Legislature(2013 - 2014)Anch Temporary LIO

10/07/2014 01:00 PM LABOR & COMMERCE

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Audio Topic
01:11:39 PM Start
01:12:30 PM Presentation: Patient Protection and Affordable Care Act
03:17:14 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Location: 733 W 4th Ave, 1st Floor Conference Rm.
+ Patient Protection and Affordable Care Act TELECONFERENCED
-- Testimony <Invitation Only> --
                    ALASKA STATE LEGISLATURE                                                                                  
          HOUSE LABOR AND COMMERCE STANDING COMMITTEE                                                                         
                        October 7, 2014                                                                                         
                           1:11 p.m.                                                                                            
MEMBERS PRESENT                                                                                                               
Representative Kurt Olson, Chair                                                                                                
Representative Lora Reinbold, Vice Chair                                                                                        
Representative Mike Chenault                                                                                                    
Representative Charisse Millett                                                                                                 
Representative Dan Saddler                                                                                                      
Representative Andy Josephson                                                                                                   
Representative Craig Johnson                                                                                                    
MEMBERS ABSENT                                                                                                                
Representative Bob Herron                                                                                                       
COMMITTEE CALENDAR                                                                                                            
PRESENTATION: PATIENT PROTECTION AND AFFORDABLE CARE ACT                                                                        
     - HEARD                                                                                                                    
PREVIOUS COMMITTEE ACTION                                                                                                     
No previous action to record                                                                                                    
WITNESS REGISTER                                                                                                              
LORI WING-HEIER, Director                                                                                                       
Division of Insurance                                                                                                           
Department of Commerce, Community, and Economic Development                                                                     
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Testified on the Patient Protection and                                                                   
Affordable Care Act (ACA).                                                                                                      
BECKY HULTBERG, President and CEO                                                                                               
Alaska State Hospital and Nursing Home Association (ASHNHA)                                                                     
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Testified on the ACA.                                                                                     
SHEELA TALLMAN, Senior Manager, Legislative Policy                                                                              
Premera Blue Cross                                                                                                              
Seattle, Washington                                                                                                             
POSITION STATEMENT: Testified on the ACA.                                                                                     
JASON GOOTEE, Regional Manager                                                                                                  
Moda Health, Alaska                                                                                                             
Palmer, Alaska                                                                                                                  
POSITION STATEMENT: Introduced his supervisor.                                                                                
KRAIG ANDERSON, Senior Vice President and Chief Actuary                                                                         
Moda Health                                                                                                                     
Portland, Oregon                                                                                                                
POSITION STATEMENT: Testified on the ACA.                                                                                     
VINCE O'SHEA, Vice President                                                                                                    
Pacific Seafood Processors Association (PSPA)                                                                                   
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Testified on the ACA.                                                                                     
BILL STREUR, Commissioner                                                                                                       
Department of Health and Social Services (DHSS)                                                                                 
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Testified on the ACA.                                                                                     
ACTION NARRATIVE                                                                                                              
1:11:39 PM                                                                                                                    
CHAIR KURT  OLSON called  the House  Labor and  Commerce Standing                                                             
Committee  meeting  to  order  at   1:11  p.m.    Representatives                                                               
Reinbold, Josephson, Saddler, Johnson,  and Olson were present at                                                               
the call  to order.   Representative  Sam Kito  III was  on line.                                                               
Representatives Millett  and Chenault arrived as  the meeting was                                                               
in progress.                                                                                                                    
^Presentation: Patient Protection and Affordable Care Act                                                                       
    PRESENTATION: Patient Protection and Affordable Care Act                                                                
1:12:30 PM                                                                                                                    
CHAIR OLSON announced that the only  order of business would be a                                                               
discussion  related   to  the  federal  Patient   Protection  and                                                               
Affordable  Care Act  (ACA)  and the  impact  of rate  increases.                                                               
When the  ACA was rolled out,  he said, people were  told that if                                                               
they  liked their  doctors they  could  keep them  and if  people                                                               
liked their  health care plans,  they could  keep them.   The ACA                                                               
would  also   lower  healthcare   costs  for  families   and  for                                                               
businesses, he stated.  He said  if he was still in the insurance                                                               
business, "and  I sold a  product like  that, I'd probably  be in                                                               
jail for  any number  of violations  of the  insurance statutes."                                                               
He added that he is trying not to let his bias show.                                                                            
1:14:37 PM                                                                                                                    
LORI   WING-HEIER,  Director,   Division   of  Insurance   (DOI),                                                               
Department  of  Commerce,  Community,  and  Economic  Development                                                               
(DCCED),  said there  have been  many statements  made about  the                                                               
DOI.   Its  mission  is  to regulate  the  insurance industry  to                                                               
protect  Alaska consumers.   She  said  that sometimes  decisions                                                               
need to  be made and  issues need to  be resolved that  result in                                                               
"no clear winner" and that the  division needs to make a decision                                                               
after reviewing hundreds  of pages of data  and holding countless                                                               
meetings to have  a viable, financial, secure  product for Alaska                                                               
consumers that  is available today and  tomorrow.  Interestingly,                                                               
"sometimes our hands are tied  [and] our creativity is stifled by                                                               
a statute  or regulation or  court decision that dictates  how we                                                               
meet our mission."   She noted that on March  23, 2010, President                                                               
Obama signed a  sweeping piece of legislation  called the Patient                                                               
Protection and  Affordable Care Act  (ACA) to  provide affordable                                                               
healthcare insurance  to those who  were uninsured and  to expand                                                               
certain benefits to those that were already insured.                                                                            
1:18:36 PM                                                                                                                    
MS. WING-HEIER  showed a  timeline on slide  4 of  her PowerPoint                                                               
presentation.    In the  fall  of  2013, the  insurance  industry                                                               
canceled health insurance for five  million Americans.  She spoke                                                               
of shock and  dismay, and it was unsettling  for stakeholders and                                                               
for her division.   Approximately 5,500 of the  consumers were in                                                               
Alaska,  she  explained.   These  consumers  were  to go  from  a                                                               
noncompliant to  a compliant plan,  and people were  shocked, she                                                               
said.  In October, open  enrollment began and there were problems                                                               
with the website,  she reported, and repeated attempts  to log in                                                               
caused distress.   In  November, people  were notified  that they                                                               
could keep  their insurance  for a year,  through 2014,  but that                                                               
delayed the  individual enrollment.   The "SHOP option"  was also                                                               
delayed  for one  year [Small  Business Health  Options Program],                                                               
she stated.   So the question  given to the state  was: Would you                                                               
allow your consumers to keep their current benefits for a year?                                                                 
MS.  WING-HEIER  said  that  after   some  analysis,  DOI  issued                                                               
Bulletin 1309,  and "it  did not, per  se, allow  the transition,                                                               
but what it  did allow was for  the insurers to make  a choice in                                                               
their  business  decisions  to cancel  and  rewrite  the  current                                                               
insurance  policies effective  December 31  for a  period of  one                                                               
year."   She said if  a policy was to  expire in April,  it would                                                               
have been  canceled on  December 31, 2013,  and would  now expire                                                               
December  31,  2014,   and  it  would  continue  to   be  a  non-                                                               
grandfathered  plan and  out  of  the ACA.    She  said this  was                                                               
distressing  to consumers  as  they  did not  know  if they  were                                                               
supposed  to  enroll or  not,  and  it  created anxiety  for  the                                                               
insurers too as they had to adjust  to the new plan.  She said it                                                               
was upsetting  for many.   The progress  was halted for  the time                                                               
being, and the issues continued  with the ACA website through the                                                               
spring  of  2014,  she  explained.   In  March,  President  Obama                                                               
announced that  those who like  their insurance would be  able to                                                               
