Legislature(2013 - 2014)BARNES 124
04/06/2013 03:15 PM House LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| HB196 | |
| HB169 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 196 | TELECONFERENCED | |
| *+ | HB 169 | TELECONFERENCED | |
| + | TELECONFERENCED |
ALASKA STATE LEGISLATURE
HOUSE LABOR AND COMMERCE STANDING COMMITTEE
April 6, 2013
3:21 p.m.
MEMBERS PRESENT
Representative Kurt Olson, Chair
Representative Lora Reinbold, Vice Chair
Representative Mike Chenault
Representative Bob Herron
Representative Charisse Millett
Representative Dan Saddler
Representative Andy Josephson
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE BILL NO. 196
"An Act relating to group insurance coverage and self-insurance
coverage for school district employees; and providing for an
effective date."
- HEARD & HELD
HOUSE BILL NO. 169
"An Act relating to the authority of the Regulatory Commission
of Alaska to regulate the production and distribution of
telephone directories."
- MOVED CSHB 169(L&C) OUT OF COMMITTEE
PREVIOUS COMMITTEE ACTION
BILL: HB 196
SHORT TITLE: SCHOOL DISTRICT EMPLOYEE HEALTH INSURANCE
SPONSOR(s): EDUCATION
04/02/13 (H) READ THE FIRST TIME - REFERRALS
04/02/13 (H) EDC, L&C
04/05/13 (H) EDC REFERRAL REMOVED
04/05/13 (H) FIN REFERRAL ADDED AFTER L&C
04/05/13 (H) BILL REPRINTED 4/5/13
04/05/13 (H) EDC AT 8:00 AM CAPITOL 106
04/05/13 (H) <Bill Hearing Canceled>
04/06/13 (H) L&C AT 3:15 PM BARNES 124
BILL: HB 169
SHORT TITLE: RCA REGULATION OF TELEPHONE DIRECTORIES
SPONSOR(s): OLSON
03/15/13 (H) READ THE FIRST TIME - REFERRALS
03/15/13 (H) L&C
04/05/13 (H) L&C AT 3:15 PM BARNES 124
04/05/13 (H) <Bill Hearing Canceled>
04/06/13 (H) L&C AT 3:15 PM BARNES 124
WITNESS REGISTER
REPRESENTATIVE LYNN GATTIS
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Testified as sponsor on HB 196.
ERICK CORDERO-GIORGANA, Staff
Representative Lynn Gattis
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Testified during the discussion of HB 196.
DANA PARAMO, Superintendent
Matanuska-Susitna Borough School District (MSBSD)
Wasilla, Alaska
POSITION STATEMENT: Testified during the discussion of HB 196.
STEVE ATWATER, PhD, Superintendent
Kenai Peninsula Borough School District (KPBSD)
Kenai, Alaska
POSITION STATEMENT: Testified in support of HB 196.
THERESA KEEL, Superintendent
Cordova City School District (CSD)
Cordova, Alaska
POSITION STATEMENT: Testified during the discussion of HB 196.
ROB THOMASON, Superintendent
Petersburg School District (PSD);President
Alaska Association of School Administrators (AASA)
Petersburg, Alaska
POSITION STATEMENT: Testified during the discussion of HB 196.
BECKY HULTBERG, Commissioner
Department of Administration (DOA)
Juneau, Alaska
POSITION STATEMENT: Testified during the discussion of HB 196.
MIKE BARNHILL, Deputy Commissioner
Office of the Commissioner
Department of Administration (DOA)
Juneau, Alaska
POSITION STATEMENT: Testified during the discussion of HB 196.
ANNA LATHAM, Staff
Representative Kurt Olson
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: On behalf of the sponsor, Representative
Kurt Olson, presented HB 169.
LEONARD STEINBERG, Senior Vice President
Legal Regulatory & Government Affairs
Alaska Communications
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 169.
MARK MODERO
GCI
Anchorage, Alaska
POSITION STATEMENT: Testified in support of CSHB 169, Version
U.
