Legislature(1993 - 1994)
02/23/1994 03:00 PM House HES
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE HEALTH, EDUCATION AND SOCIAL SERVICES
STANDING COMMITTEE
February 23, 1994
3:00 p.m.
MEMBERS PRESENT
Rep. Cynthia Toohey, Co-Chair
Rep. Con Bunde, Co-Chair
Rep. Gary Davis, Vice Chair
Rep. Al Vezey
Rep. Pete Kott
Rep. Harley Olberg
Rep. Irene Nicholia
Rep. Tom Brice
MEMBERS ABSENT
Rep. Bettye Davis
OTHER LEGISLATORS PRESENT
Rep. John Davies
COMMITTEE CALENDAR
HB 139: "An Act establishing a loan guarantee and interest
rate subsidy program for assistive technology."
PASSED OUT OF COMMITTEE
*HB 451: "An Act establishing the Alaska Health Insurance
Corporation and requiring licensed health care
providers to comply with certain statutes and
regulations relating to the corporation; relating
to disability insurance claims processing and to
approval of rates for disability insurance,
including health insurance; and providing for an
effective date."
HEARD AND HELD
(* First public hearing.)
WITNESS REGISTER
RUPE ANDREWS, Representative
American Association of Retired Persons
9416 Long Run Dr.
Juneau, Alaska 99801
Phone: (907) 789-7422
Position Statement: Testified in support of HB 139
STAN RIDGEWAY, Deputy Director
Division of Vocational Rehabilitation
Department of Education
801 W. 10th St., Ste. 200
Juneau, Alaska 99801-1894
Phone: (907) 465-6932
Position Statement: Testified in support of HB 139
DR. THOMAS NIGHSWANDER, Chairman
Health System Reform Work Group
255 Gambell St.
Anchorage, Alaska 99501
Phone: (907) 257-1234
Position Statement: Testified in support of HB 451
NANCY CORNWELL, Member
Health System Reform Work Group
2411 West 69th Ave.
Anchorage, Alaska 99502
Phone: (907) 243-8326
Position Statement: Answered questions on HB 451
PREVIOUS ACTION
BILL: HB 139
SHORT TITLE: ASSISTIVE TECHNOLOGY LOAN GUARANTEES
SPONSOR(S): REPRESENTATIVE(S) DAVIES,Brice,Brown,B.Davis,
Grussendorf,James,Larson,Nordlund,Sitton,Ulmer,Menard,
Hudson,Mackie,MacLean,Porter,Foster,Hanley,Kott
JRN-DATE JRN-PG ACTION
05/01/03 (S) JUD AT 12:00 PM BELTZ ROOM 211
02/08/93 254 (H) READ THE FIRST TIME/REFERRAL(S)
02/08/93 254 (H) L&C, HES, JUDICIARY, FINANCE
03/25/93 (H) L&C AT 03:00 PM CAPITOL 124
03/25/93 (H) MINUTE(L&C)
03/26/93 784 (H) L&C RPT CS(L&C) 5DP
03/26/93 784 (H) DP: GREEN, WILLIAMS,MULDER,
SITTON,HUDSON
03/26/93 784 (H) -FISCAL NOTE (DOE) 3/26/93
05/01/93 (S) JUD AT 00:00 AM BELTZ ROOM 211
01/21/94 2127 (H) COSPONSOR(S): MACKIE
02/03/94 2247 (H) COSPONSOR(S): MACLEAN
02/09/94 2327 (H) COSPONSOR(S): PORTER,FOSTER,
HANLEY,KOTT
02/23/94 (H) HES AT 03:00 PM CAPITOL 106
BILL: HB 451
SHORT TITLE: COMPREHENSIVE HEALTH INSURANCE ACT
SPONSOR(S): HEALTH, EDUCATION AND SOCIAL SERVICES BY REQUEST
JRN-DATE JRN-PG ACTION
02/09/94 2315 (H) READ THE FIRST TIME/REFERRAL(S)
02/09/94 2315 (H) HES, LABOR & COMMERCE, FINANCE
02/23/94 (H) HES AT 03:00 PM CAPITOL 106
ACTION NARRATIVE
TAPE 94-27, SIDE A
Number 000
CHAIR TOOHEY called the meeting to order at 3:06 p.m., noted
members present and announced the calendar. She brought HB
139 to the table.