keep it, and current plans, at  the direction of the state, could                                                               
stay in  place until October,  2016, she  added.  She  noted that                                                               
two insurers, Premera  and Moda, kept their plans in  place.  She                                                               
     They  were  given notice,  and,  again,  this is  their                                                                    
     decision, if  they keep those  plans.  The  Division of                                                                    
     Insurance  can only  allow it;  we  cannot dictate  it.                                                                    
     It's  their business  decision.    Under Bulletin  1403                                                                    
     they  received  a  notice  that  they  had  to  make  a                                                                    
     decision   if  they   were   going   to  continue   the                                                                    
     noncompliant plans.  We felt  it was important to do so                                                                    
     because we  realize the impact  of the premiums  in ACA                                                                    
     compliant plans,  and we  hope to delay  it as  long we                                                                    
     could for those that we could.                                                                                             
MS.  WING-HEIER  questioned  if   the  division  made  the  right                                                               
decision, but she  feels that it did because it  gave about 5,000                                                               
Alaskans  the choice  to  stay  out of  the  ACA compliant  plans                                                               
unless they preferred them.                                                                                                     
1:23:21 PM                                                                                                                    
MS.  WING-HEIER noted  that, in  an attempt  to keep  costs to  a                                                               
minimum for consumers, on June  2, the division petitioned Health                                                               
and  Human Services  to opt  out  of "SHOP"  (for small  business                                                               
owners) for  one year.   The  ACA, she  believes, allows  for the                                                               
individual employee  of small businesses  to get a set  amount of                                                               
money to  go into  the marketplace  to buy his  or her  own plan.                                                               
She said  she heard  from several small  business owners  who did                                                               
not  like  that  concept  because   of  their  concern  with  the                                                               
possibility  of   administering  multiple  plans  in   one  small                                                               
business.  So, the division did  the petition and was granted the                                                               
authority to opt out of SHOP for one year.                                                                                      
1:24:22 PM                                                                                                                    
MS. WING-HEIER stated that people  who had insurance on March 23,                                                               
2010, are  grandfathered in  and not subject  to the  majority of                                                               
the ACA, but they could benefit  from the ACA program of insuring                                                               
their children  up to the age  of 26.  The  non-grandfathered (or                                                               
noncompliant) plans  were purchased  between March 23,  2010, and                                                               
January 1, 2014,  she said, and they were to  become compliant by                                                               
2014.   Those were  also the plans  that the  insurance companies                                                               
mailed out a notice of  cancelation (but then reinstated) and can                                                               
be kept until October 1, 2016,  if the insurer allows for it, she                                                               
explained.   She said January  1, 2014, [begins  the] compliance-                                                               
qualified health plans.  "Those  are the three buckets that we're                                                               
talking about," she added.                                                                                                      
1:26:08 PM                                                                                                                    
REPRESENTATIVE SADDLER asked how many Alaskans have the non-                                                                    
grandfathered plans.                                                                                                            
MS.  WING-HEIER  said  page  8  does not  talk  about  the  large                                                               
employers, "but it gives you  an estimate of approximately 22,000                                                               
in  the  individual  market  in 2014."    For  the  grandfathered                                                               
[plans], Premera had about 2,800  in individual markets and about                                                               
4,600 in the small groups.   Moda does not have any grandfathered                                                               
plans.  She said to look at her slide 9.                                                                                        
REPRESENTATIVE JOSEPHSON  asked about  slide 5.   At the  time of                                                               
the  signing  of  the  ACA,  if  someone  had  a  policy  it  was                                                               
grandfathered, so they got to keep what they had.                                                                               
MS. WING-HEIER  agreed, but there  were some  modifications, such                                                               
as the  children could remain  on their parents'  insurance until                                                               
the  age  of  26,  as  well  as  other  benefits  to  those  with                                                               
grandfathered  plans,  "but  not the  significant--the  essential                                                               
health benefits and others that  are in the ACA compliant plans."                                                               
She  turned to  slide  6  from 2012  and  2013,  which shows  all                                                               
insurers in Alaska,  but it does not show the  self-insured.  She                                                               
said she  has focused on Premera  and Moda, because they  are the                                                               
two insurers that  "we have released the 2015 rates  for and they                                                               
are the two insurers that  offer products to Alaskan consumers on                                                               
the Federal  Facilitated Marketplace."   She noted that  they had                                                               
about 75  percent of  the market.   In 2013,  the numbers  do not                                                               
change that much,  she added.  She turned to  slide 8, "these are                                                               
all insurers--individual and  small group in 2014."   It includes                                                               
the  grandfathered plans,  non-grandfathered plans,  and the  ACA                                                               
compliant plans, but the numbers can  change from day to day, she                                                               
noted.  Slide 9 slices the  numbers a little bit differently with                                                               
regard  to what  Premera  and  Moda have,  as  far as  individual                                                               
markets, small  group markets,  grandfathered, non-grandfathered,                                                               
and ACA compliant, she explained.                                                                                               
1:31:25 PM                                                                                                                    
MS. WING-HEIER  said her point  is to show  that if she  added up                                                               
all of the  numbers for all of the individuals  that she has, and                                                               
if she added in  the 6,000 that she thinks may  be out there that                                                               
have  yet to  enroll,  the sum  is  28,828.   Alaska  is a  small                                                               
market, and nothing  about the ACA is going to  change that.  She                                                               
said Alaska  has extremely high  health care costs, and  there is                                                               
not enough  in the pool  to spread the  costs of the  claims that                                                               
were  seen  in 2014  and  prior  years  and make  it  affordable.                                                               
Looking  at  other  states, the  marketplace  enrollment  of  ACA                                                               
qualified  plans in  2014  was about  8  million nationwide,  she                                                               
reported, and some states had a  decrease in rates and others had                                                               
rates that  did not go  up.   She said, "California  enrolled 1.4                                                               
million; Idaho,  76; [and]  Washington State,  163.   Some states                                                               
had a  little less than  us.  Hawaii,  for one, had  about 9,000.                                                               
South Dakota did not have  many--about 13, and North Dakota, 10."                                                               
She added  that those  states have  a lower  cost of  health care                                                               
and, perhaps, more access to some health care.                                                                                  
1:33:34 PM                                                                                                                    
MS. WING-HEIER presented a slide  to show where Alaska falls with                                                               
enrollment  [expectations],  and  it  is "pretty  much  right  on                                                               
target"  for  what  CMS,  Avalere, and  what  the  Kaiser  Family                                                               
Foundation  shows us.   Alaska  is a  little over  16,000 in  all                                                               
markets for  enrollment, she  stated.  No  one knows  exactly how                                                               
many  uninsured there  were in  Alaska, but  this is  the closest                                                               
number she  has.   She said  there has been  a lot  of discussion                                                               
over the federal exchange and  the rate-review grants and why the                                                               
state  made the  decision that  it  did.   Regarding the  federal                                                               
exchange  grants,  the federal  government  awarded  close to  $4                                                               
billion  to 49  states to  study--and in  some cases,  design and                                                               
implement--a  state-based exchange,  and of  those 49  states, 39                                                               
elected to  participate in the  federal exchange, "as  Alaska did                                                               
from the beginning."   Recent data shows that in  addition to the                                                               
$4 billion from  the federal government, there was  close to $3.5                                                               
billion spent by  the states themselves, she stated.   In Hawaii,                                                               
the average cost  per enrollee of their exchange  is $23,899, and                                                               
for California  it is $758.   California has some of  the highest                                                               
enrollment numbers of any state, she added.                                                                                     
1:34:15 PM                                                                                                                    
MS.  WING-HEIER  said  Alaska  is  part  of  the  FFM  [Federally                                                               
Facilitated  Marketplace], and  the average  cost is  $12,890 per                                                               
enrollee.   The  lowest is  Florida at  $76 and  North Dakota  is                                                               
$7,089 per enrollee  just to access the web site  and process the                                                               
application, she said.                                                                                                          
1:36:44 PM                                                                                                                    
REPRESENTATIVE JOSEPHSON noted that  Ms. Wing-Heier said that the                                                               
State  of  Alaska spends  over  $10,000  and  writes a  check  to                                                               
someone for each enrollee into the federal exchange.                                                                            
