Legislature(2005 - 2006)CAPITOL 17

03/18/2005 03:15 PM LABOR & COMMERCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= HB 147 INSURANCE TELECONFERENCED
Heard & Held
+= HB 150 LICENSING RADIOLOGIC TECHNICIANS TELECONFERENCED
Moved CSHB 150(L&C) Out of Committee
*+ HB 196 ALTERNATIVE ENERGY PROJECT LOANS TELECONFERENCED
Scheduled But Not Heard
*+ HB 203 MOTOR VEHICLE DEALER SALES TELECONFERENCED
<Bill Hearing Postponed to Mon. 3/21/05>
*+ HB 216 PROPERTY/CASUALTY INSURANCE REGULATION TELECONFERENCED
<Bill Hearing Postponed to Mon. 3/21/05>
Bills Previously Heard/Scheduled
                    ALASKA STATE LEGISLATURE                                                                                  
          HOUSE LABOR AND COMMERCE STANDING COMMITTEE                                                                         
                         March 18, 2005                                                                                         
                           3:27 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Tom Anderson, Chair                                                                                              
Representative Pete Kott                                                                                                        
Representative Gabrielle LeDoux                                                                                                 
Representative Bob Lynn                                                                                                         
Representative Norman Rokeberg                                                                                                  
Representative Harry Crawford                                                                                                   
Representative David Guttenberg                                                                                                 
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
All members present                                                                                                             
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                              
HOUSE BILL NO. 147                                                                                                              
"An  Act  relating  to the  regulation  of  insurance,  insurance                                                               
licensing,  surplus   lines,  insurer  deposits,   motor  vehicle                                                               
service  contracts,  guaranteed automobile  protection  products,                                                               
health  discount plans,  third-party administrators,  self-funded                                                               
multiple   employer   welfare   arrangements,   and   self-funded                                                               
governmental plans; and providing for an effective date."                                                                       
                                                                                                                                
     - HEARD AND HELD                                                                                                           
                                                                                                                              
HOUSE BILL NO. 150                                                                                                              
"An   Act  requiring   licensure  of   occupations  relating   to                                                               
radiologic  technology, radiation  therapy, and  nuclear medicine                                                               
technology; and providing for an effective date."                                                                               
                                                                                                                                
     - MOVED CSHB 150(L&C) OUT OF COMMITTEE                                                                                     
                                                                                                                                
HOUSE BILL NO. 203                                                                                                              
"An  Act relating  to a  motor vehicle  dealer's selling  certain                                                               
motor vehicles as new model motor  vehicles or as new model motor                                                               
vehicles having a manufacturer's warranty."                                                                                     
                                                                                                                                
     - BILL HEARING POSTPONED TO 3/21/05                                                                                        
                                                                                                                                
HOUSE BILL NO. 216                                                                                                              
"An Act relating to insurance rate-making and form filing."                                                                     
                                                                                                                                
     - BILL HEARING POSTPONED TO 3/21/05                                                                                        
                                                                                                                                
HOUSE BILL NO. 196                                                                                                              
"An Act relating to the alternative energy project loan program                                                                 
of the Alaska Industrial Development and Export Authority."                                                                     
                                                                                                                                
     - SCHEDULED BUT NOT HEARD                                                                                                  
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                              
BILL: HB 147                                                                                                                  
SHORT TITLE: INSURANCE                                                                                                          
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR                                                                                    
                                                                                                                                
02/14/05       (H)       READ THE FIRST TIME - REFERRALS                                                                        
02/14/05       (H)       L&C, FIN                                                                                               
02/23/05       (H)       L&C AT 3:15 PM CAPITOL 17                                                                              
02/23/05       (H)       Heard & Held                                                                                           
02/23/05       (H)       MINUTE(L&C)                                                                                            
03/02/05       (H)       L&C AT 3:15 PM CAPITOL 17                                                                              
03/02/05       (H)       Heard & Held                                                                                           
03/02/05       (H)       MINUTE(L&C)                                                                                            
03/16/05       (H)       L&C AT 3:15 PM CAPITOL 17                                                                              
03/16/05       (H)       Scheduled But Not Heard                                                                                
03/18/05       (H)       L&C AT 3:15 PM CAPITOL 17                                                                              
                                                                                                                              
BILL: HB 150                                                                                                                  
SHORT TITLE: LICENSING RADIOLOGIC TECHNICIANS                                                                                   
SPONSOR(s): REPRESENTATIVE(s) ANDERSON                                                                                          
                                                                                                                                
02/14/05       (H)       READ THE FIRST TIME - REFERRALS                                                                        
02/14/05       (H)       L&C, JUD, FIN                                                                                          
02/23/05       (H)       L&C AT 3:15 PM CAPITOL 17                                                                              
02/23/05       (H)       Scheduled But Not Heard                                                                                
03/02/05       (H)       L&C AT 3:15 PM CAPITOL 17                                                                              
03/02/05       (H)       Heard & Held                                                                                           
03/02/05       (H)       MINUTE(L&C)                                                                                            
03/18/05       (H)       L&C AT 3:15 PM CAPITOL 17                                                                              
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
PATRICIA NAULT, Trustee                                                                                                         
Alaska State Employee Association (ASEA) Health Benefit Trust                                                                   
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified in opposition to Sections 28 and                                                                 
29 of HB 147.                                                                                                                   
                                                                                                                                
CHRIS PACE                                                                                                                      
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified in opposition to the fiscal note                                                                 
and Sections 28-29 of HB 147.                                                                                                   
                                                                                                                                
COLLEEN SAVORI                                                                                                                  
Public Employees Local 71                                                                                                       
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified in opposition to HB 147.                                                                         
                                                                                                                                
JON COOK, Director                                                                                                              
Alaska Auto Dealers Association                                                                                                 
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT:  Testified in opposition to Sections 30 and                                                                 
33 of HB 147.                                                                                                                   
                                                                                                                                
MIKE COMBS                                                                                                                      
Alaska Independent Agents and Brokers Incorporated (AIABI)                                                                      
(No address provided)                                                                                                           
POSITION STATEMENT:  Proposed amendments to HB 147.                                                                             
                                                                                                                                
LINDA HALL, Director                                                                                                            
Division of Insurance                                                                                                           
Alaska Department of Commerce, Community, and Economic                                                                          
Development                                                                                                                     
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Answered questions regarding HB 147.                                                                       
                                                                                                                                
JON BITTNER, Staff                                                                                                              
to Representative Anderson                                                                                                      
Alaska State Legislature                                                                                                        
POSITION STATEMENT:  Presented HB 150 and an amendment as staff                                                                 
to sponsor.                                                                                                                     
                                                                                                                                
ALEX MALTER, MD                                                                                                                 
Alaska State Medical Association (ASMA)                                                                                         
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified in opposition to HB 150.                                                                         
                                                                                                                                
REPRESENTATIVE PEGGY WILSON                                                                                                     
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified in opposition to HB 150.                                                                         
                                                                                                                                
JIM TOWLE, Executive Director                                                                                                   
Alaska Dental Society                                                                                                           
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:   Testified in  support of Amendment 1  to HB                                                               
150.                                                                                                                            
                                                                                                                                
STEVEN WAHL, MD,                                                                                                                
Tok Community Clinic                                                                                                            
Tok, Alaska                                                                                                                     
POSITION STATEMENT:  Testified in opposition to HB 150.                                                                         
                                                                                                                                
DON SMITH, PA                                                                                                                   
Wasilla Medical Clinic                                                                                                          
Wasilla, Alaska                                                                                                                 
POSITION STATEMENT:   Testified in opposition to HB 150.                                                                        
                                                                                                                                
TIMO SAARINEN                                                                                                                   
Alaska Society of Radiologic Technologists                                                                                      
Homer, Alaska                                                                                                                   
POSITION STATEMENT:   Testified in support of HB 150.                                                                           
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
CHAIR TOM ANDERSON  called the House Labor  and Commerce Standing                                                             
Committee  meeting  to  order at  3:27:30  PM.    Representatives                                                             
Crawford,   Lynn,   Guttenberg,  LeDoux   (via   teleconference),                                                               
Anderson,  and  Rokeberg  were  present at  the  call  to  order.                                                               
Representative Kott arrived as the meeting was in progress.                                                                     
                                                                                                                                
HB 147-INSURANCE                                                                                                              
                                                                                                                                
3:28:42 PM                                                                                                                    
                                                                                                                                
CHAIR ANDERSON announced  that the first order  of business would                                                               
be HOUSE  BILL NO.  147, "An  Act relating  to the  regulation of                                                               
insurance, insurance licensing,  surplus lines, insurer deposits,                                                               
motor   vehicle   service    contracts,   guaranteed   automobile                                                               
protection   products,   health   discount   plans,   third-party                                                               
administrators,    self-funded    multiple    employer    welfare                                                               
arrangements, and  self-funded governmental plans;  and providing                                                               
for an effective date."                                                                                                         
                                                                                                                                