ACTION NARRATIVE
3:21:24 PM
CHAIR KURT OLSON called the House Labor and Commerce Standing
Committee meeting to order at 3:21 p.m. Representatives
Chenault, Reinbold, Millett, Josephson, Saddler, Herron, and
Olson were present at the call to order.
HB 196-SCHOOL DISTRICT EMPLOYEE HEALTH INSURANCE
3:21:53 PM
CHAIR OLSON announced that the first order of business would be
HOUSE BILL NO. 196, "An Act relating to group insurance coverage
and self-insurance coverage for school district employees; and
providing for an effective date."
3:22:35 PM
REPRESENTATIVE LYNN GATTIS, Alaska State Legislature, asked to
present a bill on behalf of the House Education Standing
Committee, which she chairs. She related that the intent of
HB 196 is to help Alaska's public schools with the ever
increasing cost of health care and life insurance benefits for
all employees; all 53 school districts provide health insurance
coverage for their certified and classified employees. The
number of employees covered by a single school district ranges
from 6-6,300 employees. Each school district each must obtain
its own insurance policy so coverage and premiums vary widely
throughout the state. This bill would bring all schools into
one group insurance program, managed by the state. By joining a
larger insurance pool, public schools may benefit in two
important ways. First, schools can save through cost savings of
a volume discount from participation in a health insurance pool.
Second, schools can save by joining an agency that exists
explicitly to obtain the best possible health care benefits for
its members at the lowest possible cost.
REPRESENTATIVE GATTIS predicted that by joining a health
insurance pool operated by the state, local school districts
would still retain the right to negotiate the level of employer
and employee contributions for health and life insurance
premiums, which would likely result in cost savings to the
employees and employer. In FY 12, employer and employee health
insurance premium costs, administrative costs, and [medical]
claims costs for self-insured plans for the 53 school districts
in Alaska totaled nearly $282 million. Under this bill, instead
of 53 different medical insurance programs, school districts
would participate in one health care insurance plan that could
serve 19,000 employees. Additionally, reducing the cost of
medical insurance would allow districts to reallocate funds to
the classrooms, where funds are so desperately needed. She
asked members to move the bill to the next committee so that
committee can consider the financial impacts and benefits for
Alaska's school districts.
3:25:54 PM
REPRESENTATIVE HERRON asked whether the sponsor contacted the
Alaska Municipal League Joint Insurance Association (AMLJIA) to
inquire if this organization is interested in expanding its
[insurance] pools to provide this service.
REPRESENTATIVE GATTIS replied she did not.
ERICK.CORDERO-GIORGANA, Staff, Representative Lynn Gattis,
Alaska State Legislature, deferred to the Department of
Administration (DOA) to answer the question on AMLJIA coverage.
3:26:33 PM
DANA PARAMO, Superintendent, Matanuska-Susitna Borough School
District (MSBSD), estimated that the MSBSD currently spends
about $30 million on health insurance benefits each year from
its general operating fund, which represents approximately 15
percent of its expenditures. She estimated the average cost of
health care has been increasing 12 percent annually so the MSBSD
could potentially experience a $3.6 million increase in health
insurance costs. This health insurance cost represents the
equivalent of 36 teaching positions. However, the trend of
increasing health insurance costs is not new. In fact, over the
past 10 years, the MSBSD's health insurance costs have increased
by 131 percent. She emphasized the necessity to lower the
health insurance growth rate and health care expenditures since
the current path is unsustainable.
3:28:14 PM
MS. PARAMO offered her belief that including K-12 school
districts as eligible participants in the statewide benefit plan
would significantly spread the covered employees over a much
wider base and potentially save all employees, the school
district, and the state money. Second, including additional
participants in the medical insurance pool could significantly
increase the negotiating power of the group with medical
providers. Finally, centralizing the benefit plan's
administration would eliminate significant duplication of effort
and could reduce the associated administrative costs and the
burden of administration on all school districts. She reported
that the per employee health insurance cost in the MSBSD is
$13.41 per hour. She thanked the committee for hearing
testimony on HB 196 and giving public education due
consideration.