MS. WING-HEIER  said no.   "We joined  the federal  exchange, the                                                               
federal government  is spending $12,890  ... priced out  over all                                                               
of the  applicants or all  the enrollees,"  and it is  an average                                                               
for Alaska's share.                                                                                                             
REPRESENTATIVE JOSEPHSON asked if that is the federal subsidy.                                                                  
MS. WING-HEIER said no.   "This is just the cost for  you or I to                                                               
go to  the website  and enroll  through healthcare.gov  to obtain                                                               
insurance."  She  said she will find the source  of that data for                                                               
him.   She continued  and said that  several states  started down                                                               
the  path of  the  federal exchange  grants, including  Oklahoma,                                                               
Louisiana, Kansas,  Maine, and Wisconsin,  and they  returned the                                                               
funding when they  started to look at what the  costs would be to                                                               
build a state-based exchange.  She  said the states of Oregon and                                                               
Nevada failed  miserably.  Oregon  spent $350 million  and Nevada                                                               
spent  $75 million  for their  exchanges  in 2014,  and they  are                                                               
joining the  federal exchange in  2015.   The costs are  high, so                                                               
states are looking  to partner with each other  and searching for                                                               
a more economical way for  people to access healthcare, she said.                                                               
With a  small state like Alaska,  there is no way  to provide the                                                               
software and the commitment without  the grant money running out,                                                               
leaving the state to deal with the financial burden.                                                                            
1:39:12 PM                                                                                                                    
MS.  WING-HEIER  said she  has  heard  about the  Effective  Rate                                                               
Review  and what  that  means.   Historically,  the oversight  of                                                               
insurance  rates  has  been  a   state  responsibility,  and  ACA                                                               
established a role  for HHS [U.S. Department of  Health and Human                                                               
Services]  by requiring  that the  secretary establish  a process                                                               
for  the annual  review  of unreasonable  rate  increases in  the                                                               
individual  and   small  group  market.     [Alaska]  rates  were                                                               
submitted  to HSS  on  September  4, and  she  said  she had  one                                                               
conversation with  HSS and  "they have yet  to question  the data                                                               
that was  submitted to them or  the need for the  rate increase."                                                               
She  said  that  HSS  will  also determine  if  a  state  has  an                                                               
effective  rate review,  and she  questioned what  that is.   She                                                               
showed a slide of the states  that were granted an effective rate                                                               
review  status,  and  "we,  along  with  45  other  states,  were                                                               
approved  by HHS  as  an  effective rate  review."   The  process                                                               
entails  very  detailed  information   under  federal  and  state                                                               
statutes, and  "we try to  point out the  types of data  that are                                                               
submitted  to  us  and  reviewed   to  determine  if  a  rate  is                                                               
justified," she explained.   Much like the  exchange, the federal                                                               
government  released grants  to fund  states to  become effective                                                               
rate review  states, she  added, and  Alaska has  been criticized                                                               
for not  accepting [these grants].   She said, "Cycle  I provided                                                               
$1  million to  the  states to  help develop  or  enhance a  rate                                                               
review process that  we have already been  certified as effective                                                               
rate review by HHS."                                                                                                            
1:41:31 PM                                                                                                                    
REPRESENTATIVE SADDLER  asked if she  is speaking of a  review of                                                               
effective rates or is it the system that is effective.                                                                          
MS. WING-HEIER said that the intent  is to determine if "our rate                                                               
review process is  effective and over any  qualification that HHS                                                               
statutory obligation or  any of their processes  to determine the                                                               
rate to be charged to Alaska consumers."                                                                                        
1:42:17 PM                                                                                                                    
REPRESENTATIVE JOSEPHSON  said Susan Johnson, U.S.  Department of                                                               
Health and Human Services, gave him something that reads:                                                                       
     Although  Alaska   meets  the  effective   rate  review                                                                    
     standards, it does not go  beyond the minimum standards                                                                    
     in terms of their  rate review process and transparency                                                                    
     of  rate review  data.   For example,  Alaska does  not                                                                    
     have  public  hearings  on  rates;  they  post  minimal                                                                    
     information in a form inaccessible to consumers.                                                                           
REPRESENTATIVE JOSEPHSON  said that Ms. Johnson  cites the Kaiser                                                               
Foundation who says  that Alaska is one of  the least transparent                                                               
states  in  terms  of  making  rate review  available.    "Is  it                                                               
possible that we're complying with  this minimum standard but not                                                               
doing all that we could to help consumers?"                                                                                     
MS. WING-HEIER said,  "No, sir, I believe we are  going above the                                                               
standard."  In  Alaska the concern with the  transparency is that                                                               
there is  a statute that  requires rates to be  kept confidential                                                               
until the  effective date.   "I cannot,  by statute,  release the                                                               
rates  until  January  1."  The  statute  was  intended  to  keep                                                               
insurers  from  knowing what  their  competition  was bidding  to                                                               
enable fair competition, she said.                                                                                              
1:43:53 PM                                                                                                                    
MS. WING-HEIER  said there was  the $250 million over  five years                                                               
awarded for  effective rate review  grants.  "In Alaska,  we felt                                                               
that there  was adequate staffing;  we thought we  only qualified                                                               
and we believe we only qualified  for Cycle I," she said, because                                                               
one of the criteria for Cycle II  "is that you're trying to be an                                                               
effective rate  review--we already achieved that  status."  There                                                               
are only eight healthcare insurers  in Alaska, she explained, and                                                               
some  states have  20 to  60 insurers,  so it  was not  clear how                                                               
Alaska could spend a million  dollars of federal money to enhance                                                               
a  process that  had been  working for  years, she  stated.   She                                                               
     When  we have  taken criticism  for the  effective rate                                                                    
     review,  we're  taking  it on  the  individual  market,                                                                    
     because  there are  some significant  rate increases--I                                                                    
     don't deny that;  I can't, but no one  talks about that                                                                    
     we use  the same rate  review, the same  processes, for                                                                    
     the group  market, and that  the small group  went down                                                                    
     17  percent  on  the  average for  Moda  and  a  slight                                                                    
     increase of  a little over  5 percent for  Premera, and                                                                    
     it's the  same process we  use; the same type  of data;                                                                    
     the same qualifiers.                                                                                                       
1:45:25 PM                                                                                                                    
CHAIR OLSON  recalled that Ms.  Wing-Heier said that the  top two                                                               
companies were writing 75 percent of the premiums.                                                                              
MS. WING-HEIER  said, yes, Premera  and Moda.  She  continued and                                                               
said that the determination to  accept funding under Cycle II was                                                               
that the state had to be  working towards being an effective rate                                                               
review state,  but Alaska had  already qualified, so "we  did not                                                               
qualify to  receive Cycle II grants."   She noted that  there was                                                               
$159 million awarded, and $14  million was returned as the states                                                               
could not  justify how to spend  the money.  Ms.  Wing-Heier said                                                               
that  the  Division of  Insurance  does  not set  premium  rates;                                                               
insurers  file   their  rates  and   the  division   approves  or                                                               
disapproves them, and rates are  defined by statute and cannot be                                                               
excessive,  based  on  historical  data.   The  rates  cannot  be                                                               
inadequate, "we have  to guarantee the solvency  of the insurance                                                               
companies," she  said, and they  cannot unfairly  discriminate or                                                               
be  applied unfairly  for similar  risks, such  as age,  plan, or                                                               
tobacco use.                                                                                                                    
1:47:24 PM                                                                                                                    
MS. WING-HEIER  noted that  in 2014, when  ACA came  about, there                                                               
was speculation across the nation as  to what the pool would look                                                               
like.  She  said there were assumptions that those  who were most                                                               
in need of  insurance would enroll the first year,  and those who                                                               
are not in need  of healthcare right now have yet  to enroll.  In                                                               
2014, there  was significance loss.   By reviewing the  data, she                                                               
found that some of  it is pent up demand and  that there are some                                                               