PATRICIA  NAULT,  Trustee,   Alaska  State  Employee  Association                                                               
(ASEA) Health Benefit Trust ("the Trust") commented:                                                                            
                                                                                                                                
     The Trust is  one of entities that would  be subject to                                                                    
     the requirements proposed  in Sections 28 and  29 on HB                                                                    
     147.   By definition  in the Trust  agreement, trustees                                                                    
     are members  of the  Alaska State  Employee Association                                                                    
     Local 52, so I'm also  a union member and a beneficiary                                                                    
     of the  Trust as well  as a  trustee.  Since  2001, the                                                                    
     Trust  has  been  providing  employee  health  benefits                                                                    
     under a  self-insured plan to approximately  7,000 ASEA                                                                    
     members and  an additional  10,000 dependents  of those                                                                    
     members  under  provisions  of the  union's  collective                                                                    
     bargaining  agreement   with  the   state.    I   am  a                                                                    
     relatively  new trustee,  having been  elected to  this                                                                    
     responsibility  in November  2004  by  my fellow  union                                                                    
     members.   I ran for this  seat because I felt  that by                                                                    
     virtue of  the experience  and knowledge I  have gained                                                                    
     in  12   years  of   working  in  policy   and  program                                                                    
     development  at the  [Alaska Department  of Health  and                                                                    
     Social  Services]  and  my Master's  degree  in  public                                                                    
     administration earned  in 1999  from the  University of                                                                    
     Alaska Southeast, that I could  contribute to the long-                                                                    
     term success  of the Trust.   In the total of  20 years                                                                    
     that I have  worked as a state employee,  I have relied                                                                    
     on the  health benefits provided to  state employees to                                                                    
     take care  of my family's  health care needs.   I'm now                                                                    
     doing my part  to make sure future  state employees who                                                                    
     are  members of  Local 52  can continue  to count  on a                                                                    
     good  benefits package  as  a reasonable  out-of-pocket                                                                    
     cost.                                                                                                                      
                                                                                                                                
MS. NAULT continued:                                                                                                            
                                                                                                                                
     I am here  to express my concern  that the requirements                                                                    
     on  self-funded government  plans  proposed  in HB  147                                                                    
     will increase the  Trust's administrative costs without                                                                    
     improving its financial  solvency or the accountability                                                                    
     of the  Trust to its  beneficiaries.  I  understand the                                                                    
     fiduciary  responsibilities  I  have  assumed  for  the                                                                    
     benefit  of my  fellow  ASEA  members.   I  made it  my                                                                    
     business to  satisfy myself to  the extent  possible at                                                                    
     the beginning of  my tenure that the  Trust operates in                                                                    
     a  financially responsible  manner.   It appears  to me                                                                    
     that the trustees  who have served before  me and those                                                                    
     who  currently  serve with  me  have  been diligent  in                                                                    
     operating  the  health  benefits plan  according  to  a                                                                    
     responsible and objective set  of standards, that being                                                                    
     those established  by the Employee  Retirement Security                                                                    
     Act of  1974, even  though the Trust  is not  among the                                                                    
     types of plans covered by that federal legislation.                                                                        
                                                                                                                                
3:31:40 PM                                                                                                                    
                                                                                                                                
MS. NAULT continued:                                                                                                            
                                                                                                                                
     Annual audits by an accounting  firm ... confirmed that                                                                    
     the Trust  is financially sound.   Administrative costs                                                                    
     are kept  to a minimum.   The Trust has set  an example                                                                    
     for  other state  plans  with  its positive  enrollment                                                                    
     policy, which  requires members to document  that those                                                                    
     they  are claiming  as dependents  do  indeed meet  the                                                                    
     plan's  definition.   And  the  [Alaska] Department  of                                                                    
     Administration  is currently  considering adopting  the                                                                    
     Trust   documentation    standard   for    the   state-                                                                    
     administered  health benefit  plan  dependents.   At  a                                                                    
     time  when  the  legislature  is grappling  with  a  $5                                                                    
     billion   shortfall    in   employee    pension   plans                                                                    
     administered by  the state, it is  clear that oversight                                                                    
     by a  state agency holds  no guarantee of  solvency for                                                                    
     employee  benefit plans.   [Sections]  28  and 29  will                                                                    
     increase the  Trust's administrative costs,  which will                                                                    
     require the Trust to either  reduce coverage for health                                                                    
     care benefits  or increase out-of-pocket costs  for our                                                                    
     beneficiaries.                                                                                                             
                                                                                                                                
3:32:39 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GUTTENBERG  asked  if  the Trust  has  a  federal                                                               
reporting requirement.                                                                                                          
                                                                                                                                
MS.   NAULT  replied   that  the   Trust   does  have   reporting                                                               
requirements,  but   she  wasn't   sure  if  they   were  federal                                                               
requirements.  In reference to  Sections 28 and 29, she commented                                                               
that  she wasn't  sure what  the  purpose of  the proposed  state                                                               
reporting requirements is.   She noted that the  Trust is already                                                               
audited and is capable of meeting standards.                                                                                    
                                                                                                                                
REPRESENTATIVE  GUTTENBERG  asked  what changes  Ms.  Nault  felt                                                               
needed to be made to the state system.                                                                                          
                                                                                                                                
MS. NAULT responded:                                                                                                            
                                                                                                                                
     It appears to  me that the complaints  that are perhaps                                                                    
     the cause  of this  legislation ... won't  be addressed                                                                    
     by  the  legislation,  and  the  circumstances  of  the                                                                    
     people who  think they are  going to improve  what they                                                                    
     get by  virtue of this  legislation; it's not  going to                                                                    
     play out that way.  It's  just going to cost them money                                                                    
     out of their pockets.                                                                                                      
                                                                                                                                
3:34:51 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GUTTENBERG  asked if  complaints to the  state are                                                               
forwarded to the Trust.                                                                                                         
                                                                                                                                
MS. NAULT  responded that when  a person complains to  the state,                                                               
the state is supposed to  give the person information to directly                                                               
contact  the  Trust's administrators.    Complaints  made to  the                                                               
administrators are  passed to the  trustees.  She  explained that                                                               
there  is also  an appeal  process for  people whose  claims were                                                               
denied.  She remarked that she  prefers the current plan over the                                                               
previous plan, noting  that she has "far better  ability to speak                                                               
to and impact  and make people aware of my  needs under this plan                                                               
than I did  when a large insurance company ...  was declaring the                                                               
terms of our coverage, and it  was much harder to make any impact                                                               
on that system."                                                                                                                
                                                                                                                                
3:37:28 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GUTTENBERG commented  that [beneficiaries]  would                                                               
not lose the ability to file complaints under HB 147.                                                                           
                                                                                                                                
MS. NAULT stated:                                                                                                               
                                                                                                                                
     We're just  not even  sure actuaries  will take  on the                                                                    
     kinds  of  responsibilities   that  are  specified  for                                                                    
     them....   There's also some confusion,  I think, among                                                                    
     people who have read the  legislation itself as to what                                                                    
     impact it  will actually have on  the trustees' ability                                                                    
     to set  policy for the  plan versus some  other outside                                                                    
     authority having more ability to do that.                                                                                  
                                                                                                                                
MS.  NAULT, in  response  to  Representative Rokeberg,  clarified                                                               
that the  trustees are the board  of appeal and they  have access                                                               
to  consultants,  specialists,  medical review,  and  utilization                                                               
review to help them in the decision-making process.                                                                             
                                                                                                                                
REPRESENTATIVE ROKEBERG asked if the  administrator has a part in                                                               
the appeal process.                                                                                                             
                                                                                                                                
MS.  NAULT  replied  that the  administrator  makes  the  initial                                                               
determination about whether claims are  paid or not, and then any                                                               
appeals go to the trustees.                                                                                                     
                                                                                                                                
REPRESENTATIVE ROKEBERG asked if the arbitration is binding.                                                                    
                                                                                                                                
MS.  NAULT  replied,  "It  is   a  binding  arbitration  and  the                                                               
arbitrators  that they  use  are people  who  are specialized  in                                                               
health benefit claims."  In  response to further questioning from                                                               
Representative  Rokeberg,   she  explained,   "[The  arbitrators]                                                               
consider all of  the documentation that has been  presented up to                                                               
that point to the trustees in  the course of the appeal, and that                                                               
often   includes  a   complete   set  of   medical  records   and                                                               
determinations by specialists."                                                                                                 
                                                                                                                                
3:40:08 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE ROKEBERG commented, "If  state law were applicable                                                               
to the Trust,  then they would have, under the  Patient's Bill of                                                               
Rights,  the ability  to have  a review  by a  peer review  so if                                                               
somebody who  was in that  particular specialty would be  able to                                                               
review the decision to ... not  grant the benefits."  He asked if                                                               
the Trust has any other outside  standards that it is required to                                                               
meet.                                                                                                                           
                                                                                                                                