HB 139 - ASSISTIVE TECHNOLOGY LOAN GUARANTEES
REP. JOHN DAVIES, Prime Sponsor of HB 139, addressed the
bill. He stated that people with disabilities often have
difficulties qualifying for conventional loans to purchase
assistive technology. Assistive technology includes items
such as hearing aids, walkers, talking computers, wheel
chairs, and wheel chair lift equipment. He explained that
HB 139 would set up a fund to guarantee up to 90% of a bank
loan received by a qualified individual for the purpose of
purchasing needed assisted technology. In addition, the
state could subsidize on a needs basis or part of the
interest on the loan. He said the fund would be capitalized
with $100,000 of federal money, as indicated on the fiscal
note. He further mentioned that there could possibly be
some additions to the fiscal note if the program is
reauthorized; more funds may be available in the out years.
He maintained that this year's fiscal note would not be
affected. He said the National Multiple Sclerosis Society,
Denali State Bank, Deaf Community Services, and Access
Alaska support the legislation.
REP. DAVIES said that the Department of Education (DOE)
estimates that there are at least 4000 people in Alaska that
would benefit from the proposed legislation. He provided a
committee substitute (CS) that indicated changes on page 2
where loans for businesses have been omitted. Also, on page
2, line 15, there is a provision which allows for loans to
modify vehicles but not to purchase a vehicle. He further
stated that page 2, line 18, establishes the loan technology
committee.
Number 173
CHAIR TOOHEY asked if there was any other conduit that
people with disabilities could use to obtain the needed
funds.
REP. DAVIES replied that the bill requests that people
exhaust all other possible conduits first before utilizing
this program. He said one of the features of the bill is
that it allows the interest rate to be brought down out of
the loan funds, thereby making the loan more affordable.
Number 185
CHAIR TOOHEY asked how many people in Alaska would benefit
from the proposal.
REP. DAVIES reiterated that the Department of Education
estimates there to be 4000 eligible people.
CHAIR TOOHEY asked if there were enough funds available for
that number of people.
REP. DAVIES said the average loan application would be for
$700. He said it is a type of revolving loan as people
would pay the loan back as money becomes available.
CHAIR TOOHEY asked what happens when people default on the
loan.
REP. DAVIES responded that the funds are guaranteed by the
federal government, and the loans are made by private
lending institutions. He explained that other states have
experienced very low default rates on these types of loan.
Number 249
REP. VEZEY, after explaining the high cost to a lending
institution for granting small amount loans, asked if many
lending institutions are interested in the program.
REP. DAVIES indicated a letter of support from Gary Roth,
President and Chief Executive Officer of Denali State Bank,
Fairbanks. He said Mr. Roth was very enthusiastic about the
program. He further stated that the loans would be made at
standard private bank rates, and if the individual could not
afford the interest rate, the fund would be allowed to buy
down the interest rate.
Number 329
REP. VEZEY asked what the origination costs of the loans
would be.
REP. DAVIES said he did not know what the specific rates
were. He explained that the loan is processed through a
bank at standard rates.
REP. VEZEY asked why there were no administrative costs
listed in the fiscal note.
REP. DAVIES responded that the Division of Vocational
Rehabilitation, Department of Education, estimates that
their existing personnel can handle the required
administration.
Number 390
REP. VEZEY asked how fast $100,000 would be depleted.
REP. DAVIES explained that it would depend on the decisions
of the committees and banks as to how many loans need to be
subsidized, what the default rates are, etc. He further
stated that the Clinton Administration has just reauthorized
the program, requesting an additional $3 million nationwide.
He said at least three to five years of federal money could
be expected to go into the program, on an annual basis.
REP. VEZEY asked if the $100,000 was currently available.
REP. DAVIES answered yes.
REP. VEZEY asked why the fiscal note was $100,000.
REP. DAVIES said it represents federal receipts.
Number 431
REP. G. DAVIS asked if the director referred to on page 2,
line 18, was the director of the Division of Vocational and
Rehabilitation, DOE.
REP. DAVIES said yes.
Number 441
CHAIR TOOHEY asked if there was a time frame for the program
or would it go on indefinitely.
REP. DAVIES said it would go on forever as long as the
federal program exists. He also said that private monies
are allowed into the program. He further stated that with a
certain amount of federal money going into the program each
year, the program would operate somewhat like a revolving
loan fund.
CHAIR TOOHEY asked if there would be a limit on how low the
funds could become before loans would no longer be granted.
REP. DAVIES said if there is no money the program does not
exist.
CHAIR TOOHEY asked Rep. Olberg if it would be prudent to not
grant loans until the fund has been replenished.
REP. OLBERG responded no. He explained that the funds are
to guarantee a bank that they will be repaid.