very  ill individuals  who have  needed healthcare.   In  certain                                                               
months, the division looks at  loss ratios of the premiums coming                                                               
in over the  claims going out.  In some  months the insurers were                                                               
paying out over $2.50 in claims  for every $1.00 they were taking                                                               
in for  premiums, and  they cannot stay  in business  long paying                                                               
out that kind  of money, she stated.   She said that  the ACA has                                                               
10 essential benefits,  and those going forward in  2014 have the                                                               
benefits without  any option "to roll  in or roll out."   Perhaps                                                               
someone  does not  want prescription  or  pediatric service,  for                                                               
example, but the plan provides for them, she said.                                                                              
1:49:46 PM                                                                                                                    
MS.  WING-HEIER turned  to the  "medical loss  ratio."   She said                                                               
that this appears to be a  good thing for consumers, "and perhaps                                                               
it is."   In 2014,  Premera issued  checks back to  consumers for                                                               
$2.6 million for their 2013  [indecipherable].  For all insurers,                                                               
the medical  loss ratio  is "if they,  basically, guess  wrong on                                                               
what they  expect their claims were  ... then the money  is given                                                               
back to  the consumers, which is  a great thing on  a good year."                                                               
She opined  that it is  unfortunate that the  insurance companies                                                               
cannot keep the money  to spread it out over the  bad years.  She                                                               
said if  the companies guess too  high on what their  losses will                                                               
be, the  money comes  back to  the consumers,  but that  does not                                                               
allow them  to build up surplus  money to pay future  claims, and                                                               
that causes  a rate  increase.   She turned  to slide  25 dealing                                                               
with risk  adjustment, risk corridor, and  reinsurance, which are                                                               
part of  the ACA,  and the  intent was  to stabilize  the market,                                                               
particularly  for  the first  two  years.   The  risk  adjustment                                                               
transfers  money   amongst  the   insurers  to  adjust   for  the                                                               
possibility  that some  insurers may  get more  or less  of their                                                               
proportionate share of  costly enrollees, she said.   She defined                                                               
reinsurance as insurance  for the insurance companies.   In 2014,                                                               
she said,  "it attached to  a claim  at $45,000, but,  I believe,                                                               
for the  first $250,000 after  that there  was an 80  percent co-                                                               
insurance."   She said it  increases in  2015 and again  in 2016,                                                               
and it  is done in  2017.  The  risk corridor, she  explained, is                                                               
much like  the medical loss  ratio, and it allows  the government                                                               
to claw  back some  of the  premiums if  the expected  losses are                                                               
lower than what the insurer  predicted.  The program will operate                                                               
for  three years,  and  her concern  is that  last  week the  GAO                                                               
[federal  Government  Accountability  Office]  released  a  legal                                                               
opinion that  the law  was not funding  for 2015  unless Congress                                                               
passes a clarification.                                                                                                         
1:52:29 PM                                                                                                                    
REPRESENTATIVE SADDLER asked why it is only for three years.                                                                    
1:52:53 PM                                                                                                                    
MS. WING-HEIER  said that she has  no clue, but she  believes the                                                               
intent was  for things to stabilize,  and at some point  we would                                                               
know exactly what  was out there and the rates  would be adequate                                                               
for the population served.                                                                                                      
REPRESENTATIVE SADDLER asked if it was  not to deal with the pent                                                               
up demand.                                                                                                                      
MS. WING-HEIER said  it could have been to deal  with the pent up                                                               
demand and  to see what  the pool would  be.  Everyone  knew that                                                               
there were  uninsured people and  people needing  healthcare, but                                                               
there was no way to quantify  the number and the pool with regard                                                               
to healthcare costs.                                                                                                            
CHAIR OLSON asked if it was written by the insurance companies.                                                                 
MS. WING-HEIER said it was written  into ACA.  She continued.  In                                                               
September  2014,  Secretary  Sylvia   Burwell  wrote  that  while                                                               
competition  is working  in the  online marketplace,  it may  not                                                               
work  as  efficiently   in  a  high-cost  market   with  a  small                                                               
population such as Alaska.  That  is the point Ms. Wing-Heier has                                                               
been trying to  push since the onset of the  ACA: the concerns of                                                               
a  one-size-fits-all option  to provide  healthcare, without  her                                                               
division  being able  to be  creative or  think outside  the box,                                                               
which it is making it costly to consumers.                                                                                      
1:54:50 PM                                                                                                                    
REPRESENTATIVE JOSEPHSON  asked what she  meant by one  size fits                                                               
all,  and if  that is  the state  perspective, not  the consumer,                                                               
because consumers have some choices.                                                                                            
MS. WING-HEIER  said the  consumer can  choose a  gold, platinum,                                                               
silver,  or  a bronze  plan,  and  the  consumer can  choose  the                                                               
insurer.  There are variations  in the deductible "and such," but                                                               
the health benefits are one size fits all.                                                                                      
REPRESENTATIVE  JOSEPHSON  said  that   some  states  with  small                                                               
populations,  like Arkansas,  saw a  reduction of  2 percent  and                                                               
Montana's  increase was  only  1.35  percent.   "Are  we just  an                                                               
MS.  WING-HEIER  said  part  of   the  concern  is  the  cost  of                                                               
healthcare, which is one of the  highest in the nation and higher                                                               
than healthcare  in Arkansas.   She said,  "We're in  a dilemma."                                                               
Alaska healthcare  is one of  the costliest  in the nation.   The                                                               
ACA  has  limited  options  for   the  products  for  the  Alaska                                                               
consumers,  she  added.    She said  the  underwriting  has  been                                                               
restrictive,  and she  has heard  from people  from all  walks of                                                               
life that there is a problem with the ACA in Alaska                                                                             
1:58:19 PM                                                                                                                    
MS. WING-HEIER  said her mission  is to protect  Alaska consumers                                                               
and provide  them with products  that are financially  secure and                                                               
to  make sure  the providers  are  stable and  accountable.   She                                                               
added  that nothing  in ACA  is affordable,  and the  division is                                                               
doing everything in its power to make healthcare affordable.                                                                    
1:59:01 PM                                                                                                                    
REPRESENTATIVE SADDLER  turned to slide  27, and he asked  if the                                                               
rates of increase are annual.                                                                                                   
MS. WING-HEIER said  the slide shows the average  rates, filed by                                                               
the insurance companies, of individual  states for the individual                                                               
market.  It is the average  rate of the individual markets, so it                                                               
is the expected change in healthcare expenses.                                                                                  
1:59:52 PM                                                                                                                    
CHAIR  OLSON said  the original  numbers he  saw for  Alaska were                                                               
closer to 70 percent on certain types of groups.                                                                                
MS. WING-HEIER  said there was  never a  filing for a  70 percent                                                               
rate  increase.    When  the division  first  met  with  Premera,                                                               
Premera indicated  that it  would be 70  percent, but  because of                                                               
its  relationship  in the  state,  their  financial solvency  and                                                               
stability, "we  could see  that they could  provide a  product in                                                               
2015 [with] less  than a 70 percent increase and  still be around                                                               
in 2016."   She said she  does not know what  Premera's testimony                                                               
will  be,  but  its  rates  filed  with  the  division  show  the                                                               
expectation of a $5 million loss next year.                                                                                     
REPRESENTATIVE  SADDLER asked  about the  2015 rates  of plus  22                                                               
percent and plus 40 percent on slide 28.                                                                                        
MS. WING-HEIER  said, "22 percent  would the  low end of  one, to                                                               
the high end of the other, [and] all the plans in between."                                                                     
2:02:22 PM                                                                                                                    
REPRESENTATIVE  JOSEPHSON noted  that Ms.  Johnson said  that the                                                               
state average  premium increase was  17 percent between  2008 and                                                               
2011, so  that is less than  even our lower end,  but Ms. Johnson                                                               
notes  that Premera  had the  largest increase  of 32  percent in                                                               
2008, which would be near the  middle of those numbers.  Although                                                               
none of  this is good  news, is it  possible there could  be some                                                               
leveling, he asked, and if it is wildly inconsistent.                                                                           
