Legislature(1999 - 2000)
04/10/1999 10:07 AM 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 10, 1999 10:07 a.m. MEMBERS PRESENT Representative Fred Dyson, Co-Chair Representative John Coghill, Co-Chair Representative Jim Whitaker Representative Joe Green Representative Carl Morgan Representative Tom Brice (via teleconference) MEMBERS ABSENT Representative Allen Kemplen COMMITTEE CALENDAR HOUSE BILL NO. 175 "An Act requiring the Department of Health and Social Services to provide notice to a community council on receipt of an application for a license to operate a certain kind of foster group home." - HEARD AND HELD; ASSIGNED TO SUBCOMMITTEE HOUSE BILL NO. 149 "An Act relating to insurance coverage for treatment of mental illness and substance abuse; repealing provisions of ch. 8, SLA 1997, that terminates required mental health benefit coverage; and providing for an effective date." - HEARD AND HELD; ASSIGNED TO SUBCOMMITTEE HOUSE BILL NO. 142 "An Act relating to the education credit for the fisheries business tax and the fisheries resource landing tax; and providing for an effective date." - MOVED CSHB 142(HES) OUT OF COMMITTEE HOUSE JOINT RESOLUTION NO. 6 Proposing amendments to the Constitution of the State of Alaska relating to state aid for education. - MOVED HJR 6 OUT OF COMMITTEE (* First public hearing) PREVIOUS ACTION BILL: HB 175 SHORT TITLE: LICENSING OF FOSTER GROUP HOMES SPONSOR(S): REPRESENTATIVES(S) GREEN, Dyson, Halcro Jrn-Date Jrn-Page Action 3/31/99 628 (H) READ THE FIRST TIME - REFERRAL(S) 3/31/99 628 (H) HES, CRA 4/06/99 661 (H) COSPONSOR(S): HALCRO 4/08/99 (H) HES AT 3:00 PM CAPITOL 106 4/08/99 (H) HEARD AND HELD 4/10/99 (H) HES AT 10:00 AM CAPITOL 106 BILL: HB 149 SHORT TITLE: INSURANCE: MENTAL HEALTH & SUBSTANCE ABUSE SPONSOR(S): REPRESENTATIVES(S) DAVIS BY REQUEST Jrn-Date Jrn-Page Action 3/19/99 516 (H) READ THE FIRST TIME - REFERRAL(S) 3/19/99 516 (H) HES, L&C, FIN 4/08/99 (H) HES AT 3:00 PM CAPITOL 106 4/08/99 (H) HEARD AND HELD 4/10/99 (H) HES AT 10:00 AM CAPITOL 106 BILL: HB 142 SHORT TITLE: EDUCATION CREDIT FOR FISHERY TAXES SPONSOR(S): REPRESENTATIVES(S) DAVIS Jrn-Date Jrn-Page Action 3/19/99 514 (H) READ THE FIRST TIME - REFERRAL(S) 3/19/99 514 (H) HES, FINANCE 4/08/99 (H) HES AT 3:00 PM CAPITOL 106 4/08/99 (H) HEARD AND HELD 4/10/99 (H) HES AT 10:00 AM CAPITOL 106 BILL: HJR 6 SHORT TITLE: CONST. AM: EDUCATION FUNDING SPONSOR(S): REPRESENTATIVES(S) KOHRING, Coghill Jrn-Date Jrn-Page Action 1/19/99 17 (H) PREFILE RELEASED 1/15/99 1/19/99 17 (H) READ THE FIRST TIME - REFERRAL(S) 1/19/99 17 (H) HES, JUDICIARY, FINANCE 2/05/99 146 (H) COSPONSOR(S): COGHILL 3/16/99 (H) HES AT 3:00 PM CAPITOL 106 3/16/99 (H) SCHEDULED BUT NOT HEARD 3/23/99 (H) HES AT 3:00 PM CAPITOL 106 3/23/99 (H) HEARD AND HELD 3/23/99 (H) MINUTE(HES) 4/01/99 (H) HES AT 3:00 PM CAPITOL 106 4/01/99 (H) MEETING CANCELED 4/10/99 (H) HES AT 10:00 AM CAPITOL 106 WITNESS REGISTER JEFF LOGAN, Legislative Assistant to Representative Joe Green Alaska State Legislature Capitol Building, Room 214 Juneau, Alaska 99801 Telephone: (907) 465-3727 POSITION STATEMENT: Testified on HB 175. RUSS WEBB, Deputy Commissioner Department of Health, Education and Social Services P.O. Box 110601 Juneau, Alaska 99811 Telephone: (907) 465-3030 POSITION STATEMENT: Testified on HB 175. ROBERT BUTTCANE, Juvenile Probation Officer Youth Corrections Division of Family and Youth Services Department of Health and Social Services P.O. Box 110630 Juneau, Alaska 99811 Telephone: (907) 465-3228 POSITION STATEMENT: Provided information on HB 175. SHANNON O'FALLON, Assistant Attorney General Human Services Section Civil Division (Juneau) Department of Law P.O. Box 110300 Juneau, Alaska 99811 Telephone: (907) 465-3600 POSITION STATEMENT: Provided information on HB 175. REPRESENTATIVE GARY DAVIS, Alaska State Legislature Capitol Building, Room 513 Juneau, Alaska 99801 Telephone: (907) 465-2693 POSITION STATEMENT: Testified as sponsor of HB 149 and HB 142. DEB DAVIDSON, Legislative Administrative Assistant to Representative Gary Davis Alaska State Legislature Capitol Building, Room 513 Juneau, Alaska 99801 Telephone: (907) 465-2693 POSITION STATEMENT: Presented sponsor statement on HB 149. WALTER MAJOROS, Executive Director Alaska Mental Health Board Office of the Commissioner Department of Health and Social Services P.O. Box 110601 Juneau, Alaska 99811 Telephone: (907) 465-3071 POSITION STATEMENT: Testified in support of HB 149. GENE GRASTO National Alliance for the Mentally Ill, Fairbanks 1369 Ballaine Road Fairbanks, Alaska 99709 Telephone: (907) 455-6263 POSITION STATEMENT: Testified in support of HB 149. JEANETTE GRASTO, President National Alliance for the Mentally Ill, Fairbanks 1369 Ballaine Road Fairbanks, Alaska 99709 Telephone: (907) 455-6263 POSITION STATEMENT: Testified on HB 149. VICKI TURNER MALONE, Owner, Malone and Company, Inc., Independent Insurance Agents P.O. Box 2178 Bethel, Alaska 99559 Telephone: (907) 543-2934 POSITION STATEMENT: Testified on HB 149. NANCY CAUGHELL Parents Incorporated P.O. Box 232786 Anchorage, Alaska 99523 Telephone: (907) 344-7158 POSITION STATEMENT: Testified on HB 149. SCOT WHEAT National Alliance for the Mentally Ill P.O. Box 2353 Homer, Alaska 99603 Telephone: (907) 235-6840 POSITION STATEMENT: Testified on HB 149. ELIZABETH LaCROSSE, Vice President National Alliance for the Mentally Ill, Alaska; Member, Alaska Mental Health Board; Member, Governor's Committee on Employment and Rehabilitation of People With Disabilities P.O. Box 8552 Ketchikan, Alaska 99901 Telephone: (907) 225-8552 POSITION STATEMENT: Testified in support of HB 149. JEFF JESSEE, Executive Director Alaska Mental Health Trust Authority Board of Trustees 13030 Back Road Anchorage, Alaska 99515 Telephone: (907) 269-7960 POSITION STATEMENT: Testified in support of HB 149. ROBYN HENRY, Executive Director National Alliance for the Mentally Ill, Alaska P.O. Box 1143205 Anchorage, Alaska 99514 Telephone: (907) 522-3152 POSITION STATEMENT: Testified in support of HB 149. JOHN GEORGE, Lobbyist for American Council of Life Insurance 3328 Fritz Cove Road Juneau, Alaska 99801 Telephone: (907) 789-0172 POSITION STATEMENT: Testified on HB 149. DONALD DAPCEVICH, Executive Director Governor's Advisory Board on Alcoholism and Drug Abuse P.O. Box 110608 Juneau, Alaska 99811 Telephone: (907) 465-8920 POSITION STATEMENT: Testified in support of HB 149. GORDAN EVANS, Lobbyist for Health Insurance Association of America 211 Fourth Street, Suite 305 Juneau, Alaska 99801 Telephone: (907) 526-3210 POSITION STATEMENT: Testified on HB 149. PAMELA LaBOLLE, President Alaska State Chamber of Commerce 217 Second Street, Suite 201 Juneau, Alaska 99801 Telephone: (907) 586-2323 POSITION STATEMENT: Testified on HB 149. PAT CLASBY Alaska State Hospital and Nursing Home Association 211 Fourth Avenue, Suite 114 Juneau, Alaska 99801 Telephone: (907) 463-6753 POSITION STATEMENT: Testified in support of HB 149. PATRICIA ARNOLD 3479 Landing, Number 1 Homer, Alaska 99603 Telephone: (907) 235-7423 POSITION STATEMENT: Testified on HB 149. DEBORAH VOGT, Deputy Commissioner Department of Revenue P.O. Box 110400 Juneau, Alaska 99811 Telephone: (907) 465-2300 POSITION STATEMENT: Provided information on HB 142. DIANE BARRANS, Executive Director Postsecondary Education Commission Department of Education 3030 Vintage Boulevard Juneau, Alaska 99801 Telephone: (907) 465-6740 POSITION STATEMENT: Provided information on HB 142. ACTION NARRATIVE TAPE 99-33, SIDE A Number 0001 CO-CHAIRMAN DYSON reconvened the House Health, Education and Social Services Standing Committee meeting at 10:07 a.m. Members present at the call to order were Representatives Dyson, Coghill, Whitaker, Morgan and Brice (via teleconference). Representative Green joined the meeting at 10:18 a.m. HB 175 - LICENSING OF FOSTER GROUP HOMES Number 0035 CO-CHAIRMAN DYSON announced the first order of business as House Bill No. 175, "An Act requiring the Department of Health and Social Services to provide notice to a community council on receipt of an application for a license to operate a certain kind of foster group home." Number 0238 JEFF LOGAN, Legislative Assistant to Representative Joe Green, came forward to make corrections on some testimony heard on April 8, 1999. He stated, "Not to debate anyone in absentia, but there are a few points that were made during testimony on Thursday that I would like to either correct, complete or clear up. Mr. Jessee, who is also a constituent of Representative Green, testified that 'hard cases make bad law' and inferred that the sponsor got angry in a situation and jumped up and drafted the bill. For the record, Mr. Chairman, when the scope of this problem became apparent about a year ago, I advised the sponsor to amend a bill that he had at that time in the Judiciary Committee, HB 375, which had a title that clearly encompassed solutions to the problems we saw here, and he decided no, to wait to ... collect a paper trail and see if we could work the problem through the department. That didn't happen. So I would like the record to be clear that this is not any angry reaction to a problem; we've been working it for over a year." MR. LOGAN referred to inferences about the bill being a violation of the fair housing act. He asked the drafter about this and on the face of it, it appears it is not a violation of the fair housing act. He is continuing research on that point. There were statements about how the bill would burden foster parents and operators. The sponsor may choose to speak later about the gift of foster parenthood, but in drafting the measure, they very specifically avoided burdening foster parents in any way. The bill does not require anything of foster parents. The only performance required in the bill is by the department. It is a notice from the department to the community council, similar to the statutory required notice for a liquor license. MR. LOGAN went on to say that there were some statements that this bill would only apply to Anchorage because community councils are only organized in Anchorage. The Kenai borough has three community councils, the Matanuska-Susitna borough has 24 community councils, and Anchorage has 37 