04/11/2003 03:25 PM House L&C
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= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
HOUSE LABOR AND COMMERCE STANDING COMMITTEE
April 11, 2003
3:25 p.m.
MEMBERS PRESENT
Representative Tom Anderson, Chair
Representative Bob Lynn, Vice Chair
Representative Nancy Dahlstrom
Representative Carl Gatto
Representative Norman Rokeberg
Representative Harry Crawford
Representative David Guttenberg
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE BILL NO. 169
"An Act increasing the amount of revenue received by the state
from charitable gaming activities; and providing for an
effective date."
- MOVED HB 169 OUT OF COMMITTEE
HOUSE BILL NO. 234
"An Act relating to brewpubs, and continuing the existence of
the Alcoholic Beverage Control Board; and providing for an
effective date."
- MOVED CSHB 234(L&C) OUT OF COMMITTEE
HOUSE BILL NO. 195
"An Act relating to coverage offered under an individual policy
of health care insurance; and providing for an effective date."
- MOVED CSHB 195(L&C) OUT OF COMMITTEE
HOUSE BILL NO. 10
"An Act amending the definition of group health insurance, and
allowing the Department of Administration to obtain a policy or
policies of group health care insurance for employers that are
small businesses, nonprofit organizations, special services
organizations, or small associations for insurance purposes; and
providing for an effective date."
- MOVED CSHB 10(L&C) OUT OF COMMITTEE
PREVIOUS ACTION
BILL: HB 169
SHORT TITLE:CHARITABLE GAMING REVENUE
SPONSOR(S): RLS BY REQUEST OF THE GOVERNOR
Jrn-Date Jrn-Page Action
03/05/03 0442 (H) READ THE FIRST TIME -
REFERRALS
03/05/03 0442 (H) L&C, FIN
03/05/03 0442 (H) FN1: (REV)
03/05/03 0442 (H) GOVERNOR'S TRANSMITTAL LETTER
03/31/03 (H) L&C AT 3:15 PM CAPITOL 17
03/31/03 (H) Heard & Held
MINUTE(L&C)
04/11/03 (H) L&C AT 3:15 PM CAPITOL 17
BILL: HB 234
SHORT TITLE:BREWPUBS; ABC BOARD
SPONSOR(S): REPRESENTATIVE(S)MCGUIRE
Jrn-Date Jrn-Page Action
04/02/03 0739 (H) READ THE FIRST TIME -
REFERRALS
04/02/03 0739 (H) L&C, FIN
04/09/03 (H) L&C AT 3:15 PM CAPITOL 17
04/09/03 (H) Heard & Held
MINUTE(L&C)
04/11/03 (H) L&C AT 3:15 PM CAPITOL 17
BILL: HB 195
SHORT TITLE:INDIVIDUAL HEALTH CARE INSURANCE
SPONSOR(S): REPRESENTATIVE(S)ROKEBERG
Jrn-Date Jrn-Page Action
03/14/03 0541 (H) READ THE FIRST TIME -
REFERRALS
03/14/03 0541 (H) L&C, HES
04/09/03 (H) L&C AT 3:15 PM CAPITOL 17
04/09/03 (H) Scheduled But Not Heard
04/11/03 (H) L&C AT 3:15 PM CAPITOL 17
BILL: HB 10
SHORT TITLE:GROUP HEALTH INSURANCE FOR PRIVATE GROUPS
SPONSOR(S): REPRESENTATIVE(S)HEINZE, ROKEBERG
Jrn-Date Jrn-Page Action
01/21/03 0033 (H) PREFILE RELEASED (1/10/03)
01/21/03 0033 (H) READ THE FIRST TIME -
REFERRALS
01/21/03 0033 (H) L&C, HES
01/29/03 0088 (H) COSPONSOR(S): HAWKER
02/07/03 0152 (H) COSPONSOR(S): FOSTER, STEVENS
02/07/03 0152 (H) WILSON, SEATON
02/10/03 0172 (H) COSPONSOR(S): WEYHRAUCH
02/14/03 0218 (H) COSPONSOR(S): MOSES
02/18/03 0231 (H) COSPONSOR(S): KERTTULA
02/24/03 (H) L&C AT 3:15 PM CAPITOL 17
02/24/03 (H) Heard & Held
MINUTE(L&C)
03/10/03 0497 (H) COSPONSOR(S): GRUENBERG
04/11/03 (H) L&C AT 3:15 PM CAPITOL 17
WITNESS REGISTER
REPRESENTATIVE LESIL McGUIRE
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented changes in the proposed committee
substitute (CS) for HB 234.
KATIE CAMPBELL, Life and Health Actuary
Division of Insurance
Department of Community and Economic Development
Juneau, Alaska
POSITION STATEMENT: Answered questions about HB 195 and
explained the department's proposed amendment; answered
questions on HB 10, Version Q.