MS. WING-HEIER  said she  hopes that there  is some  leveling and                                                               
that the  rates stabilize in  three to  five years, but  she does                                                               
not know if it will level out.                                                                                                  
2:04:04 PM                                                                                                                    
REPRESENTATIVE SADDLER  said he has  an interest in  the coverage                                                               
of young  people with  disabilities.  He  spoke of  an exemption,                                                               
and he  asked how many in  Alaska do not have  coverage of mental                                                               
healthcare services.                                                                                                            
MS. WING-HEIER said she will get back to him on that.                                                                           
BECKY  HULTBERG, President  and  CEO, Alaska  State Hospital  and                                                               
Nursing  Home Association  (ASHNHA), said  the members  of ASHNHA                                                               
include  hospitals  and  nursing  homes across  the  state.    As                                                               
healthcare  providers,   the  members  know  the   importance  of                                                               
healthcare   insurance,  because   an   accident  or   unexpected                                                               
diagnosis  can  tilt someone's  world,  and  for someone  without                                                               
health  insurance  the  consequences   can  be  devastating.    A                                                               
functioning  private insurance  market is  critical to  providing                                                               
Alaskans  access to  health insurance,  she said.   Not  everyone                                                               
chooses to be  employed, she explained, and  private insurance is                                                               
a necessity,  not a  luxury, for those  who are  self-employed or                                                               
those with employers  who do not offer health  insurance.  Having                                                               
a functioning  private insurance market is  essential to Alaska's                                                               
economy, she added.                                                                                                             
MS.  HULTBERG  said, "We  need  entrepreneurs  and we  need  risk                                                               
takers," but without affordable health  insurance this may be too                                                               
much of  a risk  for people.   Prior to  the ACA,  insurers could                                                               
deny  coverage   based  on  pre-existing  conditions,   and  this                                                               
coverage  is one  of the  most popular  aspects of  the ACA,  she                                                               
explained.   "We're not likely, nor  should we, return to  a time                                                               
where you could be denied coverage  due to the genetic lottery or                                                               
unfortunate  circumstances," she  stated, but  the provision  has                                                               
changed the risk pool.   She noted that in a  small market, it is                                                               
hard  to spread  risk unless  premiums  increase.   She spoke  of                                                               
ASHNHA's  concern  about the  premium  increases  in the  private                                                               
market for 2015 and that the  dialogue has not been as much about                                                               
finding solutions  as it  has been about  pointing fingers.   She                                                               
encouraged  the  state,  the   federal  government,  and  private                                                               
insurers to  sit down and discuss  how to move this  forward to a                                                               
sustainable  future.   The state  needs to  think big,  she said.                                                               
Alaska is unique  and here is an opportunity  to demonstrate that                                                               
we can find  unique solutions to our unique problems.   She asked                                                               
the   federal  government   to  consider   the  flexibility   and                                                               
innovation that  may be  necessary to  meet the  health insurance                                                               
needs of  Alaskans.   The problem is  solvable if  everyone works                                                               
together--it is  a math  equation, she said,  and people  need to                                                               
step out of their boxes and think differently.                                                                                  
2:07:40 PM                                                                                                                    
CHAIR  OLSON said  that  when  ACA was  rolled  out,  one of  the                                                               
appealing points was taking pressure  off of the emergency rooms,                                                               
because primary care  would no longer be dealt  with in emergency                                                               
rooms.  He asked if that impact is already occurring.                                                                           
MS. HULTBERG said, "Not really."   Medicaid expansion is what has                                                               
really changed that,  so for states that  have expanded Medicaid,                                                               
uncompensated  care  costs have  gone  down  significantly.   The                                                               
volume of new  Alaska entrants to the exchange  is not sufficient                                                               
enough to  see any difference  in the  use of emergency  rooms or                                                               
uncompensated care, she explained.                                                                                              
2:08:46 PM                                                                                                                    
REPRESENTATIVE  REINBOLD  asked her  to  describe  the risk  pool                                                               
Alaska had prior to the ACA.                                                                                                    
MS.  HULTBERG  said  she  is  not going  to  claim  expertise  on                                                               
insurance, but she believes that Alaska  has had a high risk pool                                                               
through    ACHIA   (Alaska    Comprehensive   Health    Insurance                                                               
Association), and some  of the people who were in  that high risk                                                               
pool have transferred  to the individual market.  It  is a matter                                                               
of numbers.  Alaska has a  small pool, and in spreading risk over                                                               
a small pool "you can see these kinds of swings," she explained.                                                                
2:09:48 PM                                                                                                                    
REPRESENTATIVE  MILLETT said  she is  confused by  Ms. Hultberg's                                                               
testimony,  and she  asked  if  ASHNHA is  in  favor of  Medicaid                                                               
MS. HULTBERG said  yes, but her point today is  the concern about                                                               
the private insurance  market and the importance in  having it in                                                               
Alaska  to provide  access to  insurance  and for  the health  of                                                               
Alaska's  economy.    She  added   that  ASHNHA  is  asking  that                                                               
creativity and flexibility be brought to the table.                                                                             
2:10:45 PM                                                                                                                    
REPRESENTATIVE  JOSEPHSON asked  about  any  linkage between  the                                                               
states that have taken Medicaid expansion and cost increases.                                                                   
MS. HULTBERG  said she does  not know, but the  primary published                                                               
metric  involves uncompensated  care, and  as uncompensated  care                                                               
goes  down,   the  financial  performance  and   the  ability  of                                                               
healthcare providers to provide services is enhanced.                                                                           
2:11:36 PM                                                                                                                    
REPRESENTATIVE  REINBOLD  asked   why  ASHNHA  supports  Medicaid                                                               
expansion and if the physicians are taking Medicaid.                                                                            
MS. HULTBERG  said that for  many of ASHNHA's  member facilities,                                                               
Medicaid  expansion is  a  moral obligation.    "We believe  that                                                               
people have  the right to  healthcare," she  stated.  There  is a                                                               
population of people  with no way to  purchase health insurance--                                                               
it is  simply beyond their reach,  she explained.  She  said that                                                               
the most  fiscally responsible way to  ensure healthcare coverage                                                               
for  that   population  is   through  accessing   federal  funds.                                                               
Regarding  the  second questions,  she  noted  that some  of  the                                                               
member hospitals employ physicians and  some do not, so it really                                                               
depends on the facility.                                                                                                        
2:12:28 PM                                                                                                                    
REPRESENTATIVE  SADDLER  asked Ms.  Hultberg  the  basis for  her                                                               
statement that people  have a right to healthcare.   "Is that the                                                               
state or federal constitutions, or any state law?"                                                                              
MS. HULTBERG  answered that  this country  has made  the decision                                                               
with the  Emergency Medical Treatment  and Active Labor  Act that                                                               
one of  the things the people  of the United States  will provide                                                               
is emergency  medical care  regardless of  a person's  ability to                                                               
pay.    The organization  has  many  people with  many  different                                                               
opinions,  but it  is fair  to say  that many  of the  members do                                                               
believe  that as  a society,  healthcare is  one of  those basic,                                                               
fundamental responsibilities.                                                                                                   
REPRESENTATIVE   SADDLER  asked   about  the   Emergency  Medical                                                               
Treatment and Active Labor Act.                                                                                                 
2:13:40 PM                                                                                                                    
REPRESENTATIVE  MILLETT asked  how many  providers of  ASHNHA are                                                               
accepting Medicaid at this point.                                                                                               
MS. HULTBERG  said all  of the hospitals  take Medicaid,  and she                                                               
assumes that  the physicians  who are  employed by  the hospitals                                                               
take Medicaid.                                                                                                                  
2:14:35 PM                                                                                                                    
REPRESENTATIVE REINBOLD  spoke of government debt  and questioned                                                               
this   moral  obligation   [regarding  providing   healthcare  to                                                               
others].   She said there are  "families that want to  be able to                                                               
support  their own  families--the people  they've chosen."   With                                                               
regard to spending federal dollars, there  is a large debt to pay                                                               
back right  now, so the "bottom  line is why should  people, when                                                               
we have such  a high debt, be  forced to pay more  taxes in order                                                               
