Legislature(1995 - 1996)
04/23/1996 03:04 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 April 23, 1996 3:04 p.m. MEMBERS PRESENT Representative Cynthia Toohey, Co-Chair Representative Con Bunde, Co-Chair Representative Gary Davis Representative Norman Rokeberg Representative Caren Robinson Representative Tom Brice Representative Al Vezey MEMBERS ABSENT None COMMITTEE CALENDAR CS FOR SENATE BILL NO. 244(FIN) am "An Act relating to transportation of public school students; relating to school construction grants; relating to state foundation aid and supplementary state aid for education; and providing for an effective date." - BILL WAS TABLED CS FOR SENATE BILL NO. 253(FIN) "An Act relating to insurance coverage for costs of prostate cancer or cervical cancer detection." - HEARD AND HELD HOUSE BILL NO. 488 "An Act relating to matching funds requirements for municipal school construction grants." - BILL POSTPONED PREVIOUS ACTION BILL: SB 244 SHORT TITLE: STATE AID TO EDUCATION SPONSOR(S): RULES BY REQUEST OF THE GOVERNOR JRN-DATE JRN-PG ACTION 01/26/96 2224 (S) READ THE FIRST TIME - REFERRAL(S) 01/26/96 2224 (S) HES, FIN 01/26/96 2224 (S) FISCAL NOTE (DOE) 01/26/96 2224 (S) GOVERNOR'S TRANSMITTAL LETTER 02/28/96 (S) HES AT 9:00 AM BUTROVICH ROOM 205 02/28/96 (S) MINUTE(HES) 03/06/96 (S) HES AT 9:00 AM BUTROVICH ROOM 205 03/06/96 (S) MINUTE(HES) 03/06/96 2625 (S) HES RPT 2NR 1AM 03/06/96 2625 (S) PREVIOUS FN (DOE) 03/27/96 (S) FIN AT 9:00 AM SENATE FINANCE 532 04/02/96 (S) FIN AT 9:00 AM SENATE FINANCE 532 04/11/96 (S) FIN AT 9:00 AM SENATE FINANCE 532 04/11/96 (S) RLS AT 7:45 PM FAHRENKAMP RM 203 04/11/96 3148 (S) FIN RPT CS 1DP 6NR SAME TITLE 04/11/96 3148 (S) FISCAL NOTE TO CS (DOE) 04/12/96 3193 (S) RULES TO CALENDAR & 1DNP 4/12/96 04/12/96 3196 (S) READ THE SECOND TIME 04/12/96 3196 (S) PLACED AT BOTTOM OF CALENDAR 04/12/96 3210 (S) FIN CS ADOPTED UNAN CONSENT 04/12/96 3211 (S) AM NO 1 FAILED Y9 N10 E1 04/12/96 3212 (S) AM NO 2 FAILED Y7 N12 E1 04/12/96 3213 (S) AM NO 3 FAILED Y7 N12 E1 04/12/96 3215 (S) AM NO 4 ADOPTED Y12 N7 E1 04/12/96 3217 (S) AM NO 5 WAS NOT OFFERED 04/12/96 3217 (S) ADVANCED TO THIRD READING UNAN CONSENT 04/12/96 3217 (S) READ THE THIRD TIME CSSB 244(FIN) AM 04/12/96 3218 (S) PASSED Y11 N8 E1 04/12/96 3218 (S) EFFECTIVE DATE PASSED Y19 N- E1 04/12/96 3218 (S) PHILLIPS NOTICE OF RECONSIDERATION 04/15/96 3246 (S) RECON TAKEN UP - IN THIRD READING 04/15/96 3246 (S) HELD ON RECONSIDERATION TO 4/16 CALENDAR 04/16/96 3316 (S) IN THIRD READING ON RECONSIDERATION 04/16/96 3316 (S) RTN TO 2ND RESCIND ACTN FLG AM 1 Y16 N4 04/16/96 3316 (S) RESCINDED ACTN FLG TO ADPT AM 1 Y14 N6 04/16/96 3317 (S) AM NO 1 ADOPTED Y13 N7 04/16/96 3317 (S) AUTOMATICALLY IN THIRD READING 04/16/96 3317 (S) RETURN TO SECOND FOR AM 6 UNAN CONSENT 04/16/96 3318 (S) AM NO 6 MOVED BY PHILLIPS 04/16/96 3318 (S) AM NO 6 FAILED Y10 N10 04/16/96 3325 (S) AUTOMATICALLY IN THIRD READING 04/16/96 3325 (S) RETURN TO SECOND FOR AM 7 UNAN CONSENT 04/16/96 3325 (S) AM NO 7 MOVED BY HALFORD 04/16/96 3325 (S) AM NO 7 ADOPTED Y12 N8 04/16/96 3326 (S) AUTOMATICALLY IN THIRD READING 04/16/96 3326 (S) PASSED ON RECONSIDERATION Y12 N8 04/16/96 3326 (S) EFFECTIVE DATE PASSED Y18 N2 04/16/96 3329 (S) TRANSMITTED TO (H) 04/17/96 3808 (H) READ THE FIRST TIME - REFERRAL(S) 04/17/96 3808 (H) HES, FINANCE 04/23/96 (H) HES AT 3:00 PM CAPITOL 106 BILL: SB 253 SHORT TITLE: INS.FOR PROSTATE & CERVICAL CANCER TESTS SPONSOR(S): SENATOR(S) DUNCAN,Ellis,Salo,Zharoff,Lincoln,Kelly; REPRESENTATIVE(S) Robinson,Kubina,Navarre JRN-DATE JRN-PG ACTION 02/02/96 2279 (S) READ THE FIRST TIME - REFERRAL(S) 02/02/96 2280 (S) L&C, FIN 02/05/96 2309 (S) COSPONSOR(S): ELLIS, SALO 02/07/96 2330 (S) COSPONSOR(S): ZHAROFF 03/07/96 (S) L&C AT 1:30 PM FAHRENKAMP RM 203 03/07/96 (S) MINUTE(L&C) 03/12/96 (S) MINUTE(L&C) 03/14/96 2736 (S) L&C RPT 3DP 1NR 03/14/96 2736 (S) ZERO FISCAL NOTES (DCED, ADM) 03/28/96 (S) FIN AT 8:30 AM SENATE FINANCE 532 04/02/96 (S) FIN AT 9:00 AM SENATE FINANCE 532 04/03/96 (S) RLS AT 1:15 PM FAHRENKAMP RM 203 04/03/96 3042 (S) FIN RPT CS 7DP NEW TITLE 04/03/96 3042 (S) ZERO FN TO CS (ADM) 04/03/96 3042 (S) PREVIOUS ZERO FN (DCED) 04/10/96 3112 (S) RULES TO CALENDAR 4/10/96 04/10/96 3115 (S) READ THE SECOND TIME 04/10/96 3115 (S) FIN CS ADOPTED Y18 N2 04/10/96 3115 (S) ADVANCE TO THIRD READING FLD Y14 N6 04/10/96 3136 (S) COSPONSOR: LINCOLN 04/10/96 3116 (S) THIRD READING 4/11 CALENDAR 04/11/96 3167 (S) READ THE THIRD TIME CSSB 253(FIN) 04/11/96 3168 (S) PASSED Y19 N1 04/11/96 3168 (S) KELLY NOTICE OF RECONSIDERATION 04/12/96 3205 (S) RECON TAKEN UP - IN THIRD READING 04/12/96 3205 (S) COSPONSOR(S): KELLY 04/12/96 3206 (S) PASSED ON RECONSIDERATION Y18 N1 E1 04/12/96 3220 (S) TRANSMITTED TO (H) 04/15/96 3733 (H) READ THE FIRST TIME - REFERRAL(S) 04/15/96 3733 (H) L&C, STATE AFFAIRS 04/15/96 3783 (H) HES REFERRAL ADDED 04/15/96 3785 (H) CROSS SPONSOR(S): ROBINSON, KUBINA 04/22/96 3936 (H) CROSS SPONSOR(S): NAVARRE 04/23/96 (H) HES AT 3:00 PM CAPITOL 106 WITNESS REGISTER RICHARD CROSS, Deputy Commissioner Department of Education 801 West 10th Street, Suite 200 Juneau, Alaska 99801-1894 Telephone: (907) 465-2800 POSITION STATEMENT: Testified on CSSB 244(FIN) am EDDY JEANS, Project Assistant School Foundation School Finance Department of Education 801 West 10th Street, Suite 200 Juneau, Alaska 99801-1894 Telephone: (907) 465-8685 POSITION STATEMENT: Answered questions on CSSB 244(FIN) am VERNON MARSHALL, Executive Director NEA-Alaska 114 Second Street Juneau, Alaska 99801 Telephone: (907) 586-3090 POSITION STATEMENT: Testified on CSSB 244(FIN) am LORRAINE FERRELL, Vice President Anchorage School Board 4358 Rendezvous Circle Anchorage, Alaska Telephone: (907) 337-4003 POSITION STATEMENT: Testified in support of Section 1, CSSB 244(FIN) am JAMES ELLIOTT, Director School Finance Department of Education 801 West 10th Street, Suite 200 Juneau, Alaska 99801-1894 Telephone: (907) 465-2891 POSITION STATEMENT: Testified on CSSB 244(FIN) am BILL WRIGHT, Administrator Pupil Transportation Program Department of Education 801 West 10th Street, Suite 200 Juneau, Alaska 99801-1894 Telephone: (907) 465-8687 POSITION STATEMENT: Testified on CSSB 244(FIN) am KRISTINE PELLET, Student Intern to Senator Jim Duncan Alaska State Legislature Capitol Building, Room 119 Juneau, Alaska 99801-1182 Telephone: (907) 465-4766 POSITION STATEMENT: Presented sponsor statement for CSSB 253(FIN) JANET PARKER Retirement & Benefits Manager Department of Administration P.O. Box 110203 Juneau, Alaska 99811-0203 Telephone: (907) 465-4470 POSITION STATEMENT: Answered questions on CSSB 253(FIN) GENE DAU, Representative American Association of Retired Persons; and Veterans of Foreign Wars P.O. Box 20995 Juneau, Alaska 99802 Telephone: (907) 586-3816 POSITION STATEMENT: Testified in support of CSSB 253(FIN) BILL CHISHAM 6550 North Douglas Highway Juneau, Alaska 99801 Telephone: (907) 586-8911 POSITION STATEMENT: Testified in support of CSSB 253(FIN) BOB STALNAKER, Director Division of Retirement & Benefits Department of Administration P.O. Box 110203 Juneau, Alaska 99811-0203 Telephone: (907) 465-4460 POSITION STATEMENT: Testified in support of CSSB 253(FIN) GORDON EVANS, Lobbyist Health Insurance Association of America 318 4th Street Juneau, Alaska 99801 Telephone: (907) 586-3210 POSITION STATEMENT: Testified in opposition to CSSB 253(FIN) REED STOOPS, Lobbyist Aetna Life & Casualty 240 Main Street, Number 600 Juneau, Alaska 99801 Telephone: (907) 463-3223 POSITION STATEMENT: Testified on CSSB 253(FIN) JERRY REINWAND, Lobbyist Blue Cross of Washington & Alaska 2 Marine Way, Number 219 Juneau, Alaska 99801 Telephone: (907) 586-8966 POSITION STATEMENT: Testified on CSSB 253(FIN) ACTION NARRATIVE TAPE 96-44, SIDE A Number 001 The House Health, Education and Social Services Standing Committee was called to order by CO-CHAIR CON BUNDE at 3:04 p.m. Members present at the call to order were Representatives Bunde, Toohey, Davis, Robinson and Brice. Members absent were Representatives Rokeberg and Vezey. He announced the calendar was SB 244, Calculation of State Aid for Education; SB 253, Insurance for Prostate and Cervical Cancer Tests and HB 488 was postponed. CSSB 244(FIN) am - STATE AID TO EDUCATION CO-CHAIR BUNDE announced the first order of business to come before Number 088 RICHARD CROSS, Deputy Commissioner, Department of Education, said first he would point out the differences between the original Senate Bill 244 and the Committee Substitute before the committee. The Committee Substitute has an amendment which reimburses the Anchorage pupil transportation at the same