MS. NAULT replied  that there is a Trust agreement  that sets the                                                               
terms  of operation  and the  responsibilities  of the  trustees.                                                               
She  explained that  the  agreement was  a  result of  collective                                                               
bargaining.  She clarified that  [the Trust] has some significant                                                               
fiduciary  responsibilities that  are  spelled out  in the  trust                                                               
agreement.                                                                                                                      
                                                                                                                                
3:43:12 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE CRAWFORD asked  if the appeal process  is the same                                                               
as preauthorization of procedures.                                                                                              
                                                                                                                                
MS.   NAULT  replied   that  preauthorization   goes  through   a                                                               
contracted  utilization review  organization.    She stated  that                                                               
this year,  the trustees  have had six  two-day meetings,  but in                                                               
the  past  the  trustees  met via  teleconference  if  there  are                                                               
appeals in the interim.                                                                                                         
                                                                                                                                
CHRIS PACE  testified in opposition to  Sections 28 and 29  of HB                                                               
147, as well as the fiscal note.  He commented:                                                                                 
                                                                                                                                
     One  of the  positive reasons  I like  working for  the                                                                    
     state is that we  benefit from a self-funded government                                                                    
     health  plan sponsored  by our  union, the  [ASEA].   I                                                                    
     believe  we   enjoy  more  health  benefits   from  our                                                                    
     precious  health   care  dollars  because   we've  been                                                                    
     successful  in   our  health   trust  in   keeping  our                                                                    
     administrative  overhead costs  down.   I think  HB 147                                                                    
     would reverse  that.   This bill  would result  in [an]                                                                    
     administrative overhead  expense that  I don't  want or                                                                    
     need.  My  health plan is already being  regulated as a                                                                    
     trust under  Alaska Statute Title 13,  and also through                                                                    
     our collective  bargaining agreement, and  then through                                                                    
     a   letter   of   agreement  between   ASEA   and   the                                                                    
     administration  and  the  health  trust  that  contains                                                                    
     actuarial reporting  requirements and  ... a  report on                                                                    
     the stop-loss coverage it's maintained.                                                                                    
                                                                                                                                
3:45:31 PM                                                                                                                    
                                                                                                                                
MR. PACE commented that there  are several bills currently in the                                                               
legislature and in Congress that  attempt to cut down health care                                                               
costs.   However, he said,  it seems that  HB 147 would  drive up                                                               
the state  employee health care  cost.  He pointed  out, "There's                                                               
nothing [in  the bill] really  to provide anything  additional in                                                               
the way of  doctor visits, prescriptions, or dental  care. ... It                                                               
looks  like it's  going to  move  money out  of state  employees'                                                               
paychecks  and into  the pockets  of actuaries,  accountants, and                                                               
bond-brokers."   He commented that  HB 147 would  increase health                                                               
care costs  for thousands  of state employees,  but has  a fiscal                                                               
note  that only  includes funding  for one  additional regulatory                                                               
position.   He  asked, "Shouldn't  the fiscal  note also  include                                                               
funding  to  pay  the  union  health  plans  for  the  additional                                                               
actuaries  or the  cost of  buying the  huge fidelity  bonds that                                                               
would be required?"  He continued:                                                                                              
                                                                                                                                
     These added costs weren't  factored into the collective                                                                    
     bargaining agreements that we  just negotiated with the                                                                    
     state.      Your  health   plan,   the   one  for   the                                                                    
     commissioners,  the  directors, legislators,  and  your                                                                    
     legislative  staff ...  - that  health plan  [won't be]                                                                    
     burdened with these  new costs.  It appears  to me like                                                                    
     it's only the union health  plans, the trust funds that                                                                    
     will have  to shoulder these  additional costs.   So it                                                                    
     doesn't seem  like a level  playing field. ...  My real                                                                    
     concern  is  that  the tab  for  all  these  additional                                                                    
     regulatory costs  is going  to end up  on the  backs of                                                                    
     state government employees.   So I would  urge you [to]                                                                    
     either not  pass this  bill or, better  yet, to  fix it                                                                    
     here in  committee and remove  Sections 28, 29  and the                                                                    
     fiscal note.                                                                                                               
                                                                                                                                
3:49:28 PM                                                                                                                    
                                                                                                                                
COLLEEN SAVORI, Public Employees Local 71 (PE 71), commented                                                                    
regarding HB 147:                                                                                                               
                                                                                                                                
     This  will  impose   a  costly  administrative  burden.                                                                    
     There are some requirements in  this bill that might be                                                                    
     impossible for these trusts to  meet; for example, it's                                                                    
     unlikely  that  any  actuary  will  actually  insure  a                                                                    
     planned fiscal solvency.  I  would like to comment on a                                                                    
     couple   of  the   questions  that   have  been   asked                                                                    
     previously, because it gets down  to the fact that this                                                                    
     is an unnecessary  ... regulation by the  state.  These                                                                    
     trust  plans  are  subject  to   a  number  of  federal                                                                    
     requirements.   The Public  Health Service  Act [Health                                                                    
     Insurance Portability  and Accountability  Act (HIPAA)]                                                                    
     is a  great example.   So  the federal  government will                                                                    
     come in  and make  sure that  the trusts  are following                                                                    
     HIPAA regulations.  ... The  trusts are  also regulated                                                                    
     by  the  [Internal  Revenue  Service  (IRS)],  and  the                                                                    
     trusts also  have to report  to the State of  Alaska as                                                                    
     it  is  through   the  collective  bargaining  process;                                                                    
     that's one of  the things that happens  when a contract                                                                    
     is  up for  renegotiation.   There's  a  great deal  of                                                                    
     information  that is  provided  to the  state by  these                                                                    
     trusts,  including the  annual audit  that's done  by a                                                                    
     third  party independent  auditor.   So  there is  some                                                                    
     oversight by the trust as it is.                                                                                           
                                                                                                                                
3:50:44 PM                                                                                                                    
                                                                                                                                
MS. SAVORI continued:                                                                                                           
                                                                                                                                
     I also wanted to touch  upon the fact that these trusts                                                                    
     do  have   peer  review  and  the   utilization  review                                                                    
     process.    They do  hire  medical  experts to  conduct                                                                    
     utilization  review;  for  example,  if  a  participant                                                                    
     needs  to  go  in   for  a  hospitalization  [and]  the                                                                    
     utilization provider  does determine that a  portion of                                                                    
     that hospitalization is  not medically necessary, there                                                                    
     is an  internal review process within  that utilization                                                                    
     review  provider.   If the  participant does  not agree                                                                    
     with  the   decision,  they  can   appeal  it   to  the                                                                    
     utilization review  provider.  And there  is a peer-to-                                                                    
     peer consultation, as  well as a review  by a physician                                                                    
     in the same  specialty.  So one of the  things that the                                                                    
     trusts do,  because these trustees are  fiduciaries and                                                                    
     they do  not have the  medical expertise to  make these                                                                    
     decisions, they hire medical experts  to help them with                                                                    
     that.   It is  in the trustees'  best interest  and the                                                                    
     Trust's  best  interest  to   hold  themselves  to  the                                                                    
     highest  fiduciary standards  and  make  sure that  all                                                                    
     participants are treated fairly and appropriately.                                                                         
                                                                                                                                
3:51:34 PM                                                                                                                    
                                                                                                                                
MS. SAVORI, in response to  Representative Rokeberg, replied that                                                               
she  is  a  consultant  for  ASEA,  which  undergoes  utilization                                                               
review,  including a  peer review.   She  noted, "It  is also  my                                                               
understanding that the collective  bargaining language is similar                                                               
to that for  PE 71, so when  they went through the  last round of                                                               
collective bargaining, we  assisted in providing a  great deal of                                                               
information  to the  state, including  the financial  information                                                               
that was discussed."                                                                                                            
                                                                                                                                
REPRESENTATIVE  ROKEBERG asked  for clarification  of the  annual                                                               
audit.                                                                                                                          
                                                                                                                                
MS. SAVORI replied that the annual  audit for both trusts is done                                                               
by the same auditing firm,  which specializes in employee benefit                                                               
plan audits and audits a number of self-funded health plans.                                                                    
                                                                                                                                
3:53:30 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GUTTENBERG  asked what  the standards are  for the                                                               
audits.                                                                                                                         
                                                                                                                                
MS. SAVORI replied,  "It is a financial audit, so  they look over                                                               
the financial statements and the  books; they also comment on the                                                               
trust reserves."                                                                                                                
                                                                                                                                
JON  COOK,  Director,  Alaska   Auto  Dealers  Association  ("the                                                               
Association"), explained  that the Association  represents nearly                                                               
every new and used  car dealer in the State of  Alaska.  He noted                                                               
that  he also  is the  general  manager and  treasurer of  Aurora                                                               
Motors in Fairbanks, Alaska.  He  commented on Sections 30 and 33                                                               
of  HB  147,  which  are  enabling  legislation  with  regard  to                                                               
guaranteed  automobile protection  products  (GAPP) and  extended                                                               
service contracts (ESC).   He explained that a GAPP  is a product                                                               
that is bought that will pay  a deficiency between the balance on                                                               
the note of a vehicle and the  fair market value in the event the                                                               
vehicle is totaled, while ESCs  are contracts that essentially go                                                               
into effect at the  end of a warranty and pay  for any repairs on                                                               
vehicles that  are needed after  expiration of the warranty.   He                                                               
continued:                                                                                                                      
                                                                                                                                