PAULA SCAVERA, Special Assistant
Office of the Commissioner
Department of Labor & Workforce Development
Juneau, Alaska
POSITION STATEMENT: Described the department's work on the
Trade Adjustment Assistance Act (TAA) as it affects HB 195.
SHAUNA HARPER, TAA Program Coordinator
Division of Employment Security
Department of Labor & Workforce Development
Juneau, Alaska
POSITION STATEMENT: During testimony on HB 195, described the
TAA program.
ACTION NARRATIVE
TAPE 03-33, SIDE A
Number 0001
CHAIR TOM ANDERSON called the House Labor and Commerce Standing
Committee meeting to order at 3:25 p.m. Representatives
Anderson, Lynn, Dahlstrom, Gatto, Rokeberg, Crawford, and
Guttenberg were present at the call to order.
HB 169-CHARITABLE GAMING REVENUE
Number 0056
CHAIR ANDERSON announced that the first order of business would
be HOUSE BILL NO. 169, "An Act increasing the amount of revenue
received by the state from charitable gaming activities; and
providing for an effective date."
Number 0073
REPRESENTATIVE ROKEBERG moved to report HB 169 out of committee
with individual recommendations and the accompanying fiscal
notes.
Number 0090
REPRESENTATIVE CRAWFORD objected.
Number 0101
A roll call vote was taken. Representatives Gatto, Rokeberg,
Lynn, and Anderson voted in favor of HB 169. Representatives
Guttenberg, Crawford, and Dahlstrom voted against it.
Therefore, HB 169 was reported out of the House Labor and
Commerce Standing Committee by a vote of 4-3.
HB 234-BREWPUBS; ABC BOARD
Number 0164
CHAIR ANDERSON announced that the next order of business would
be HOUSE BILL NO. 234, "An Act relating to brewpubs, and
continuing the existence of the Alcoholic Beverage Control
Board; and providing for an effective date."
Number 0168
REPRESENTATIVE LESIL McGUIRE, Alaska State Legislature, spoke as
the sponsor of HB 285 and informed the committee that she met
with the parties who testified at the last hearing on HB 234,
and they have worked out an agreement in the form of a committee
substitute (CS). The earlier bill adopted the recommendation by
the Legislative Audit Division to limit the scope of the ABC
[Alcoholic Beverage Control] Board's power to investigate
prostitution and gambling. She said there are compelling
arguments that ABC officials are the most likely to discover
prostitution and gambling. So that limitation is removed from
the proposed CS, she said.
Number 0280
REPRESENTATIVE McGUIRE stated that the proposed CS also changes
the bill's earlier provisions on brewpubs. After conversations
with various business people in the industry, she said they
agreed that increasing the allowable number of gallons sold by
brewpubs is a major policy change and might blur the line
between retailing and manufacturing. She said that she will
work with Representatives Rokeberg and Crawford, CHARR [Cabaret
Hotel Restaurant & Retailers Association] people, and the
various interests during the interim and discuss the whole
concept of the three-tiered system - where it is working and
where it isn't. She said that it's not just brewpubs and
breweries that have issues; there are other areas of the Alaska
statute that need to be examined. She thanked the president of
CHARR for his hard work; she relayed that he will support the
growler issue, [the sale by brewpubs of 5 gallon amounts to
customers]. In developing the proposed CS, she and the other
interested parties agreed that brewpubs' clients are their
patrons, whereas a manufacturer's clients are found all over the
state and potentially in other states.
REPRESENTATIVE McGUIRE mentioned that an amendment suggested by
Representative Rokeberg would extend the sunset date [one year
beyond that proposed in the CS] to June 30, 2007.
Number 0484
REPRESENTATIVE ROKEBERG moved to adopt CS for HB 234, Version
23-LS0862\S, Ford, 4/10/03, as the working document. There
being no objections, Version S was before the committee.
Number 0530
REPRESENTATIVE ROKEBERG moved to adopt Conceptual Amendment 1,
on page 2, line 13, deleting "2006" and replacing it with
"2007".
Number 0579
REPRESENTATIVE CRAWFORD objected. He asked for an explanation
for continuing the board for one more year.
REPRESENTATIVE ROKEBERG said the legislative audit recommended
the three-year term so legislators could check on the progress
of the board during the many suggested statutory changes. He
warned about the "Christmas Tree" of amendments that tend to
accumulate on legislation when the lawmakers consider major
changes to the ABC board. He noted that HB 234 does not adopt
the changes proposed by the legislative audit. The four-year
extension of a board by the legislature is standard. He replied
to Representative Crawford's question about the changes the
bill's sponsor has promised to consider during the interim,
saying those are separate from a straightforward extension of
the board.