level as the contractor rate. He noted this was not in the original bill. The Department of Education had provided a fiscal note which showed the impact of changing that rate of reimbursement for the Anchorage School District. That fiscal note reflects increased costs of $1.992 for FY 97. The fiscal note also indicates a potential cost for FY 96 which is speculative, but he would explain that for the committee. Section 8 of the legislation specifies the Act would take effect immediately and should the Governor sign the bill prior to July 1, 1997, then potentially it could impact and require a proration of this year's transportation funding because the entitlement to the Anchorage School District figured under this year's schedule would be $2,050,243. He commented that is one substantive change between the original Senate Bill and the Committee Substitute. The Committee Substitute also contains an amendment on portables, which says that portables will not count into the space when used in figuring unhoused students. It is current practice of the department to not count that space now so the amendment would not change their practice. MR. CROSS said the Committee Substitute increases the deductible PL-874 from Regional Education Attendance Areas (REAA) from 95 percent in the original bill which would have started in FY 97 and kicks it in this year at 96 percent. He noted that both bills give a payment to REAAs of $500 per instructional unit in order to meet disparity. He said the Committee Substitute contains a hold harmless provision and explained the Senate Finance Committee amended the bill to have it take effect this year in order to minimize the cost of the $500 instructional unit to the REAAs. In the original bill, next year the department had planned to pay out the $500 payment, but in effect, recover it by increasing the deductible PL-874. The Senate amendment kicks that system in this year rather than next year. Under the original bill, the method of accomplishing that was to get a $1.2 million appropriation in order to cover that $500 payment and did not increase the deductible. So the Senate Finance Committee put in a hold harmless provision so any district that would lose money as a result of that 96 percent deductible and then $500 payback would not in fact lose money, but would be held even. Number 380 MR. CROSS stated the original bill allowed the Department of Education to adjust the $500 allotment to make sure that disparity was met if such an adjustment should be necessary; the Committee Substitute does not allow for that. The original bill funded single sites through the formula program; the Committee Substitute does not. The Committee Substitute sunsets the provision for the public school foundation formula on June 30, 1997, which the department interprets as meaning there would be no funding formula after June 30, 1997, unless and until a new one was adopted. The effective dates are different and the fiscal notes are different. The fiscal note for SB 244 of $311 million does not include the transportation fees. He commented those are essentially the differences between the original Senate Bill and the Committee Substitute and he and members of the department were available to answer questions. Number 458 CO-CHAIR BUNDE referred to the hold harmless provision and asked Mr. Cross if he knew which districts and how much money was involved. MR. CROSS invited Eddy Jeans from the department to join him at the witness table. Number 493 EDDY JEANS, Project Assistant, School Foundation, School Finance, Department of Education, explained the hold harmless section basically keeps districts at the level they would have been funded in FY 96 had this legislation not passed. He directed the committee's attention to the schedule attached to the fiscal note and said there were nine districts that would qualify for the hold harmless provision. In other words, the hold harmless provision ensures that these districts do not lose any funding in FY 96. CO-CHAIR BUNDE questioned if the loss wouldn't occur in FY 97. MR. JEANS explained that some districts will experience some loss in FY 97 and noted the previously mentioned schedule indicated a $20,000 increase. He continued to explain the bracketed amounts on the schedule indicate the state aid those districts would lose in FY 97. Essentially, the hold harmless provision is because the districts already have their budgets established for the current year and it would be difficult for them to make the adjustment in the current year. Number 598 CO-CHAIR BUNDE commented he thought it would be cheap insurance to change the effective date so it doesn't become effective until July 1. MR. CROSS pointed out the problem with changing the effective date to July 1 for Sections 3, 4 and 5 is that the Senate Finance amendment took the mechanism the department was suggesting for next year and wanted to implement it a year earlier in order to not incur the full $1.2 supplemental cost in the budget. Therefore, some aspect of the bill has to be retroactive in order to enable the department to deduct the PL-874 at 95 percent and return the $500 payment to make the adjustments for this year. In order for that mechanism to work, there would have to be retroactivity. CO-CHAIR BUNDE said, "So we have good news and bad news. If they wanted to take a look at it as figuring into this year's -- you said if it takes effect before July 1, districts on the pupil transportation..." MR. CROSS said in his opinion, the cleanest way to accomplish that would be to amend Section 8, not the retroactive part of it. CO-CHAIR BUNDE responded that was what he was referring to - amending Section 8 to read July 1. Number 731 REPRESENTATIVE CAREN ROBINSON asked what the thinking was on Section 6? MR. CROSS responded that Section 6 was added in the Senate Finance Committee and he didn't want to characterize the author's intent except to say there was a clear message they wanted a new formula; they wanted this to be a temporary fix, not a permanent fix. REPRESENTATIVE NORM ROKEBERG arrived at 3:16 p.m. REPRESENTATIVE ROBINSON asked where the department was at in terms of getting ready for a new formula. MR. CROSS replied that Commissioner Holloway had met all last week with the State Board of Education and he, Mr. Jeans and Dr. Elliott would be meeting with the commissioner later that day. He added that an aggressive schedule had been set to adopt a new formula and the department expects the Governor will submit a new formula in legislation in January 1997. REPRESENTATIVE ROBINSON asked what happens if that time line wasn't met? MR. CROSS responded that either existing legislation would have to modified and extended or there have been years where there has been no "funding formula" and there's been a temporary measure for continuing funding for districts from one year to the next. REPRESENTATIVE AL VEZEY arrived at 3:17 p.m. CO-CHAIR BUNDE observed the State Board of Education worked long and hard this past summer to rewrite the formula and stopped when they got to making the hard decisions. This will encourage the board to get to the hard decisions and keep going. Number 915 REPRESENTATIVE GARY DAVIS said it was his understanding that the amendment on the pupil transportation has added a $2 million fiscal note to the bill. MR. CROSS said that's correct; it has added a nearly $2 million fiscal note for FY 97 and potentially a fiscal note for FY 96 of $2,050,000. REPRESENTATIVE DAVIS observed that was approximately a $4 million additional funding request this legislation would require as it stands now. MR. CROSS replied yes. REPRESENTATIVE DAVIS asked what happens if the funding isn't provided and the legislation passes as it is written. MR. CROSS stated the department would prorate the transportation program and that proration would result in a proportional deduction to all school districts in the state that have transportation programs. Number 983 CO-CHAIR BUNDE asked if it would be fair to say the $4 million is somewhat close to the $4 million originally cut from pupil transportation in the Governor's proposed budget. MR. CROSS replied it would be fair to say that if the original cut was $4 million, but he didn't have that number readily available. CO-CHAIR BUNDE thought it was in the ball park. Number 1027 VERNON MARSHALL, Executive Director, NEA-Alaska, said that NEA- Alaska feels it is a tremendous and important obligation that Alaska educate all its children and that public schools have a responsibility to accept all children and educate them to the best of their opportunity. In order