3:29:41 PM
STEVE ATWATER, PhD, Superintendent, Kenai Peninsula Borough
School District (KPBSD), testified in favor of HB 196. He
stated that the KPBSD's health care is self-insured and the
district does all it can to contain costs. For example, the
KPBSD has a wellness plan and takes a conservative approach
toward setting benefits. Still, the district has not been able
to slow the rising cost of health care for its employees. In
fact, in 2008, the KPBSD's employees generated close to $12
million in medical claims. Last year, this amount exceeded $21
million, which represents a 62-percent increase in just four
years. He offered his belief that a statewide health insurance
system for all school district employees would lead to health
care cost savings for the KPBSD. Further, he said he's
convinced that the efficiencies enjoyed by a large pool of
participants must be embraced by the state. As it stands today,
the KPBSD anticipates a $2.5 million shortfall in revenue for
next year, which is less than the amount needed to maintain the
current level of service for students. Additionally, any cost
savings the KPBSD can realize from reductions in health care
insurance could be used to support classroom instruction. At
the district level, the KPBSD has one full-time employee
dedicated to the self-insurance plan and several other employees
devote part of their day on health insurance-related tasks. Not
only would a statewide system save money in claims, it would
reduce overall expenditures tied to health care. He
acknowledged that a statewide system represents a big step for
Alaska; however, he encouraged the committee to recognize it as
the right step.
3:31:32 PM
THERESA KEEL, Superintendent, Cordova City School District
(CSD), stated she would like to echo the testimony of Mr.
Atwater and Ms. Paramo. She said the CSD's [health insurance
issues are similar to] all the other school districts in Alaska,
although the CSD is a much smaller district than either the
MSBSD or the KPBSD. She said that the average increase for the
CSD employee's health care costs has been 11 percent each year.
Based on the information from the CSD's carrier, this year the
district is bracing for a 15 percent increase. Currently, 12.5
percent or $813,000 of the CSD's $6.5 million budget is spent on
health insurance. Next year, the CSD projects this cost to
increase to 18.3 percent of its $5 million budget. Further, the
CSD is experiencing declining enrollment; however, health
insurance costs still continue to rise. It has been very
difficult to provide adequate funding for the tools teachers
need to do their job in the classroom due to health insurance
costs. Any relief the state can give all school districts from
insurance costs will be welcome, she said. In conclusion, from
her conversations with teachers she believes the CSD teachers
concur with her sentiments. The CSD wants to maintain the level
of benefits the school district currently offers, but if another
provider can [reduce] the costs of medical insurance, the CSD
truly would support those efforts. She thanked the committee.
3:33:43 PM
REPRESENTATIVE MILLETT referred to her letter of April 5, 2013,
in members' packets from the Cordova School District and asked
whether she still has concerns about a monopoly [if the school
districts were under the state's plan].
MS. KEEL responded that in her experience anytime a mandate is
created by the state the initial costs decrease, but over time
the costs will eventually rise due to a lack of competition.
For example, the CSD experienced this with the [NEA-Alaska
Health Plan], which the CSD currently uses. The NEA's costs
were initially low due to their large insurance pool, but over
time these costs have increased [even though] the majority of
school districts in Alaska now use this organization's
insurance. She concluded that in her experience competition
breeds lower costs.
REPRESENTATIVE MILLETT agreed. She asked whether the CSD has
any employees that are part of the health insurance plan for
Public Employees Local 71.
MS. KEEL answered no.
3:35:21 PM
REPRESENTATIVE JOSEPHSON pointed out that in the letter dated
April 5, 2013, Ms. Keel related her opposition to HB 196;
however, he understood from her testimony today that she
supports the bill. He requested clarification regarding Ms.
Keel's position on HB 196.
MS. KEEL explained that the letter provided information to the
committee, including that the school district wants relief from
health insurance costs regardless of the source of the relief.
REPRESENTATIVE JOSEPHSON inquired as to the CSD's current cost
of health insurance. He offered that the state costs are
approximately $1,330 per employee and asked whether the CSD is
paying less than that for its medical insurance.