community councils. Mr. Vote testified that he felt harassed when people stopped in front of his home and wrote down license plate numbers. For the record, Mr. Logan noted, he may have been responsible for that. When the neighbors called their state representative to complain about vehicles with state license plates speeding on their street, he called the Division of Family and Youth Services (DFYS) and was told to have people write down license plate numbers, and they would take care of it. MR. LOGAN noted there was a statement made that Mr. Vote was forced to sell his home at a loss. Mr. Vote purchased his home for $450,000, and the selling price listed in the classified of the Anchorage Daily News is $489,900. The ad also states the house has nine bedrooms. There are motels in this state that do not have nine bedrooms. There was a question from someone asking what if they, as a neighbor, wanted to take in foster children. The phrase "as a neighbor" is key; if it is a neighbor, that person is already known. That is a far cry from an unknown person, a single man, coming in and filling a nine-bedroom house with emotionally disturbed teenagers. That was the cause of the problem in this case. There was some talk about big brother; the bill provides too much information. The government already has this information. They are not collecting any more information; they are simply notifying the community council that an application has been received. MR. LOGAN stated that in the sponsor's and his opinions, there was a breathtaking gap between what Mr. Webb testified and what actually happened. Yes, they got information, but it took a year. The information that Mr. Webb indicated to the committee that is readily available, was not readily available. He quoted from a letter Representative Green wrote last May which said, "A few minutes from the Deputy Commissioner or the Commissioner with a group of local citizens would clear the whole thing up." The department wrote back and said "No it wouldn't." CO-CHAIRMAN DYSON asked Mr. Logan for copies of the series of letters. Number 0630 REPRESENTATIVE WHITAKER asked who makes notification to whom in HB 175. MR. LOGAN answered that notification would be made by DFYS to the community councils, and the list of their addresses is readily available. REPRESENTATIVE WHITAKER asked if that is where the process stops. MR. LOGAN replied that it is up to the community council. There was some discussion about how the bill might not fix the problem; it wasn't intended to be an overall systems approach because there might not be a problem. It might be that once citizens are informed an application has been received, they will say "No problem." It could be that the home is for some developmentally disabled toddlers or someone who would posed no threat. They could put their arms around that and say, "That is great." It could be that the home is for a group of emotionally distressed teenagers, and they might want to know more about that. Whether the process stops there depends on the community council or the neighbors. Number 0776 REPRESENTATIVE WHITAKER said that was his concern. The bill says there will be notification; it doesn't say anything about a continuing process. Yet that continuing process has been inferred by what Mr. Logan has said. Representative Whitaker believes that, by intent, there is a continuing process, and it needs to be identified. He sees this bill putting something out that provides a number of questions that are unanswered. He asked Mr. Logan what would be the next step if the community council says "No, we don't want this." Number 0819 MR. LOGAN said the next step would be whatever steps they have available to them now. There is no empowerment in this legislation to stop a home. The worst-case scenario is at least people will know what is going on in their neighborhood. He compared the bill to a bear bell. "As you are hiking through the woods in territory that might have bears, you have two ways to let the bear know you're coming. You can wear a bell to let the bear know you're coming so the bear can adjust its spatial requirements, become acclimated to the fact that you are there, and everybody's OK. Or you can surprise the bear, in which case, the bear becomes irritated and might react in a way that people might react if all of a sudden, right next to them, is an institution with a bunch of people that they know nothing about." This bill simply notifies people so they can make their internal adjustments. REPRESENTATIVE WHITAKER asked Mr. Logan to describe the neighborhood in question. MR. LOGAN answered that it is mid- to upper-price level homes; not affluent but upscale. There is an undeveloped park with a small playground on one side and a sea bluff on the backside. Number 0941 REPRESENTATIVE WHITAKER commented that there may be a stigma attached to foster group homes. They are not considered upscale nor affluent. He is concerned that those in the neighborhood may think that foster group homes are just fine--in somebody else's neighborhood, perhaps a less upscale neighborhood, "Not in my backyard (NIMBY)." He asked Mr. Logan to comment on that. MR. LOGAN deferred that question to the sponsor, Representative Green. Number 1035 CO-CHAIRMAN DYSON indicated that his cursory analysis of this situation is everything that could go wrong, did; almost every reaction that could have been better, wasn't; and he wants to do everything possible to de-escalate the intensity of the discussion and focus on what went wrong, if anything. He wants to know if there is a generic problem that needs to be addressed, what they learned from it, and what can they do better in the future. Even though he is listed as a sponsor, he believes that HB 175 is not the best solution. REPRESENTATIVE WHITAKER concurred with Co-Chairman Dyson's analysis and intent; he is not trying to put Representative Green or anyone on the spot. REPRESENTATIVE GREEN appreciated Representative Whitaker's comments. He guaranteed that in this particular neighborhood, NIMBY is not an issue. If that were a safe home for children or younger children, it wouldn't matter. That neighborhood has children of its own and loves children; they would welcome such an institution. They are concerned about the safety of their own children. It would be acceptable to have notification only when the children are above certain ages. The spokesperson for the community said she would have no problem with that and would welcome such a situation. CO-CHAIRMAN DYSON told the people at the Kenai Legislative Information Office the committee is under a time constraint, and if they don't get to their testimony, he would like them to leave their phone numbers so they can get back to them if this goes to a subcommittee. The committee does want their input. Number 1254 CO-CHAIRMAN DYSON asked Mr. Webb to summarize from his perception what went wrong in this particular situation, what if any problems or mistakes the department made, what they learned from it, and what would be different in the future. Number 1280 RUSS WEBB, Deputy Commissioner, Department of Health, Education and Social Services (DHSS), came forward to testify. He stated that there was a good bit of information the community council and the neighborhood wanted from the department; they tried to make a good faith effort by meeting with the community council and neighborhood on at least three occasions to provide them with information. One thing the DHSS encountered was the desire from the neighborhood for information that they cannot provide. If they failed, what they failed to do is help people really understand the legal framework within which they work, and the impeding interests that drive that legal framework. CO-CHAIRMAN DYSON asked Mr. Webb what the time lag was between the time the people called for the information and the first meeting. Number 1341 MR. WEBB responded that his first indication was when Representative Green contacted him last May at the end of session. After that teleconference, they established within a week a meeting with the DFYS licensing staff, regional manager, and several other DFYS staff, in the neighborhood to discuss the issues. CO-CHAIRMAN DYSON asked when was the first time the neighbors started trying to get the information and didn't. He also asked Mr. Webb to document the other two meetings he had in the neighborhood. MR. WEBB said he didn't have the date of the second meeting off the top of his head, but he believed the licensing staff and regional manager had a second meeting in the neighborhood a month or two after the initial meeting. He met with the community council November 11, 1998. Within the time available at that meeting, there was not enough time to answer all the neighbors' questions. It was suggested the neighbors submit their written questions to the DHSS, and the DHSS received two separate submissions over a month's time. They answered the 64 questions in January 1999 attempting to provide detailed answers and information. Number 1453 CO-CHAIRMAN DYSON asked Mr. Webb if he knows how the initial phone calls from the neighborhood got handled. MR. WEBB answered he essentially knows nothing about questions the neighborhood may have raised. CO-CHAIRMAN DYSON asked what the policy is for the staffers who would have responded for those calls. MR. WEBB told him when someone calls, the staff try to give out the public information. He understands that much of the information people asked for was information on the children's conditions, diagnoses, treatment histories and other things that are not public information. The department does not give out information that they are legally bound not to. REPRESENTATIVE GREEN recommended that someone from DFYS attend the subcommittee meeting. Obviously, there is disparity in what people on both sides of this issue agree as facts. He pointed out there should never had been a need for him to be involved in the first place. There is a seven-month hiatus between the end of session and November. It seems like it is pulling teeth to try to get information from the DHSS. He believes that breeds an attitude which creates animosity, and therein lies the problem. Lack