CHAIR TOOHEY asked if, once the amount is encumbered, no
more loans would be granted.
REP. OLBERG agreed and said that the entire $100,000 could
be encumbered without any problems.
CHAIR TOOHEY said that nothing would be encumbered over the
$100,00 amount.
REP. OLBERG commented not if the loans are to be guaranteed.
Number 498
REP. BRICE said that as payments are received on the loans
the amount would be replenished accordingly.
REP. OLBERG, as a former colleague of Gary Roth, spoke to
Mr. Roth's professionalism and expertise. He stated that
the program must have a great deal of merit if Mr. Roth was
endorsing it.
Number 525
REP. DAVIES said the committee that the director shall
establish will include a representative of a financial
institution. The committee would establish the percentage
of money that may be used for subsidizing interest rates.
Number 546
RUPE ANDREWS, Representative, American Association of
Retired Persons (AARP), testified in support of HB 139. He
stated that the state legislative committee is in full
support of the proposal. He said the bill would ensure
access to quality living for all generations, not just
senior citizens.
CHAIR TOOHEY asked if senior citizens would be using the
program.
REP. DAVIES said there are no age restrictions.
(CHAIR TOOHEY stated for the record that Rep. Olberg arrived
at 3:08 p.m., Rep. Kott arrived at 3:23 p.m., and Rep. Brice
arrived at 3:10 p.m.)
Number 589
STAN RIDGEWAY, Deputy Director, Division of Vocational
Rehabilitation, Department of Education, testified in
support of HB 139. He stated that within the Division of
Vocational Rehabilitation there is a program called
Assistive Technologies of Alaska. He said assistive
technology is the mechanism that allows federal funds to the
state to fund the loan program. He said President Clinton
had just signed the reauthorization for the federal program,
and with that information he foresees the program being
funded for the next five years with a minimum of $100,000.
He said it was good leverage to make loans with. Mr.
Ridgeway said the program is not a revolving loan, it's a
loan guarantee. He further stated that the $100,000 that
would be set aside in the treasury would be a guarantee to
back the loans. He indicated that there were several ways
for the loans to be leveraged. He explained there is an
estimate that the $100,000 would leverage approximately
$750,000 in loans, depending how much money the loan
committee would set aside to buy down interest rates. He
said there are 42 other states with the program, and three
states are fully funded by the federal government. He said
the banks would incur either the same cost or less to make
the assistive loans. He indicated that most states have a
limit of $5000 on the loans.
Number 583
REP. VEZEY commented that if $100,000 is leveraged for
$750,000 in loans, the state could be responsible for
$650,000 in defaulted loans. He said it's either a loan
guarantee or not.
MR. RIDGEWAY agreed, saying that one of the possibilities on
loan guarantee is that part of the $100,000 could be used to
buy "an insurance policy that would guarantee those loans."
He said the committee could decide to loan $100,000 against
$100,000 for the first year.
REP. VEZEY asked if Mr. Ridgeway had any experience with
loan insurance.
MR. RIDGEWAY answered that he had a report that he could
extract that information from.
REP. VEZEY commented that Alaska has had such a terrible
loss experience with loan insurance that he did not think
loan insurance policies would be available at a reasonable
cost.
Number 759
REP. G. DAVIS stated if all the money was allocated and
there were no defaults, it would be conceivable that the
$100,000 could accumulate up to $500,000.
REP. DAVIES concurred.
Number 777
CHAIR TOOHEY asked the pleasure of the committee.
REP. VEZEY asked if the bill was before the committee for
amendment. After some discussion, Rep. Vezey moved to adopt
the committee substitute for HB 139.
CHAIR TOOHEY, hearing no objections, said the CS for HB 139
was so moved.
Number 799
REP. VEZEY said the CS should be amended to ensure that the
state would not be responsible for any defaults on loans.
CHAIR TOOHEY suggested that Rep. Vezey and Rep. Davies get
together to address that issue and that the bill would be
brought up again at a future time.
REP. BRICE suggested that the bill be passed out of
committee to the Finance Committee. He felt that financial
decisions would be better made there.
REP. VEZEY said to amend the bill would take a total of two
days.
REP. BRICE recommended sending the amendment on to Finance.
Number 853
REP. KOTT said he would work with Rep. Vezey on the
amendment and offer the amendment to the Judiciary
Committee, the next committee of referral.
REP. G. DAVIS concurred with Rep. Kott.
Number 874
CHAIR TOOHEY asked the pleasure of the committee.
