVIDUAL RECOMMENDATIONS *HB 12: "An Act relating to health insurance for small employers; and providing for an effective date." PASSED WITH INDIVIDUAL RECOMMENDATIONS *HB 105: "An Act providing for incarceration for nonviolent, youthful first offenders in boot camps operated by the Department of Corrections; creating the Boot Camp Advisory Board in the Department of Corrections; amending Alaska Rule of Criminal Procedure 35; and providing for an effective date." HEARD AND HELD *HB 195: "An Act authorizing youth courts by which to provide for peer adjudication of minors who have allegedly committed violations of state or municipal laws, renaming the community legal assistance grant fund and amending the purposes for which grants may be made from that fund in order to provide financial assistance for organizations and initial operation of youth courts, and relating to young adult advisory panels in the superior court." NOT HEARD - POSTPONED TO TIME CERTAIN *HB 22: "An Act establishing the Alaska Children's Health Corporation and the Alaska Healthy Start Program; relating to insurance; and providing for an effective date." NOT HEARD - POSTPONED TO TIME CERTAIN (* First public hearing.) WITNESS REGISTER RENA BUKOVICH Aide to Rep. Eileen MacLean Alaska State Legislature Room 507 Capitol Building Juneau, Alaska 99801-1182 Phone: (907) 465-672 Position Statement: Testified in favor of HB 217 RANDALL HINES Division of Family and Youth Services Department of Health and Social Services P.O. Box 110630 Juneau, Alaska 99811-0630 Phone: (907) 465-3187 Position Statement: Testified in favor of HB 217 LARRY CARROLL Senior Securities Examiner Division of Banking, Securities and Corporations Department of Commerce and Economic Development P.O. Box 110808 Juneau, Alaska 99811-0808 Phone: (907) 465-2521 Position Statement: Answered questions on HB 217 ELLA BENNETT Shareholder Records Manager Sealaska Corp. 1 Sealaska Plaza, Suite 400 Juneau, Alaska 99801 Phone: (907) 586-1512 Position Statement: Testified in favor of HB 217 JAN MEISELS, Legislative Director Health Insurance Association of America 22144 Clarendon St., Suite 220 Woodland Hills, California 91367-6324 Phone: (818) 704-9274 Position Statement: Testified in favor of HB 12 KEN SYKES, Insurance Analyst Division of Insurance Department of Commerce and Economic Development P.O. Box 110805 Juneau, Alaska 99811-0805 Phone: (907) 465-2564 Position Statement: Answered questions on HB 12 JAY FRANK, Lobbyist State Farm, Allstate insurance companies 431 N. Franklin St. Juneau, Alaska 99801 Phone: (907) 586-5777 Position Statement: Testified in favor of HB 12 RESA JERREL, State Director 9159 Skywood Lane Juneau, Alaska 99801 Phone: (907) 789-4278 Position Statement: Testified in favor of HB 12 REED STOOPS Lobbyist, Aetna Insurance Co. 240 Main St., Suite 600 Juneau, Alaska 99801 Phone: (907) 463-3223 Position Statement: Testified in favor of HB 12 REP. ED WILLIS Alaska State Legislature Room 614 Courthouse Juneau, Alaska 99811 Phone: (907) 465-2199 Position Statement: Prime sponsor of HB 105 LLOYD RUPP, Commissioner Department of Corrections P.O. Box 112000 Juneau, Alaska 99811-2000 (907) 465-3376 Position Statement: Testified in favor of HB 105 PREVIOUS ACTION BILL: HB 217 SHORT TITLE: NATIVE CORPORATION DIVIDENDS TO MINORS BILL VERSION: SPONSOR(S): REPRESENTATIVE(S) MACLEAN TITLE: "An Act relating to Native corporation dividends and other distribution due to minors in state custody." JRN-DATE JRN-PG ACTION 03/10/93 592 (H) READ THE FIRST TIME/REFERRAL(S) 03/10/93 592 (H) HES, JUDICIARY 03/24/93 (H) HES AT 03:00 PM CAPITOL 106 BILL: HB 12 SHORT TITLE: GROUP HEALTH INS. FOR SMALL EMPLOYERS BILL VERSION: SSHB 12 SPONSOR(S): REPRESENTATIVE(S) B.DAVIS,Ulmer,Nordlund, Brice,Mackie TITLE: "An Act relating to health insurance for small employers; and providing for an effective date." JRN-DATE JRN-PG ACTION 01/04/93 27 (H) PREFILE RELEASED 01/11/93 27 (H) READ THE FIRST TIME/REFERRAL(S) 01/11/93 27 (H) HES,L&C,JUDICIARY,FINANCE 01/27/93 167 (H) COSPONSOR(S): NORDLUND 02/10/93 312 (H) COSPONSOR(S): BRICE 02/18/93 380 (H) SPONSOR SUBSTITUTE INTRODUCED-REFERRALS 02/18/93 380 (H) HES,L&C,JUDICIARY,FINANCE 03/23/93 (H) HES AT 03:00 PM CAPITOL 106 03/23/93 (H) MINUTE(HES) 03/24/93 (H) HES AT 03:00 PM CAPITOL 106 03/26/93 779 (H) HES RPT 4DP 1DNP 2NR 03/26/93 779 (H) DP:G.DAVIS,B.DAVIS,NICHOLIA, BRICE 03/26/93 779 (H) DNP: VEZEY 03/26/93 779 (H) NR: BUNDE, TOOHEY 03/26/93 779 (H) -ZERO FISCAL NOTE (DCED) 3/26/93 03/31/93 (H) MINUTE(ECO) 04/06/93 (H) L&C AT 03:00 PM CAPITOL 17 04/07/93 1094 (H) COSPONSOR(S): MACKIE 04/08/93 1103 (H) L&C RPT CSSS(L&C) 2DP 3NR 04/08/93 1103 (H) DP: MACKIE, WILLIAMS 04/08/93 1103 (H) NR: PORTER, GREEN, HUDSON 04/08/93 1103 (H) -PREVIOUS ZERO FN (DCED) 3/26/93 04/08/93 1103 (H) REFERRED TO JUDICIARY BILL: HB 105 SHORT TITLE: BOOT CAMP FOR NONVIOLENT FIRST OFFENDERS BILL VERSION: SPONSOR(S): REPRESENTATIVE(S) WILLIS,Bunde,Sanders TITLE: "An Act providing for incarceration for nonviolent, youthful first offenders in boot camps operated by the Department of Corrections; creating the Boot Camp Advisory Board in the Department of Corrections; amending Alaska Rule of Criminal Procedure 35; and providing for an effective date." JRN-DATE JRN-PG ACTION 01/29/93 180 (H) READ THE FIRST TIME/REFERRAL(S) 01/29/93 180 (H) HES, JUDICIARY, FINANCE 03/24/93 (H) HES AT 03:00 PM CAPITOL 106 BILL: HB 195 SHORT TITLE: AUTHORIZING YOUTH COURTS BILL VERSION: SPONSOR(S): REPRESENTATIVE(S) SITTON,Ulmer,Willis,Foster, Brown,B.Davis,Olberg Porter TITLE: "An Act authorizing youth courts by which to provide for peer adjudication of minors who have allegedly committed violations of state or municipal laws, renaming the community legal assistance grant fund and amending the purposes for which grants may be made from that fund in order to provide financial assistance for organization and initial operation of youth courts, and relating to young adult advisory panels in the superior court." JRN-DATE JRN-PG ACTION 03/03/93 519 (H) READ THE FIRST TIME/REFERRAL(S) 03/03/93 519 (H) HES, JUDICIARY, FINANCE 03/12/93 628 (H) COSPONSOR(S): WILLIS, FOSTER, BROWN 03/12/93 628 (H) COSPONSOR(S): B.DAVIS, OLBERG 03/19/93 716 (H) COSPONSOR(S): PORTER 03/24/93 (H) HES AT 03:00 PM CAPITOL 106 BILL: HB 22 SHORT TITLE: ALASKA HEALTHY START PROGRAM BILL VERSION: SPONSOR(S): REPRESENTATIVE(S) NORDLUND,Brown,B.Davis,Ulmer,Sitton,Finkelstein Brice TITLE: "An Act establishing the Alaska Children's Health Corporation and the Alaska Healthy Start Program; relating to insurance; and providing for an effective date." JRN-DATE JRN-PG ACTION 01/04/93 30 (H) PREFILE RELEASED 01/11/93 30 (H) READ THE FIRST TIME/REFERRAL(S) 01/11/93 30 (H) HES, LABOR & COMMERCE, FINANCE 01/15/93 92 (H) COSPONSOR(S): SITTON 01/20/93 117 (H) COSPONSOR(S): FINKELSTEIN, BRICE 03/24/93 (H) HES AT 03:00 PM CAPITOL 106 ACTION NARRATIVE TAPE 93-44, SIDE A Number 000 CHAIR TOOHEY called the meeting to order at 3:07 p.m. and noted members present. She announced the calendar, and brought HB 217 to the table. HB 217: NATIVE CORPORATION DIVIDENDS TO MINORS Number 030 RENA BUKOVICH, LEGISLATIVE AIDE to REP. EILEEN MACLEAN, testified on HB 217 on behalf of Rep. MacLean, PRIME SPONSOR of the bill. She read the sponsor statement, which is on file in the committee room. In summary, the statement said the bill would require Native corporations to hold in an interest-bearing account dividends of minor shareholders who were in state custody. The bill, requested by the Department of Health and Social Services, is an effort to ensure that dividends were spent only for the benefit of the child. MS. BUKOVICH said a letter from the Cook Inlet Regional Corp. (CIRI) raised two issues that could be addressed by HB 217. First, CIRI requested an amendment to the bill that would allow the state to extend the same benefits to those Native minors living outside Alaska. She said issues of jurisdiction might be difficult to address. The second would be an amendment relating to distribution of funds when state custody terminates while the child is still a minor and no new custodian has been appointed. She asked that the two amendments be referred to the House Judiciary Committee, the next committee of referral. Number 090 REP. BUNDE asked whether the zero fiscal note was appropriate, as there were likely to be some expenses in administrating the accounts. Number 100 MS. BUKOVICH answered no, there would be no cost, as the accounts would be set up and maintained by Native corporations. (Rep. Brice arrived at 3:12 p.m.) Number 106 RANDALL HINES, LEGISLATIVE CONTACT for the DIVISION OF FAMILY AND YOUTH SERVICES (DFYS) in the DEPARTMENT OF HEALTH AND SOCIAL SERVICES (DHSS), testified in Juneau in favor of HB 217. He said the department strongly supported the bill, which would protect dividends of after-born children entering or leaving state custody. The bill supports the department's mission to act in the best interests of children while enabling self-determination by allowing the corporations to act as childrens' fiduciaries. Number 117 REP. BUNDE asked how many children would be affected by HB 217. MR. HINES said he did not know how many children were eligible for dividends from Native corporations. Number 135 REP. VEZEY asked if any Native corporations had elected to issue new stock since 1971, the cutoff date for eligibility to receive stock in Native corporations under the Alaska Native Claims Settlement Act (ANCSA). MR. HINES said some corporations had issued new stock, but Congress had extended the inalienability issue, such that the question was meaningless around that issue. Number 151 REP. VEZEY said it appeared that the only class of people covered by HB 217 would be those who were heir to Native corporation