to do that, funding is necessary and NEA-Alaska has been an advocate for additional funding for schools. He said NEA-Alaska has some general concerns about the formula, but it is their feeling that what makes the formula anemic many times is the fact that funding isn't adequate and then local governmental units don't pass that funding on to local school districts so that children benefit. NEA-Alaska is concerned that single site school districts have been omitted from CSSB 244(FIN) which they believe is a cost of about $3.2 million in the scheme of a $850+ million budget program for schools. It is NEA-Alaska's belief that single sites should be a priority; there are kids that exist in those single sites who need to be taken care of. MR. MARSHALL said that NEA-Alaska feels that federal disparity is an issue that needs to be addressed. Their concern is that if it is not addressed, it will have a negative impact through proration on all children in the state by actually having the effect of reducing the instructional unit by approximately $2,000. At a time when schools are attempting to prepare kids for the challenges of the new century, it is critical to upgrade and modernize facilities relative to not only the books they read but the technology as well and not the time to jeopardize funding. He expressed concern with the section that deals with June 30, 1997. He said he understood what happened in Michigan, having received some reports about the "Michigan experience." He thought Alaska given its uniqueness, had a better approach to dealing with the whole issue of the whole formula and as he understood, the State Board of Education was carefully looking at the formula, entertaining proposals and ideas and hopefully developing a process that is designed to involve everyone in terms of identifying deficiencies if they exist, and ways to deal with the formula that best meets the educational needs of kids. That process is taking place and NEA-Alaska feels that sunsetting the formula raises the apprehension of a lot of people. He wasn't trying to be paranoid, but he felt it is important that schools be assured of some stability. He didn't necessarily understand the history of the past when somehow schools were taken care of when provisions sunsetted, but he thought there was a statement of state policy that everyone needed to be concerned about. He encouraged the committee to remove the section and take a look at single site school, the disparity and the sunset provision. NEA-Alaska believed those issues should be addressed and removed. Number 1271 CO-CHAIR TOOHEY asked Mr. Marshall if he had been involved in the meetings that took place during the summer? MR. MARSHALL responded that he was involved in some of the meetings as an observer, not as a participant of the committee. He did have an opportunity to follow and hear much of the report. CO-CHAIR TOOHEY asked if Mr. Marshall was of the opinion that the State Board of Education could have come up with an answer. MR. MARSHALL replied the committee had a tremendous amount of work to do and he didn't know that they were given the resources and the time to get the job done. He believes the committee could come up with an answer; however, he felt that probably some polarization did take place during the process of the meetings, but in his opinion that could have been overcome. He contended if that group or another group is empowered and charged with the responsibility, and given the time and support they could come up with an answer. Number 1328 CO-CHAIR BUNDE said as an interested observer, he would characterize the end result of what was accomplished. Basically the committee came up with three possible solutions: 1) status quo, hope for a miracle; 2) change the formula, hope for a miracle by an infusion of a lot of money; and 3) change the formula and live within the current budget which means there would be clear winners and losers in various school districts. The decision didn't go forth is because two of them were not viable options and the third was not comfortable. MR. MARSHALL thought the committee had addressed a couple of issues. He said one was the formula fix for single site school districts and the other was to minimally address the problem of us not addressing the federal disparity issue. He thought that was put in place primarily because of changes on the federal level. CO-CHAIR BUNDE understood the State Board of Education planned to continue their quest and it is a high priority. He asked if there were any other questions for Mr. Marshall. Hearing none, he invited Lorraine Ferrell to testify at this time. Number 1440 LORRAINE FERRELL, Vice President, Anchorage School Board (ASB), said she particularly wanted to address Section 1 of CSSB 244(FIN) amended. She testified in support of Section 1 which corrects a disparity in transportation reimbursement that the Anchorage School District has been living with for quite some time. This particular section would reimburse the ASB 100 percent for their district-run route, as well as their contracted routes. This is important to the ASB because currently they are funding that portion which is not state funded out of their operating budget. As times get tighter, they believe they could find better uses for this particular operating money, especially since every other district in the state gets 100 percent reimbursement on their transportation. She encouraged the committee to keep Section 1 in the bill and eliminate the disparity that's been particularly aimed at Anchorage for many years. Number 1529 REPRESENTATIVE DAVIS asked how long the disparity had been in existence. MS. FERRELL said she couldn't answer in the exact number of years, but it had been quite awhile. She thought originally the disparity was put into place when there was such a difference in compensation for contracted drivers versus district drivers. Now that those two are pretty much in alignment, there is no reason to not fund both at 100 percent. She noted there is no contractors other than Laidlaw Transit that could provide this service to the students of the Anchorage School District. She explained they were caught between a rock and a hard spot; they continue to run routes on their own to put them in a favorable position to be able to negotiate the contracted routes with Laidlaw. Number 1568 REPRESENTATIVE DAVIS inquired to what degree had the disparity been addressed in the legislative process. He noted this was the first time he had heard of it. MS. FERRELL believed it was just one of those "sleepers" that happened, and no one noticed it or realized that it was continuing to go forward. It came up in a review of their transportation dollars so the Anchorage School District requested it be brought before the legislature to be equalized. CO-CHAIR BUNDE asked if there were other questions of Ms. Ferrell. Hearing none, he asked if there was further public testimony on CSSB 244(FIN) am. REPRESENTATIVE ROBINSON asked the Department of Education to explain how this language impacts the other school districts in the state. Number 1620 JAMES ELLIOTT, Director, School Finance, Department of Education, introduced Bill Wright, Administrator of the Pupil Transportation Program who would provide some background on the difference between the Anchorage contract routes and their district-run routes. Number 1644 BILL WRIGHT, Administrator, Pupil Transportation Program, Department of Education, said the effect of this amendment without additional funding, will result in about another 5 percent proration of the program. Each district will receive 5 percent less funding. REPRESENTATIVE ROBINSON confirmed that all the school districts except Anchorage would receive 5 percent less. MR. WRIGHT responded that Anchorage would be prorated as well and would receive 5 percent less. REPRESENTATIVE VEZEY stated he was confused as to why this wording would avoid or not avoid a proration. MR. WRIGHT asked Representative Vezey to repeat his question. REPRESENTATIVE VEZEY inquired if there was a proration if the appropriation is less than the expenses. MR. WRIGHT responded affirmatively. REPRESENTATIVE VEZEY commented that was a certain formula under existing statute, but it changes under the proposed language. MR. WRIGHT said that was true. He added that if the department bases their budget on what they estimate to be the total entitlement, but receive less money than what they need to fully fund the districts, everyone would be prorated equally. REPRESENTATIVE VEZEY asked if equally meant on a per dollar basis or per student basis? MR. WRIGHT responded