REP. G. DAVIS made a motion to pass the CS for HB 139 out of
committee to the Judiciary committee with attached fiscal
notes and individual recommendations.
CHAIR TOOHEY, hearing no objections, declared the bill was
so moved. She then brought HB 451 to the table.
HB 451 - COMPREHENSIVE HEALTH INSURANCE ACT
CHAIR TOOHEY stated that Dr. Nighswander would join the
meeting via offnet from Anchorage, and Nancy Cornwell would
be available for technical questions in Juneau. She
indicated that the meeting was being teleconferenced for
observers only.
Number 902
DR. NIGHSWANDER, Chairman, Health System Reform Work Group,
testified on HB 451. He gave a history of the process
behind HB 451 that lead up to the committee meeting. He
said the primary concern of the work group was to keep
Alaskan's healthy and to direct people in need of services
of quality care at a reasonable cost. He said the
fundamental issue was whether to take action now or wait to
see what happens at the federal level. He felt the question
should be what is right for Alaskans and listed some major
points of concern. Dr. Nighswander stated that the issues
of long term care and access of services to rural
communities continue to be of keen interest to everyone. He
said there are 76,000 Alaskans that are completely
uninsured.
DR. NIGHSWANDER said a total of six very public meetings had
taken place prior to the day's meeting. He said there was a
large cross-section of the public and of professionals in
attendance at those meetings. He felt it was a very healthy
exchange.
DR. NIGHSWANDER stated that the bill does not define a
benefit package, therefore there is no "sticker price" for
the plan. He said the legislation does suggest some
financing options, but it does not specify those options.
He explained that the bill is a phased approach in
considering health reform. It proscribes a very public
concept that provides universal coverage of a standard
benefit package to all residents of the state. He stated
that there is a well defined public health initiative within
the bill that focuses on wellness and prevention. He
further stated that the bill would allow persons to choose
their own physician.
DR. NIGHSWANDER stated that a voluntary cost control
mechanism is provided for in the legislation. Also, he said
a peer group would be established to monitor quality and
utilization of health care. He said the bill would not
prohibit an individual from buying services that would not
be covered by the state plan.
DR. NIGHSWANDER asserted that the bill would establish the
Alaska Health Corporation, which would be separated from the
federal government as much as possible. He said the board
would have public representation and would act independently
of government concerns.
TAPE 94-27, SIDE B
Number 000
DR. NIGHSWANDER said the corporation would collect data from
all health care providers regarding the services being
rendered and relative costs. The proposal requires state
waivers to obtain that information from the federal
government. He further stated that the corporation would be
charged with developing a benefit package and reviewing any
options for financing, and subsequently the findings would
be presented to the legislature. He said there are
incentives within the bill for rural providers.
DR. NIGHSWANDER addressed the issues of cost control
concepts. He felt that Alaska could accomplish many things
in this area that no other state could. For example, he
maintained that all orthopedic surgeons or ophthalmologists
could be gathered around one table to discuss cost, quality,
and utilization of services.
DR. NIGHSWANDER explained the term market-based single-payer
system. He said the single-payer system is straight
forward. He said money for health care that includes
deductibles and co-payments that is provided by the
individual would be funnelled through a single payer. The
market base would allow for providers to publish price lists
of their services and descriptions of the services they
provide. He said this would enable a person to cost shop.
He said a statewide health expenditure target is provided
for in the proposal. The target would be based upon the
data that would be collected early on by the corporation,
focusing on cost and utilization of services. He said from
the data an accurate assessment could be made as to how much
is being spent on health care. He asserted that the target
could be adjusted based on various factors; i.e., the
consumer price index (CPI). He further stated that the plan
provides for voluntary compliance to the expenditure target.
Number 250
CHAIR TOOHEY asked if there were comments or questions for
Dr. Nighswander.
DR. NIGHSWANDER said the question remains as to when the
action would be taken on health care.
Number 296
REP. BRICE asked how the proposal would dovetail with the
federal providers.
DR. NIGHSWANDER stated that Senator Ted Stevens perceives
the potential of a "seamless system" in the future whereby
both federal care and private care would be amalgamated into
a single (seamless) system.
Number 362
CHAIR TOOHEY said the Oregon plan, which went into effect in
January in the state of Oregon, has become three times
larger than the state had anticipated. She said that
caution must be used before a plan is implemented in Alaska.
DR. NIGHSWANDER said that was an appropriate concern and
needed to be addressed as soon as possible.
Number 413
REP. NICHOLIA asked what type of impact HB 451 would have on
Indian Health Services.