Number 0651
REPRESENTATIVE CRAWFORD withdrew his objection.
CHAIR ANDERSON, hearing no further objections, stated that
Conceptual Amendment 1 was adopted.
REPRESENTATIVE McGUIRE stated for the record that Chris
Anderson, owner of the Orso Ristorante and Glacier Brewhouse in
Anchorage, was not involved in the original bill, although some
testimony in the first hearing suggested otherwise. She said
Mr. Anderson had told her that he agreed not to be an advocate
on the bill. [Mr. Anderson had made an agreement with the ABC
Board not to lobby for legislation.]
Number 0658
REPRESENTATIVE ROKEBERG moved to report the CS for HB 234,
Version 23-LS0862\S, Ford, 4/10/03, as amended, out of committee
with individual recommendations and the accompanying fiscal
notes. There being no objections, CSHB 234(L&C) was reported
out of House Labor and Commerce Standing Committee
HB 195-INDIVIDUAL HEALTH CARE INSURANCE
CHAIR ANDERSON announced that the next order of business would
be HOUSE BILL NO. 195, "An Act relating to coverage offered
under an individual policy of health care insurance; and
providing for an effective date."
Number 0793
REPRESENTATIVE LYNN moved to adopt committee substitute (CS) for
HB 195, Version 23-LS0690\Q, Ford, 4/9/03, as the working
document. There being no objection, Version Q was before the
committee.
Number 0828
REPRESENTATIVE ROKEBERG, as sponsor of HB 195, presented the
bill. He explained that an official of the Division of
Insurance will address the changes in the CS. Alaska and the
nation are in the midst of a health care financial crisis, he
said. People are contributing a greater percentage of their
disposable income to the increasing cost of health insurance.
This committee has been working to contain those costs, and HB
195 is a small tool the insurance industry can use to lower the
cost of insurance for individuals who don't participate in a
health insurance plan. The section of the bill relating to the
insurance mandates is only for individual policies, which covers
individuals and their families. The bill does not affect the
insurance mandates for group plans. Insurance statutes
differentiate between individual and group polices and has
different rules for each.
Number 0923
REPRESENTATIVE ROKEBERG explained that legislatures across the
country have mandated coverage of certain types of services in
[group] insurance policies. The result has been a continuous
rise in the cost of insurance. Certain underwriting policies
apply to group policies, but they don't apply to individual
plans. Therefore, there's more flexibility in writing
individual plans, he said. Many people in a group plan have
employer contributions that help offset the costs. If HB 195
can help lower the cost of an individual insurance plan, more
people will be apt to buy insurance. Allowing products to be
underwritten by the insurance business that would enable people
to afford a [health insurance] policy is a good thing, he said.
He predicted that this bill may generate some controversy
because all these mandated services [in group policies] are good
requirements.
Number 1025
REPRESENTATIVE ROKEBERG listed the health care services mandated
by state law [for group policies], which include acupuncture,
midwives services, eye care, substance abuse treatment,
mammography, PKU (phenylketonuria), dental and vision, diabetes,
and prostate and cervical cancer screening. Federal mandates
cover newly born children, postpartum hospital coverage, and
reconstructive surgery following mastectomies. He explained
that the legislature cannot change the federal mandates.
REPRESENTATIVE ROKEBERG stated that HB 195 allows an underwriter
to write a policy that doesn't contain the state-mandated
services. For example, he said, he doesn't need to buy a health
plan for himself that includes mammogram coverage.
REPRESENTATIVE LYNN noted that men do need mammography coverage;
he said a good [male] friend of his died of breast cancer.
Number 1135
REPRESENTATIVE ROKEBERG said HB 195 allows the insurance
community to write a product that is cheaper.
REPRESENTATIVE ROKEBERG described the ACHIA program (Alaska
Comprehensive Health Insurance Association), which is the
insurance of last resort in Alaska. This program is required
under the federal HIPAA (Health Insurance Portability and
Accountability Act of 1996). He said Alaska provides health
coverage for anyone who cannot buy it elsewhere. The ACHIA
insurance has a relatively high premium, but it is subsidized by
all the health insurance underwriters in the state. He said
that the other health insurance [companies] had to contribute $2
million to help pay the premiums of people who couldn't buy
insurance elsewhere. He explained that it is a very good
program for those people who can afford the premiums but can't
get insurance otherwise because of pre-existing conditions. He
alerted committee members that they may be able to refer
constituents to this program.
Number 1221
REPRESENTATIVE ROKEBERG explained that the federal Trade
Adjustment Assistance Reform Act of 2002 (TAA), PL 207-210,
provides a subsidy for health insurance. He used the example of
a person in the fishing industry who loses a job because of
foreign trade activity - for example, when Chileans dump fish
[in US markets at below-market prices]. The person qualifies
for [health] insurance from Alaska's ACHIA program, and the
federal government will pick up 65 percent of the premium.