per dollar basis. REPRESENTATIVE VEZEY affirmed it would be a straight across the board per dollar basis proration. MR. WRIGHT said the department reimburses under the pupil transportation program on an actual cost basis. It depends on their contracted daily rates, so that amount changes over the year based on whether buses are added and (indisc.) changes, so this is the department's best guess right now as to what their full funding level is going to be. However, during the year that amount can go up. REPRESENTATIVE VEZEY asked how the proposed amendment to the statute change the formula? MR. WRIGHT responded it increases Anchorage's entitlement by approximately $1.2 million, so unless the department receives additional funding to cover that, their estimated entitlement in the budget is $1.9 short. REPRESENTATIVE VEZEY remarked the wording could just as well read, "The Anchorage School District is entitled to more money." MR. WRIGHT confirmed that. CO-CHAIR BUNDE asked if there were further questions or testimony? Number 1774 REPRESENTATIVE ROKEBERG asked if the $500 REAA in Section 4 related to the disparity problem? MR. ELLIOTT responded it was of a different type than the busing. REPRESENTATIVE ROKEBERG said he was referring to the federal disparity definition and asked why it occurred. MR. ELLIOTT explained that the federal government changed the standard. Number 1795 REPRESENTATIVE DAVIS recalled the discussion last year about the non-counting of students housed in portables and said in his opinion they should be counted. He asked Mr. Elliott to refresh his memory regarding the reasons for the students not being counted. MR. ELLIOTT understood that prior to this year, districts that had students in portable classrooms were not counted as unhoused for the purposes of requesting money to build facilities. He noted the department has grappled with the issue of unhoused students in portable classrooms through the bond reimbursement grant review committee that was set up under SB 7 which passed in 1993. The department grappled with the issue for better than a year and were unable to resolve the issue, but the department, based on its own interpretation, this year has left it up to districts as to whether to count those students as housed or unhoused. This amendment, as it is written, doesn't do anything different than what the department is doing. It did hurt Anchorage about a year ago, because when they made their submission to the department many of students they had in portables were not counted as unhoused and therefore, did not qualify for needed space. Number 1853 CO-CHAIR BUNDE explained the students in portables were considered adequately housed. This amendment says they are not adequately housed. REPRESENTATIVE VEZEY expressed curiosity about how the Anchorage School system works and inquired if they own their own buses. MR. WRIGHT explained the Anchorage district-operated purchase their own buses. They are the largest district-operated transportation system in the state; the next largest is Barrow. REPRESENTATIVE VEZEY inquired how many buses the Anchorage district operates. MR. WRIGHT replied about 81. CO-CHAIR TOOHEY believed there were also Laidlaw-contracted buses. MR. WRIGHT stated that Anchorage was unique in that they have district-operated and contracted within the same community. He believed that Laidlaw operates 158 buses in the community and the district operates about 81. Number 1910 CO-CHAIR BUNDE asked if it would be a fair statement that the district started out with a busing program, owned some buses and had employees, but as things grew they chose to contract. MR. WRIGHT commented he didn't know if it started out with just the district and then went to contracting or if they both can about at the same time. Number 1927 REPRESENTATIVE VEZEY asked if there was an evaluation of which service was more cost effective. CO-CHAIR BUNDE commented that unfortunately the representative from the Anchorage School Board had departed, but he recounted that her testimony had been that by providing their own, they set a base and provide competition with the only vendor that provides this service so they can keep the bids down. MR. WRIGHT mentioned a study done in the early 1980s that compared the district-operated with the contractors; comparing the rates and the services. That's when the district-operated rate of reimbursement was established which was 66.83 percent. Since then, that has just been carried over. REPRESENTATIVE VEZEY inquired 66.83 percent of what. MR. WRIGHT responded 66.83 percent of what it actually cost them to operate the district-operated program. It includes the transportation director, the purchase of the buses, drivers, etc. REPRESENTATIVE VEZEY inquired if that was to equate it to the cost of contracting for the services. MR. WRIGHT responded yes, because to contract it is much cheaper than the district operating their own buses. He added if you look at it on a per student reimbursement on a per bus on a per mile basis, to contract it is always cheaper than what the district can operate it for themselves. He was aware that a study had just been completed by an accounting firm in Anchorage that compares the two operations; however, that study has not been released. CO-CHAIR TOOHEY asked if Mr. Wright had any figures available from that study? MR. WRIGHT responded no, because it hadn't been released yet. Number 2004 CO-CHAIR BUNDE asked if there were further questions or anyone else wishing to testify. Hearing none, he closed public testimony. Number 2017 CO-CHAIR TOOHEY offered an amendment to Section 8 to have this Act take effect July 1, 1996. CO-CHAIR BUNDE asked if the department would like to comment on the amendment. Number 2039 MR. CROSS said the amendment would change the fiscal note to only include $1.9+ million for FY 97 for pupil transportation. CO-CHAIR BUNDE inquired if the fiscal note for FY 97 is $1.992 million as it stands now. MR. CROSS confirmed that. CO-CHAIR BUNDE asked if there was some possibility that the fiscal note could have gone up, but this amendment would keep it at $1.992 million. MR. CROSS clarified the amendment would eliminate the potential of the current year fiscal impact of $2,050,243. Number 2071 REPRESENTATIVE ROBINSON asked Mr. Cross to put it in simple terms - - was it good or bad? MR. CROSS remarked it depends on the point of view. He said if you believe that the 66.23 percent rate for reimbursement of the school transportation program in Anchorage is unfair and that 100 percent is fair, then they're only getting half-a-loaf and with this amendment and they're getting it corrected prospectively, but not for this year. It is predicated on the belief that that reimbursement is inappropriate and that Anchorage is entitled to a higher rate. Number 2111 CO-CHAIR BUNDE, speaking to the amendment, agreed he would like to see the 100 percent reimbursement, but in the spirit of compromise we change prospectively and it cuts the fiscal note for this year in half. CO-CHAIR BUNDE asked if there was any objection to Amendment 1. Hearing none, Amendment 1 was adopted. Number 2185 REPRESENTATIVE VEZEY proposed Amendment 2. As a defender of the private sector, Amendment 2 clarifies that the reimbursement of the transportation costs would be on a daily cost comparison basis rather than a level basis which tests will indicate that was to be the same percentage of total cost. This amendment would take it back to the basis of if a municipality wishes to provide its own transportation, it will be reimbursed at the lower unit cost available through the contracting. He made a motion to adopt Amendment 2. CO-CHAIR BUNDE objected to Amendment 2. REPRESENTATIVE DAVIS understood Amendment 2 would return to the status quo, as it had been in the past 5-10 years. Number 2208 MR. WRIGHT responded it would not return to the status quo. He said currently they are reimbursed on a percentage of their actual cost instead of on a daily rate per bus which is how the contracts are reimbursed. CO-CHAIR BUNDE recalled that Mr. Wright had previously testified that the daily rate of the contractor is unknown at this point, so adopting this amendment would say the district would be reimbursed at... MR. WRIGHT interjected the department knows what the daily rates are for the contracts, but they don't know what it is for the district-operated portion. CO-CHAIR BUNDE understood that Mr. Wright had testified that a comparison had just been done and the audit showed the contract daily rates, but not the district rates. He asked if that was Mr. Wright's