of information and an adversarial appearance, even if it is not true but appears that way, is a problem. The DHSS needs to mend some fences. They have been able to make inroads in release of information where it is absolutely necessary. He contends that when a foster group home is being established in a neighborhood, a certain amount of public information could be released. He wants government to cooperate with its people. That is all he is after, and that is all the people in his neighborhood are after. CO-CHAIRMAN DYSON asked Mr. Webb if there were activities in the house that required the police to come. MR. WEBB replied that he believed Mr. Vote answered that question the other day in the affirmative; the police had been called and Mr. Vote called Mr. Webb. CO-CHAIRMAN DYSON asked if the police record was available from that incident or was it confidential. MR. WEBB explained that with passage of HB 6 several years ago, there is information available about an offense committed by a youth which includes the youth's name and the type of offense. He asked Mr. Buttcane to answer the question. ROBERT BUTTCANE, Juvenile Probation Officer, Youth Corrections, Division of Family and Youth Services, Department of Health and Social Services, responded that HB 6, known as the juvenile disclosure law, requires that the records related to juvenile offenses involving weapons be made public. He believes that the case described would be subject to the juvenile disclosure law, but he doesn't know if that incident occurred prior to the enactment of HB 6. If that type of incident happened today, there would be a public record available to anyone who asked for it. CO-CHAIRMAN DYSON asked how would someone go about getting that information. Number 1773 MR. BUTTCANE answered they would contact the local juvenile probation office. Those records are available en masse to anyone who comes in the front doors so they can look at a flip board and see any or all of the juvenile disclosure records. CO-CHAIRMAN DYSON asked if there is a geographical sort on the list if people don't know the name. MR. BUTTCANE answered that they are not structured in such a way to do exhaustive searches with bits of information, but if they can't find the information, they would invite the person to look at the file to see if he/she can find the one they want. The probation office tries to be as cooperative and helpful as possible. CO-CHAIRMAN DYSON asked if that information would ever be on-line. MR. BUTTCANE said they are not in the process now of putting information on line, but there is nothing that money can't solve. MR. WEBB told them they are attempting to develop a juvenile offender management information system, but they are a long way from getting there. Once they get there, this may very well be information that is available to the public on-line. CO-CHAIRMAN DYSON asked if HB 6 only involved crimes with a weapon. MR. BUTTCANE answered no, there are a number of offenses: felony assaults against persons (which include sexual assaults), burglary in the first degree, and violations of court orders could result in disclosure of original offense referrals. CO-CHAIRMAN DYSON asked Mr. Webb if he foresaw the day when he will have a data base where anyone can know if there has been a serious offense. MR. WEBB responded certainly at some point in the future. As Mr. Buttcane said, the information is available now; it is the sorting that is a bit difficult. However, the numbers are relatively small in many communities, so information is more readily available. There is a process that needs to be undertaken before that information can be put out, but down the line, it should be more readily available to the public. Number 1956 REPRESENTATIVE GREEN reiterated his concern of an attitude about releasing information to help the community understand. He pointed out that HB 6 went into effect in 1997, but they didn't know about this situation until 1998, and they found out about it through a newspaper article. "Can you imagine somebody with two little girls that play across the street or in this park area, and they're having their morning coffee, and they read that there is a knife wielder in a group foster home two doors away." There is a huge tidal wave of animosity that should never have happened. If the neighbors had known that this might happen, or there could be arrangements made, as there were subsequently. DFYS did agree they would not put that kind of person in this particular home again. He believes the department would have never heard from them if all of that had been handled up-front. Number 2028 MR. WEBB understands the issues that have been raised. They didn't have, and currently don't have, a mechanism for identifying all the people who would be interested in knowing whether a particular foster home exists in their community. He believes a limit in this bill would be on the type, the size. It would be difficult for the DHSS to promise, in every instance, that no child with a particular history or background would ever be placed in a community-based setting. If that were the case, all children who ever committed offenses would be in institutional settings until they turned 18. They have tried to be sensitive to the issues raised. There are only 44 delinquent children in foster homes today statewide, and the children with histories of sexual offenses are in specific, highly trained and specialized placements; however, those placements are in communities. CO-CHAIRMAN DYSON asked for the criteria of whether a child goes in a foster home or a foster group home. MR. WEBB indicated it is the needs of the child, the ability of the foster parent to meet those needs, to provide supervision, care, follow through with treatment needs, and support the plan for the child. CO-CHAIRMAN DYSON asked if it was fair to say these are the children who need more intensive support and services and have greater needs than children put with nuclear families. MR. WEBB said yes. CO-CHAIRMAN DYSON asked why foster homes didn't have to deal with municipal zoning and planning restrictions. MR. WEBB believes that each municipality can set its own zoning regulations, and presumably they can establish zoning regulations that would impact foster homes. Perhaps Shannon O'Fallon from the Department of Law can answer that. He doesn't know of a state law that says that foster homes are not subject to municipal zoning ordinances. CO-CHAIRMAN DYSON clarified that this legislation is talking only about group foster homes, not foster homes. SHANNON O'FALLON, Assistant Attorney General, Human Services Section, Civil Division (Juneau), Department of Law, answered that she was not aware of any state law or regulation that says that a foster home or a foster group home wouldn't have to comply with any local zoning ordinances, but she would do some research. MR. WEBB noted that the community council did research on specific zoning ordinances in Anchorage in this case, and he believes they have some plans to address ordinances for the specific concerns. He knows that the larger facilities do have some zoning restrictions in some communities. CO-CHAIRMAN DYSON agreed he was surprised on Thursday when somebody said the state doesn't have to abide by municipal codes. He asked Representative Green or Mr. Logan why they didn't deal with this on a municipal level. REPRESENTATIVE GREEN answered that was the first way they went through assembly members Mr. Bell and Ms. Abney. Mr. Bell checked with an Anchorage attorney and was told that the state's needs superseded local zoning ordinances. They took that as a fact and didn't pursue it any further; obviously, they will now. REPRESENTATIVE BRICE told them the larger institutions for residential care providers are held to planning and zoning requirements in Fairbanks. He agreed they should pursue that. CO-CHAIRMAN COGHILL recommended that the subcommittee will need to take up the definition of a foster group home because it is not in statute now. REPRESENTATIVE GREEN noted they got a description from DFYS and presumed it was part of their regulations. TAPE 99-33, SIDE B REPRESENTATIVE GREEN added it is not the intent of the legislation nor the neighborhood to exclude foster homes or even foster group homes. They just want to know beforehand. REPRESENTATIVE WHITAKER pointed out that the only concern he has to this bill is that they not create an impediment to the furtherance of the foster care program. It is there because there is great need. They need to recognize the neighborhood's need to know what is happening in their neighborhood as well as the need of the foster care program. He hopes this can be done through the subcommittee. He didn't want his concerns to be misconstrued as opposition to the bill. He believes there is a way to bring both needs together. REPRESENTATIVE BRICE asked if someone from the DHSS could answer whether there is a regulatory definition of foster group homes. MR. WEBB reported there is a definition of foster group homes in regulations. A foster group home is defined in 7AAC 50.990 as a home having not more than eight children. Number 2275 CO-CHAIRMAN DYSON commented that the focus of the debate is group homes where there is a demonstrated risk from violence and sexual offenses. That is all the neighbors are concerned about, and there is some legitimacy to that. He asked Mr. Webb if they could post the addresses and locations of group homes on their web page. MR. WEBB answered they certainly could with enough time and resources. Given that there are very few foster group homes, it should not be a huge burden. CO-CHAIRMAN DYSON said they will need to talk about the mechanics about the information that can be disclosed and the limitations. He announced the committee would hold HB 175, and he assigned it to a subcommittee made up of Representatives Green, Brice and Dyson. He requested that the subcommittee meet in the next seven to ten days. Co-Chairman Dyson will be the chair of the subcommittee. [HB 175 was held over.] The committee took an at-ease from 11:04 - 11:08 a.m. CO-CHAIRMAN DYSON handed the gavel to Co-Chairman Coghill. HB 149 - INSURANCE: MENTAL HEALTH & SUBSTANCE