stock. He asked if there was another class of people who would be eligible. MR. HINES referred the question to Mr. Larry Carroll of the Department of Commerce and Economic Development. Number 159 REP. VEZEY said it appeared the statute would cover only a very few people. He asked why the state would want to make special note of a minor's rights to Native corporation dividends and not any stock dividends. MR. HINES said the state already does set up special trust accounts for the permanent funds of children in state custody, regardless of their race. He said there were no trust accounts set up for other stock dividends. Number 176 REP. VEZEY asked the number of children for whom the state was acting as fiduciary or custodial officer. MR. HINES answered that it would be the number of children in custody under court order at the time of issue of permanent fund dividend. He said the state set up trust accounts for such children to hold their dividends, and the trusts could not be accessed except through a third-party petition to the court. He said he did not know the number, but could provide it to the committee. Number 196 LARRY CARROLL, SENIOR SECURITIES EXAMINER, DIVISION OF BANKING, SECURITIES AND CORPORATIONS, DEPARTMENT OF COMMERCE AND ECONOMIC DEVELOPMENT, testified in Juneau on HB 217. He said about four Native corporations had decided to issue corporation stock to children born after 1971 who had previously been ineligible to receive such stock. He said that while each corporation could decide to do so, the total number of children affected was not likely to be large. He said the department's involvement in the issue was limited and it dealt with regulations governing proxies and voting. Number 239 ELLA BENNETT, SHAREHOLDER RECORDS MANAGER, SEALASKA CORP., testified in Juneau in support of HB 217. She said some children have shares in Sealaska which they inherited or received as gifts. She said Sealaska may hold a proxy election in a year or so to determine whether it will allow new shareholders. She said there were from 20 to 30 minor shareholders in 1991 when the corporation had the AK-Ahtna (???) that would be affected by HB 217, but she did not know the current number. Number 261 REP. VEZEY spoke against the bill, saying it was concerned with such a small number of people that it risked violating the constitutional prohibition against special-interest legislation. He said if the state was the custodian for minors, it should receive any income due those minors, including permanent fund dividends, to offset the cost of providing custodial care. REP. NICHOLIA voiced support for HB 217, saying it would benefit four Native regional corporations and any others that might adopt after-born provisions. While only a few people might benefit, she said, the exact number was unknown, as four different Native corporations were involved. Number 285 REP. B. DAVIS said the House Judiciary Committee might deal with questions raised about the number of children affected by the bill. She said protecting the childrens' money was a good idea. Number 295 REP. B. DAVIS moved for passage of HB 217 from the HESS Committee with individual recommendations. REP. VEZEY objected. Number 300 CHAIR TOOHEY called for a roll call vote. Those voting yes were Reps. G. Davis, Olberg, B. Davis, Nicholia, Brice, Toohey and Bunde. Rep. Vezey voted no. The motion passed 7-1. She brought HB 12 to the table. HB 12: GROUP INSURANCE FOR SMALL EMPLOYERS Number 304 REP. BETTYE DAVIS spoke as PRIME SPONSOR of HB 12. She said it was a great opportunity to improve Alaskans' access to health care at no cost to the state. She said the bill was passed by the state Senate in 1992, but died in the House Rules Committee. Number 310 REP. B. DAVIS introduced JAN MEISELS, legislative director of the HEALTH INSURANCE ASSOCIATION OF AMERICA (HIAA), an association which supported the bill. (Rep. Olberg departed at 3:27 p.m.) Number 330 MS. MEISELS testified in support of HB 12. She presented an overview of the HIAA proposal to adopt reform measures for small markets. She said HB 12 was based on a National Association of Insurance Commissioners' (NAIC) prospective reinsurance model for small employers. MS. MEISELS went through the bill, outlining its key points. The information is contained in a document, "Statement of HIAA on Small Group Market Reform House Bill 12," which is on file in the committee room. In brief, she said 90 percent of Alaskans work for companies with from two to 25 employees. She said the bill was aimed primarily at preventing people from being denied access to health insurance, but it did address some cost issues. MS. MEISELS said the reforms included guaranteeing access to health insurance for small groups regardless of their risks; that there would be no cherry picking (the practice of insuring healthy people, and rejecting coverage to others); guaranteed renewal