Legislature(1993 - 1994)

03/24/1993 03:00 PM House HES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= 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                     
            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                                                                
  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                                                                
  BILL VERSION: SSHB 12                                                        
  SPONSOR(S): REPRESENTATIVE(S) B.DAVIS,Ulmer,Nordlund,                        
  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                               
  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,                     
  03/26/93       779    (H)   DNP: VEZEY                                       
  03/26/93       779    (H)   NR: BUNDE, TOOHEY                                
  03/26/93       779    (H)   -ZERO FISCAL NOTE  (DCED)                        
  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)                         
  04/08/93      1103    (H)   REFERRED TO JUDICIARY                            
  BILL:  HB 105                                                                
  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                     
  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,                    
  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,                    
  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)                                                
  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                                                                   
  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                 
  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                            
  (Rep. Brice arrived at 3:12 p.m.)                                            
  Number 106                                                                   
  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                                                                   
  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                                                                   
  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                          
  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                      
  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'                     
  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                    
  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                  
  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                   
  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                   
  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                          
  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                   
  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                        
  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                  
  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                   
  Number 424                                                                   
  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                        
  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                   
  MS. MEISELS said the cost was borne entirely by the                          
  insurance companies, and it would not be a government                        
  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                                                                   
  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                   
  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                    
  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                     
  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                          
  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.                                                                    

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