ABUSE Number 2077 CO-CHAIRMAN COGHILL announced the next order of business as House Bill No. 149, "An Act relating to insurance coverage for treatment of mental illness and substance abuse; repealing provisions of ch. 8, SLA 1997, that terminates required mental health benefit coverage; and providing for an effective date." REPRESENTATIVE GARY DAVIS, Alaska State Legislature, sponsor of HB 149, came forward to present it. He stated that HB 149, the mental health parity bill, is an issue that affects every state because of federal legislation passed three or four years ago. He finds it interesting that insurance treats mental health differently. A task force was put together to study the issue, and the result is the "Mental Health Parity Task Force Report" and HB 149. DEB DAVIDSON, Legislative Administrative Assistant to Representative Gary Davis, presented the sponsor statement for HB 149. Briefly, HB 149 affects businesses with 20 or more employees who already provide health insurance benefits to their employees. It requires these businesses to provide mental health substance abuse benefits that are equal to those that they provide for physical health. It specifically says that in providing health insurance regarding mental health benefits, a plan cannot require different deductibles, coinsurance ,or copayments, than they require for physical health. They cannot impose different lifetime benefit limits and cannot use different maximum out-of-pocket expenses. Additionally, it requires they use the same claim payment methodologies for mental and physical health. They cannot apply different limits for treatment services or general coverage such as pre-notification requirements for second opinions of existing conditions. The different claim payment methodologies and different limits for treatment services are criteria that are currently in statute in the substance abuse statute, and they just incorporated that into HB 149. The bill was drafted to allow insurance plans to implement these two things as either a part of the existing limits, or as "separate but equal." For example, if there is a $250 deductible, they can say that the deductible is met when both physical and mental health bills reach that amount, or they can have a $250 deductible for each. They leave it up to the individual plans and employers. MS. DAVIDSON continued that recognizing that a lot of the costs can be contained through managed care, HB 149 does not prohibit the involvement of a managed care organization to provide mental health and substance abuse treatment. But it does state however, that involvement cannot diminish or negate the requirements and intents of the bill itself. It also says the organization may not use administrative or clinical protocols that reduce the access to treatment. Additionally, the managed care organization must still provide timely and appropriate access to and adequate quantity of location and specialty distribution for the providers. MS. DAVIDSON explained that the task force determined that the types of mental illness to be covered would be those disorders that are described in the Diagnostic and Statistical Manual of Mental Disorders (DSM-IV) which is published by the American Psychiatric Association. These include the mental disorders that have a biological or chemical cause for the onset. It excludes the disorders classified with a "V" code--these types of disorders related normally to a relationship or workplace problems. MS. DAVIDSON stated that they also decided to require the coverage for substance abuse under the legislation because it is very common for individuals diagnosed with mental illness to also suffer from substance abuse or vice versa. It has been shown that in many cases, one ailment cannot be controlled without also treating the other. The primary concerns are who is affected by this legislation and how much is it going to cost; how much will claims to insurance companies increase; and how much will the health insurance premiums increase. MS. DAVIDSON reported that preliminary estimates provided by the task force's consultant shows that there are approximately 2,000 Alaska businesses employing more than 20 individuals. These businesses have an estimated 218,000 employees. There are a number of businesses that are self-insured or otherwise fall under federal Employees Retirement and Income Security Act (ERISA), and thus would be exempt. The legislation cannot mandate this type of coverage to a company that self insures. Additionally, businesses that do not currently provide health insurance are not affected. This legislation affects only those businesses who do not fall under ERISA and who do offer health insurance benefits. Taking those things into account, the task force consultant and C & S Management Associates estimated that somewhere between 103,000 and 127,000 individuals would have this coverage which is about 17 to 20 percent of the state's population. MS. DAVIDSON reported that according to Ron Bachman, the actuarial consultant, he estimated that insurance premiums could increase between $31 and $79 per year, per person. This would depend on the amount of managed care involved in it. The costs to companies that currently provide mental health coverage would not increase as much as perhaps companies that provide no mental health coverage. He also estimated the cost of claims filed with insurance could increase between 1.7 and 4.3 percent. There are a lot of unanswered questions regarding this legislation as to the impact on the employers as well as the individuals who need the benefits. The task force decided it was an important issue to get on the table to discuss the best solution. REPRESENTATIVE DAVIS handed out the Mental Health Parity Task Force report. He explained that this legislation was drafted around the recommendations after lengthy debate and discussion. Some of the provisions may seem questionable, but they were thought out, and there are reasons why the bill was drafted as it is. WALTER MAJOROS, Executive Director, Alaska Mental Health Board (AMHB), Office of the Commissioner, Department of Health and Social Services, came forward to testify. He pointed out that the composition of the Alaska Mental Health Board must include, by statute, mental health consumers or family members of mental health consumers. They are in touch with those who experience mental illnesses. Mental health parity is AMHB's number one legislative priority this year. The reason they need advocacy for mental health parity is because there is serious discrimination now. The fact is 90 percent of insurance policies treat mental illness differently than physical illness. Their goal is to achieve equality and end discrimination through this legislation. They believe there isn't much debate on this. The issue is medical necessity. Anyone who meets the definition should have access to the treatment, regardless whether the ailment has a physical base, a mental base or a substance or chemical base. He indicated they can debate about how quickly they get there, the cost, and the size of the risk pool, but there should be no debate on the issues of discrimination and equality. They should consider mental health parity now because of the prevalence of mental illness and substance abuse in Alaska. MR. MAJOROS mentioned that the AMHB is responsible for estimating the number of people in Alaska who experience mental illness and serious emotional disturbances. They do the estimate in conjunction with the Center for Mental Health Services. They estimate that there are 44,500 adults and children who experience serious mental illness and serious emotional disturbances in Alaska. The prevalence of mental illness is shown by the fact that six out of ten of the leading medications prescribed by general practitioners (not psychiatrists) at Providence Hospital are psychotropic medications for mental illness. Number 1444 MR. MAJOROS reported there is data based on a 1997-1998 Gallup Poll that indicates that 18.5 percent of Alaskan men and 8.6 percent of Alaskan women meet the definition of alcohol abuse. For drug abuse, it is 2.9 percent of Alaskan men and 1.1 percent of Alaskan women. He noted that prevalence alone is not the important factor, but the fact that treatment works for both mental illness and substance abuse. There is a tremendous recognition now that mental illnesses are brain disorders caused by chemical imbalances that can be treated successfully through neuropsychology and psychotropic medication. Not only is there success, the mental illnesses are being treated more effectively and less expensively than treating major physical illnesses. For example, treatment of bipolar disorders and schizophrenia is less expensive and more effective than treating physical ailments such as diabetes and heart disease. A report from 1995-1998 showed that 34 percent of Alaskans going through residential treatment for substance abuse abstained from substances for one year of post-treatment. For those that participated in outpatient treatment, 59 percent abstained from substance abuse for an entire year. He reiterated that there is strong evidence that treatment works. MR. MAJOROS pointed out that parity increases consumer self- reliance. The AMHB hears from people who want to work but cannot work. One of the reasons they cannot work is they cannot afford to pay for their medications. Private insurance does not pay for these medications, and they are the same medications that prevent these people from being institutionalized and causes them to be successful in society. These people with mental illnesses revert to the public system. So instead of being productive citizens, they are dependant on the public welfare system. He stated that parity can help reverse that trend. Number 1319 MR. MAJOROS believes that parity is cost-effective, not expensive, and this is demonstrated by the actuarial study done by Ron Bachman of Price Waterhouse Coopers. He is the leading expert in the nation of actuarial studies on the impact of mental health parity. Mr. Bachman estimates that the cost of implementing this legislation would average about $2.62 per person, per month. That is the