DR. NIGHSWANDER said there might be a change in financing,
but relatively there would be little impact. He felt there
would be more of an impact in urban areas. He indicated
that problems with corporations in the rural areas are
addressed by President Clinton's health care plan.
REP. NICHOLIA asked what the problem was that Dr.
Nighswander referred to regarding corporations in the rural
areas.
DR. NIGHSWANDER explained that in some rural areas there are
no hospitals or providers.
Number 534
REP. G. DAVIS suggested that perhaps those people who are
not insured choose not to be insured.
DR. NIGHSWANDER deferred to Nancy Cornwell to answer the
question.
Number 545
NANCY CORNWELL, Member, Health System Reform Work Group,
answered questions on HB 451. She acknowledged that there
are some individuals who make the judgement that health care
is not a priority. She asserted that a great concern was
for the low income individuals that are faced with the
problem of not being able to afford health care. She
indicated that the percentage of a family's income that is
devoted to health care had increased from 9% to 12%, and it
is projected to be closer to 16% in the year 2000. She felt
there was little research to indicate the number of Alaskans
who go without health care coverage for long periods of
time. Ms. Cornwell said there is an overall decline in the
United States of those who have health care coverage.
Number 632
DR. NIGHSWANDER asked where the 76,000 figure came from
regarding the number of Alaskans with no coverage.
MS. CORNWELL said the number was derived from the current
population survey. The number was derived by combining
three years of data obtained from the Bureau of the Census.
CHAIR TOOHEY asked what time of year the population survey
was taken, indicating that there is a larger population at
work in the summer.
MS. CORNWELL said the population survey is ongoing. She
said the survey referred to as the March Supplement is where
the statistics originate from and the survey is taken in the
month of March.
CHAIR TOOHEY said one half of those people would be employed
in June. She then asked what the percentage was of people
who do not want to purchase coverage.
MS. CORNWELL said she did not know, and said it is very
difficult information to obtain. She further stated that
only 9% of the 76,000 are unemployed. She also said that
people who work in small businesses have a difficult time
receiving health care coverage through their employer.
Number 708
DR. NIGHSWANDER agreed with Ms. Cornwell. He related to the
committee the scenario of a youth who is uninsured and is
involved in a serious car accident. He said the result of
situations like that is cost shifting.
REP. G. DAVIS asked about volume control as opposed to cost
control from the standpoint of prevention.
Number 750
DR. NIGHSWANDER stated that utilization could be controlled
by the process of co-payments. He also said the bill allows
for less expensive options; i.e., nurse practitioners and
physicians' assistants (PAs).
Number 791
MS. CORNWELL referred to page 18, line 2, and said that the
peer review process would review the utilization, quality,
and prices of health care services, after the fact. Through
the peer review process, there would be self-regulation.
She said the process was modeled after the Maine Medical
Assessment Foundation. She explained that the process would
cut down on much unwarranted medical procedures.
REP. G. DAVIS agreed.
DR. NIGHSWANDER indicated there would be a claims clearing
house.
REP. G. DAVIS said that Indian Health Services (IHS) was
making strides in that area.
DR. NIGHSWANDER said that information is shared with other
states.
Number 877
MS. CORNWELL asserted that the proposal would enable all
claims to be brought into a single clearing house in the
state, which would provide a tremendous amount of
information not only for the corporation but everyone in the
state. She felt certain that the information would be a
significant part of the information highway.
CHAIR TOOHEY asked who would be responsible for the fiscal
note. No one had an answer to that question.
Number 920
REP. G. DAVIS referred to the presentation made by the trial
lawyers, and asked Dr. Nighswander what the focal points
were.
DR. NIGHSWANDER stated that the main focus was tort reform
and malpractice reform.
CHAIR TOOHEY said that the trial lawyers would be presenting
two bills to the HESS Committee the following week. She
urged Dr. Nighswander to observe and stay abreast of the
issues. She asked for further questions.
REP. G. DAVIS said that it was his hope that much of the
proposed legislation within HB 451 would be retained and
implemented if a "final product" should come about. He
thanked Dr. Nighswander for his efforts.
DR. NIGHSWANDER thanked the committee.
CHAIR TOOHEY expressed her appreciation to both Dr.
Nighswander and Nancy Cornwell for their efforts.
DR. NIGHSWANDER said he was inspired by the whole process.
CHAIR TOOHEY stated that now they both know how much
educating needs to be done so that people can make informed
choices pertaining to health care.
Seeing no further business before the committee, CHAIR
TOOHEY ADJOURNED the meeting at 4:22 p.m.
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