     The  Association  believes  that  enabling  legislation                                                                    
     such as  this merits detailed scrutiny  because if it's                                                                    
     granted, it's  obviously going  to allow  the [Division                                                                    
     of   Insurance,   Alaska    Department   of   Commerce,                                                                    
     Community, and  Economic Development]  to draw  up very                                                                    
     specific  rules outside  the legislative  process.   We                                                                    
     believe the effects of  the enabling legislation that's                                                                    
     introduced    would   be    damaging   to    consumers,                                                                    
     dealerships, and  the economy  of the State  of Alaska.                                                                    
     And  the Association  strenuously  opposes Sections  30                                                                    
     and 33 of HB 147....                                                                                                       
                                                                                                                                
MR. COOK continued:                                                                                                             
                                                                                                                                
     The  bill states  that GAPP  is  insurance which  would                                                                    
     automatically subject automobile  dealers to regulation                                                                    
     by  the  state  regardless   of  what  regulations  are                                                                    
     issued. ... The  definition of [GAPP] in  Section 33 of                                                                    
     the proposed  statute will not  work in any  event; the                                                                    
     definition uses  the word  "insurance" to  describe the                                                                    
     product,   which  is   a  conclusion   rather  than   a                                                                    
     definition.  ...  Treating  GAPP waivers  as  insurance                                                                    
     demonstrates a  misunderstanding of  the nature  of the                                                                    
     relationship between the dealer  and its customer; debt                                                                    
     cancellation programs  are structured  very differently                                                                    
     from other  types of credit  insurance programs.   With                                                                    
     GAPP   waivers,  the   dealer,   which   acts  as   the                                                                    
     originating  lender, enters  into a  contract with  the                                                                    
     customer  regarding  how  the  debt  may  be  canceled,                                                                    
     suspended,   or   otherwise  modified   under   limited                                                                    
     circumstances.    It's  nothing more  than  a  contract                                                                    
     between the  dealer and  its customer.   The  dealer in                                                                    
     turn may  then choose  to purchase an  insurance policy                                                                    
     to  cover  this  potential liability.    The  insurance                                                                    
     contract,  which   is  between   the  dealer   and  the                                                                    
     insurance company, is already  subject to regulation by                                                                    
     the Division of Insurance.                                                                                                 
                                                                                                                                
3:57:32 PM                                                                                                                    
                                                                                                                                
MR. COOK continued:                                                                                                             
                                                                                                                                
     Thirty-nine other  states have  ruled that GAPP  is not                                                                    
     insurance but  is actually debt cancellation,  which is                                                                    
     not subject  to regulation  by the  insurance division.                                                                    
     ... The vast  majority of GAPP contracts  are issued by                                                                    
     banks  and  credit  unions.    However,  due  to  their                                                                    
     federal   charter,   they   are   exempt   from   state                                                                    
     regulation.   Contracts  are typically  sold by  highly                                                                    
     trained and compensated  finance and insurance managers                                                                    
     in  automobile dealerships,  versus part-time  low-paid                                                                    
     tellers  at the  banks and  credit unions.   And  we're                                                                    
     certain that  our employees are more  qualified ... yet                                                                    
     we would be  subject to regulations, and  the banks and                                                                    
     credit  unions would  not.   We  don't feel  this is  a                                                                    
     level playing field.                                                                                                       
                                                                                                                                
3:58:18 PM                                                                                                                    
                                                                                                                                
MR. COOK continued:                                                                                                             
                                                                                                                                
     [Guaranteed  automobile  protection product]  contracts                                                                    
     are a  minimal cost to  the customer and profit  to the                                                                    
     dealer, but  they provide an  enormous benefit  to both                                                                    
     parties  in   the  event  the  customer's   vehicle  is                                                                    
     totaled.  The typical  contract sells for approximately                                                                    
     $300, at a profit to the  dealer of $150 at the time of                                                                    
     sale.  However,  let's take an example  here and assume                                                                    
     that the  customer totals their vehicle  one year after                                                                    
     purchase.   For  discussion's sake,  I can  assume that                                                                    
     the loan  balance is  approximately $7,000  higher than                                                                    
     the fair market value of  the vehicle, as determined by                                                                    
     their  insurance company.  ... In  the event  that that                                                                    
     vehicle's  totaled,  GAPP   will  pay  the  deficiency,                                                                    
     period.   If the  customer doesn't have  GAPP coverage,                                                                    
     they'll be  liable for the  deficiency in  its entirety                                                                    
     and  will have  to  pay  off the  loan  balance.   Most                                                                    
     customers do  not have  this much cash  in hand  and in                                                                    
     such cases the loan would  go into default.  The result                                                                    
     of  such  a   default  would  mean  the   ruin  of  the                                                                    
     customer's credit rating, or  likely leave them without                                                                    
     reliable  transportation,  as  banks will  not  finance                                                                    
     someone who's defaulted  on a loan.   In this scenario,                                                                    
     which  occurs  quite  often, the  customer  loses,  the                                                                    
     dealership  loses,  and the  economy  of  the State  of                                                                    
     Alaska loses.                                                                                                              
                                                                                                                                
3:59:32 PM                                                                                                                    
                                                                                                                                
MR.  COOK  explained  that  the   director  of  the  Division  of                                                               
Insurance  currently  requires  dealer personnel  who  sell  GAPP                                                               
contracts  to  have  a  limited  lines  insurance  license.    He                                                               
commented:                                                                                                                      
                                                                                                                                
     First  off,   this  license  provides  no   benefit  to                                                                    
     dealership   personnel  or   the  customers,   as  it's                                                                    
     irrelevant to  the product sold.   Secondly, there's no                                                                    
     clear-cut   guidance   from   the   director's   office                                                                    
     regarding  testing,   study  materials,   or  accepting                                                                    
     continuing education requirements.                                                                                         
                                                                                                                                
MR. COOK  pointed out that Section  30, subsection (c) of  HB 147                                                               
says:                                                                                                                           
                                                                                                                                
     This section does not apply  to a motor vehicle service                                                                    
     contract  issued  by  the  manufacturer  of  the  motor                                                                    
     vehicle covered by the service contract.                                                                                   
                                                                                                                                
MR.  COOK  remarked  that  he assumes  the  above  statement  was                                                               
inserted into  the bill  because the  Division of  Insurance felt                                                               
that   it  did   not  need   to  police   the  large   automobile                                                               
manufacturers.   However, he pointed  out, the wording  is flawed                                                               
and has several  unintended consequences.  He  explained that the                                                               
manufacturers do  not issue the service  contracts directly; they                                                               
issue the service contracts through  a subsidiary.  He also noted                                                               
that the  language does not  exempt, for example,  General Motors                                                               
service contracts sold to non-General Motors vehicles.  He said:                                                                
                                                                                                                                
     Every  new car  dealer  in the  State  of Alaska  sells                                                                    
     their   manufacturer's   service  contracts   on   used                                                                    
     vehicles for  which they don't have  a franchise, which                                                                    
     means  that the  exemption provision  would not  apply.                                                                    
     ... The [Division of Insurance]  does attempt to exempt                                                                    
     manufacturers,  but  it  does  not  exempt  many  other                                                                    
     reputable companies who sell service contracts....                                                                         
                                                                                                                                
4:01:28 PM                                                                                                                    
                                                                                                                                
MR. COOK then referred to  a particular company that sold service                                                               
contracts before it  recently failed.  He said,  "That's the only                                                               
company I'm aware of in the  State of Alaska that's failed in the                                                               
last  10 years."    He  presented more  reasons  why the  company                                                               
failed.    He then  pointed  out  that  HB  147 only  applies  to                                                               
automobile dealers,  even though there  are GAPP and ESC  sold by                                                               
heavy  equipment manufacturers,  RV dealers,  snowmobile dealers,                                                               
and motorcycle dealers.                                                                                                         
                                                                                                                                
4:03:30 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  ROKEBERG   asked  if   there  is   some  existing                                                               
statutory protection  of consumers under consumer  protection law                                                               
for these issues.                                                                                                               
                                                                                                                                
MR.  COOK  replied,  "Yes,  there   is.    There's  unfair  trade                                                               
practices laws  that are on  the books,  and ... other  truth and                                                               
lending disclosures and things like  that that are already on the                                                               
books  to deal  with us."   He  noted that  he emailed  committee                                                               
members copies of his testimony.                                                                                                
                                                                                                                                