equivalent of giving someone a 3.5 cent per hour raise. There is demonstrated evidence from other states with mental health parity that the costs are not high in terms of the increases. He told the committee they will hear different information from different parties today, but the AMHB can quote many studies that have indicated that the cost of implementing mental health parity has been very small. In many cases combined with managed care, the costs of these services have gone down. Mental health parity will help give access to treatment earlier, and this will result in higher productivity and lower absenteeism for employees. Early access will also prevent more serious and costly conditions from developing. It will prevent more people from being institutionalized and allow people to receive services in the community. MR. MAJOROS acknowledged that there will be some impact on small businesses, although they don't see it as an enormous hardship; the legislation does include an exemption for businesses with under 20 employees. MR. MAJOROS stated from the AMHB's perspective, they are not a big fan of mandates, but they understand what a risk pool means, and they understand that Alaska does not have a huge population. In order for the risk pool to be large enough to keep the costs down, it is critical that these services be mandated. If it is left as a total voluntary situation, the risk pool will shrink because employers do not choose this coverage, and then the costs will skyrocket. It is economics that brings them to this conclusion. MR. MAJOROS indicated they are estimating 115,000 plus or minus 10 percent as the size of the risk pool. This is a soft number because there is no uniform data base. They drew some information from the Department of Labor, from other states and insurance companies, and Mr. Bachman also validated their estimates. They all come to the same conclusion of 115,000 people. They would be willing to look at other information if someone can provide it. MR. MAJOROS summarized that the very technical issues involving mental health parity, size of the risk pool, mandates, and cost implications can be debated at the Labor and Commerce Committee. He believes the important policy issue at the HESS committee is whether or not they should move towards equality and away from discrimination. He urged the committee's support conceptually for this legislation. Number 1104 CO-CHAIRMAN DYSON declared on the record that he has an obvious conflict of interest, in that his wife is a mental health provider. She derives much of their income from insurance payments and copayments. He has not been able to find anything in the code that would allow him to excuse himself from the vote. He requested that he not be a part of any subcommittee that may come out of this. Number 1041 REPRESENTATIVE GREEN said they had been told there are some 44,000 mentally ill patients in the state, and that the risk pool, because of exemptions, would be somewhere around 110,00 to 125,000. That seems to indicate that two out of those in the risk pool would be paying for the third one. Mr. Majoros indicated about $2 to $3 per month and earlier Ms. Davidson said it would be between $30 and $79 per month, he wondered how they can address the cost of mental illness among what would then be some 80,000 people to pay for 44,000 patient's treatments at only $79 or $2-$3 per month. Number 0993 MR. MAJOROS believes there is no contradiction there; he was giving the average cost per month while Ms. Davidson was talking about the cost per year. Most of the 44,000 people now receive services through the public mental health system. Part of the issue is that the burden for providing mental health services lies almost exclusively on the public system. They are trying to shift that balance and put some of the responsibility within the private sector. REPRESENTATIVE GREEN asked about the majority of the 44,000 being handled by the state who are probably on medication of some sort. MR. MAJOROS explained that figure includes some of those people would be receiving medication. Mental illness is episodic; people may be successfully existing with the community for a long period of time, sometimes with or without the assistance of medication, and then there may be the need for short-term hospitalization. The figure does not mean that 44,000 people are receiving mental health services every day during that year. It may mean at some time during that year that they would require some sort of mental health service. REPRESENTATIVE GREEN asked for clarification on the denominator used to reach the figure of $35 to $70 per month for those in the risk pool. He also asked if it is then borne by the private sector and what assurance do they have that it will not escalate quite rapidly. MR. MAJOROS mentioned there are two primary mechanisms on that. One is the issue of medical necessity which insurance companies use as a standard by which they make decisions about whether a person should receive service or not. If someone comes and wants to receive relationship counseling, they are not going to get it under this coverage. That is one way costs would be controlled and monitored and have been successful in many other states. The other is the issue of managed care. There are many methods insurance companies do use, including prior authorization and continued utilization to manage costs and benefits, to keep them from escalating. Number 0673 REPRESENTATIVE GREEN asked why haven't some of the industry come forward to offer mental health coverage if it is only going to cost about $30 or $40 per year. MR. MAJOROS commented that there have been incredible advances in the fields of mental illness and substance abuse, and there are more successful treatment methodologies available today than there were a few years ago. Some of this is a new mind set; they are seeing treatment effectiveness that they didn't see 10 to 20 years ago. They also need to educate the insurance companies so they are more aware of the effectiveness of preventive techniques and earlier interventions that can lower costs in the long run. REPRESENTATIVE DAVIS responded that the perception of mental illness for a majority of Americans is "One Flew Over the Cuckoo's Nest," and that it is handled in institutions. A lot of other options haven't gotten a lot of consideration. MR. MAJOROS thanked Representative Davis for co-chairing the task force and introducing the legislation. Number 0409 GENE GRASTO, National Alliance for the Mentally Ill, Fairbanks, testified via teleconference from Fairbanks. He stated that over the course of a year, many millions of Americans, including many Alaskans, experience severe mental illness. Today most insurance plans put restrictions on care for severe mental illness that include higher copayments, additional deductibles, stricter limits on the length of hospital stays and the number of outpatient visits. He believes that insurance companies are more concerned about making money than mental health patients getting the care they need. It reinforces the stigma when insurance companies discriminate against mental health patients and refuse to give them equal coverage. They don't take emotional pain or mental suffering as seriously as physical pain. When a person suffering from the flu or a fever and is incoherent, they work to stabilize the patient, but a mentally ill patient who needs to be stabilized, is thrown in jail. It is the only illness he knows of that people get thrown in jail for. MR. GRASTO continued saying the constitution of the state of Alaska in Article I says, "All persons are equal and entitled to equal rights, opportunities, and protection under the law." Since insurance companies operate under the rules of state law, it is wrong to treat mentally ill people in a discriminatory way. It is time to fix it and make it right. Please support mental health parity. JEANETTE GRASTO, President, National Alliance for the Mentally Ill, Fairbanks, testified via teleconference from Fairbanks. She stated it is important to remember that severe mental illness is biological and can be diagnosed and treated as effectively as other physical conditions. The cost of treating mental illness is comparable to the costs of treating other medical conditions. The direct costs in 1990 for treating a person with diabetes was $7,725 compared with $7,158 for treating a person with schizophrenia. She researched insurance companies for her son, who suffers from bipolar disorder, after he was no longer covered under his father's insurance and discovered that Blue Cross would not take him because he had bipolar disorder. He finally got insurance through his employer, but that plan did not cover mental health for the first year of employment. After the first year he will be given 50 percent coverage. A large portion of his wages have gone to medical costs including his deductible and copayments. He is qualified to go on disability, but he doesn't want to; he wants to work. He needs adequate treatment, including his doctor visits and his medication, to be able to work. It is a Catch-22 situation. She knows another young man with bipolar disorder who puts himself in the hospital and gets medication, but when he is released, he cannot afford the medication. He goes without treatment and gets worse. TAPE 99-34, SIDE A Number 0047 VICKI TURNER MALONE, Owner, Malone and Company, Inc., Independent Insurance Agents, testified via teleconference from Bethel. She stated she has become an advocate for mental illness. She shared an article she read in the National Insurance Underwriter, a mainstream trade journal focusing on life and health issues. In this article they were advocating parity in mental health. Their logic was that mental illness left untreated becomes severe and chronic; it was much more effective to treat it earlier than later. They don't blatantly mention cost-effectiveness, but obviously, they have competent actuarial people helping them develop this position. She pointed out that if mainstream insurance industry is supporting parity in mental illness, then it is certainly time for Alaska to do it. She faxed the article to the committee. Number 