of health insurance policies; and limits on the range of charges for people with different risk levels to 35 percent above and below the average rate, but no limits on the rates themselves. MS. MEISELS said such reforms would require establishment of a private, not-for-profit reinsurance pool to which all insurance companies that sold policies to small employers would have to contribute up to 5 percent of net premiums from small employers. Such insurance companies would have to pay a $5,000 deductible before they could draw on the pool, she said. The companies would offer a basic standard set of benefits, the level of which would be made by a nine member reinsurance board, on the recommendation of a seven member board comprised of Alaskans. She said HIAA wanted the director of insurance involved to ensure equity and fairness. MS. MEISELS said HB 12 requires the reinsurance board to report every three years to the legislature and insurance director on the legislation's effectiveness. The bill would exempt the reinsurance association, which is a private nonprofit, from provisions of the Administrative Procedures Act and from taxes. It would also limit the liability of individual association members, except in the case of egregious and willing acts. She said the bill would cover group plans, but not individual policies. Number 488 CHAIR TOOHEY invited questions from the committee, but then decided to delay questions until the end of Ms. Meisels' presentation. Number 500 MS. MEISELS provided further, extensive testimony on the provisions of the bill, an analysis of which is contained in the report on file in the committee room. She offered to testify again later by teleconference if the committee so desired. Number 560 REP. BUNDE asked Ms. Meisels why the health insurance industry was proposing voluntary reforms of small employer insurance in Alaska. MS. MEISELS said the HIAA had been pushing for national reforms for four years, and her territory was California, Nevada, Utah and Alaska, and so far only Alaska had not passed such reforms. Number 573 REP. BUNDE asked who funded such an effort to enact such legislation all over the company. MS. MEISELS said 270 member insurance companies paid dues to HIAA, a national lobbying group. REP. BUNDE asked whether the HIAA and its members believed that the reform the group advocated was good business for insurance companies. Number 578 MS. MEISELS said they believed that the reforms were good public policy and they were trying to reform bad private insurance and public policy practices. She said the HIAA board decided to attempt reform of small employer insurance to address some of the problems relating to health insurance access. The insurance industry wants to remain in business, she said, and believes some reform will assist them to that end. Number 590 REP. BUNDE noted that insurance companies have to make a profit, and the restrictions included in HB 12 might make it more difficult for them to remain in business. He said he was suspicious of the insurance industry's motives in proposing reform that might limit its ability to make a profit. He said if companies could not raise individual rates, they would have to raise rates elsewhere. He said guaranteeing insurance for all would require high rates. TAPE 93-44, SIDE B Number 000 MS. MEISELS said that Rep. Bunde was not the first person to question the insurance industry's motives. She said the bill included "premium pricing limitations" but no prohibitions to annual rate increases upon annual renewal to reflect increases in health care costs. Because the insurance companies would be accepting higher-risk clients that had previously been rejected, there was concern that costs would go up. But she said the good risks would outweigh the bad risks, and cited an American Academy of Actuaries study claiming price increases after such reforms would raise prices by no more than 5 percent. She referred to a report which showed that insurers in Connecticut had insured more groups under a similar reform effort and had experienced price increases of from 4 percent to 10 percent. She said an HIAA actuary estimated that a set of average basic insurance plan for five 40-year-old people, based on Florida rates, might cost $84 per month per employee or $145 per month per employee for a standard plan. She said Alaska rates would depend on many variables, including benefit package levels. Number 074 REP. BUNDE asked whether the restrictions on small employers and higher prices would make it less likely for small employers to provide health insurance to their employees. MS. MEISELS referred to a September 1992 marketplace report, also on file in the committee room, from the Connecticut small employer health reinsurance pool. She said reforms in that state had seen the sale of an additional 4,687 insurance plans, covering from 19,000 to 25,000 previously