MS. KEEL answered that the CSD's premium is $1,712 per employee
per month so the state's plan is less.
REPRESENTATIVE JOSEPHSON asked whether teachers have negotiated
a share of the cost.
MS. KEEL answered that the teacher's share is 8 percent and the
school district's contribution is 92 percent. She informed the
committee that the CSD is in the process of negotiating a new
contract and has requested a 50-50 split between the employees
and the school district for any increases in health insurance
costs.
REPRESENTATIVE JOSEPHSON asked whether any comparison has been
done to compare benefits offered in the state's health insurance
plan to ones offered in the current CSD's health insurance
benefit plan.
MS. KEEL answered no, the comparison has been limited to the
cost since the overall cost would be $400 per month less per
employee.
3:37:25 PM
ROB THOMASON, Superintendent, Petersburg School District (PSD);
President, Alaska Association of School Administrators (AASA),
stated that he echoes the positive comments on HB 196. He said
health insurance is essential, but should not be the vehicle
that drains the resources from the critical mission of school
districts, which is educating kids. The PSD's experience is
somewhat similar to [others portrayed today]. He related that
in 2010-2011, the PSD used AETNA's plan. At the time, PSD was
facing a 40 percent increase or $250,000 in health insurance
costs. The PSD switched to the [NEA-Alaska Health Plan], whose
policy was equivalent, but cost $200,000 less per year.
Additionally, the PSD did not have to pay AETNA's proposed
$250,000 increase. However, the PSD is now facing a 15 percent
increase with the NEA's plan, which represents an increase of
approximately $150,000 per year.
MR. THOMASON related that currently, the PSD's health insurance
costs are approximately $1,650 per employee, with the school
district paying 80 percent and the employee paying 20 percent.
He reported that $1.2 million of PSD's $8 million budget has
been designated for health insurance. He said it is difficult
for a school district the size of the PSD to factor in costs in
the range of 10-15 percent for health insurance alone. In
conclusion, he said he agrees with the Petersburg School Board -
anything that can be done by an economy of scale to reduce and
control health insurance costs will allow the district to
allocate scarce funds to direct support to educate school
children. In conclusion, he said that insurance is critical but
it doesn't have to be the Cadillac version.
3:39:57 PM
REPRESENTATIVE JOSEPHSON said he calculated the PSB's per
employee cost at $1,650 with 20 percent paid by the employee.
He said the PSD's cost per employee would total $1,330 per
employee, which is the same rate the state would pay, so the
district would break even [under the state's plan.]
MR. THOMASON agreed, but offered his belief that it is also
important for employees and the district to have access to
something better.
3:40:47 PM
REPRESENTATIVE MILLETT asked whether anyone from the Public
Employees Local 71 would be testifying to clarify the three
optional plans for their health care.
CHAIR OLSON answered yes; noting the Public Employees Local 71
is scheduled to testify at a later hearing.
3:41:36 PM
BECKY HULTBERG, Commissioner, Department of Administration
(DOA), commented that the only accurate way to compare plan
coverage is by an actuarial value of the plan. She explained
that the comparison should not only consider the monetary
contribution, but the actual benefits that are offered or not
offered in the medical insurance plans. Again, she cautioned
that without an actuarial comparison it can get very difficult
to compare health insurance coverage. She reported the
department spends an inordinate amount of time managing health
care costs. She offered her belief this is the second most
pressing economic issue in the state and emphasized the
importance of grappling with health care costs. Alaska has
experienced a greater increase in health insurance plan costs
than many other states. Managing expenses has been one of the
core functions of the department since health care costs are
subject to some of the largest and fastest growing rate
increases. The state currently manages several health care
plans, but she offered to focus on the active and retiree's
health insurance plans which cover approximately 85,000 people.
She noted that approximately 40 percent of retirees reside
outside Alaska. The combined annual cost for the plan is $600
million. Both state health care plans are self-insured with
claims managed by a third-party administrator, which processes
the claims, negotiates network discounts, and receives payment
on a per-member per-month basis.