Number 1326
REPRESENTATIVE LYNN clarified his earlier remark about men
needing mammograms. He said about 5 percent of the people who
die of breast cancer are males. He said the problem is that men
do not typically have breast exams; therefore by the time breast
cancer is discovered, it's very far advanced. He also asked
about phenylketonuria, which is on the list of state-mandated
coverage for group policies.
Number 1414
REPRESENTATIVE DAHLSTROM explained that phenylketonuria is a
very rare condition in a small number of newborns that prevents
the normal use of protein in the body. One timely shot takes
care of the condition.
REPRESENTATIVE LYNN asked about the list of state-mandated
health insurance services. He asked if these are elective
procedures.
REPRESENTATIVE ROKEBERG replied that HB 195 allows insurance
underwriters to design a policy [for an individual] and exclude
those mandates. The idea is to lower the cost of the policy.
For example, a customer may not need or want the option of
substance abuse treatment, which can be extremely expensive.
Premera Blue Cross sent a letter of support for HB 195. He said
he has asked Premera Blue Cross to calculate an approximate
savings for a policy [without these mandates]. The State of
Washington is also considering a similar bill.
Number 1489
REPRESENTATIVE GATTO asked if the goal of this bill is to save
money.
REPRESENTATIVE ROKEBERG replied that this is part of the goal;
the idea is to entice somebody to obtain insurance coverage. An
individual could still ask for some of the mandated services in
the policy.
REPRESENTATIVE GATTO noted that if he is able to select
components of his policy, he will pay less and that helps him.
But, he stated, the insurance companies will be disadvantaged
because their policies are priced to cover these mandated items.
He asked if the insurance companies will make up the lost
revenue on other policies.
Number 1541
REPRESENTATIVE ROKEBERG said that cost shifting among insurance
companies is a common practice. Most people with health care
insurance in Alaska are covered under group plans. According to
the Division of Insurance's 2001 Health Insurance Survey, there
were 5,843 individual policies in force at the end of 2001;
14,946 people, including dependents, were covered by those
policies. The premiums on those policies cost $24 million. He
said the vast majority of the policies that are underwritten in
Alaska are either group or self-insured plans, and they must
include the state-mandated services. This [exception from state
mandates] is intended for individual policies. In his own case,
as a self-employed independent contractor, he said he was on his
own seeking insurance, and it was a constant problem. He
couldn't join an HMO (health maintenance organization), which
are not present in Alaska. If he had had the opportunity to buy
a major medical policy with no mandates that he could afford, he
would have done that. He said he wants to do more than just
save costs; he wants to make an affordable policy available and
allow that product to be on the market. He said he wants people
to buy a product they can afford.
Number 1636
REPRESENTATIVE GATTO asked why insurance companies have not
already [taken this step].
REPRESENTATIVE ROKEBERG replied that insurance companies could
not offer this type of health coverage [minus the mandated
service]; the state forced them to offer the mandated coverages.
He said he thinks insurance companies will offer these new types
of policies because they are looking for new products to sell.
They want to make a profit, but they can't if they are required
to include all these services and underwrite for them.
Number 1739
REPRESENTATIVE GUTTENBERG said health care should be available
to everyone; what people pay for it is another issue. He stated
that he favors the idea of allowing the industry to offer looser
coverage because more people are getting covered. But he
questioned who would be left out. He said he wants to see where
this approach goes.
Number 1822
KATIE CAMPBELL, Life and Health Actuary, Division of Insurance,
Department of Community and Economic Development, discussed the
federal Trade Adjustment Assistance Reform Act (TAA) in 2002.
She said that it gives people who have become unemployed because
of international trade the option to purchase qualified health
insurance coverage; the federal government will pay 65 percent
of their premium. The program is administered by the U.S.
Department of Treasury and the Alaska Department of Labor &
Workforce Development. A qualified person has four options for
health coverage for a two-year period. The federal government
will cover 65 percent of the premiums for any of the following
four options: 1) continued health coverage from the person's
former employer through COBRA (Comprehensive Omnibus Budget
Reform Act); 2) continued coverage through a current health
insurance plan; 3) continued coverage by a spouse's plan that
paid less than 50 percent of the premium; and 4) coverage under
a state's high risk pool.
Number 1888
MS. CAMPBELL explained that the fourth option is added to state
law through HB 195. If a person who is eligible under TAA
applies for the state's high risk ACHIA pool, then the federal
government will pay 65 percent of that premium. She explained
that in order for these individuals to purchase coverage through
the high risk pool, state law needed to be changed so that they
didn't have to be high risk or eligible under the Health
Insurance Portability and Accountability Act (HIPAA).