uninsured employees. The report said private health insurance would do more to provide coverage to the uninsured than would public efforts. Number 108 CHAIR TOOHEY asked why a small group was defined as more than two employees. MS. MEISELS answered that a single person was not a group, and small groups were from two to 25 employees. She said, "Some states that have gone to one person do not have an uninsurable risk pool, that's why they did it at one. This state enacted legislation last year, SB 74 by Sen. Kertulla, which is an uninsurable risk pool for those individuals." Number 123 CHAIR TOOHEY asked how many small insurance companies were involved in HIAA. MS. MEISELS made the distinction that the reform bill concerned itself with insurers of small employers, not small insurance companies. She said about 15 insurance companies, including Aetna, Blue Cross, and Great-West sold policies to small employers in Alaska. Number 147 CHAIR TOOHEY asked if Aetna would be part of any insurance group. Number 150 MS. MEISELS answered that the bill required all companies selling insurance to small employers in Alaska to join the group. She said that Reed Stoops, a Juneau lobbyist for Aetna, said the company supported HB 12 and would join the group. Number 155 REP. G. DAVIS asked whether Alaska was unique in the number of its small businesses. Number 157 MS. MEISELS answered no, Alaska was similar to Wyoming in that both were largely rural states with few people and many small businesses. She said the insurance reform legislation passed in Wyoming, almost identical to the plan outlined in HB 12, was working and made provisions for small entrepreneurial operations. Number 184 REP. B. DAVIS invited MR. KEN SYKES to testify. Number 195 KEN SYKES, an INSURANCE ANALYST for the DIVISION OF INSURANCE in the DEPARTMENT OF COMMERCE AND ECONOMIC DEVELOPMENT, made himself available to answer questions from the committee concerning HB 12. REP. BUNDE said he did not begrudge insurance companies a fair profit, but said HB 12 places large limits on the companies. He asked if the bill would force some insurance companies out of the Alaska market, or discourage some Alaska small businesses from providing insurance for their workers. MR. SYKES answered that he did not believe HB 12 would drive insurers out of the Alaska buying market. He said the basis of the plan was risk sharing, which Alaska has not had. He said insurers would be able to set prices based on a much larger group. The more people involved in insurance, the lower the price per person. He said good risks would balance out bad risks. Number 217 REP. BUNDE asked how the insurance division would react to the criticism of an average Alaskan who might not care how the insurance industry operated Outside. MR. SYKES answered that the state could be proactive, not reactive, to insurance problems. He said the bill would bring rises in group premiums and taxes because it would be better for small employers to participate in groups. Number 236 REP. BUNDE asked the position of the Department of Commerce and Economic Development on HB 12. MR. SYKES answered that the department's position was neutral. Number 242 MS. MEISELS commented that the department supported SB 242, a similar bill. REP. B. DAVIS noted that the department was neutral and did not oppose HB 12. She said the Alaska State Chamber of Commerce supported the bill as favorable to small businesses of from two to 25 employees. She said the bill would allow uninsured employees of small businesses to get health insurance and would cost the state nothing more than the price of oversight. While HB 12 is not the answer to all health care problems, she said, it was an answer. Number 272 CHAIR TOOHEY asked whether the bill would require small businesses to offer health insurance. MS. MEISELS answered no. CHAIR TOOHEY asked whether an employee insured at one job could retain his health insurance if he switched jobs to work for a company that did not offer such insurance. MS. MEISELS said the answer would be yes, if Alaska state law addressed conversion of insurance policies, or if the first employer was covered by COBRA (Comprehensive Omnibus Budget Reform Act), a federal insurance conversion requirement for companies employing 20 or more people. Number 290 REP. VEZEY asked what the bill would do that was new. MS. MEISELS answered that HB 12 would enable small employers to obtain insurance, even though they had previously been denied insurance because they worked in a high-risk field or because their employees were high risks. Number 300 REP. VEZEY said he knew of no one who had been denied insurance coverage, though he knew that insurance companies demanded high premiums for some high-risk employees or companies. He said he did not see what the bill would do to help small business, except even out the pools and rates. MS. MEISELS disagreed, saying