4:05:41 PM                                                                                                                    
                                                                                                                                
MIKE COMBS,  Alaska Independent  Agents and  Brokers Incorporated                                                               
(AIABI) noted  that he  serves on  the legislative  committee for                                                               
the AIABI.  He proposed  that the committee consider an amendment                                                               
to  clarify its  position regarding  owners controlled  insurance                                                               
programs  (OCIP) and  contractors  controlled insurance  programs                                                               
(CCIP).   He stated that  OCIPs and  CCIPs have been  designed in                                                               
the  past  to  provide  for  uniformity  in  insurance  coverage,                                                               
limits,  and  forms  for  specific  large  construction  projects                                                               
involving an array  of various industry trades.   He said, "There                                                               
are some  large employers  in Alaska  that are  contemplating the                                                               
use of  OCIPs and CCIPs  in the  maintenance and repair  of their                                                               
existing  facilities."    He explained  that  there  are  several                                                               
problems  with using  this insurance  method for  maintenance and                                                               
repair programs.   One problem, he said, was that  the removal of                                                               
any insurance  clients from the already  fragile Alaska insurance                                                               
market  may  lead to  further  deterioration  of the  competitive                                                               
arena.  He said:                                                                                                                
                                                                                                                                
     It's estimated that  the payroll right now  for some of                                                                    
     these large  contractors is in  excess of  $100 million                                                                    
     in payroll.  The total  volume of insurance business in                                                                    
     Alaska is so small that  any reduction in the available                                                                    
     insurance  risk  would  lead  to  additional  insurance                                                                    
     markets  exiting  the state.    Too  many laws  in  the                                                                    
     current  insurance market  would  adversely affect  the                                                                    
     remaining  clients' overall  bottom line  cost.   Fewer                                                                    
     insurance markets lead to higher  costs for the rest of                                                                    
     the clients  not involved  in the  OCIPs or  the CCIPs.                                                                    
     OCIP  and CCIP  include  all  owners, contractors,  and                                                                    
     subcontractors  for  all  aspects of  the  construction                                                                    
     project.   All ...  employers are defined  and included                                                                    
     on the insurance program.   No dual employer situations                                                                    
     exist.   The insurance provided  is the sole  source of                                                                    
     remedy for  the public  and employee exposures.   [This                                                                    
      is] not so clear when the OCIP form of insurance is                                                                       
     used for maintenance or repair of existing facilities.                                                                     
                                                                                                                                
4:07:15 PM                                                                                                                    
                                                                                                                                
MR. COMBS explained  that a [construction company]  may have jobs                                                               
in  several locations  throughout the  state during  a year,  but                                                               
only a small  portion is performed at an OCIP  facility.  He said                                                               
that the company would provide  worker's compensation benefits to                                                               
its employees during  travel exposures around the  state, but the                                                               
OCIP and  the CCIP programs  would only provide benefits  for the                                                               
employee  while he/she  is actually  present  at the  maintenance                                                               
site.  He asked who would  be responsible for the travel exposure                                                               
of the  employees in this case.   He opined that  this could lead                                                               
to a lot of unnecessary  litigation to determine the employee and                                                               
employer  status at  the  time of  injury.   He  stated that  his                                                               
proposed   amendment  is   to  change   AS  21.12.140   regarding                                                               
limitation of  OCIPs and  CCIPs in Alaska.   The  amendment would                                                               
limit these  to construction  projects in  excess of  $50 million                                                               
only and not include any repair or maintenance operations.                                                                      
                                                                                                                                
REPRESENTATIVE  ROKEBERG commented  that the  proposed amendments                                                               
were confusing and asked for  further clarification.  He asked if                                                               
Mr. Combs used language from another  state as a template for his                                                               
amendment.                                                                                                                      
                                                                                                                                
MR.  COMBS replied  that the  construction  project language  had                                                               
been developed through  a committee process.  He  noted, "The $50                                                               
million figure is  certainly not cast in stone; ...  we feel that                                                               
some  number has  to be  given  as far  as  the ...  size of  the                                                               
projects  that can  go  under the  OCIP or  CCIP  projects."   He                                                               
pointed  out  that this  would  not  eliminate any  additions  or                                                               
renovations to a large facility that exceeds [$50 million].                                                                     
                                                                                                                                
REPRESENTATIVE  ROKEBERG  referred to  a  letter  written to  the                                                               
committee by Mr.  Combs, dated March 14, 2005 in  which Mr. Combs                                                               
proposed  a new  Section AS  21.12.140.   Representative Rokeberg                                                               
said, "I'm  confused in looking  at your [proposed]  subsection 6                                                               
that  says   ...  'includes   major  renovations   involving  the                                                               
replacement of  more than fifty  percent of  existing structures,                                                               
buildings,  facilities,   or  roadways.'     It   includes  major                                                               
renovations; you just said you wanted to exclude it."                                                                           
                                                                                                                                
CHAIR  ANDERSON commented  that the  committee will  consider Mr.                                                               
Combs'  proposal  and  will  consult with  the  director  of  the                                                               
[Division of Insurance] to see if the proposals are possible.                                                                   
                                                                                                                                
4:12:06 PM                                                                                                                    
                                                                                                                                
LINDA HALL, Director, Division of Insurance, Alaska Department                                                                  
of Commerce, Community, and Economic Development, commented:                                                                    
                                                                                                                                
     [Sections  28  and  29] are  included  in  the  omnibus                                                                    
     insurance   bill   because   I   feel,   as   did   the                                                                    
     administration when we did this,  that this is a policy                                                                    
     decision for  the legislature.   We  have approximately                                                                    
     19,000  state  employees  who are  covered  under  five                                                                    
     union  health  trusts  and  the  proposal  here  is  to                                                                    
     determine whether  there should  be ...  some oversight                                                                    
     of these plans.   And as I said, I  think it's a policy                                                                    
     decision  that you  as legislators  should  make and  I                                                                    
     will tell you  the impetus for it  because there's been                                                                    
     some question about  that today.  I  have received over                                                                    
     the year and  a half that I've been in  this position a                                                                    
     number of complaints.                                                                                                      
                                                                                                                                
MS. HALL continued:                                                                                                             
                                                                                                                                
     In  December of  2003, I  received a  letter from  [the                                                                    
     ASEA/American   Federation   of   State,   County   and                                                                    
     Municipal  Employees  (AFSCME) Local  52]  specifically                                                                    
     quoting statutory  language that was passed  in 2002 by                                                                    
     this body that indicated that  if a person is unable to                                                                    
     show   their   subjective   jurisdiction   of   another                                                                    
     governmental   agency  and   have  not   received  that                                                                    
     certification,  that then  they will  fall under  Title                                                                    
     21, the  insurance title.   I was asked by  that group,                                                                    
     and  I  would  quote  from this  letter  ...,  "As  the                                                                    
     governing body  of ASEA, the executive  board expresses                                                                    
     concern that  the ASEA/AFSCME Local 52  health benefits                                                                    
     trust  is  not  accountable  to any  federal  or  state                                                                    
     agency for the same  standards as any unrelated medical                                                                    
     ... provider  insurer.  The  level of service  and care                                                                    
     that ASEA members  receive from its trust  should be no                                                                    
     less  than what  is expected  of any  unrelated medical                                                                    
     provider  or insurer  subject to  Alaska statutes."   I                                                                    
     have received  other letters that have  indicated to me                                                                    
     that  the ASEA  convention delegates  voted to  ask the                                                                    
     state to  regulate the  plan.   This was  not something                                                                    
     that the Division of Insurance took upon themselves.                                                                       
                                                                                                                                
4:14:42 PM                                                                                                                    
                                                                                                                                
MS. HALL continued:                                                                                                             
                                                                                                                                
     In receiving these  letters, on March 19  of 2004 under                                                                    
     my signature we wrote letters  to all five of the union                                                                    
     health  trusts quoting  the statutory  language, asking                                                                    
     them to  provide us with  documentation that  they were                                                                    
     regulated by  another entity,  as required  by statute.                                                                    
     We  received a  variety  of responses  which have  been                                                                    
     evaluated.   We  have done  follow up  letters, and  in                                                                    
     that process  it has  been our  intent to  clarify some                                                                    
     oversight of these trusts.  And  I know we've had a lot                                                                    
     of discussion.  I believe  in your packets I have given                                                                    
     you a handout  where I tried to  streamline what's very                                                                    
     technical  ... of  what we  require from  trust in  the                                                                    
     statute,  what we  would require  from an  insurer, and                                                                    
     what  we require  ... [from  Multiple Employer  Welfare                                                                    
     Arrangements (MEWA)].                                                                                                      
                                                                                                                                
4:15:29 PM                                                                                                                    
                                                                                                                                
MS. HALL continued:                                                                                                             
                                                                                                                                
     In  the  second page  of  that  there are  some  filing                                                                    
     requirements. ... There needs  to be actuarial analysis                                                                    
     of rate levels  to ensure that the  rates being charged                                                                    
     will  adequately cover  the cost  of  claims, that  the                                                                    
     reserves  are set  at levels  are  to ensure  solvency.                                                                    
     ... No actuary ensures the  solvency of the plan.  What                                                                    
     an actuarial plan  does is certify that  they have done                                                                    
     an analysis  and that these  are appropriate  levels of                                                                    
     contributions  ...   [and]  that  their   reserves  are                                                                    
     adequate to ensure solvency.                                                                                               
                                                                                                                                