0198 NANCY CAUGHELL, Parents Incorporated., testified via teleconference from Anchorage. She pointed out that most insurance covers mental health at a lower rate than physical health. Families are unable to get their mental health issues covered; this causes a great financial burden and conditions go untreated. These conditions can be treated, and family health and well-being can be restored if more coverage were provided. Treatments are stopped because families cannot afford to continue, or they reach the maximum amount of mental health coverage. Parents Incorporated believes that the whole person needs to be treated. A family's mental health is the key to happiness and a productive life. Number 0333 SCOT WHEAT, National Alliance for the Mentally Ill, testified via teleconference from Homer. He is a public member on the Alaska Psychiatric Institute board so he is very aware of the issues surrounding hospitalization and utilization and community support or the lack thereof. He is a mental health consumer with an Access I diagnosis. In his experience, it is the untreated mental illness that is expensive. There are drugs available within the past five years that have allowed people to go back to work, at least part- time. He believes it is necessary to keep people involved in the work force. He has only been able to get help in the last few years, out of 45 years, that has been effective. In the first six years of his involvement with the state's Medicaid program, there was a bill for $193,000; it was paid at $143,000 for his various medical treatments. He believes most of this would have been unnecessary, including three hospitalizations, if he had been getting treatment and medication through the years . He concluded that untreated mental illness is the problem; mental health treatment is very cost effective. Number 0527 REPRESENTATIVE DAVIS asked Mr. Wheat how old he was when he was initially diagnosed. MR. WHEAT answered that the first real diagnosis was in 1985 when he was 31. Number 0562 ELIZABETH LaCROSSE, Vice President, National Alliance for the Mentally Ill, Alaska; Member, Alaska Mental Health Board; Member, Governor's Committee on Employment and Rehabilitation of People With Disabilities, testified via teleconference from Ketchikan. She has a psychiatric disability and has good and bad experiences with the mental health system in Alaska. She has been receiving services from Medicaid since 1992, including mental health services. It is through these services that she is able to function at a higher level of awareness since the onset of her illness. Prior to that she was in debt for her medical care including psychiatric prescription medication. She worked two jobs at the time, yet received no health insurance benefits for her mental illness. Once her bills were too large, her providers began demanding payment up-front for mental health services. She often had to borrow money for her medication and went without food. Had she been eligible for mental health services through her employment, she may have been able to recover faster. She urged the committee to support HB 149 to make sure every Alaskan has equal opportunity to health insurance benefits, regardless whether it is a physical or mental disorder. Number 0703 JEFF JESSEE, Executive Director, Alaska Mental Health Trust Authority Board of Trustees, testified via teleconference from Anchorage. He expressed the support of the trustees for HB 149. They believe it is a positive step forward in providing a continuum of services and funding mechanisms for mental health services for all Alaskans. In response to the question "Why aren't the insurance companies coming forward with support," he believes it is because there still is a misunderstanding about mental health issues. MR. JESSEE pointed out that many mental illnesses are, in fact, brain chemistry disorders; they are physical. The manifestations of those physical difficulties in behavior and thought processes, historically, have been very scary to people, particularly when there wasn't medications and treatments to help improve situations. If businesses and insurance companies were coming forward today and saying, "We no longer want to cover diabetes," or "AIDS is expensive, and we don't want to cover that under health policy," he believes the legislature would be justly concerned about the cost shifting that would occur as the insurance industry pulled back out of covering some of those health conditions. The difference is mental health hasn't been covered in the past. There should be no distinction. It is imperative that the state incorporate this funding mechanism as a part of the public/private partnership to provide care to all Alaskans; the trustees support this legislation. Number 0857 REPRESENTATIVE GREEN asked Mr. Jessee if he knew what the cost would be statewide for those that would qualify for services. MR. JESSEE suggested that he ask the people who were on the task force to answer that. Number 0906 ROBYN HENRY, Executive Director, National Alliance for the Mentally Ill, Alaska, testified via teleconference from Anchorage. She has the privilege of working daily with a group of very courageous people. A group of people who, through no fault of their own, struggle daily with the devastating affects of the debilitating and biologically based diseases that fall under the category of mental illness. It is a group of people who, far too often, are first and foremost seen as their illness, and not as the valuable individuals and the contributions that they can make as individuals. They have a great deal to contribute to society. Far too often these contributions are not able to be made, not because of lack of talent or ability, but because of lack of accessibility to effective treatment that can help open the door for peace of mind and pave the way for creativity, entrepreneurship and self- actualization. MS. HENRY indicated that the committee had all the data and information, and she urged the legislators to see this as an issue to be rectified. It may be a leap of faith, but with the information they have, it is not a large leap of faith. Many states have made the decision to end discrimination with less information, and she urged them to support the legislation. JOHN GEORGE, Lobbyist for American Council of Life Insurance, came forward to testify. He commented that they have heard some interesting testimony today and many of the things he concurred with. The problem the insurance industry has is that health insurance is not mandatory. Employers can go under a self-insured program under ERISA, and they wouldn't be subject to these requirements. He described three choices: You can buy insurance with a number of mandated coverages; you can become self-insured, partially, and not have to meet the mandates, that's cheaper; or you can not provide insurance to your employees at all, and that's certainly cheaper. So, trying to compete with self-insurance and no insurance at all, you've got one faction that you're saying 'We're going to increase the cost for and make your product much less attractive than the others.' We heard someone way that they can't work because they can't afford their medication so they need a job so they be covered by insurance to afford the medications. Well, by definition then, you're assuming that that's going to be an insured program, not a self-insured program, and that the insurance company is going to pay. But I'll tell you, these are not unfunded mandates. These are funded mandates. Insurance companies are in business to make a profit. Someone said "The insurance companies have more interest in making a profit than taking care of people's mental illness. Well, I guess that's true because they are a profit-making organization, and the way they do that is by charging a premium to the policy holders. If you mandate a coverage, that means if it costs more, they pass that on to their customers. The small employers in the state who then have to make a decision: 'Do I pay the extra money, or do we become uninsured.' So you may actually find that fewer people will be covered by insurance if you increase the costs incrementally. You heard ... several people testify that by actually providing this mandated coverage, the overall cost of insurance should go down because people won't have other physical ailments or whatever. If in fact that's true, the insurance companies would, I believe, have already subscribed to this, and I think this group needs to do a better job of selling the insurance industry on the fact that that is true, rather than coming in through the legislature and mandating the coverage. In my former life as the director of insurance, I used to hear a lot of complaints about health insurance is too expensive. We can't afford health insurance. But in fact, every time you turn around there's someone mandating a coverage and you look at the list of mandates: chiropractors, nurse-midwives, advanced practitioners, naturopaths, physical therapists, occupational therapists, marital and family therapists, clinical social workers, the list goes on, those are all increments that have to be added to insurance that small employers have to pay and they have to decide whether or not to buy insurance if they only have, say, $200 a month per employee to contribute to insurance, and the least expensive insurance is $250 because of these mandated coverages, they become uninsured employees rather than insured employees. Really, insurance companies are trying to provide an affordable product, and by doing so, they can be competitive with self-insurance, and hopefully the moral aspects of providing insurance for employees ... is on their side, and if they can keep the product relatively affordable they will sell that product. I often heard also that small employers compete with government and with large employers for employees. Your small employer in Juneau, for instance, and you want to hire a clerk typist for your small business. You go over and get the state pay scale, and that's pretty much what you have to pay because that's the option the employee has. ...You're paying the same, but they have better benefits. Well, now as