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