to take care  of others when it's not a  sustainable model?"  She                                                               
asked where these federal dollars are going to come from.                                                                       
MS.  HULTBERG said  these  dollars will  be  spent regardless  of                                                               
whether  "the  little  bit  that  we would  spend  in  Alaska  on                                                               
Medicaid expansion  is part of the  equation or not."   The funds                                                               
are  already  factored  into  those  long-term  projections,  she                                                               
2:15:42 PM                                                                                                                    
SHEELA TALLMAN, Senior Manager,  Legislative Policy, Premera Blue                                                               
Cross,  said Premera  provides coverage  to  over 100,000  Alaska                                                               
residents,  and   it  offers   coverage  to   individuals,  small                                                               
employers, and large  employers, as well as  offering services to                                                               
the larger  self-funded groups.   She said that  Premera received                                                               
approval  for  a  37.3  percent average  rate  increase  for  its                                                               
metallic Affordable  Care Act  compliant plan.   The  actual rate                                                               
increase  that  an individual  might  face  will depend  on  age,                                                               
geography,  and the  plan selected,  she  noted.   The plans  are                                                               
offered  both  on  and  off  of  the  exchange  and  will  impact                                                               
approximately   7,000  members   starting   January,  2015,   and                                                               
subsidies  will help  the lower  income individuals.   The  6,000                                                               
people on individual plans are  members who will not be impacted,                                                               
she explained.   Additionally, those who  obtain coverage through                                                               
employer-sponsored plans are not impacted by the rate increase.                                                                 
MS.  TALLMAN said  the individual  market in  Alaska has  changed                                                               
significantly since the implementation  of ACA; guaranteed access                                                               
means  that  all  Alaskans  have  access  to  private  healthcare                                                               
coverage regardless  of health  status.  The  high risk  pool, or                                                               
ACHIA program,  has decreased its  enrollment by over  half since                                                               
the beginning of this year,  she said.  Additionally, the federal                                                               
high  risk   pool,  which  ACHIA   has  administered,   has  also                                                               
[indiscernible],  so those  provided coverage  to some  very sick                                                               
individuals who could not obtain coverage in the private market.                                                                
MS. TALLMAN  said the guaranteed access  requirement coupled with                                                               
the  small  size  of  the   Alaska  market  has  resulted  in  an                                                               
unsustainable market.   There are  not enough  healthy purchasers                                                               
in  the individual  market to  offset the  costs of  members with                                                               
very  high medical  needs.   She said  that in  2014 there  was a                                                               
significant  influx  of  new enrollees  with  very  high  medical                                                               
costs.   "We  had more  than $7  million in  claims from  just 33                                                               
members, and  that is  about a  third of all  the claims  for all                                                               
7,000 members  purchasing those metallic, individual  plans," she                                                               
stated.  On  average, Premera is paying about $723  in claims per                                                               
month  for members  on this  plan  and receiving  about $500  per                                                               
month in  premiums.  She  said Premera  expects to lose  about $4                                                               
million in  the market in  2014.  The  federal "Three Rs"  or the                                                               
federal risk  mitigation programs, were designed  to minimize the                                                               
effects   of  adverse   selection   in   the  guaranteed   access                                                               
environment.  They  are insufficient at the very high  end of the                                                               
claims cost  and will not  be able to help  spread the risk  in a                                                               
market that  is too small, she  noted.  Additionally, two  of the                                                               
programs will sunset in 2016.                                                                                                   
MS. TALLMAN stated  that the key to addressing  this situation is                                                               
to create a large enough pool  to spread the costs of the members                                                               
with significant  medical needs.   Even if all of  the individual                                                               
markets were  in one  pool and  everyone purchased  coverage, the                                                               
market  in Alaska  is still  too small  to adequately  spread the                                                               
risk, she  added.   Premera suggested a  policy option,  which is                                                               
the implementation  of a supplemental state-based  free insurance                                                               
program,  which would  use the  state's current  high risk  pool,                                                               
ACHIA, to  spread the highest  cost conditions across  the entire                                                               
insured market, she  said, which is how the high  risk pool works                                                               
today.   "We  believe  this will  help  stabilize the  individual                                                               
market  for   all  individual  purchasers   and  create   a  more                                                               
competitive  market without  drastic swings  and premiums."   She                                                               
said  Premera  understands  that  the Division  of  Insurance  is                                                               
evaluating this proposal and that  this is a difficult situation,                                                               
especially  for the  impacted members,  "so we  are committed  to                                                               
working with you  and other stakeholders to  create a sustainable                                                               
market in Alaska," she concluded.                                                                                               
2:20:20 PM                                                                                                                    
REPRESENTATIVE  SADDLER asked  about  the supplemental  insurance                                                               
program based on ACHIA.                                                                                                         
MS.  TALLMAN said  it would  be a  state-based solution,  and the                                                               
idea is to build it as  a wrap-around to the federal re-insurance                                                               
program.   An  individual would  sign  up for  coverage with  any                                                               
health  plan,  obtaining  all  of  the  benefits  and  access  to                                                               
providers, and  on the  back end--much like  how the  federal re-                                                               
insurance  program  works--is  that  once an  individual  hits  a                                                               
certain amount of  medical claims costs, then  those claims would                                                               
be  ceded to  the high  risk pool  and spread  across the  entire                                                               
insured market  through the existing assessments  that ACHIA uses                                                               
today to spread  the costs of the enrollees.   She said there are                                                               
different  ways   of  establishing  a   state-based  re-insurance                                                               
program, like condition-based or a  claims dollar amount, but the                                                               
essential concept  is that certain  claims costs would  be spread                                                               
across the entire insured market.                                                                                               
REPRESENTATIVE SADDLER surmised that  those higher costs would be                                                               
borne by the state.                                                                                                             
MS. TALLMAN agreed.   "Those costs would be spread  just like how                                                               
ACHIA  is  funded  today  through an  assessment  of  the  entire                                                               
insured market; it would function the same way," she said.                                                                      
REPRESENTATIVE SADDLER said  that would be to the  benefit of the                                                               
patient and the insurance companies, but the state would pay.                                                                   
MS. TALLMAN said, "It would come  at the cost of those purchasing                                                               
insurance, actually,  because it  is an assessment  that's spread                                                               
across  the  entire insured  market,  so  anybody that's  in  the                                                               
individual and group market would pay that assessment."                                                                         
2:22:31 PM                                                                                                                    
REPRESENTATIVE  JOSEPHSON said  there is  some dispute  about how                                                               
many would be covered with  Medicaid expansion; the low number is                                                               
around 9,000  and the high  number is 41,000--a  huge difference.                                                               
But if  there were  Medicaid expansion, he  asked, "would  any of                                                               
those dollars  translate or effectuate themselves  such that Moda                                                               
and Premera could meet this demand?"   He referred to the $700 in                                                               
claims paid  versus the $500  in premiums, and asked  if Medicaid                                                               
would fix that difference by lowering the uncompensated care.                                                                   
MS.  TALLMAN   answered  that   would  require   some  additional                                                               
analysis, but  she said she  is addressing the  individual market                                                               
today, and those eligible for  Medicaid expansion can go into the                                                               
individual market  to get  coverage and  get subsidies,  but they                                                               
are  eligible for  separate programs,  so  she is  not sure  what                                                               
impact Medicaid expansion would be on the private market.                                                                       
REPRESENTATIVE JOSEPHSON  asked about the  rates that are  set by                                                               
Premera and Moda, which may be  based partly on the income of the                                                               
two main  Alaska hospitals.  "Would  it seem logical to  you that                                                               
if, according to the high end,  there was $1.1 billion of revenue                                                               
that  came in  covering 41,000  people, that  that would  trickle                                                               
down and benefit  some of the people in the  individual market by                                                               
suppressing inflation?"                                                                                                         
MS. TALLMAN  said she understands  his point, but it  would still                                                               
be difficult to answer without doing additional analyses.                                                                       
2:25:02 PM                                                                                                                    
REPRESENTATIVE JOHNSON  asked if  the $4  million was  across all                                                               