3:44:57 PM
COMMISSIONER HULTBERG then turned to the costs for health care
plans. First, health insurance costs depend on the network of
providers and the discounts offered. Second, the health
insurance premiums are based on a per-member per-month cost.
The number of high cost claimants also affects the overall cost
of medical care as does the "per unit" cost, which is
essentially medical inflation. Finally, costs are based on
utilization or the frequency in which members use the services,
and the types of services used. However, almost all of the
costs can be impacted by the volume or the number of people in
the plan. She reiterated the AlaskaCare active plan has 16,400
members, including dependents. In its current form, this bill
would add an estimated 47,000 members to the existing plan.
Theoretically, this increased volume could be advantageous since
the pool size could be used to leverage deeper discounts and
lower the third-party administrator's costs. In fact, larger
pools can reduce risk so the impact of high-cost claimants is
more leveled out over time. Additionally, a larger pool could
also impact a per-unit cost for services and utilization.
Finally, the plan design can affect use which in turn affects
the overall costs. She concluded that the department's focus is
to provide value for state employee members, which means the
cost of services, the quality of services, and the value to the
state.
3:46:56 PM
COMMISSIONER HULTBERG indicated that the state pays a large
percentage of the health insurance costs for employees, but it
also pays for employees as retirees. Thus, the state is not
only responsible for a considerable amount of funding for the
plan today, but for the experience of these plans in the future.
Therefore, the state has a vested interest in the employee's
health, the plan design, and in the overall cost of the
healthcare plan. Currently, the state has been taking a
fragmented, uncoordinated approach to managing health insurance
within the school districts, including that in some school
districts multiple plans may exist. For example, the Juneau
School District (JSD) offers four different plans within the
school district. She questioned whether it is better to manage
the plans in a fragmented way or to explore managing them in a
cohesive and integrated manner. In response to a question,
Commissioner Hultberg answered that the state has 6,500 active
state employees, but including dependents the total [covered] is
16,400. This bill would add an additional 47,000 members to the
pool. In further response, she added that the state covers
approximately 60,000 retirees.
3:48:17 PM
REPRESENTATIVE MILLETT referred to the fiscal note, which would
add 12 additional staff. She wondered if these additional
positions will also cover the growing retiree pool.
COMMISSIONER HULTBERG answered that the state is already working
to address the retirees. Currently, the state is working to
address how to manage the state's active employees. In response
to a question, Commissioner Hultberg answered that the state
manages four health insurance plans, including one small plan
with seven members. She informed the committee that the small,
specific plan would be eliminated this year.
3:50:16 PM
COMMISSIONER HULTBERG, in response to Representative Josephson,
identified what the state considers to control costs, including
network discounts, administrative fees, high cost claimants,
medical inflation, and utilization. In reference to the
administrative fees, she noted that an Institute of Social and
Economic Research (ISER) study identified that $1 of every $10
spent on health care is spent on health insurance
administration, which isn't an insignificant burden in terms of
costs. She highlighted that appropriate utilization means
having the right care available at the right time.
3:51:40 PM
REPRESENTATIVE JOSEPHSON said he was curious about differentials
in the rural school districts where services are more expensive
in rural Alaska. He acknowledged that perhaps changing to a
statewide plan would soften some [the higher expense for
services in rural Alaska]. However, he surmised that others
would have to absorb those [higher costs].
COMMISSIONER HULTBERG highlighted that currently the state
covers many state employees, including some in very rural areas
of the state. Therefore, the state has some level of experience
with the cost of providing care in rural Alaska. Although she
agreed the cost of serving employees who reside villages is more
expensive, absent claims data on those individuals [the state is
serving in rural Alaska] it is difficult to make a very detailed
analysis on the impact.
3:53:06 PM
REPRESENTATIVE REINBOLD asked for further clarification on the
number of state employees as she thought there are more than
6,500.
COMMISSIONER HULTBERG answered that the state employs
approximately 6,500 employees and including dependents totals
16,400. However, she confirmed that there are more than 6,500
state employees Currently, the state funds four union health
trusts for which the state provides a per member per month
payment to the trust and the trust provide health care to the
employees. As in the school district context, those are
contractual arrangements through the bargaining process.