MS. CAMPBELL explained proposed Amendment 1. Drafted by the
department, it will allow those people into the high-risk pool
and not subject them to some of the requirements that would
disqualify it as a qualified health plan. Amendment 1 reads as
follows [original punctuation provided]:
Page 2, after line 7 add a new section 4 to read:
*Sec.4. AS 21.55.300(a) is amended to read:
(a) Except as provided in this section, a state
resident who is a high risk, a TAA eligible
individual, or a federally defined eligible individual
is eligible to enroll in a state plan described in AS
21.55.100.
Page 3, lines 14-15 amend to read:
(23) "qualified TAA eligible individual" means a
qualifying individual as defined under 26 U.S.C. 35
(Internal Revenue Code, as enacted by sec. 201(a) of
the Trade Adjustment Assistance Reform Act of 2002).
MS. CAMPBELL explained that Section 4(a) in the proposed
Amendment 1 adds a TAA-eligible individual to the ACHIA program.
The second part of the amendment makes a consistent reference to
the Trade Adjustment Assistance Reform Act of 2002. Ms.
Campbell confirmed that the department supports this amendment.
Number 2002
REPRESENTATIVE CRAWFORD asked about the individual cost to get
into the ACHIA program.
MS. CAMPBELL replied that a plan with a $1,000 deductible for a
45-year-old has a $692 premium. If the person were eligible
through the TAA, the person's portion would be $242 after the
federal tax credit. The state sets the premium at 150 percent
of the individual health insurance rate on the open market.
REPRESENTATIVE CRAWFORD said the whole idea of spreading the
risk in insurance means enrolling as many healthy people as
possible to help pay for the mandated services [in group plans].
The problem is that people are self-selecting out of these pools
and signing up with cheaper plans, he said.
MS. CAMPBELL said in the group market, the employer decides what
items to cover. For individual health insurance policies, the
insurance companies design a plan that they think is a good plan
that will sell; some are lower benefit plans; others are higher
benefit plans. For example, an individual policy may only cover
hospital admissions, which is valuable coverage because
hospitals are generally a person's greatest expense, she said.
If HB 195 passed, the insurance companies would presumably
design a plan that would not include the mandates. A person
would have a choice of an individual plan that includes
mandates, which would be a little more expensive, or one that
doesn't. It would be the consumer's choice. She reiterated
that Premera Blue Cross would be doing some estimates on the
impact of removing those mandates [from individual policies].
Number 2185
REPRESENTATIVE ROKEBERG said that the committee can assume that
by allowing insurance companies to design products without the
mandates, the resulting policies will be cheaper. Right now, he
said, companies don't do much designing like they do in group
policies with their menu selections. He has requested Blue
Cross and Aetna to show what kind of savings these policies can
generate for the consumer.
REPRESENTATIVE ROKEBERG asked Ms. Campbell to explain why
individual plans generally are cheaper than group plans because
of the guarantee issue.
Number 2260
MS. CAMPBELL explained that in the large group market, companies
generally guarantee [coverage of every policyholder] because
it's a larger market, and insurance companies want to sell these
policies. She said that is also true in the small group
insurance market; an insurance company that writes in that
market cannot refuse to cover someone, regardless of the risk.
So if there are a number of unhealthy employees in a small group
policy, the insurance company can't refuse to cover an
individual; therefore, it's more costly insurance. However, in
the individual market, insurance companies ask a lot of medical
questions. For example, if a customer has had cancer in the
last five years, they're not going to issue a policy to the
person. Or if the person has had a back problem, they may put a
rider excluding coverage for back treatments. So if customers
have those kinds of conditions, they go to the high-risk [ACHIA]
pool where they are guaranteed coverage.
Number 2311
REPRESENTATIVE ROKEBERG stated that in group plans, the large
majority of employers pay a portion of the premium, so the
policyholder tends to pay less out of pocket than a person with
an individual plan. He said it's ironic that individual plans
may be cheaper than group plans, but because there's no employer
contribution, the out-of-pocket cost may be higher for the
individual. He pointed out that in individual plans, the
insurance company doesn't cover preexisting conditions, unless
it is a very expensive policy. He said HB 195 doesn't address
that issue.
TAPE 03-33, SIDE B
Number 2368
REPRESENTATIVE GATTO asked about the insurance options available
to a young college graduate with a degree, a $40,000 school loan
debt, and no job.
MS. CAMPBELL said the person would go to an insurance agent or a
broker and get some quotes on policies. One company offers a
policy for a $186 monthly premium, with a $l,000 deductible.
She answered a question from Representative Gatto about coverage
of successive cancers. She said the company probably wouldn't
have covered the first cancer, and if the second cancer was
related to the first cancer, the company would not cover that
one either.
Number 2265
REPRESENTATIVE GUTTENBERG asked several questions about the
details of the federal subsidy of health insurance under the
Trade Adjustment Assistance Reform Act.