testimony? MR. WRIGHT said yes, the contracts are on a daily rate. The review that was done compared the two operations but he didn't believe it established a daily rate for the district-operated. Number 2246 REPRESENTATIVE DAVIS recollected the testimony of Ms. Ferrell had been that she felt the costs were getting fairly even, although $2 million is not quite too even. CO-CHAIR BUNDE pointed out it was important to remember that currently the Anchorage School District is reimbursed at 66 percent of actual cost; it's not 66 percent of the private operator. They are not reimbursed at the private level, but rather 66 percent of the actual cost. He added that it's not sure what 66 percent of the actual cost to the district is compared to the private operator. Number 2286 REPRESENTATIVE ROBINSON was under the impression that this amendment brought it back to where it was originally. MR. WRIGHT commented it's extremely close; much closer than what the first amendment does, but he couldn't say what the impact is of reimbursing the district at the contracted daily rate. Number 2307 REPRESENTATIVE VEZEY clarified that Amendment 2 simply says that if a public agency wants to compete with the private sector, they can do that. They will be reimbursed but only at the same cost that we can contract for and receive the service. He couldn't say how that compares with the existing system but it does say there will not be two unit costs for pupil transportation. TAPE 96-44, SIDE B Number 001 REPRESENTATIVE BRICE said, "Considering the fact that currently not fully funding student transportation - at least on our side of the budget, that's still sort of nebulous as to what's happening there, but what this does is it ensures that my district doesn't get brought down based on the old language. There's not a transfer of funds -- not as great of a transfer of funds." MR. WRIGHT said he couldn't answer that at this time because he didn't know what the effect of reimbursing the district is at the same rate as the contractor. He added it would certainly be less than the $1.9 million indicated on the original fiscal note. REPRESENTATIVE ROBINSON asked if the existing language was removed on page 1, lines 8-12, would bring it back to the status quo? MR. WRIGHT responded that removing the original amendment would bring it back to the status quo. He added the department had met with representatives from the Anchorage School District and have agreed to revisit the issue of what their percent reimbursement is for the district-operated. CO-CHAIR BUNDE remarked that Ms. Ferrell would be returning to give more specific information about Anchorage. He asked how many school districts own their own buses. MR. WRIGHT guessed about 15 districts operated their own buses, but they are typically 1 or 2 bus operations. Usually when it gets above that level, districts choose to contract it out. CO-CHAIR BUNDE asked if these were all small cities or districts? MR. WRIGHT responded yes. CO-CHAIR BUNDE asked if the Fairbanks district owned any of their own buses? MR. WRIGHT replied no, they contract. Number 112 REPRESENTATIVE DAVIS had spoken with the Kenai School District who indicated they have their own in-house busing in Seward. He explained the core contract for the central peninsula area is geographically conducive to a contract where Seward being separated from the central peninsula would boost the contract price per bus because of the distance between the central area. He didn't know how many buses were involved, but Seward had probably 800-1000 students, so there would be a number of buses in Seward. It was also indicated that the district preferred that because they have something to compare when the contract prices come in. If they come in under their in-house price, then it is beneficial. Also, it had been alluded to that Mat-Su had some of their own buses and he assumed probably the same rationale would apply; if there are remote areas that don't fit into the central core, it would increase the contract price. MR. WRIGHT said Representative Davis was correct in that the Kenai School District does operate the buses in Seward, they also have other contracts through other contractors within the district. The Seward operation has about eight buses he believed. He noted that Mat-Su owns their own buses, but they use them for activity trips; they are not reimbursed by the state. All their state reimbursed to/from school transportation is contracted by Laidlaw. CO-CHAIR BUNDE announced that Lorraine Ferrell was back and advised her of the discussion of an amendment that would allow reimbursement only to the daily cost level; in other words to the contracted cost. He noted that questions had been raised about how that would impact Anchorage, being the biggest owner of their own busing system. Number 214 MS. FERRELL said the Anchorage School District would prefer to have it reimbursed on a per route basis or a daily basis rather than the cost per hour basis. CO-CHAIR BUNDE noted it would be on a daily basis, but what it amounts to is that Anchorage would get reimbursed for the amount they pay the private contractor Laidlaw, and not for the amount it costs the district to run their buses. MS. FERRELL said the Anchorage School District would not agree with that amendment. CO-CHAIR BUNDE remarked he assumed that, but he was trying to get an idea of the amount of the impact. MS. FERRELL said it would take $1.9 million to bring it up to parity. CO-CHAIR BUNDE stated this was different and explained that the Anchorage School District gets reimbursed at 66 percent now and it would take $1.9 million to bring that up to 100 percent. He said what we are doing is comparing now the cost of the 100 percent cost of Anchorage owned buses as compared to the Laidlaw buses. This amendment would reimburse the Anchorage School District at the rate paid to Laidlaw per day. He asked Ms. Ferrell if she had an idea of what it costs per day to run an Anchorage bus as opposed to what it costs per day to run a Laidlaw bus. MS. FERRELL thought there were individuals in the audience that could answer that question. CO-CHAIR BUNDE commented that no one has been able to provide the answer. The bottom line is it costs the Anchorage School District more to run the district-owned buses per day than it costs to run a Laidlaw bus per day. He noted that Ms. Ferrell had testified earlier the district maintained the city portion in order to provide competition to Laidlaw, because she felt that without competition Laidlaw prices would go up. MS. FERRELL said yes, there would be a 15 percent increase immediately in the cost of busing if the school district's busing was eliminated. CO-CHAIR BUNDE inquired if that was 15 percent not just because there would have to be more Laidlaw buses. MS. FERRELL interjected it would be an overall increase of 15 percent to the cost of busing because the competition has gone away. There would then be a sole source or a monopoly. Number 334 REPRESENTATIVE VEZEY offered that he had been around the public procurement process for approximately 24 years and the competitive marketplace will step in and will fill the gap. He noted if there was any validity to what was being said, the federal government would build its own airplanes just to keep contractors in line, but they learned a long time ago not to try to compete with the private sector. The competition with the opportunity to make a dollar is a far stronger incentive than anything the district can do by threatening them with a couple of buses that probably costs the district 50 percent more per hour to operate. MS. FERRELL believed there was a rather unique situation in Alaska in that Laidlaw has systematically bought out all the other bus companies, so she didn't think there was much chance another bus company would come in and establish a competitive market. REPRESENTATIVE VEZEY said the marketplace seems to belie that fact. Laidlaw has bought out other companies simply because they have underbid them. He commented there was no shortage of people bidding on busing contracts in Fairbanks. The incentive behind the profit motive cannot be underestimated; it is tremendous. CO-CHAIR TOOHEY asked if Ms. Ferrell had any idea of the approximate amount of the annual contract for Laidlaw? MS. FERRELL said she didn't have that figure available at this time. She offered to provide the information at a later date. REPRESENTATIVE DAVIS agreed with Representative Vezey regarding competition. He made reference to the Kenai School District and said a couple of years ago Mayflower came in and outbid Laidlaw, and