4:17:54 PM                                                                                                                    
                                                                                                                                
MS. HALL commented:                                                                                                             
                                                                                                                                
     [The Division  of Insurance]  felt it  was in  the best                                                                    
     interest of  the plan participants to  have a different                                                                    
     level of  oversight because there isn't  one elsewhere.                                                                    
     Again, it's a policy decision  and if this body chooses                                                                    
     to  not have  that  level of  oversight,  then I  would                                                                    
     assume you would remove these sections from the bill.                                                                      
                                                                                                                                
4:18:34 PM                                                                                                                    
                                                                                                                                
MS. HALL noted that she has spoken with Mr. Cook, the Auto                                                                      
Dealers Association and Alaska State Senator Ralph Seekins,                                                                     
about ways to  make the bill viable for the  auto industry and to                                                               
provide a  level of consumer  protection.  She remarked,  "I want                                                               
to  make  sure that  we  have  standards  that apply  across  the                                                               
board."    Regarding Mr.  Combs'  testimony,  she said  that  she                                                               
supports  the  concept  behind  his proposal  and  she  would  be                                                               
willing to work on the language with the committee.                                                                             
                                                                                                                                
REPRESENTATIVE LYNN  asked if  there is anything  in HB  147 that                                                               
clarifies what health benefits are and  are not covered.  He also                                                               
asked if prohibition  of certain types of  benefit coverage could                                                               
be put into statute.                                                                                                            
                                                                                                                                
4:21:03 PM                                                                                                                    
                                                                                                                                
MS. HALL responded that on page 17,  line 17 of HB 147 there is a                                                               
reference  to  AS  21.42.345-21.42.365, and  she  explained  that                                                               
those are the  current benefit mandates that have  been passed by                                                               
the legislature.   She said  that the  inclusion of that  line in                                                               
the bill  would require  that those  mandates be  included; today                                                               
there is  no such  requirement.   She stated, "As  far as  I know                                                               
there are no prohibitions [against certain types of coverage]."                                                                 
                                                                                                                                
REPRESENTATIVE ROKEBERG  commented that it seems  as though there                                                               
is no actual  oversight for the health benefit trusts.   He asked                                                               
Ms. Hall,  "Is there a  way we can adopt  in essence some  of our                                                               
statutory  requirements  ...  that   would  mandate  at  least  a                                                               
template  of minimal  baseline  requirements  within these  trust                                                               
agreements?"                                                                                                                    
                                                                                                                                
MS. HALL replied that on page 17,  line 12 of the bill there is a                                                               
reference to  AS 21.07, which  she explained refers to  a process                                                               
that  would  require both  an  internal  and an  external  review                                                               
process.                                                                                                                        
                                                                                                                                
4:24:36 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  ROKEBERG  asked  if  there is  the  potential  to                                                               
change  HB 147  to  a  simplified review  process  that would  be                                                               
cheaper.                                                                                                                        
                                                                                                                                
MS. HALL  replied that  she doesn't know  of any  current [health                                                               
care] plan  that does  not have  an audited  financial statement.                                                               
She remarked  that she  hoped that  an outside  firm is  doing an                                                               
audit of the financial standing [of  all plans].  She noted, "The                                                               
only  thing that  I  see  in this  list  of  the really  standard                                                               
minimum requirements  that may  not be met,  although I  do think                                                               
most of  the plans  have, is  the actuarial  opinion. ...  And we                                                               
think that is a critical  component to any entity who's providing                                                               
coverage for medical care."  She  said that if there is something                                                               
in the bill  that is overly burdensome, she is  willing to review                                                               
that issue.                                                                                                                     
                                                                                                                                
4:28:23 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GUTTENBERG  asked if  the division  had approached                                                               
the administration  about including [the  issues in the  bill] in                                                               
the collective bargaining agreement.                                                                                            
                                                                                                                                
MS. HALL replied that it had not.                                                                                               
                                                                                                                                
REPRESENTATIVE CRAWFORD  commented that he  is not sure  that the                                                               
bill would  be fixing  a problem,  and instead  it might  just be                                                               
adding  costs.   He  said  that he  was  inclined  to agree  with                                                               
Representative Rokeberg;  that perhaps there could  be a simpler,                                                               
cheaper way to deal with these issues.                                                                                          
                                                                                                                                
CHAIR ANDERSON announced that HB 147 would be held over.                                                                        
                                                                                                                                
4:33:33 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  ROKEBERG remarked  that the  bill deserved  to be                                                               
moved but  needed to  be analyzed and  amended first.   Regarding                                                               
the  motor vehicle  section,  Representative  Rokeberg asked  Ms.                                                               
Hall,  "You want  to assert  jurisdiction and  take this  off the                                                               
attorney general's office for consumer protection?"                                                                             
                                                                                                                                
MS.  HALL  responded,  "No.  ...   We  currently  regulate  these                                                               
products."   She  explained that  the State  of Alaska  regulates                                                               
[GAPP and  debt waivers] as  insurance and requires  auto dealers                                                               
to be licensed to sell them.                                                                                                    
                                                                                                                                
4:34:48 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE LEDOUX commented that  the committee ought to make                                                               
sure  that  the  bill  has  the least  impact  on  "the  affected                                                               
parties."                                                                                                                       
                                                                                                                                
[HB 147 was held over.]                                                                                                         
                                                                                                                                
HB 150-LICENSING RADIOLOGIC TECHNICIANS                                                                                       
                                                                                                                                
4:36:13 PM                                                                                                                    
                                                                                                                                
CHAIR ANDERSON  announced that the  next order of  business would                                                               
be  HOUSE   BILL  NO.  150,   "An  Act  requiring   licensure  of                                                               
occupations   relating   to  radiologic   technology,   radiation                                                               
therapy, and  nuclear medicine technology;  and providing  for an                                                               
effective date."                                                                                                                
                                                                                                                                
The committee took an at-ease from 4:36 PM to 4:40 PM.                                                                          
                                                                                                                                
4:41:08 PM                                                                                                                    
                                                                                                                                
JON  BITTNER,  Staff  to Representative  Anderson,  Alaska  State                                                               
Legislature,  in response  to concerns  that were  raised at  the                                                               
last committee hearing  for HB 150, presented  an amendment which                                                               
would  include dental  hygienists  and dental  assistants in  the                                                               
license and permit exemption on page 2, line 2 of the bill.                                                                     
                                                                                                                                
CHAIR  ANDERSON   moved  to  adopt   Amendment  1,   labeled  24-                                                               
LS0470\Y.5, Mischel, 3/18/05, which read:                                                                                       
                                                                                                                                
     Page 2, following line 2:                                                                                                  
          Insert new paragraphs to read:                                                                                        
               "(1)  a licensed practitioner;                                                                                   
                (2)  a dental hygienist or dental assistant                                                                     
     who uses  equipment emitting radiation on  humans under                                                                    
     the direct supervision of a licensed practitioner;"                                                                        
                                                                                                                                
REPRESENTATIVE  LEDOUX   asked  if  Amendment  1   is  simply  an                                                               
exemption for a licensed practitioner.                                                                                          
                                                                                                                                
MR.  BITTNER   replied  affirmatively  and  explained   that  the                                                               
proposed   paragraphs   1  and   2   add   the  words   "licensed                                                               
practitioner" and  "dental hygienist or dental  assistant" to the                                                               
exemption.                                                                                                                      
                                                                                                                                
[There being no objection, Amendment 1 was adopted.]                                                                            
                                                                                                                                
MR. BITTNER presented a brief overview HB 150, explaining:                                                                      
                                                                                                                                
     This  bill   is  aimed  at  protecting   Alaskans  from                                                                    
     excessive exposure to radiation;  not just patients but                                                                    
     also providers  as well.   This bill is  congruent with                                                                    
     nationwide  efforts of  the  Institute  of Health  Care                                                                    
     Improvement and  is supported by  efforts of  the joint                                                                    
     commission    of   accreditation    of   health    care                                                                    
     organizations,  which  is  the  national  accreditation                                                                    
     body   for  4,000   hospitals,  the   American  Medical                                                                    
     Association,  the  American   Nurses  Association,  the                                                                    
     Centers  for   Medicare  and  Medicaid   services,  the                                                                    
     Veterans'  Administration,  Providence  Alaska  Medical                                                                    
     Center,  the Alaska  State  Hospital  and Nursing  Home                                                                    
     Association,  and the  American  Society of  Radiologic                                                                    
     Technologists.   Both  patients  and providers  deserve                                                                    
     the  highest level  of safety  and training  available,                                                                    
     and HB 150 provides that.                                                                                                  
                                                                                                                                
4:44:36 PM                                                                                                                    
                                                                                                                                
ALEX MALTER, MD, Alaska State  Medical Association (ASMA), stated                                                               
that he is  a past president of ASMA and  an internist in private                                                               
practice in  Juneau.   He provided the  committee members  with a                                                               
letter from Paul Worrell, MD,  President, ASMA, which he read for                                                               
the record:                                                                                                                     
                                                                                                                                