MS. CAMPBELL said the federal subsidy takes the form of a tax
credit. The person [who lost a job because of international
trade] applies to become eligible, and starting in August 2003,
the U.S. Department of Treasury will issue tax credits on a
monthly basis, instead of waiting till the end of the year. The
person is covered for two years then is no longer eligible. The
trade scene may shift, and the person may return to the previous
job or find a new one.
Number 2193
REPRESENTATIVE ROKEBERG reviewed the four types of health
insurance premiums that can be partially subsidized through
federal tax credits. He emphasized that HB 195 only covers
federal subsidies for access to ACHIA coverage.
Number 2152
PAULA SCAVERA, Special Assistant, Office of the Commissioner,
Department of Labor & Workforce Development, explained that the
Trade Adjustment Assistance Reform Act is for people who have
lost their jobs due to competition from foreign imports. In the
last few years, timber and oil industry workers [in Alaska] have
been qualified for assistance under this law. Most recently,
fishing industry workers have become eligible. In the late
1990's, there were hundreds of people eligible, but recently,
displaced workers have numbered in the thousands. There's money
for training, retraining, and this health care tax credit.
MS. SCAVERA said she would provide the number of workers from
the oil and other industries who have qualified for these
federal benefits. She noted that the department is publicizing
the program through its job centers. The information is
available on the department's web site, and the department is
contacting companies directly. Because the department was
recently added to HB 195, she is developing additional materials
for legislators.
Number 1986
SHAUNA HARPER, TAA Program Coordinator, Division of Employment
Security, Department of Labor & Workforce Development, responded
to a question from Representative Guttenberg about the history
of the Trade Adjustment Assistance Reform Act. She testified
that the TAA was established in 1974; it was reformed on August
6, 2002, when the health care tax provision was added. The law
sunsets in 2007 but has been reauthorized every three or four
years since 1974. Other benefits include retraining, job search
allowances, relocation allowances, and weekly benefits that are
similar to unemployment insurance.
Number 1920
REPRESENTATIVE ROKEBERG moved to adopt Amendment 1 [text
provided previously]. There being no objection, it was so
ordered.
Number 1890
REPRESENTATIVE DAHLSTROM moved to report CSHB 195, Version 23-
LS0690\Q, Ford, 4/9/03, as amended, from committee with
individual recommendations and the accompanying committee zero
fiscal note. There being no objection, CSHB 195(L&C) was
reported out of the House Labor and Commerce Standing Committee.
HB 10-GROUP HEALTH INSURANCE FOR PRIVATE GROUPS
Number 1853
CHAIR ANDERSON announced that the final order of business would
be HOUSE BILL NO. 10, "An Act amending the definition of group
health insurance, and allowing the Department of Administration
to obtain a policy or policies of group health care insurance
for employers that are small businesses, nonprofit
organizations, special services organizations, or small
associations for insurance purposes; and providing for an
effective date."
Number 1847
REPRESENTATIVE ROKEBERG moved to adopt the proposed committee
substitute (CS), Version 23-LS0030\Q, Ford, 4/11/03, as a work
draft. There being no objection, Version Q was before the
committee.
CHAIR ANDERSON said this is a great bill and announced that he
would cosponsor it.
REPRESENTATIVE ROKEBERG, prime sponsor along with Representative
Heinze, told members the bill allows nonprofit organizations and
others who qualify to pool together for group insurance.
Explaining reasons for the changes in Version Q, he said this
had the [Alaska Mental Health Trust Authority ("Mental Health
Trust")] provide some $91,000 to help "organize the state, which
would go out with an RFP [request for proposals] to the private
sector to get the private sector involved to try to put that
group together." He also pointed out that the Division of
Retirement & Benefits, Department of Administration, had
provided a fiscal note [for the original bill] for some $40,000
[for 2004] to participate in this. He said the bill was
generating some negative reaction in the insurance community,
including major underwriter and independent companies; concern
about the growing fiscal note; and concern that people's
expectations [wouldn't be met].
REPRESENTATIVE ROKEBERG explained that he and Representative
Heinze want to allow people to group together without
restrictions to form "critical-mass, larger pools," which could
drive down the cost of insurance and would allow people to get
together [for insurance purposes] who are currently restricted
from doing so under state law. Therefore, he explained, it had
dawned on him to "break down the barriers to getting affiliated
affinity groups together" by making it a more open process,
changing state law to allow even insurance underwriters to form
their own groups, rather than have the state involved in the
process of forming groups.