Laidlaw eventually bought them out. He didn't think there were any laws that dictate that Laidlaw will be the only bidder in Anchorage, and perhaps in a couple years there will be competition. Number 485 CO-CHAIR BUNDE noted Amendment 2 was before the committee and an objection had been raised. A roll call vote was taken. Voting in favor to adopt Amendment 2 were Representatives Vezey, Davis, Brice, Robinson and Toohey. Voting against Amendment 2 were Representatives Rokeberg and Bunde. Co-Chair Bunde announced CSSB 244(FIN) was tabled. CSSB 253(FIN) - INS.FOR PROSTATE & CERVICAL CANCER TESTS CO-CHAIR BUNDE announced the next item on the agenda was CSSB 253(FIN). He turned the gavel over to Co-Chair Toohey. Number 543 KRISTINE PELLET, Student Intern to Senator Jim Duncan, said the importance of screening for malignant cancer is well documented. Both prostate and cervical cancer can be detected early by simple screening procedures and Senator Duncan believes that insurance companies should provide coverage for these screening procedures. Prostate cancer accounts for 36 percent of all male cancer and is the second leading cause of death in men after lung cancer as reported by the National Cancer Institute. It is estimated that this year in the United States 25,000 men will be diagnosed with prostate cancer and about 40,000 men will die from this disease. Although often presumed to develop slowly, nearly two-thirds of new cancer cases have spread beyond the prostate gland by the time of diagnosis. In addition to coverage of the Prostate Specific Antigen (PSA) test, SB 253 would require coverage for cervical cancer screening. Cervical cancer accounts for about 16 percent of all cancers in women. It is estimated that nearly one-half of the approximately 15,000 women who are diagnosed annually with the condition never underwent early screening procedures which could have led to highly successful treatment. Senate Bill 253 makes health issues a priority. Senator Duncan welcomes the committee's support in requiring that insurance companies cover the cost of prostate and cervical cancer screening. Ms. Pellet offered to answer any questions from the committee. Number 617 REPRESENTATIVE ROKEBERG asked what the approximate cost is for a PSA test and a Pap smear? Number 643 JANET PARKER, Retirement & Benefits Manager, Department of Administration, testified the cost of a PSA test is between $60 and $70 in the state of Alaska. She didn't have the information available on the cost of a Pap smear test. CO-CHAIR TOOHEY said as a recipient of a Pap smear for many years, the cost runs between $60 and $80. CO-CHAIR BUNDE pointed out there had been a Health Fair a couple of weeks ago and the cost of a PSA test was $30. CO-CHAIR TOOHEY asked if there were any questions for Ms. Parker. Hearing none, she asked Gene Dau to present his testimony. Number 689 GENE DAU, Representative, American Association of Retired Persons and Veterans of Foreign Wars, said that prostate cancer is an issue that men don't particularly like to talk about, even with their doctors. His doctor talked with him about prostate cancer and encouraged him to take the blood test, which he did. He said prostate cancer is the second largest killer of men in the United States. He shared the story of the Juneau swim coach who hadn't undergone the screening test and discovered he had prostate cancer. Unfortunately, it wasn't detected earlier enough and the cancer spread through other parts of his body. He was given 17 months to 35 months to live. He noted this is a problem and something needs to be done to encourage men to take this simple test. Mr. Dau believed that requiring insurance companies to provide and pay for the test will result in more men taking the test as part of their annual physical so it can be detected early enough and treated. In most cases it can be cured if it is detected early. He supports the bill without the amendment which changes the language to "offer" rather than "provide" coverage for the costs of prostate cancer screening tests. If the test is offered, the patient could still have to pay for it, whereas if it is provided, the insurance company will have to cover the cost. Number 870 CO-CHAIR BUNDE agreed that men should take more control of their health and be more aware of prostate cancer. However, he disagreed that insurance companies will pay for the testing in that everyone will pay for it through increased insurance premiums. The insurance companies are not going to take the costs out of their profits just because it's mandatory coverage; they will simply raise the premiums to cover the service. MR. DAU thought it would be advantageous for the insurance companies if cancer is detected in the early stages in that it would certainly save a lot of money later on. CO-CHAIR TOOHEY commented that's called preventative medicine and that's always advocated but not necessarily funded. She asked Mr. Dau if he would continue to have the screening test even without the insurance company paying for it. MR. DAU said he probably would. However, he thought it would encourage more men to discuss it with their doctors and have the screening test. He commented there were a lot of people living on fixed incomes who probably couldn't afford to pay for the test and he believed that everything should be done to encourage men to have the PSA test. CO-CHAIR TOOHEY thought education was the key and AARP played a vital role in getting the message out of the importance of the screening test through their monthly newsletters. Personally, she didn't believe it was the role of government to insist that people get a PSA test, Pap smear or mammogram. Number 1074 BILL CHISHAM, resident of Juneau and state employee, testified in support of CSSB 253(FIN) on his own behalf. He noted that in 1991 Aetna covered the cost of his PSA test and the cost was $77. The first two years he had the test, Aetna covered the cost; however, the last few years Aetna has not paid for it. He inquired of Aetna why they would no longer cover the cost and the response he received was, "Well, apparently we made a mistake before by covering the cost of the test." He continues to have the test and to pay for it himself because he is in the age range at risk. He noted that a dental examination is covered as preventative medicine, but Aetna alludes to the fact that the PSA test may be preventative medicine and therefore will not cover the cost. He related that he is not opposed to insurance companies. He attended the Aetna school on health insurance a number of years ago and has spent approximately the last 30 years reviewing insurance contracts and dealing with insurance matters. He urged the committee's support of this legislation. CO-CHAIR TOOHEY remarked that people should be encouraged to take advantage of the services offered at the recent Health Fair, which is half the cost for the PSA test. REPRESENTATIVE ROKEBERG asked if he was correct in that Aetna had drawn a distinction between this being a preventative type medicine vis a vis a treatment. MR. CHISHAM said yes, it was his understanding the doctor would do the examination with the potential of detecting something rather than treating something. He questioned how that would equate with going to a dentist on an annual basis, finding a cavity and then taking the action to correct that, whereas Aetna would not cover this on the same basis. He added there apparently was a medical opinion, which he didn't feel qualified to comment on, that perhaps this test is not the best way to detect prostate cancer. However, he felt there was argument on both sides of that issue. When there are two tests available and this test offers a very scientific approach, he was more in favor of this test than hoping the examining physician in conducting the other test can detect a minuscule difference in size or texture of what he is examining. He felt there was too much possibility that something might be overlooked during the examination, so he had more faith in this test. Number 1292 BOB STALNAKER, Director, Division of Retirement & Benefits, Department of Administration, testified the Administration supports CSSB 253(FIN). He noted that everyone knows there are certain steps that can be taken to find illnesses earlier on that will save the health costs into the future for both insurance companies and employers. However, it is a hard step to take because it generally costs money up-front to be able to find illnesses in the earlier stage. He clarified that under the state of Alaska's plan, this test is not denied all the time; it is covered