a small employer, I have to provide more benefits as well. So ... people have to compete in a small business with major employers for employees and the employee benefits to health insurance is certainly one aspect they have to compete on. Government and self-insured major employers are not required to provide this benefit. So you're really loading against the small employer who has to provide insurance to compete, and now they have to provide benefits greater than the other major entities have to provide. Number 1400 CO-CHAIRMAN DYSON indicated that they have gotten charts from California that show for every increment going up in the cost of health insurance, a group of folks opt out of the pool. He asked Mr. George if there is anyone in the industry here who can advise what that ratio of price participation would be like in Alaska. MR. GEORGE said he could not tell them that today, but he could see if he could find it. Alaska is unique in that there are so many people covered under government systems and others. It could well be different than other states. He can try to find the answer. CO-CHAIRMAN DYSON asked Mr. George how many people now have health insurance but don't have mental health parity. He commented that is an important piece of information for the committee and asked Mr. George to try to get that for them. MR. GEORGE said he will certainly try to get that information. REPRESENTATIVE BRICE asked Mr. George when he had been director of insurance. MR. GEORGE replied that he left in 1988. Number 1497 REPRESENTATIVE BRICE noted that it was right around the time the legislature passed mandated mammography. He asked Mr. George if there was a noticeable drop in health insurance coverage for employees when the legislature mandated mammography and substance abuse parity. MR. GEORGE said he didn't have the answer, but he could try and get an answer. REPRESENTATIVE BRICE commented that would be interesting information to have. Number 1614 DON DAPCEVICH, Executive Director, Governor's Advisory Board on Alcoholism and Drug Abuse, came forward to testify in support of HB 149. A year and a half ago the advisory board did a key informant survey around the state of Alaska. One of the results of that survey was nine out of ten Alaskans felt that alcoholism was the number one health problem in this state. To significantly alter the way they administer one health problem over other health problems seems to be irresponsible. He agreed there is cost involved in parity for substance abuse and mental health services, however, the savings received will far outweigh those costs. Recent studies have been done in California that indicate there is a seven for one return for every one dollar that is spent on substance abuse treatment; society recoups seven dollars in savings in other areas. MR. DAPCEVICH believes that insurers don't opt to buy insurance on their own because the risk pool is so small. If there were a mandate, the risk pool is larger and the costs go down. Most states' experience has been that the cost does not go up that high; less than $3 per month per person is the cost other states have experienced. Some have found there are appreciable savings. He believes that as the state moves from the public dole to individual responsibility, they will accrue some savings if they pass this legislation. He urged the committee to give it serious consideration. REPRESENTATIVE GREEN asked Mr. Dapcevich if he knew what a reasonable size of the risk pool would be. MR. DAPCEVICH answered he was not part of the task force or the actuarial studies that were done, but it appears that it is less than $3 per person, per month with a pool of 110,000, so they would be over that threshold. GORDAN EVANS, Lobbyist for Health Insurance Association of America (HIAA), came forward to testify. He agreed with the comments made by Mr. George and told the committee they have his written statement and the HIAA's statement in the task force report. They have sent the committee lengthy facts of some statistical information. He pointed out by mandating this type of legislation in Alaska, they are really getting to the smaller employers. The state government isn't covered by mandates, although they have on some occasions voluntarily followed mandates. The Municipality of Anchorage, Carr's supermarkets, British Petroleum Company and Exxon Company are not covered. They are getting down to the smaller employers. MR. EVANS noted that this bill differentiates between what is a small employer and what the small employer group health insurance bill calls for. That says a small employer is one who employs 2 to 50 employees. Most of the federal legislation is based on that level, 50 people or less. This bill says under 20, which means 19 or less. He believes they have to get some equality out of this, but also any time they start mandating coverages, employers do drop coverage. It is cheaper for them to raise their employees' wages by $10 per month than to continue to pay for health insurance; so then there are more people uninsured. A pool of 115,000 is not a very good-sized pool when they are looking at coverage like this. He offered to get some of the same information they asked from Mr. George, but he is not too confident that they can come up with precise information, but they will see what they can do. Number 1887 PAMELA LaBOLLE, President, Alaska State Chamber of Commerce, came forward to testify. She handed out a sheet that shows the difference between the Federal Mental Health Parity Act (MHPA) and the provisions called for in HB 149. Most of the larger employers within Alaska would be exempt; they are really targeting the small business people. She has heard from several small employers who have said this would be the difference of them offering any health insurance; they couldn't afford it. Many have said the costs have been continually rising for what they offer now. It is imperative for them to offer some benefits, if they are to compete with the state and local governments who offer very good benefits. The state and local governments are exempt under this law. Because of the generous benefit package they already offer, the problem of mandating coverage puts a hidden tax on employers. It is taking a public problem and transferring it to small businesses. It is an unfunded mandate, and they are against unfunded mandates. The state has continually complained to the federal government about the unfunded mandates that are passed down to the state. Only now the state is passing them down to small business. Yes, the savings would be to the state but at the cost of the employers. MS. LaBOLLE indicated that it also forces employees who pay part of their health insurance, pay for something they may not want. They are very sorry that there are people who need mental health care coverage. There are people who need dental or vision coverage, but in general medical policies those things aren't covered; it is an option of the employer to buy them as another benefit. These are market-place driven options, and they oppose the mandate aspect of this. If mental health care coverage is offered as it is in the federal law, then it should be at a level of parity with the medical coverage that is offered. That is not a problem, but to force them to offer, pay for it and pick up the costs that society now picks up, is not acceptable. Furthermore, the people who no longer are covered because the small employers have to drop their insurance, their catastrophic illnesses are going to fall to the state, or they will fall to the rest of the consumers who because the hospitals and health care providers will pick it up and pass it on to the consumers. There is no such thing as a free program. Number 2095 CO-CHAIRMAN DYSON asked Ms. LaBolle if she has a mechanism to find out how many people have health insurance that doesn't cover mental illness. MS. LaBOLLE answered only through a survey of her membership, which would be doable but time consuming. CO-CHAIRMAN DYSON believes this bill will not get through this year and it sunsets in 2001. If she does a survey for other reasons in the next few months, he asked her if she could get them some information. MS. LaBOLLE said she would consider that. REPRESENTATIVE GREEN asked how many small employers might be either factually or perceptually wanting to drop their health insurance coverage. MS. LaBOLLE indicated that the most common response she has had from her members is that they would drop it. Number 2175 CO-CHAIRMAN COGHILL said it might be more helpful to know if a business were to drop coverage, how many employees it has, whether is has under 20 or under 50 because this law is asking them to draw a line there, and then the pool changes. Because of that, there might be added pressure for people to opt out. MS. LaBOLLE concluded that decisions about what types of health care to offer, if it is mandated, becomes based on the preferences of politics and interest groups, rather than on the needs and desires of small business owners and their employees. They oppose mandating of this. CO-CHAIRMAN COGHILL said there is a philosophical difference on the mandate, and even mental health people recognize the problem of a mandate. He will offer some information to the state on how they can encourage insurance companies to draw them into insurance, rather than mandate them into insurance. There may be ways that the state and the mental health trust might be able to induce insurance companies to facilitate that. He believes the subcommittee should look at that area. MS. LaBOLLE stated that it is a matter of cost. Employers would like to offer mental health care coverage if it is affordable, and she is sure if they offered it, they would like it to be at a level of parity. CO-CHAIRMAN COGHILL understands that there are people out there in need. The policy makers don't want to slight them because of economics, but at the same time, they could inadvertently do that by mandating something that would have an adverse affect. It is worthy of study. TAPE 99-34, SIDE B Number 2322 REPRESENTATIVE GREEN asked if the subcommittee could find out the sliding scale to see how much more it costs the