REPRESENTATIVE ROKEBERG reported that he'd discussed this with
the Mental Health Trust, which is very supportive of the
concept, particularly on behalf of nonprofit organizations; he
said Mr. Jessee [executive director of the Mental Health Trust]
had expressed concern early on, but thought it was a great idea
to open the process up and make it nonspecific, allowing
nonprofits to work on their own together. He said [the Mental
Health Trust] still would do the financing, and offered his
understanding that the private insurance industry currently is
working with the Foraker Group in Anchorage, through the
Rasmuson Foundation, on trying to form a nonprofit group. He
added that [the Mental Health Trust] is willing to put up at
least $45,000 to underwrite this activity, and it wouldn't have
to go through the state budget.
Number 1631
REPRESENTATIVE ROKEBERG, calling Version Q the "light version of
the bill," specified that the intention is to allow groups to
come together, break these barriers down, and form pools or
groups basically on their own, in conjunction with underwriters.
He pointed out that there are plans in the state that allow
associations to self-insure, but explained that he hadn't wanted
to do that with this bill because it requires the Division of
Insurance to address issues of solvency and managing the group.
This bill, instead, keeps it simple and lets the private sector
"group together and do what they want."
REPRESENTATIVE ROKEBERG pointed out that Version Q "comes up
slightly short" because it doesn't include individuals. Noting
that there are some technical issues, he said he'd keep working
on it to try to allow individuals to join the group. He
requested that members get some clarification from Ms. Campbell
[of the Division of Insurance] and then move the bill from
committee. He characterized it as a "breakthrough kind of
thing" and questioned the need for artificial barriers. In
response to a member with regard to whether any barriers remain,
he said there are some in the bill right now; he mentioned the
need for constitutional bylaws and said he wasn't happy about
that. He asked Ms. Campbell to address that.
Number 1544
CHAIR ANDERSON observed that there are a lot of cosponsors.
REPRESENTATIVE ROKEBERG concurred, saying he'd circulate a
memorandum to inform them that the nature of the bill has been
changed. He surmised that people who didn't like the bill
before would like it now, and that those who liked before still
should. He said he didn't see any downside.
Number 1519
REPRESENTATIVE GATTO recalled earlier committee discussion and
his own question about what business the state has getting
involved in this; he mentioned potential lawsuits and so forth.
He said that as he reads Version Q, however, it appears the
question no longer needs to be asked. He sought assurance that
the state is out of the picture.
REPRESENTATIVE ROKEBERG responded:
Representative Gatto's concerns, while I don't 100
percent agree with, totally, his concerns from the
prior version, I think they had a lot of validity.
And by trying to make this bill simpler, with more
general applicability, ... and doing it totally
outside the bounds of state government and just
lowering barriers to pooling and aggregation, I think
that's the intention of the bill, and I think I can
... answer in the affirmative.
Number 1421
REPRESENTATIVE CRAWFORD remarked that one reason he believes
what Representative Rokeberg is doing [with the new concept in
Version Q] is so laudable is that it wasn't being done before.
Agreeing with the need to remove barriers, he said he hadn't had
a chance to read through [Version Q] yet, but indicated he
wholeheartedly agreed with the concept and offered to help get
it moving in any way he could.
Number 1360
REPRESENTATIVE GUTTENBERG highlighted the idea of removing the
obstacles as a new approach and letting the market take over,
suggesting it might just do it. He indicated the desire to hear
from people about it.
REPRESENTATIVE ROKEBERG emphasized that he doesn't want
nonprofit organizations to feel "we're turning our back on
them"; on the contrary, the desire is to put something workable
together. He suggested this bill is a prototype allowing
[nonprofits] to do things they weren't able to do before, in
conjunction with the private sector and groups like [the Mental
Health Trust] and the Foraker Group that will step up and be the
conduit, which the state would have been under the former bill
version.
Number 1203
REPRESENTATIVE CRAWFORD asked Representative Rokeberg how he
envisions this happening. For example, will nonprofits call a
1-800 phone number and express the desire to be part of this,
get together a group of nonprofits and small businesses, and
then ask for bids?
REPRESENTATIVE ROKEBERG replied:
Well, frankly, there's already the move underway ...
with the Foraker Group for nonprofits, ... working
with a specific underwriter. And unfortunately,
because of ... the timing and everything else, I would
have them to testify today, but ... this bill has got
two other referrals, so I wanted to get it moving.
And I will be getting further backup and getting them
involved. I just want to make sure that the nonprofit
community understands that, and that this process is
already underway, because I think we've got at least
two organizations, the Foraker Group and [the Mental
Health Trust], willing to take up ... this issue.
REPRESENTATIVE ROKEBERG noted the presence of Ms. LaBolle of the
Alaska State Chamber of Commerce, and suggested that other
groups which might have been restricted by law before would now
be able to move forward along these lines.
Number 1100
REPRESENTATIVE ROKEBERG asked Ms. Campbell to explain why
individuals couldn't be included. He also referred to the
Alaska State Chamber of Commerce and asked why the barriers for
group affiliation existed before and yet can be lowered now. He
indicated he would be working with Ms. Campbell on these issues.