after the digital test has been performed or if there is indications by the doctor that there is the need for this test as a further test. Also, the test itself is generally performed in a well-physical and that is a cost borne entirely by the employee at this point. He explained that's why the fiscal note from the Division of Retirement & Benefits shows there will be an impact on the plan. He commented that if the number of tests increase, there will be a cost but the employees are paying the cost themselves now by virtue of the Supplemental Benefits System (SBS) Option 1. CO-CHAIR TOOHEY asked him to explain how the employees are paying now. MR. STALNAKER explained the Supplemental Benefits Option 1 provision under the state plan provides for an annual well- physical. Currently, the annual well-physical will cover a digital exam and only in the case that further test is needed will the plan cover this test. In other words, the current plan covers the digital exam. This bill would provide for the SBS to also cover the blood test as an initial test. CO-CHAIR TOOHEY inquired if the state plan covers the cost if the doctor would like to do blood test, also. MR. STALNAKER responded it would not be covered in the event the doctor would like to do the test; there has to be an indication or a finding by the doctor. Number 1441 REPRESENTATIVE VEZEY questioned why this wasn't negotiated into the contract if the Administration believes this is a good idea; there doesn't need to be a law to negotiate benefits for employee health coverage. MR. STALNAKER stated that was true for the state and yes, the state employees can through negotiation amend the health contracts to include these provisions at whatever the cost is, which he believed wouldn't be much. The Administration support is as a public policy: Early detection helps find the number 2 killer of men in the country at an early stage where not only can treatment be provided that will save lives but also at a much lower cost to the health industry as a whole. The Administration's support is based on the policy issue that pre-advanced notice through this kind of test is more accurate than just a digital type of an examination. REPRESENTATIVE VEZEY again questioned why the Administration didn't negotiate that into the health benefits package for state employees. MR. STALNAKER remarked he is not part of the negotiations for labor contracts and he wasn't sure what the strategy is currently with negotiating on the contracts for this unique provision. Therefore, he couldn't speak to if the Administration is or why it isn't negotiating to include this provision under the plan. He reiterated the inclusion of this provision under the state health plan deals with state employees, and it does not deal with the coverage of this kind of treatment in general. REPRESENTATIVE VEZEY noted there are a number of state employees who are not part of a bargaining unit, but they are covered by the state plan the Administration puts together on their behalf. If the Administration believes this is a good policy, why don't they negotiate it into that service? MR. STALNAKER pointed out that a change in the health plan is being looked at for non-covered employees which would include a flexible benefit plan that employees then could select certain types of coverages but there would be minimal coverages. As a matter of fact under that plan, one of the minimal coverages is a well- physical for employees annually because it has been determined that it is a good idea for people to get physicals from time to time. Therefore, the idea of preventative care or early detection would be embedded in that approach to the flexible plan being looked at. REPRESENTATIVE VEZEY asked Mr. Stalnaker, "Then is your testimony that the Administration intends to make this sort of health care as a mandatory provision that's employee's health care packages for non-covered employees at least, if not for covered employees?" MR. STALNAKER said, "The Administration's position is that these types of treatment are good for the health costs as a whole for early detection. What part of these coverages, whether it be Pap smears, whether it be -- well, mammograms are already mandated coverage, but that these kind of early detection tests are beneficial with the end result because the end result of the health plan will be the result of a group of people that will include legislative employees as well as Executive Branch employees as well Court system employees, deciding exactly what kind of coverages will be provided. So, I can't speak to a guarantee, but certainly the Administration is supportive of early detection and the types of tests that would help to provide early detection." REPRESENTATIVE VEZEY asked if that means the Administration is going to insist that this sort of medical plan be included in its health care programs in the future or not? MR. STALNAKER responded he couldn't speak specifically as to what the plan will look like at the end. He could however, say the group that has worked on this plan to this date, meaning the supervisory bargaining unit as well as the Administration, believes there is value to early detection tests and types of medical treatments that would provide early detections. Number 1748 CO-CHAIR TOOHEY asked why these people making the decisions on what is included in the new contracts weren't at the hearing to testify? She felt it was important to get the word to them that the committee believes these tests are necessary. She announced the bill would be held over until the following Tuesday to allow the people involved to be present. REPRESENTATIVE VEZEY said that Mr. Stalnaker had testified the Administration supports this legislation, and then testified the Administration thought it would be a good idea to put in the contract, but they weren't sure. He asked if the Administration is sure this legislation is a good bill? MR. STALNAKER responded the Administration thinks this bill is a good idea. CO-CHAIR TOOHEY asked if the Administration thinks testing is a good idea or do they think this bill is a good idea? MR. STALNAKER replied the Administration believes testing is a good idea. Number 1877 REPRESENTATIVE ROBINSON said this bill, as written, basically provides this coverage to all people of the state, not just state employees. MR. STALNAKER responded that was correct. REPRESENTATIVE ROBINSON felt this would probably be difficult to negotiate into a contract since the legislature has continued to indicate they want any contract negotiations to come in at a lower amount. MR. STALNAKER confirmed that. He added there had, at times, been comments that the state's plan is very generous and that is a sensitive issue as the unions and Administration negotiate. REPRESENTATIVE ROBINSON surmised it was the Administration's position as preventative measure, that it is important all insurance coverage for health benefits offer the opportunity for people to be able to get this kind of screening and have it paid for. MR. STALNAKER said that was correct. Number 1963 CO-CHAIR BUNDE said Representative Robinson had used two important key words - opportunity and offering. As a person who could be impacted by prostate cancer, he had done some research on the issue and had read that on a statistical average nationwide, participating in this screening test extends the life of prostate cancer victims by six months and may in some cases decrease the quality of life for the individuals who get a PSA test that is high, have surgery and end up being incontinent the rest of their life. He noted there are some down sides; it should be a personal decision and it is not going to prevent or cure prostate cancer. MR. STALNAKER agreed there are weaknesses as well as strengths with this type of testing and people involved need to know what the numbers indicate. However, it is a way that through a general battery of blood tests the cost of the PSA test could be cut from $70-$80. TAPE 96-45, SIDE A Number 025 CO-CHAIR BUNDE said he believes there is some validity in the test and like many things it has some upsides and downsides. He thought the choices should be made available to as many men as possible and in the case of cervical cancer, to as many women as possible, but it is not free. He admitted that maybe people are more inclined to take the test if the money is not coming out of their pocket at the moment, but that's no substitute for personal responsibility. He was inclined to change it to a mandatory offering rather than mandatory coverage, which allows a menu of services so to speak, and people who