Commissioner Hultberg related that the [department] has been
transparent regarding wanting to have those employees in the
state's pool as the department also believes it would be in the
state's advantage to have the union employees in the pool. She
acknowledged that would be something that would have to be
addressed at the bargaining table.
3:54:33 PM
REPRESENTATIVE REINBOLD asked whether the exempt employees would
receive the same coverage as the general government unit (GGU)
plan.
COMMISSIONER HULTBERG clarified that she thinks Representative
Reinbold is referencing a different bill before the legislature
that would extend provisions bargained for in the current
contract to the non-covered employees, which includes leave, pay
increments, and the cost-of-living adjustment.
REPRESENTATIVE REINBOLD asked how that bill would impact the
state's budget.
COMMISSIONER HULTBERG answered that the aforementioned bill will
have a fiscal note. She offered to further discuss the bill
with Representative Reinbold at a later time.
3:55:34 PM
REPRESENTATIVE SADDLER asked whether any other states have
coordinated or consolidated health care coverage by combining
educational employees with state employees, and if so, what has
been the experience.
MIKE BARNHILL, Deputy Commissioner, Office of the Commissioner,
Department of Administration, answered that he has not done a
state-by-state analysis; however, he recalled that Indiana
offered an optional program for school districts to opt into its
active health care plan. In further response to a question, he
answered that he did not have any additional information.
3:56:43 PM
REPRESENTATIVE HERRON asked whether the administration supports
this concept and whether it makes sense to create an insurance
pool.
COMMISSIONER HULTBERG answered that currently the
[administration] is not taking position on HB 196, but would
like to speak from a philosophical standpoint on the value of
insurance pooling.
3:57:15 PM
REPRESENTATIVE SADDLER asked whether any factors in Alaska
specifically work in favor or against this type of health
insurance plan in Alaska.
COMMISSIONER HULTBERG mentioned three factors in Alaska as
unique. First, Alaska is unique in its geography. Second,
Alaska has a small population. Third, some areas of Alaska have
a significant concentration of medical care. She offered her
belief that addressing these specific factors can be
challenging; however, she thinks [health care plans] could be
better addressed through larger pools of employees, rather than
negotiating [coverage] for small pools of employees.
3:58:09 PM
REPRESENTATIVE CHENAULT asked whether all state employees are
required to have state health insurance.
COMMISSIONER HULTBERG answered yes.
3:58:27 PM
REPRESENTATIVE CHENAULT suggested one possible savings the state
might consider. He highlighted double coverage exists, such as
one person might be an employee of a school district, but
his/her spouse is a state employee, and the coverage creates
double coverage. He suggested that offering choices for some
employees to select one good policy could result in cost
savings.
REPRESENTATIVE HERRON asked whether the private sector health
insurance pools should be considered as an option. He referred
to the pool insurance previously mentioned through the AMLJIA,
which provides various pool insurance for facilities,
municipalities, and workers' compensation.
COMMISSIONER HULTBERG answered that the state offers a pool for
political subdivisions, which is managed by AETNA. She recalled
the private sector also has one managed by Premera. The
challenge has been some people are moving between the two pools.
MR. BARNHILL remarked that the issue is one of scale. The
larger scale pool has lower risk in insurance pooling.
Additionally, the larger scale pool has more options to leverage
the coverage into better discounts. The state has a pretty
large pool, but one could argue it could be larger, he said.
This year the state experienced some high-cost claimants, which
increased the state's total costs by an additional $8-9 million.
These high-cost claimant's costs are spread throughout the pool;
however, if it was a bigger pool the costs could be spread
further and would tend to decrease the overall health care costs
for everyone.
4:01:23 PM
REPRESENTATIVE MILLETT requested a breakdown between urban and
rural state employees.
COMMISSIONER HULTBERG offered to provide the information.
4:02:01 PM
REPRESENTATIVE REINBOLD asked for clarification on the number of
union trust employees.
COMMISSIONER HULTBERG answered the union trust employees
probably number about 11,000 employees. She assumed the state
has approximately 17,000 state employees and dependents. She
offered to ask the Division of Personnel for the exact number of
employees.