     The   Alaska  State   Medical  Association   represents                                                                    
     physicians  statewide and  is primarily  concerned with                                                                    
     the  health of  Alaskans.   [The  Alaska State  Medical                                                                    
     Association] has  historically supported  and advocated                                                                    
     for the best  health care for all our  patients.  House                                                                    
     Bill 150  provides for  a system  for the  licensure of                                                                    
     radiologic  technicians.    [The Alaska  State  Medical                                                                    
     Association]  supports   this  effort  to   attempt  to                                                                    
     provide  for  safe, quality  care.    However, ASMA  is                                                                    
     concerned  with  an  unintended  consequence  that  may                                                                    
     detract from  timely access to care.   Rural physicians                                                                    
     and  small practices  may  have  x-ray capabilities  to                                                                    
     provide for the occasional  x-ray.  However, the volume                                                                    
     of that  service is not  sufficient to be able  to hire                                                                    
     fully certified radiologic  technicians.  Physicians in                                                                    
     small practices have  historically trained other clinic                                                                    
     staff  to do  those uncomplicated  x-rays.   House Bill                                                                    
     150 would eliminate that mode  of practice.  Keeping in                                                                    
     mind  that   the  employing  physician   is  ultimately                                                                    
     responsible legally  for the  acts of the  employee who                                                                    
     takes the  x-ray.  To  eliminate this  current practice                                                                    
     will  certainly   slow  down  the  care   provided  and                                                                    
     probably add  to costs.   Perhaps an  alternative would                                                                    
     be  to provide  a  registration system  (as opposed  to                                                                    
     full licensing  system) for [such] people  providing x-                                                                    
     ray service  when in the  employ of a physician.   This                                                                    
     would  allow  the  current practice  to  continue,  yet                                                                    
     provide for state oversight.                                                                                               
                                                                                                                                
REPRESENTATIVE ROKEBERG commented that the legislature has in                                                                   
the past used "Bush exemptions" for areas of the state that are                                                                 
not on  the road or ferry  system.  He noted  that this exemption                                                               
may not  work for HB  150 because there  may be small  towns that                                                               
are on the road system that still need this exemption.                                                                          
                                                                                                                                
4:47:55 PM                                                                                                                    
                                                                                                                                
DR.  MALTER agreed  and  remarked that  even  small practices  in                                                               
Juneau would  run into some  of the aforementioned problems.   He                                                               
noted that he takes one or two  x-rays per day in his office, and                                                               
currently those x-rays are taken by trained staff members.                                                                      
                                                                                                                                
REPRESENTATIVE  LYNN  commented  that  though  the  physician  is                                                               
responsible,  a  patient  can  still  get  injured  by  an  x-ray                                                               
machine.                                                                                                                        
                                                                                                                                
DR. MALTER  responded that  by taking  on the  responsibility for                                                               
the x-ray  operators, the  physicians ensure  that the  lab techs                                                               
are doing a good job.                                                                                                           
                                                                                                                                
CHAIR  ANDERSON remarked  that the  local  universities now  have                                                               
training programs for the x-ray technicians.                                                                                    
                                                                                                                                
4:51:38 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE CRAWFORD pointed  out that damage to a  body by x-                                                               
rays  isn't always  readily apparent,  and "the  only thing  that                                                               
protects  people is  the knowledge  that the  [operator] had  the                                                               
training  ... to  correctly administer  the x-rays  in the  first                                                               
place."                                                                                                                         
                                                                                                                                
DR. MALTER  agreed that people can  be exposed to high  levels of                                                               
radiation while  receiving full  body x-rays  or CT  scans, which                                                               
are essentially performed by radiologists.   However, he remarked                                                               
that he didn't  think that the people receiving  a simple, single                                                               
x-ray in  a physician's office  are exposed to the  same dangers.                                                               
He explained  that he can  x-ray an  individual in his  office to                                                               
see if  he/she has bronchitis or  pneumonia; if HB 147  passed as                                                               
is, he  would not have  this ability.   He would instead  have to                                                               
send the patient to the hospital  for the x-ray, which would take                                                               
more time and  money.  He also  pointed out that in  a small town                                                               
like Skagway  the patient would have  to get on a  plane or ferry                                                               
and come to the hospital in Juneau for the x-ray.                                                                               
                                                                                                                                
DR. MALTER  continued, "While  I understand  that it  might sound                                                               
good that there's going to be  a 12 hour internet-based course to                                                               
get  partial certification,  my  understanding is  that it's  not                                                               
delineated in  this bill; that  would be dependent  upon whatever                                                               
board or  group is  going to  be overseeing  this coming  up with                                                               
that plan  or program."   He  also expressed  disappointment that                                                               
ASMA was not  invited to participate in a working  group that met                                                               
last summer regarding these issues.                                                                                             
                                                                                                                                
4:56:12 PM                                                                                                                    
                                                                                                                                
CHAIR ANDERSON read  from his original intent letter  for HB 150,                                                               
which said:                                                                                                                     
                                                                                                                                
     A report  prepared for [Department of  Health and Human                                                                    
     Services  (HHS)] by  the  national toxicology  program,                                                                    
     NTP, at the National  Institute of Environmental Health                                                                    
     Sciences  said [that]  X-radiation and  gamma radiation                                                                    
     were listed  "because human studies show  that exposure                                                                    
     to  these  kinds  of radiation  causes  many  types  of                                                                    
     cancer including  leukemia and cancers of  the thyroid,                                                                    
     breast, and lung."   The report added  that exposure to                                                                    
     x-radiation  and gamma  radiation  has  shown to  cause                                                                    
     cancer   of  the   salivary  glands,   stomach,  colon,                                                                    
     bladder,  ovaries, central  nervous  system, and  skin.                                                                    
     And  finally,  it  also  stated   that  55  percent  of                                                                    
     worldwide  exposures  from low-dose  medical  diagnoses                                                                    
     such as bone, chest, and dental x-rays.                                                                                    
                                                                                                                                
4:57:12 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE LEDOUX  commented that Amendment 1  exempts dental                                                               
hygienists and  assistants as  long as  they are  using equipment                                                               
under the  direct supervision  of a  licensed practitioner.   She                                                               
asked Dr.  Malter if there  is any difference between  the amount                                                               
of  radiation that  a dental  assistant  would be  using and  the                                                               
radiation used by a lab technician in a physician's office.                                                                     
                                                                                                                                
DR.  MALTER replied  that he  did not  know the  difference.   He                                                               
stated, "All these  groups come in and start a  program and folks                                                               
want to have licensure, but if  ... we end up requiring licensure                                                               
of too  many groups ... you  end up having a  situation where the                                                               
cost may become prohibitive for  some small practices to keep all                                                               
these folks licensed."                                                                                                          
                                                                                                                                
REPRESENTATIVE  LEDOUX remarked  that  her doctor  in Kodiak  had                                                               
expressed the same concerns.                                                                                                    
                                                                                                                                
REPRESENTATIVE KOTT  asked Mr. Malter  if he was trained  to take                                                               
x-rays during his studies to become a physician.                                                                                
                                                                                                                                
DR. MALTER replied that most  [physicians'] programs have a stint                                                               
in radiology  to learn how  to read  the simplest x-rays,  but do                                                               
not do  extensive training in  taking the  x-rays.  He  said that                                                               
when  small  clinics  get their  laboratories  certified  by  the                                                               
Division of  Public Health, the  division goes through  the lab's                                                               
checklists and training  lists to ensure that the  lab is meeting                                                               
statewide standards.                                                                                                            
                                                                                                                                
REPRESENTATIVE KOTT commented, "If  you were a one-person office,                                                               
could you perform the responsibilities of an x-ray technician?"                                                                 
                                                                                                                                
DR. MALTER replied affirmatively.                                                                                               
                                                                                                                                
5:02:33 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE PEGGY WILSON,  Alaska State Legislature, testified                                                               
in opposition  to HB 150.   She voiced concern for  small clinics                                                               
that are on  the road system but  are still too far  from a large                                                               
hospital  for individuals  to travel  for  a simple  x-ray.   She                                                               
presented  the example  of  the  town of  Tok,  Alaska where  she                                                               
worked in a  clinic for four years.  At  this clinic, x-rays were                                                               
not  run every  day,  but  only when  there  was  an accident  or                                                               
someone was sick.   She said that it would be  a big hardship for                                                               
the patient  and the  ambulance crew  if they  had to  drive four                                                               
hours each  way to and from  Fairbanks to go x-rays.   This would                                                               
add cost  to the small  clinics.   Also, the training  might cost                                                               
around  $800, which  she pointed  out  is a  lot of  money.   She                                                               
commented, "I  just think that you  need to be really  aware that                                                               
it's  a   hardship  in  many   different  ways  that   maybe  the                                                               
consequences we don't even know yet."                                                                                           
                                                                                                                                