are more inclined to need the services won't take it out of their pocket at the time they need the test, but will pay a premium over a period of time. He asked what Mr. Stalnaker's reaction was to changing it from a mandatory coverage to a mandatory offering. Number 173 MR. STALNAKER said, "Over the years as a health plan administrator, I generally am philosophically opposed to mandated coverages for many of the reasons that were brought out, when I see over the years certain things that you get a real good return for your investment. That's my thinking and I think this is one of those things and that's why I think it is a good idea. It isn't lightly that I say that because I don't think the place is to force an employer to have to provide certain coverages, but sometimes you do things for people's own good. And I think this is a test that will save that employer a lot of money through the very free market dynamics that you identified. Because the same can happen if you pay a little bit up-front and the cost of that treatment for prostate cancer or for late detection, if they have positive results from the test can lower the costs of those same health plans in the future. It is for those reasons that I believe this is a good idea. I think changing it to a mandatory offering would certainly dilute what the bill is trying to do in that respect. The bill does provide for mandatory, and you're suggesting mandatory offering. I think it is better than nothing because it at least puts it out in the front and makes it an issue to discuss with employers as insurance plans are suggested." CO-CHAIR TOOHEY thanked Mr. Stalnaker for his testimony and asked Gordon Evans to come forward and present his testimony. Number 317 GORDON EVANS, Lobbyist, Health Insurance Association of America, testified that as a representative of his client, they were opposed to this legislation in its present form because of the mandated requirement. Mandated benefits result in increased premiums more so in individual policies than in group policies because the benefit can be negotiated in a group policy where there are more people in which to spread the cost. The Health Insurance Association of America does support a mandated offering because then the insurance companies can take it into consideration in their underwriting. He said incidentally, the Health Insurance Association of America does not include Aetna or Blue Cross. MR. EVANS said on an individual basis, he recently underwent the PSA testing as a part of his physical, and felt comfortable knowing he got a low rating. He noted the cost was $36 with his family physician, so it isn't all that expensive. With regard to insurance companies not covering the cost of the PSA test because of it being preventative medicine, his client had advised that it's not because it's preventative, but rather it's still considered experimental and insurance companies do not pay for experimental tests. As an individual, he felt the testing was a good thing but he didn't know that his insurance company should necessarily pay for it or if he should. He concluded that if the bill were changed to a mandated offering, the association would support it. Number 504 CO-CHAIR TOOHEY asked if Mr. Evans' client considered Pap smears and mammograms experimental? MR. EVANS said he did not know, but added that mammograms have been mandated in this state for several years. CO-CHAIR TOOHEY asked if there were any questions for Mr. Evans. Hearing none, she asked Reed Stoops and Jerry Reinwand to testify. CO-CHAIR TOOHEY asked if either Aetna or Blue Cross of Washington & Alaska offered mammograms and Pap smears and/or PSA testing in state contracts? Number 609 REED STOOPS, Lobbyist, Aetna Life & Casualty, testified that Aetna handles the state contract and covers mammograms, Pap smears and PSA testing, but as Mr. Stalnaker pointed out, if it is requested by a doctor for medical reasons, it's covered. In the case of the PSA test, occasionally it is not covered if it is at the request of the patient on a normal screening basis and there is no other interaction with the physician. CO-CHAIR BUNDE said, "So it is often covered but not always covered." CO-CHAIR TOOHEY commented it was just two years ago that mammograms were covered; before that they were never covered. MR. STOOPS understood it was the same criteria; they were covered if it was requested by the physician. There would be a physical exam first followed by a mammogram, if considered appropriate. Number 671 JERRY REINWAND, Lobbyist, Blue Cross of Washington & Alaska, said basically it operates the same for Blue Cross of Washington & Alaska. He added that it depends on how the health care providers deal with it. He thought that under the retired state employee plan, a physical examination is not covered. But if the doctor bills it as a diagnostic test, it is covered so providers can figure out how to get around it. CO-CHAIR TOOHEY asked if there were further questions. She asked Mr. Stoops and Mr. Reinwand if they could see the need or benefit monetarily for preventative medicine? Number 747 MR. STOOPS replied yes, on behalf of Aetna. As a matter of principle, Aetna normally agrees with the Health Insurance Association in that mandated coverages are often opposed because of the fact that they increase the cost of care. In the case of mammograms, PSA tests and Pap smears, Aetna does not oppose the idea of making those mandatory if the legislature feels that benefits outweigh the small cost. Those are areas that Aetna has not opposed that kind of legislation. He felt the argument could be made that in the end early detection should result in more efficient treatment later on and ultimately will avoid high catastrophic treatment at a latter point if not detected. He thought where there had been disagreement, it's been the fact that new tests as they evolve become increasingly dependable and there's increasing agreement among providers on exactly how to use the test to best achieve the desired results. So early on there is often disagreements about whether they should be covered or not. He felt that PSAs, mammograms and Pap smears have evolved to the point now where they are becoming increasingly common and not quite as controversial as to their effectiveness. Therefore, he felt it was more a matter of policy as to whether the legislature wanted to make them mandated coverages. Number 845 MR. REINWAND said he shared Mr. Stoops' feelings and added there has been a shift in the insurance industry where things that were fought and not acceptable four or five years ago are now becoming more acceptable. He said Blue Cross has had a change in management and a change in how things are viewed and he felt generally they were trying to be more enlightened. For example, when health care was being debated in the legislature, Blue Cross came forward with a proposal advocating a kids program that would have basically been preventative in nature and very cost effective. He concluded that generally Blue Cross is supportive of preventative measures because it saves money in the long run. CO-CHAIR TOOHEY asked if Blue Cross paid for infant immunizations? MR. REINWAND didn't know, but said he would check into it. MR. STOOPS remarked that Aetna donated vaccine to the state several years and provided grant funds for non-state employees to get free infant vaccinations. CO-CHAIR TOOHEY announced that she would be holding CSSB 253(FIN) in committee until the following Tuesday. Number 944 REPRESENTATIVE ROKEBERG asked if Blue Cross provides these tests in their individual plans, non-group policies that are offered to the public? MR. REINWAND said he would have to get back with Representative Rokeberg; he didn't know at this point. CO-CHAIR TOOHEY commented she didn't think there was an insurance plan that didn't have a deductible, and she thought it would be wonderful if there was an incentive such as deducting a certain amount off their next visit for people who use their deductible for a mammogram or a Pap smear. MR. REINWAND stated that Blue Cross of Washington & Alaska is having lots of problems in individual policies because of the "Reform Bill" that was passed in the state of Washington and it's common knowledge that individual policies cost about $30 million worth of losses to the company last year simply because of the mandates and things of that nature. CO-CHAIR TOOHEY reminded committee members that CSSB 253(FIN) would be held over in committee. ADJOURNMENT CO-CHAIR TOOHEY adjourned the meeting of the House Health, Education and Social Services Committee at 4:55 p.m.