that some small employers had been denied insurance coverage. She said HIAA was not trying to establish community rate pools, as outlined in a column by Jane Bryant Quinn in the Washington Post, dated March 14, 1993 (on file in the committee room). Number 327 REP. VEZEY said it was a question of rates, not of availability. He said he had heard of a $50,000 minimum premium payment. He said many people were denied insurance at more typical rates. Number 340 MS. MEISELS insisted that some people had been denied coverage, such as those with diabetes or AIDS. She said the issue was accessibility, not affordability. She said the bill took some steps to address health care costs, including waiving mandated benefits for small group policies and allowing insurers to establish health maintenance organizations (HMOs) or preferred provider organizations (PPOs), which could help control medical care costs. Number 374 REP. VEZEY objected that all employees are obligated to provide workers workmans' compensation insurance. He said a miner's health care liability was the same as anyone else's off the job. Number 380 MR. SYKES excused himself, saying he had another meeting to attend. Before departing, he differentiated between workman's compensation, which was aimed at on the job injuries, and health care. Number 386 REP. VEZEY said that the two issues were related from an employers viewpoint, because they provided 24-hour a day coverage when combined. He said he should have the right, as a small business owner, to avoid high risks. Number 402 MS. MEISELS asked what kind of business Rep. Vezey owned. REP. VEZEY answered that he was in construction and related fields. Number 402 CHAIR TOOHEY interrupted, saying the committee was running out of time. Number 414 JAY FRANK, a LOBBYIST representing STATE FARM and ALLSTATE INSURANCE COMPANIES, testified in Juneau favor of HB 12. He said both companies are HIAA members, and both helped the NAIC write its model legislation upon which HB 12 was based. He said the bill does not answer all insurance problems, but does address the question of access to insurance for small employers. Number 424 RESA JERREL, STATE DIRECTOR of the NATIONAL FEDERATION OF INDEPENDENT BUSINESSES, testified in Juneau in support of HB 12. She said she knew of a case in which one proprietor of a drugstore in Juneau, who had cancer, was unable to obtain health insurance, a situation which forced the owners to sell the store and seek a job with health benefits. She said the bill would help the federation's member small businesses obtain health insurance for their employees. She said the waiver from mandated state insurance provisions would help keep prices lower. Number 443 REP. BUNDE said he was glad to hear from the business community. Number 448 REP. G. DAVIS asked Ms. Meisels if HMOs could buy reinsurance under HB 12. Number 450 MS. MEISELS responded, "For the purposes of this act, an HMO was going to be defined (unintelligible) an insurer, as is a hospital or medical service plan." She said the bill calls on the reinsurance board to develop an equation to equate the HMO rates with the $5,000 deductible to accommodate HMOs. She said the bill also provides for federally-qualified HMOs, required to provide a certain level of benefits. That level of benefits would be considered the standard and basic plan for the HMOs, which covers the possibility that Alaska might get an HMO. REP. G. DAVIS asked if an HMO would have a fee-for-service. MS. MEISELS answered no, HMOs pay by capitation. A PPO, a cross between an HMO and a fee-for-service plan, might pay by capitation or by fee-for-service. Number 465 REP. BUNDE asked whether Aetna and Blue Cross were part of Ms. Meisels' organizations. MS. MEISELS answered that neither were. REP. BUNDE asked whether each state had a reinsuring agency. MS. MEISELS answered yes. REP. BUNDE said it sounded like another level of expensive bureaucracy. MS. MEISELS said the cost was borne entirely by the insurance companies, and it would not be a government agency. REP. BUNDE said the insurance companies would pass the cost along to consumers. Number 481 MS. MEISELS said the premium price limitations limited how much of the cost they could pass on to customers, which would be incentive for efficient operation. Number 484 REP. G. DAVIS asked if there would be a need for an actuarial survey in order to establish fees, and asked who would pay the cost. MS. MEISELS answered that the reinsurance board would pay the cost of any actuarial survey. But she said that the members of the board would probably rely on their own companies' internal actuarial services to set rates, in an attempt to save money. Number 497 REED STOOPS, a LOBBYIST for AETNA, testified in Juneau in support of HB 12, though his company did not belong to HIAA. He agreed with Rep. B. Davis' arguments. He said the bill would help people get