4:03:33 PM
REPRESENTATIVE SADDLER asked whether any benefits exist to
making the health insurance become portable. He wondered if it
would be helpful in circumstances in which an employee who is
covered by one school district moves to another school district.
COMMISSIONER HULTBERG agreed it would make moving from one
position to another more seamless. She pointed out that some
school districts have separate plans for the administrative
component, the teachers, and the support staff, yet the plans
can have wide variations in terms of the cost and the coverage.
She concluded that it would be helpful to have portable health
insurance.
4:04:36 PM
CHAIR OLSON asked for clarification of the fiscal note.
MR. BARNHILL referred to the DOA's fiscal note for $100 million
[dated 4/5/2013]. He explained that this bill contemplates
47,000 additional people added to the health insurance pool,
which would quadruple the size of the pool. He said that
typically, the administration for a pool would have 3-4 months
of reserves, to protect the pool against claims spiking. The
department's rough estimate for 47,000 additional people would
be $100 million. He provided a brief summary of the fiscal note
calculation, noting in FY 12, the total health insurance cost
for all school districts was $282 million. This bill will take
effect in FY 15, with some people moving into the health
insurance plan in FY 15 and the remainder in FY 16. The rough
estimate of costs covering four months of reserves totals $100
million.
4:06:20 PM
MR. BARNHILL said HB 196 contemplates the $100 million could be
drawn from the public education fund over a 10-year period to
pay costs. To begin with the state doesn't know anything about
the health of the pool of 47,000 school district employees. It
could be a healthier population than the state's current pool or
it could be a less healthy population. However, even if the
state knew the health of the proposed incoming population, the
state still wouldn't be able to predict the relative health of
that population in two or three years. Thus, having access to
the $100 million is of vital importance since the state doesn't
want to run its current reserves dry. Further, in order to hold
the public education fund harmless, there is a payback. The
state would bill the school districts for the first four months
of claims and the school district would have ten years to pay.
Once the state receives the payback, it would be funneled back
to the public education fund. He pointed out the fiscal note
shows the draw on the public education fund all in the same year
for ease of reference, but in reality the draw would happen over
a period of years. The fiscal note reflects $10 million in each
year anticipating the state collecting the funds back over a
ten-year period and subsequently depositing it to the public
education fund.
[HB 196 was held over.]
4:08:35 PM
The committee took an at-ease from 4:08 p.m. to 4:09 p.m.
HB 169-RCA REGULATION OF TELEPHONE DIRECTORIES
4:09:39 PM
CHAIR OLSON announced that the final order of business would be
HOUSE BILL NO. 169, "An Act relating to the authority of the
Regulatory Commission of Alaska to regulate the production and
distribution of telephone directories."
4:09:47 PM
ANNA LATHAM, Staff, Representative Kurt Olson, Alaska State
Legislature, stated HB 169 would eliminate the requirement for
regulation and production of telephone directories by the
Regulatory Commission of Alaska (RCA). Currently, the Alaska
Administrative Code (AAC) requires the RCA oversight on the
production and distribution of white page directories. She
specified that this bill only applies to the white pages and not
to the yellow page directories. With the widespread use of cell
phones, people now create their own directories with address
books on their phones and other mobile devices and no longer
rely on white page directories. According to a 2008 Gallup
survey, only 11 percent of households across the U.S. rely on
white page directories. These directories are increasingly
incomplete since they are cyclical, distributed only once per
year, and do not include mobile listings.
MS. LATHAM said according to the National Center for Health
Statistics, in 2009, one of every four households did not have a
land line and relied completely on cell service. She explained
that many customers with land lines request their numbers be
unlisted, and therefore, the phone numbers are unpublished;
sometimes [the amount of unpublished numbers] reaches 40
percent. Consumers have expressed strong opinions about
receiving printed directories and often return them. Many
consumers express concern over environmental implications of
distributing paper directories, which are immediately recycled.