small employer than large employer. Number 2283 PAT CLASBY, Alaska State Hospital and Nursing Home Association, came forward to testify in support of mental health parity as designed in HB 149. The Association has followed this along and participated in the task force meetings providing information. This is a complex and difficult issue and impacts all of their health care facilities in Alaska. She agreed there will be a cost to individuals who have the opportunity under a mandated health insurance policy that allows them to buy into adequate mental health insurance. Part of it will be borne by the employees that is passed on by the employers, and part of it will be borne by the employers. It will also cost the state, the health care facilities, and the communities that end up supporting health care facilities. MS. CLASBY went on to say when there isn't adequate insurance for some of the primary social problems in Alaska, whether it is alcohol, drug abuse, mental illness, sexual abuse, the victimization, and the resulting emotional problems those Alaskans feel throughout their lives, they all experience them. She agreed that there are unanswered questions. She sat through the testimony of the national expert that did the actuarial studies, and she learned a great deal. She hopes that he speaks not only to the subcommittee, but to all of the HES Committee members the Labor and Commerce Committee members, so that they fully understand. MS. CLASBY noted that Mr. Bachman indicated that the risk pool has to be approximately 100,000, or if it goes below that, the cost to the individuals that opt in to it becomes much higher because then they are self-selecting. They take it because they know they have a problem and will need it. The whole point of insurance is spreading the risk so that everyone who goes in will have the benefit at the time of need. MS. CLASBY told the committee that they support HB 149 and will work with the subcommittee. She has some data from several years ago from their facilities that showed that the mental health admissions in the state were a much higher percentage charged to the public health sector than to the private sector versus the other physical illnesses. She will provide that information to the committee. Number 2130 PATRICIA ARNOLD testified via teleconference from Homer. She was formerly married to a small employer and knows the difficulty of providing insurance for a small business. Since then she has separated and has used mental health services that are covered by Medicaid. It is a two-edged sword in terms of her own life experience. (indisc--simult. speech). The Committee took an at-ease from 12:41 p.m. to 12:42 p.m. CO-CHAIRMAN DYSON asked if there is an immediate time crisis on this bill. They want to have the best and right thing in place before the 2001 date. REPRESENTATIVE DAVIS agreed the task force understands the difficulty of informing different committees and the public of the issue. Because of the complexity of the issue and the numbers crunching they are looking for, probably a subcommittee is the place to do it. Number 2008 MR. MAJOROS offered that the AMHB would be happy to work with the subcommittee. He noted the task force did deal with many of these issues through a lengthy six-month process, and they used all the available data they were aware of to address the issues that came forward. He is somewhat concerned about reinventing the wheel. Another concern is that the issues of cost and business analysis will be debated and addressed in the Labor and Commerce Committee, so he is concerned about having multiple debates on that issue. He suggested that perhaps this subcommittee may not be the appropriate venue to debate some of those business issues. He suggested that the subcommittee deal with the policy issues and perhaps save some of the business issues for debate at the Labor and Commerce Committee. CO-CHAIRMAN DYSON understood the 2001 date as where they start running into people being harmed. MR. MAJOROS believes that the date 2001 is the sunset date under federal legislation. He is not sure if there is an exact correlation between that process and this process. CO-CHAIRMAN DYSON stated that he doesn't intend that their lack of action today would make things worse for people. One question he does have is should they have started with covering everything in DSM-IV, or should they start with a more incremental approach. CO-CHAIRMAN COGHILL appointed Representatives Brice, Whitaker and Morgan to serve on the subcommittee to deal with this insurance issue. He noted that the information will be collected for the subcommittee, and he intends to be active in reviewing what is going on in the subcommittee. The policy issue is part of the question of getting the answer so they can make a worthwhile policy. He is not comfortable in mandating it without exploring some of these questions. [HB 149 was held over and assigned to a subcommittee.] The Committee took an at-ease from 12:47 p.m. to 12:48 p.m. HB 142 - EDUCATION CREDIT FOR FISHERY TAXES Number 1830 CO-CHAIRMAN COGHILL announced the next order of business as House Bill No. 142, "An Act relating to the education credit for the fisheries business tax and the fisheries resource landing tax; and providing for an effective date." He passed the gavel back to Co- Chairman Dyson. Number 1824 REPRESENTATIVE GARY DAVIS, sponsor, told the committee that HB 142 is housekeeping legislation. Currently there is legislation allowing tax credits for certain fisheries businesses to make donations and get credit for the donations. It allows donations to Alaska two-year and four-year colleges accredited by a regional accrediting association. Most of those business that are allowed the tax credit relate to vocational professions. The Alaska Vocational Technical Center (AVTEC) in Seward does not fall under the current legislation, but this legislation makes AVTEC eligible for some of those donations. They have been forced to turn down over $100,000 worth of donations because they don't fall under current legislation. They are accredited by a national accreditation association, and the current legislation addresses regional accreditation. REPRESENTATIVE GREEN asked if $100,000 is donated, do the institutions reduce their budget requests for general fund dollars for the amount of the contribution. REPRESENTATIVE DAVIS explained, with his experience on the Finance Committee as they review individual budgets, that they are aware of donations and dollars institutions have received. Even if they know there is an opportunity of some of the donations coming in, they eyeball the general fund dollars and replace them with the donated dollars if they are there. They do have that flexibility but Representative Green is correct, in that without keeping a keen eye on some of these transactions, there could be some impacts to the revenue. REPRESENTATIVE GREEN asked if they do watch that. REPRESENTATIVE DAVIS replied yes they do. REPRESENTATIVE DAVIS offered an amendment to tighten up the wording which the Department of Education wanted. CO-CHAIRMAN DYSON asked if Representative Davis preferred a sponsor substitute or committee substitute. REPRESENTATIVE DAVIS answered that an amended version of the legislation would be fine. Number 1608 DEBORAH VOGT, Deputy Commissioner, Department of Revenue, came forward to answer any tax questions. The taxpayer can deduct 50 percent of the amount he donates up to $100,000 and then 100 percent of the next $100,000. At least for the first $100,000, they might replace the donation with general funds, but there is an extra $50,000 that comes into the educational institution that they can't look at as general fund monies. It does bring some extra money in even if they balance out the budget dollar for dollar from the donations. CO-CHAIRMAN DYSON suggested they stick with the educational issues. Number 1526 DIANE BARRANS, Executive Director, Postsecondary Education Commission, Department of Education, informed the committee that she had suggested the amendment. It is to insure that the institutions, in the future that may fall under this provision, are actually accredited by a recognized accrediting association rather than simply some peer group that forms an association, calls itself an accrediting body, and issues certificates. CO-CHAIRMAN DYSON asked who wins under this legislation. MS. BARRANS clarified that the only institution that would be added would be AVTEC. Currently, the University of Alaska, Sheldon Jackson College and Alaska Pacific University benefit. If in the future, the Alaska Technical Center in Kotzebue became nationally accredited, then it too might benefit from this. Number 1423 REPRESENTATIVE Green made a motion to adopt Amendment 1, which read: Page 1, line 10, following "association": Insert "that is recognized by the Council for Higher Education Accreditation" Page 2, line 12, following "association": Insert "that is recognized by the Council for Higher Education Accreditation" CO-CHAIRMAN DYSON asked whether there was any objection. There being none, Amendment 1 was adopted. Number 1404 REPRESENTATIVE WHITAKER made a motion to move HB 142, as amended, from the committee with individual recommendations and zero fiscal note. There being no objection, CSHB 142(HES) moved from the House Health, Education and Social Services Standing Committee. REPRESENTATIVE GREEN asked why HB 142 has a Finance Committee referral with a zero fiscal note. MS. VOGT answered that it has a revenue impact; it doesn't have an operating cost. HJR 6 - CONST. AM: EDUCATION FUNDING Number 1356 CO-CHAIRMAN DYSON announced the next order of business as House Joint Resolution No. 6, Proposing amendments to the Constitution of the State of Alaska relating to state aid for education. CO-CHAIRMAN COGHILL made a motion to move HJR 6 from the committee with individual recommendations and zero fiscal note. There being no objection, HJR 6 moved from the House Health, Education and Social Services Standing Committee. ADJOURNMENT Number 1315 There being no further business before the committee, the House Health, Education and Social Services Committee meeting was adjourned at 1:00 p.m.