insurance, without cost to the state. He said it would help reduce the number of Alaskans who lacked health insurance, and was similar to Sen. Kertulla's plan of 1992. He said it was a less controversial way to address some problems with insurance service in Alaska. REP. G. DAVIS asked why insurance companies did not develop reinsurance pools on their own. MR. STOOPS answered that he had encouraged Aetna to do so. He said Aetna dominates the market for large group insurance and, as a result, has lower administration costs. But, he said, Alaska was a small market in which Blue Cross led 14 other companies. He said the market was too small to prompt companies to form their own pools for the state. Number 538 CHAIR TOOHEY called for additional public testimony and, hearing none, declared public testimony on HB 12 closed and called for committee discussion of the bill. Number 540 REP. B. DAVIS said she had amendments she wanted to offer to HB 12. CHAIR TOOHEY called an at-ease, and called the meeting back to order a few minutes later. Number 550 REP. BUNDE moved for passage of HB 12 to the House Labor and Commerce Committee with individual recommendations. REP. VEZEY objected to the motion. CHAIR TOOHEY called an at-ease, and called the meeting back to order a few minutes later. She noted that Rep. B. Davis had agreed to hold her amendments until HB 12 reached the next committee. CHAIR TOOHEY called for a roll call vote on the motion to pass the bill with individual recommendations. Those voting yes were Reps. B. Davis, Nicholia, Brice, Toohey, Bunde and G. Davis. Rep. Vezey voted no. Chair Toohey declared that HB 12 passed with individual recommendations. CHAIR TOOHEY called HB 105 to the table. HB 105: BOOT CAMP FOR NONVIOLENT FIRST OFFENDERS Number 562 REP. ED WILLIS spoke as PRIME SPONSOR of HB 105, saying it would both help teach young offenders respect for the law and give them a second chance, where a jail term might do them more harm than good. He read a sponsor statement, which is on file in the committee room. He said the bill was aimed at nonviolent first offenders and at least 24 states now offer such programs, with various conditions and age limits. TAPE 93-45, SIDE A Number 000 REP. WILLIS said the program could help reduce overcrowding and recidivism. He said the bill would limit participation to those under 26 years of age and charged with their first felony; involve military-style discipline and physical training, counseling and training; would last for less than 150 days; would refer graduates to sentencing court for probation; would refer those who failed to complete the program to other correctional institutions; and would require the commissioner to report on the program's success or failure to the legislature. Number 052 (Chair Toohey noted that Lloyd Rupp, Commissioner of the Department of Corrections, had arrived.) REP. CON BUNDE, a CO-SPONSOR of HB 105, spoke in support of HB 105. He asked where the state would find boot camp instructors with the proper training and talents to perform the job well. Number 072 REP. BRICE jokingly asked if Rep. Bunde were volunteering for the job. REP. WILLIS deferred on the question to Commissioner Rupp. He added that some states send prospective boot camp drill instructors (DIs) to U.S. Marine Corps training centers. Number 092 REP. VEZEY asked whether the zero fiscal note was accurate. REP. WILLIS said he believed it was, but deferred to the commissioner as a better authority. Number 110 CHAIR TOOHEY asked rhetorically whether the costs of having youthful offenders in boot camps might not be offset by avoiding the costs of placing them in adult prisons. Number 120 COMMISSIONER LLOYD RUPP, DEPARTMENT OF CORRECTIONS, testified in Juneau in favor of HB 105. He said he was familiar with the concept of boot camps, but said that early boot camps erred by placing instructors in difficult situations without adequate training. He spoke in favor of good training for such instructors so they could impart the lessons of military discipline, including personal discipline, accountability and responsibility. He referred to decaying state-owned agricultural properties at Point MacKenzie, across Cook Inlet from Anchorage, and said the department anticipated starting July 1 to halt the deterioration by use of heavy equipment. He asked if the program could be expanded to cover first-time misdemeanants, as there were not enough first-time youthful felons to make the program work well. He asked for language in the bill that would have the boot camps stress personal accountability and responsibility, as well as a strong work ethic. He also said that, lacking a management information system, the Department of Corrections could not provide an annual report comparing the recidivism rates for boot camp inmates and other prisoners. Number 195 CHAIR TOOHEY expressed support for the concept of boot camps, but