Finally, many places throughout the state do not offer recycling
and these directories go directly to landfills. In an effort to
modernize Alaska's regulatory requirements, HB 169 would allow
telecommunication providers to directly meet the wants and needs
of their customers.
4:12:05 PM
REPRESENTATIVE RENIBLD moved to adopt the proposed committee
substitute (CS) for HB 169, labeled 28-LS0593\U, Nauman, 4/5/13,
as the working document.
[CHAIR OLSON treated it as though he had objected for the
purpose of discussion.]
MS. LATHAM explained that the proposed committee substitute,
Version U, eliminates [subsection c] and thus deletes the
definition for "competitive local exchange market". The
rationale was to streamline the legislation and eliminate the
possibility of phone wars.
4:13:00 PM
REPRESENTATIVE SADDLER said he uses the white pages. He asked
if the RCA requires a telephone service provider to issue white
pages.
MS. LATHAM answered that all telecommunications providers within
the state are required to distribute and produce telephone
directories. In further response, she agreed this bill would
make it optional.
REPRESENTATIVE SADDLER asked whether any white page directories
will be distributed once it becomes optional.
MS. LATHAM recalled 16 states plus the District of Columbia have
adopted similar legislation, but all have optional programs.
Each state offers options to address the lack of a directory.
She recalled Ohio has a call center and California requires
every phone bill must include the phone number for customers to
request a phone directory.
CHAIR OLSON removed his objection. There being no further
objection, Version U was before the committee.
4:14:29 PM
LEONARD STEINBERG, Senior Vice President, Legal Regulatory &
Government Affairs, Alaska Communications, stated that he would
like to testify in support of HB 169, which he said will correct
an ambiguity in the law. The Alaska Public Utility Act, AS
42.05, specifically describes the boundaries of RCA's authority.
With respect to telecommunications, the statute precisely
defines the technical characteristics of the services to be
regulated. He said the RCA's jurisdiction does not extend to
the production and distribution of telephone books, yet for
years local exchange telephone companies have been required by
the RCA to produce printed copies of white page telephone
directories. This bill would provide needed clarification by
removing this issue from the RCA's purview. Telephone books
lack the usefulness they once had and are largely unwanted by
customers. In fact, telephone directories do not include
wireless numbers, or those used by Skype, Face Time or other
voice-over-Internet providers. Numerous land line customers
have requested their numbers be unlisted and as more customers
use personal, digital, and Internet-based directories, customers
have become increasingly upset about receiving unwanted
telephone directories. The RCA recently granted partial and
temporary relief from the mandatory regulations, allowing an
opt-in for subscribers to request continued deliveries of white
pages, but the results in Anchorage are very telling. Of
120,000 subscribers less than 5,000 requested continued delivery
of the book from the prior cycle.
4:17:25 PM
MR. STEINBERG said while the RCA has granted limited relief, the
need for subsequent rulemaking means the final outcome is
uncertain and will take at least four to five years of
regulatory oversight and proceedings to determine. The
additional proceedings would create unnecessary work for Alaska
Communications Systems (ACS) and similarly situated companies
and for the RCA, particularly in light of the questionable
authority to regulate telephone directories. The ACS strongly
believes AS 42.05.145 never contemplated the regulation of phone
books and urges the legislature to act now to make that clear
and to ensure that white-page directories are not subject to
further regulatory oversight. He said ACS supports the proposed
committee substitute for HB 169, Version U.
MARK MODERO, General Communication Incorporated (GCI), stated
that GCI supports Version U.
CHAIR OLSON, after first determining no one else wished to
testify, closed public testimony on HB 169.
4:19:41 PM
REPRESENTATIVE REINBOLD moved to report the proposed committee
substitute, (CS) for HB 169, labeled 28-LS0593\U, Nauman,
4/5/13, out of committee with individual recommendations and the
accompanying fiscal notes. There being no objection,
CSHB 169(L&C) was reported from the House Labor and Commerce
Standing Committee.
4:20:09 PM
ADJOURNMENT
There being no further business before the committee, the House
Labor and Commerce Standing Committee meeting was adjourned at
4:20 p.m.