Number 1069
KATIE CAMPBELL, Life and Health Actuary, Division of Insurance,
Department of Community and Economic Development, with regard to
adding individuals to the plan, explained:
It's because ... of the way that our market in Alaska
is set up. Right now, there is no "guarantee issue"
in our individual market unless you go to [a] high-
risk pool. So if you allow an individual now who is,
... say, less than healthy to come into this
association - and remember, it's formed for insurance
purposes, so if it's to their advantage and they think
they can get a better rate there, obviously they will,
as opposed to going into the high-risk pool - you end
up with a lot of high-risk people in your association
plan, and ... that causes the association plan to
fail. The rates ... will skyrocket, and it won't
serve the purpose that was intended.
REPRESENTATIVE ROKEBERG asked whether a combination of the prior
bill and this one could serve the individual market better, and
whether there is any way to finesse that [guarantee] issue
program for this new category.
MS. CAMPBELL answered, "I think that if you try to combine them
into this association plan on a guarantee basis - so if they
come in and they're guaranteed coverage - you're going to run
into the problem where that association plan won't be viable."
REPRESENTATIVE ROKEBERG asked, "What if you don't guarantee the
coverage for individuals - could you do that?"
MS. CAMPBELL responded:
You could certainly set it up so that they could
become part of the association and be underwritten
much like they underwrite in the market, and then you
end up back in the same place where, well, they could
just buy the coverage out in the market. ... I think
the individual rates are generally a little bit less
expensive because they'd be paying 100 percent of
their premium, whether they buy through the
association or through the individual market.
REPRESENTATIVE ROKEBERG suggested that it is a matter of public
education, then, with regard to what is available.
Number 0935
MS. CAMPBELL responded to Representative Rokeberg's earlier
question relating to barriers for group affiliation:
I think primarily that the reason that they have been
excluded ... can be summed up, I think, in the
conditions that are placed around this ... in this
particular version of the draft, that you have this
problem in a voluntary market where people are going
to select against one or the other, depending on what
their risk is. And so, what happens right now is, the
insurance companies ... are very cautious about
writing association plans if they cannot, in some way,
predict the risk of that group. And so, you really
look for stability in the association. If everybody
can move in and out and ... they're allowing a lot
more unhealthy people in or -- you know, it's really
about being able ... to predict the risk ... and to
offer the coverage at a reasonable rate.
MS. CAMPBELL offered her understanding with respect to the
Alaska State Chamber of Commerce that it is a legitimate
association that could get bids from insurance companies. She
said that wasn't restricted before, as long as the association
was formed for a purpose other than insurance, had a
constitution and bylaws, and was a bona fide association. She
reiterated that insurance companies are very hesitant when they
don't feel that the rules surrounding the membership and so
forth allow them to predict the cost.
Number 0790
REPRESENTATIVE GUTTENBERG recalled that one concern with the
former bill version related to the possibility, if someone
didn't get the bid, then other people would move out of the
market. He asked Ms. Campbell to explain how that wouldn't
happen under [Version Q].
MS. CAMPBELL replied:
This is allowing ... groups of people to form. It's
not one great big, huge pool. So, presumably, if
you're going to form an association, ... you could be
in a community and you could say, "Oh, I want to
provide insurance coverage to my employees," and you
could be all different businesses, and you could say,
"OK, well, all of us in this area want to form an
association." And you could do that. It's just a
portion of the market. ... I think the way that it was
set up before, it was ... more global.
REPRESENTATIVE GUTTENBERG suggested there would be a tendency to
form as large a pool as possible for a single group.
MS. CAMPBELL said it would certainly be allowed, and agreed that
the larger the group, probably the better.
Number 0735
MS. CAMPBELL, in response to a question from Representative
Crawford, explained that under the small-employer laws, "issue"
is guaranteed if a firm has 2-50 employees. On the other hand,
insurance companies can require that full-time employees
participate [as a condition of providing coverage]. For
example, a person may be covered under a spouse's plan and
therefore not want coverage, but if that person didn't
participate, the company wouldn't meet the insurer's rules that
say a certain percentage of employees must participate. That is
to avoid the selection problem, she noted, where higher-risk
people are the only ones who end up insured in an employer plan.
Number 0650
REPRESENTATIVE DAHLSTROM moved [to report from committee]
CSHB 10 [Version 23-LS0030\Q, Ford, 4/11/03] with individual
recommendations and the accompanying zero fiscal note. There
being no objection, CSHB 10(L&C) was reported from the House
Labor and Commerce Standing Committee.
ADJOURNMENT
There being no further business before the committee, the House
Labor and Commerce Standing Committee meeting was adjourned at
4:50 p.m.
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