asked if it could be done at less cost than indicated on the fiscal note by transferring such prisoners out of Alaska for treatment. COMMISSIONER RUPP said his department viewed the daily cost of boot camp treatment as low, compared to the $118 per day cost for incarceration in a prison. He noted that the state's prisons were filling to 104 percent of capacity and it was important to do something to reduce prison occupancy. He said the department has contracted out community residential centers (CRCs). He said few states send prisoners out-of-state for shock incarceration or boot camps because of the special requirements and liabilities. He said he would like to start the program on a small scale, then build it up if successful. He said the daily cost of boot camps of about $36 would be less than the $50 daily cost for CRCs. He said the boot camp program would cost about $1.3 million in operating costs, most of which would go for personnel and substance abuse programs, which he said was an essential part of successful programs. Such substance abuse counseling would be contracted from Outside firms, he said. The state departments of Labor and Education would also help boot camp inmates learn to deal with the problem of alcoholism and the challenge of employment. He said providing sobriety, marketability and support to inmates would help the inmates out of the state corrections system. Number 257 REP. B. DAVIS asked a clarifying question as to where Point MacKenzie was located. COMMISSIONER RUPP said it was located across Cook Inlet from Anchorage. He described the large dairy farms and the barns and farm buildings which were in disrepair. Number 287 REP. BUNDE asked what "prison gratuities" were. COMMISSIONER RUPP answered that the gratuities referred to "gate money" given to prisoners upon their release. He also noted that a Department of Education year-long training program was available to provide youths with job skills, and the program might be applied to the boot camp program. Number 312 REP. VEZEY referred to the fiscal note and asked whether it assumed 12,500 participants in the boot camp program. He asked whether the inmates would otherwise be incarcerated. COMMISSIONER RUPP responded that boot camp inmates would otherwise have been housed in adult prisons at a cost of about $100 per day. REP. VEZEY said he would like to see figures demonstrating the savings of the boot camp program. Number 338 COMMISSIONER RUPP noted that the boot camp program would not include capital expenditures, as the inmates would be housed in relocatable modular buildings. He noted that prison cells cost about $110,000 to build the first new prison cell, plus the cost of operation. He noted that the aim of the boot camp program was to prevent youths from committing future crimes, not just incarcerating them as punishment. Number 352 REP. BUNDE asked Rep. Willis' reaction to the amendments proposed by Commissioner Rupp. REP. WILLIS said he was open to any changes to improve his bill. REP. BUNDE asked whether it was possible to reduce the travel budget expenses for the boot camp advisory board called for in HB 105. Number 366 COMMISSIONER RUPP said the figure of $14,400 for travel expenses was a rough estimate, but he could reexamine the issue. Number 382 REP. BUNDE asked Rep. Willis to return to the committee with answers to his questions and those of Rep. Vezey, and with responses to Commissioner Rupp's proposed amendments, so that the committee could consider moving the bill out of committee. Number 390 REP. NICHOLIA offered a friendly amendment to allow Native corporations to contract with the state Department of Corrections to operate boot camps, as about 47 percent of prisoners in Alaska state prisons were Alaska Natives. She said the Tanana Chiefs Conference (TCC) supported such an amendment and she read a letter from the TCC indicating that support. She read the amendment to HB 105, numbered as 8-LSO467\A.1, dated 3/24/93. Number 415 REP. WILLIS said he did not object to the amendment. REP. BUNDE said he appreciated privatization and it might be worthwhile to have HB 105 returned to the committee with Rep. Nicholia's amendment included. Number 426 COMMISSIONER RUPP said he would welcome such an amendment, and said the department had hoped to find ways to spread the program out across the state, and in rural areas in particular. REP. VEZEY objected to the motion. He said it would be better to allow for-profit corporations to contract out boot camp programs, as they would be more motivated than nonprofits to operate such camps efficiently. Number 440 CHAIR TOOHEY asked Commissioner Rupp, Rep. Vezey and Rep. Nicholia to work on the bill and return to the full committee with the amendments. She said HB 105 would be placed on the committee's schedule as soon as possible to consider the amendments. She then ADJOURNED the meeting at 5:10 p.m.