business lines  or just across  those 7,000 outside of  the plan.                                                               
"Is that  your total loss for  the state, or is  that just within                                                               
those individual plans?"                                                                                                        
MS. TALLMAN  said the  loss is just  for that  individual market.                                                               
Premera  just evaluates  based on  each segment,  looking at  the                                                               
individual block and other components separately.                                                                               
REPRESENTATIVE JOHNSON  said, "We're  looking at  the state  as a                                                               
whole, and the  state pays an awful lot of  insurance being self-                                                               
insured, and we  provide a certain margin in that,  so I would be                                                               
curious to know across your total  lines if that $4 million holds                                                               
true or if we're really not that bad of a market to be in."                                                                     
2:26:11 PM                                                                                                                    
CHAIR OLSON  asked if there any  other states that are  doing the                                                               
supplemental rate insurance.                                                                                                    
MS. TALLMAN  said Oregon  has passed a  law that  would establish                                                               
their  supplemental  state  re-insurance program,  and  a  couple                                                               
other states might be looking into it.                                                                                          
CHAIR OLSON asked  if it is a  violation of ACA to have  a cap on                                                               
benefits.   He  spoke  of totally  debilitating long-term  cancer                                                               
with drugs  costing $70,000 a  month, "but it wouldn't  be capped                                                               
under ACA, is that correct?"                                                                                                    
MS.  TALLMAN  said yes,  so  under  a supplemental  program,  the                                                               
member would still receive all  of those benefits without any cap                                                               
or limits, "it's  just on the back end with  how the claims costs                                                               
are being  spread.   You would  set some  sort of  attachment and                                                               
build parameters  to help spread the  risk of the claims  cost on                                                               
the back end."                                                                                                                  
CHAIR  OLSON  asked if  it  would  be  optional or  mandatory  to                                                               
MS. TALLMAN  said it would depend  on how it is  designed, but it                                                               
could be permissible for any insurer to participate.                                                                            
CHAIR OLSON asked who pays for it.                                                                                              
MS. TALLMAN reiterated that it would  be based on how the current                                                               
high  risk  pool   works  today,  which  is   funded  through  an                                                               
assessment on  the entire insured market.   The idea would  be to                                                               
not  increase  the  assessment   going  forward,  but  there  are                                                               
different ways of designing it, she explained.                                                                                  
2:28:52 PM                                                                                                                    
CHAIR OLSON asked what the assessment has been.                                                                                 
MS. TALLMAN  said she  believes that it  has fluctuated  over the                                                               
past few  years, but  the average  is between  $8 million  to $10                                                               
million  annually.   From Premera's  perspective, the  assessment                                                               
has ranged from about $8 to $10 per member per month.                                                                           
REPRESENTATIVE SADDLER asked how the  projections of the costs to                                                               
private insurers  of no longer having  exclusions of pre-existing                                                               
conditions compare to actual costs of the past year.                                                                            
MS. TALLMAN said, "If we're paying  $723 in claims per member per                                                               
month compared  to $540 in  premiums in 2013, and  probably prior                                                               
years  it's been  much closer  to the  premium amount  that we've                                                               
been collecting."                                                                                                               
REPRESENTATIVE SADDLER asked about the projections.                                                                             
MS. TALLMAN  said she  does not know,  but Premera  anticipated a                                                               
lot more  people and potentially  healthier people  purchasing in                                                               
the pool overall,  and so it has  set the rates in  2014 based on                                                               
that. "Now we're looking at  rates based on the actual experience                                                               
that we're seeing."                                                                                                             
2:30:23 PM                                                                                                                    
JASON  GOOTEE, Regional  Manager, Moda  Health, Alaska,  said his                                                               
supervisor flew to Juneau specifically for this hearing.                                                                        
KRAIG  ANDERSON, Senior  Vice President  and Chief  Actuary, Moda                                                               
Health, said Moda  Health was known as ODS Health  Plans Inc. and                                                               
was a Delta Dental  Plan in 1955.  It is  the only "Delta Dental"                                                               
that does  medical insurance, he  noted.  In the  mid-2000s, Moda                                                               
took  over  marketing rights  for  Delta  Dental in  Alaska,  and                                                               
between  2005  and 2007,  "we  rolled  out individual  and  group                                                               
dental  and medical  products in  Alaska."   Moda established  an                                                               
office in Anchorage  in 2005, which serves as a  sales office and                                                               
account services, and  in 2013, ODS rebranded to Moda.   With the                                                               
passage of health  reform in 2010, there  were significant market                                                               
reforms, and perhaps  the most significant was the  impact to the                                                               
individual market by the requirement  of guaranteed issue and the                                                               
exclusion of  health statement underwriting.   Prior to  2014, in                                                               
order to  get individual coverage in  Alaska, a person had  to go                                                               
to  an insurance  company, fill  out an  application with  health                                                               
statement  information, and  the insurance  company could  either                                                               
accept or decline him or her  for that coverage.  Another option,                                                               
he said,  was that the  insurance company could actually  rate up                                                               
the policy  depending on  a person's  health condition  (but that                                                               
was  not a  practice  of Moda).   "So  that  was the  environment                                                               
before  healthcare  reform," he  stated,  and  that was  why  the                                                               
private  individual market  was  healthier than  average and  had                                                               
lower costs.                                                                                                                    
CHAIR OLSON asked about lifestyle choices, like smoking.                                                                        
MR. ANDERSON  said those  people were not  declined by  Moda, but                                                               
they may have had higher premiums.                                                                                              
2:35:26 PM                                                                                                                    
MR.  ANDERSON said  in June,  2012,  a company  called Lewis  and                                                               
Ellis did an  actuarial analysis of the exchange  and it factored                                                               
in the impacts that healthcare would  have on Alaska.  The report                                                               
had  some  interesting insights  that  relate  to the  individual                                                               
market, he stated.  It noted  three factors of health reform that                                                               
would increase  rates in the  individual market:  eliminating age                                                               
bans;  health  status  and  guaranteed  issue  restrictions;  and                                                               
minimum benefit coverage.   However, he said,  the primary factor                                                               
is  the  health status  and  guaranteed  issue restriction.    He                                                               
explained  that  the  primary  goal  of  health  reform  was  the                                                               
expansion of coverage  to the uninsured, and that was  to be done                                                               
through the exchanges.   The federal government set  up a program                                                               
to allow  for subsidized premiums for  people who earn up  to 400                                                               
percent of the  poverty level as long as they  purchased a policy                                                               
on an exchange.                                                                                                                 
MR.  ANDERSON  said  that  Lewis and  Ellis  estimated  that  the                                                               
average   cost  of   those  who   are   currently  uninsured   is                                                               
approximately  36% higher  than  the existing  population in  the                                                               
private  individual  market.   He  reiterated  that  the  private                                                               
individual market,  which was  health statement  underwritten and                                                               
healthier  on average,  and the  study "looked  at the  uninsured                                                               
people that are  out there in Alaska and estimated  they would be                                                               
36  percent  higher in  costs,  and  those  are the  people  that                                                               
they're trying  to move in  to the  market."  Although  Lewis and                                                               
Ellis said that the average cost  was 36 percent higher, they did                                                               
not know  how many of  the uninsured  would actually go  into the                                                               
private market even  with the subsidies, he added.   In 2013, the                                                               
uninsured  population  in  Alaska   was  estimated  to  be  about                                                               
138,000.   The  study estimated  that 54,000  of these  uninsured                                                               
would move into the private  market, but only 16,000 people ended                                                               
up being  on the  exchange--a very  small slice  of a  very large                                                               
pie.  He  said that that this small group  of people who actually                                                               
picked  up  policies in  the  exchanges  are  the ones  with  the                                                               
highest healthcare costs.                                                                                                       
2:39:00 PM                                                                                                                    
REPRESENTATIVE  JOSEPHSON said  the director  talked about  maybe                                                               
finding 6,000 more [people to get policies in the exchanges].                                                                   