5:05:18 PM                                                                                                                    
                                                                                                                                
CHAIR ANDERSON  commented that studies  in California  found that                                                               
healthcare costs  did not increase  when licensure  was required.                                                               
He noted that 41 other  states have passed legislation similar to                                                               
this.   He said  that the licensure  process only  requires three                                                               
on-line  courses, and  would  not be  required  for another  five                                                               
years.                                                                                                                          
                                                                                                                                
REPRESENTATIVE  WILSON  stated,  "Because  of  the  distance  and                                                               
because of  the time that  it takes  to get different  places, we                                                               
usually make  allowances in ... many  areas of things that  we do                                                               
in this  state."  She asked  if anyone knew how  many x-radiation                                                               
accidents have been documented in  Alaska; she commented that she                                                               
didn't think there were many, "if any at all."                                                                                  
                                                                                                                                
5:09:07 PM                                                                                                                    
                                                                                                                                
JIM TOWLE, Executive Director, Alaska Dental Society, testified                                                                 
in support of Amendment 1 to HB 150.                                                                                            
                                                                                                                                
5:11:38 PM                                                                                                                    
                                                                                                                                
STEVEN WAHL, MD, Tok Community Clinic, testified in opposition                                                                  
to HB 150.  He commented:                                                                                                       
                                                                                                                                
     I  feel the  burden very  likely could  eliminate x-ray                                                                    
     technology  from  Bush   and  rural  clinics  including                                                                    
     possibly  Tok Clinic,  where I  practice.   That  could                                                                    
     have  an impact  on  the level  of  health care  that's                                                                    
     available to  the people here,  both in acute  care and                                                                    
     in long-term care.   The burden of  traveling 400 miles                                                                    
     to obtain an x-ray  that currently is readily available                                                                    
     with treatment  that can be  rendered with  response to                                                                    
     that  x-ray,  ...  is  going  to  have  a  far  greater                                                                    
     negative impact on the overall  health of Alaskans than                                                                    
     the  few potential  situations  of excessive  radiation                                                                    
     exposure.   There is a  potential that you  could drive                                                                    
     advanced practitioners like myself  from the Bush; if I                                                                    
     lost my ability  to do x-ray technology in  Tok, I very                                                                    
     likely would  leave this  community and  this community                                                                    
     would no  longer have a  physician.  So there  are very                                                                    
     widespread  ramifications that  need  to be  considered                                                                    
     for Bush and rural Alaska.                                                                                                 
                                                                                                                                
DR. WAHL continued:                                                                                                             
                                                                                                                                
     I think  our current  practices are  safe, and  I would                                                                    
     like to  hear specific  testimony of specific  cases of                                                                    
     routine  office   x-rays  that  have  led   to  adverse                                                                    
     outcomes  to individuals  to balance  that against  the                                                                    
     huge  potential for  misdiagnosis, minor  injuries that                                                                    
     would be  neglected because of  people who  didn't want                                                                    
     to travel the  distance to get their  treatment, and so                                                                    
     on.  ... I'm  not saying  that there  may not  need for                                                                    
     licensure  in  more  advanced   practices  or  in  more                                                                    
     technical  settings, but  office-based x-ray,  I think,                                                                    
     is  currently   being  practiced  safely   in  numerous                                                                    
     clinics  statewide, and  that  needs to  be taken  into                                                                    
     account in  this bill  or you're going  to have  a very                                                                    
     widespread effect on health care in the Bush.                                                                              
                                                                                                                                
DON SMITH,  PA, Wasilla Medical  Clinic, testified  in opposition                                                               
to HB 150.  He noted that he  is a co-owner of clinics in Wasilla                                                               
and in Anchorage, and opined  that the bill will adversely affect                                                               
both clinics even  though they are in urban areas.   He predicted                                                               
that if the bill passed, it  would create a bottleneck in clinics                                                               
with  patients  coming  to  the   clinic,  then  going  to  x-ray                                                               
facility, and then  going back to the clinic.   He also commented                                                               
that as a physician assistant (PA),  he has had more training for                                                               
reading x-rays rather  than taking them.  He opined  that it is a                                                               
poor assumption  that a PA  or any licensed practicioner  has the                                                               
ability to physically take x-rays.                                                                                              
                                                                                                                                
TIMO  SAARINEN,  Alaska   Society  of  Radiologic  Technologists,                                                               
testified in support  of HB 150.  He commented  that Congress has                                                               
tried to  make sure that  all states do  "quality care as  far as                                                               
radiation is concerned"  to make sure that all states  are on the                                                               
same standard.  He  said that the intent of this  bill is to make                                                               
sure that  everybody is trained to  the same level, and  that the                                                               
operator and the patient receive  minimum radiation exposure.  He                                                               
remarked:                                                                                                                       
                                                                                                                                
     There  was  a  tri-state  leukemia  survey  done  which                                                                    
     indicated  that children  of chronic  diseases were  at                                                                    
     special risk  from low x-rays. ...  Children of mothers                                                                    
     x-rayed during pregnancy suffer  1.5 times the leukemia                                                                    
     rate  as  children of  mothers  not  x-rayed.   Another                                                                    
     analysis showed  the young  adults with  asthma, severe                                                                    
     allergies, heart  disease, diabetes, arthritis,  and so                                                                    
     on, were  about 12  times as susceptible  to radiation-                                                                    
     related leukemia as were healthy adults.                                                                                   
                                                                                                                                
CHAIR ANDERSON closed public testimony.                                                                                         
                                                                                                                                
5:18:35 PM                                                                                                                    
                                                                                                                                
CHAIR  ANDERSON  noted  that  physicians,  physician  assistants,                                                               
nurse  practitioners, podiatrists,  osteopaths, dentists,  dental                                                               
hygienists, dental  assistants, and chiropractors can  operate x-                                                               
ray machinery under this bill.                                                                                                  
                                                                                                                                
REPRESENTATIVE ROKEBERG suggested that  the committee allow for a                                                               
more  liberal   transition  period  rather  than   make  a  rural                                                               
exemption to the bill.                                                                                                          
                                                                                                                                
REPRESENTATIVE LEDOUX  moved to  adopt Conceptual Amendment  2 to                                                               
"exempt  technicians working  under the  direct supervision  of a                                                               
licensed practitioner."                                                                                                         
                                                                                                                                
CHAIR  ANDERSON objected  to Conceptual  Amendment  2 because  he                                                               
said that the amendment would gut the intent of the bill.                                                                       
                                                                                                                                
5:23:47 PM                                                                                                                    
                                                                                                                                
A roll call was taken.   Representatives LeDoux and Kott voted in                                                               
favor  of  Conceptual  Amendment 2.    Representatives  Crawford,                                                               
Rokeberg,  Lynn,  Anderson  voted  against  it.    Representative                                                               
Guttenberg  was  absent  for the  vote.    Therefore,  Conceptual                                                               
Amendment 2 failed by a vote of 2-4.                                                                                            
                                                                                                                                
REPRESENTATIVE  LEDOUX moved  to  adopt  Conceptual Amendment  3,                                                               
which  would exempt  technicians  working in  communities with  a                                                               
population  of less  than 1,000  which  are either  off the  road                                                               
system or over 100 miles  from a metropolitan statistical area in                                                               
excess of 50,000 people.                                                                                                        
                                                                                                                                
5:27:42 PM                                                                                                                    
                                                                                                                                
CHAIR ANDERSON objected to Conceptual Amendment 3.                                                                              
                                                                                                                                
A roll call was taken.   Representatives LeDoux and Kott voted in                                                               
favor  of  Conceptual  Amendment 3.    Representatives  Crawford,                                                               
Rokeberg,  Lynn,  Anderson  voted  against  it.    Representative                                                               
Guttenberg  was  absent  for the  vote.    Therefore,  Conceptual                                                               
Amendment 3 failed by a vote of 2-4.                                                                                            
                                                                                                                                
REPRESENTATIVE  KOTT commented  that he  hopes the  bill will  be                                                               
further amended  in the next committees.   He said, "If  we had a                                                               
qualified  physician who  had a  registered  technician that  was                                                               
under the  direct supervision  of that  physician, I  don't think                                                               
I'd  have a  problem.    Just because  someone  is certified  and                                                               
licensed doesn't  necessarily mean  you're not  going to  get bad                                                               
treatment."                                                                                                                     
                                                                                                                                
REPRESENTATIVE KOTT  moved to report  HB 150 out of  committee as                                                               
amended  with  individual  recommendations and  the  accompanying                                                               
fiscal notes.                                                                                                                   
                                                                                                                                
REPRESENTATIVE  ROKEBERG objected.    He stated  his support  for                                                               
Representative   Kott's   previous   comments  and   he   assured                                                               
Representative  LeDoux  and  Representative  Wilson  that  "their                                                               
concerns  are  not  falling  on  deaf ears."    He  withdrew  his                                                               
objection.                                                                                                                      
                                                                                                                                
There being no objection, CSHB 150(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                                                                  
5:31:48 PM.                                                                                                                   

Document Name Date/Time Subjects