MR. ANDERSON  said the Lewis and  Ellis report was done  in 2012,                                                               
so it gave a very  preliminary estimate of possibly 54,000 people                                                               
moving  into the  market.   He said  he thinks  22,000 is  a more                                                               
current estimate  of the number  of people expected to  move into                                                               
the exchange market.                                                                                                            
CHAIR  OLSON stated  that of  the  138,000, there  is probably  a                                                               
significant portion  that are  already covered,  and he  spoke of                                                               
Native Alaskans.                                                                                                                
MR. ANDERSON said that is possible.                                                                                             
CHAIR OLSON  suggested that Native  Alaskans and young  males are                                                               
not signing  up as projected.   Young males think they  are "bomb                                                               
proof,"  he explained.   Many  of his  daughters' friends  do not                                                               
have insurance but could; "a lot  of them work on the North Slope                                                               
or have the income..."                                                                                                          
MR.  ANDERSON  agreed;  many  of  the  uninsured  are  young  and                                                               
2:41:54 PM                                                                                                                    
REPRESENTATIVE  MILLETT  asked  if  he included  people  who  had                                                               
health benefits under the Indian Health Service as uninsured.                                                                   
MR. ANDERSON said he did not know.                                                                                              
2:42:27 PM                                                                                                                    
REPRESENTATIVE  REINBOLD asked  who  commissioned  the Lewis  and                                                               
Ellis study.                                                                                                                    
MR. ANDERSON said he cannot recall who commissioned it.                                                                         
REPRESENTATIVE REINBOLD  said that a  very valid source  told her                                                               
that 26,000  of these people  were working age,  childless adults                                                               
who had the ability to work.                                                                                                    
MR. ANDERSON  said, "When I  hear the term childless  adult, what                                                               
comes to mind  to me are those  who would have fallen  in the gap                                                               
of Medicaid expansion.  That's what's coming to mind for me."                                                                   
REPRESENTATIVE REINBOLD said the  "26,000 people were adults that                                                               
were completely capable of working,  did not get Medicaid because                                                               
they didn't have children, but  it was this uncovered population,                                                               
speaking of  possibly these  young men  that are  running around,                                                               
you know,  that feel like  they're invincible.   So, I  just want                                                               
you to  address that."  These  are people who are  not interested                                                               
in taking out a plan at this time, she added.                                                                                   
MR. ANDERSON said he believes they  would be included if they are                                                               
not receiving  insurance coverage.   The 26,000  childless adults                                                               
who do not have coverage would  be within the 138,000 number that                                                               
he referenced earlier.                                                                                                          
2:44:53 PM                                                                                                                    
MR.  ANDERSON noted  the additional  complication when,  in 2013,                                                               
people were  allowed to  keep the  coverage that  they had.   But                                                               
that  population who  extended their  health plans  from 2013  to                                                               
2014 tended to  be healthier and did not enter  the ACA risk pool                                                               
either.   So  these combined  factors have  resulted in  a higher                                                               
than average  risk profile for  the ACA than what  was predicted,                                                               
he stated.   Insurance  companies have to  price its  products to                                                               
the  average  market risk,  and  he  said the  Wakely  Consulting                                                               
[Group]  provides that  information to  Moda and  other insurance                                                               
companies.   Based  on  their information,  Moda  found that  the                                                               
average  morbidity  of  the  entire  Alaska  marketplace  was  26                                                               
percent higher  than what was  in Moda's  own pool of  people, he                                                               
noted, and this  was the main contributing factor  to Moda's rate                                                               
MR.   ANDERSON   stated    that   without   insurance   companies                                                               
participating in the  exchanges, it would not work.   There is no                                                               
mandate  for the  insurance  companies to  join,  and going  into                                                               
2014, there  were a number of  national carriers who "sat  it out                                                               
in  some  markets."    In   Alaska,  for  the  exchange  to  stay                                                               
competitive there needs  to be more than one option,  "and for us                                                               
to remain an option, we had  to raise our rates going into 2015."                                                               
He  said  Moda has  looked  at  2014  financial modeling  and  it                                                               
indicates  a loss.   A  big source  of the  loss is  the transfer                                                               
payment,  he said,  which  is one  of  the Three  Rs  (or a  risk                                                               
adjustment component),  where Moda  will be  making a  payment to                                                               
other  insurance carriers  because Moda  has better  than average                                                               
risk in its population.                                                                                                         
2:49:22 PM                                                                                                                    
MR.  ANDERSON  explained that  there  are  three risk  mitigation                                                               
programs as mentioned earlier:  reinsurance, risk adjustment, and                                                               
risk corridors.   The risk  adjustment program is  permanent, and                                                               
it  transfers money  between insurance  companies to  average out                                                               
the risk.  It is designed  so that insurance companies do not try                                                               
to manipulate their  risk pools.  The average risk  of the market                                                               
is much higher  than Moda's market, so Moda will  have a transfer                                                               
payment at the end  of the year, he clarified.   It is a zero-sum                                                               
game,  however,  because there  is  no  funding source  for  risk                                                               
adjustment  outside  of the  premium  that  is collected  by  the                                                               
market--it is  just moving that  premium between carriers  and it                                                               
is done on a retrospective basis, he added.                                                                                     
2:50:58 PM                                                                                                                    
REPRESENTATIVE REINBOLD  asked if  the projected  loss has  to do                                                               
with risk  or does  it also have  to do with  an increase  in the                                                               
number  of   Moda  employees,   bonuses,  salaries,   or  capital                                                               
MR. ANDERSON said it is primarily  a loss due to risk--"there are                                                               
no expenses  of the nature  you mentioned  that are in  excess of                                                               
what was planned."                                                                                                              
REPRESENTATIVE  REINBOLD   asked  if  he  was   anticipating  any                                                               
decrease in reimbursements.  [Mr. Anderson answered no.]                                                                        
2:52:18 PM                                                                                                                    
REPRESENTATIVE JOSEPHSON  asked if Moda believes  it will capture                                                               
more enrollees because the penalties  on tax returns are going to                                                               
escalate  and  because  the  [ACA]  website  is  working  better.                                                               
Nationally there has been an  increase of 10 million [enrollees],                                                               
and  he  asked   if  any  study  suggests  that   there  will  be                                                               
improvement in small states like Alaska.                                                                                        
MR. ANDERSON  said he believes that  the 8 million to  10 million                                                               
represents only  private insurance and does  not include Medicaid                                                               
expansion.   His question is really  the heart of the  matter and                                                               
the concern  that Moda  has.   "We would  anticipate more  of the                                                               
insured," he  said.  He  said there were difficulties  in getting                                                               
people  enrolled in  time and  there should  be more  enrollment.                                                               
The concern is that with  insurance companies raising their rates                                                               
as much  as they have, on  average, there may be  people dropping                                                               
REPRESENTATIVE   JOSEPHSON   asked,   "Why  is   Moda's   low-end                                                               
anticipated  increase  22  percent  and  Premera's  high  end  40                                                               
MR. ANDERSON  said he  does not  know how the  two ended  up with                                                               
different increases; this process is  confidential so he does not                                                               
know what other carriers are doing in the marketplace.                                                                          
2:55:02 PM                                                                                                                    
MR.  ANDERSON stated  that MODA  is committed  to the  individual                                                               
market  in  Alaska,  but  he  is  concerned  that  the  increases                                                               
necessitated  by  the  worsening  risk pool  will  make  it  more                                                               
difficult for  those who are  uninsured to purchase  policies and                                                               
for those who are currently  insured, to maintain those policies.                                                               
The intent is  to work with the Division of  Insurance to come up                                                               
with  ideas and  to provide  assistance to  ensure the  long-term                                                               
viability of the individual market, he concluded.                                                                               
2:55:58 PM                                                                                                                    
REPRESENTATIVE SADDLER  asked what  Moda is  working on  with the                                                               
Division of Insurance.                                                                                                          
MR.  ANDERSON said  he has  not had  those discussions  yet.   In                                                               
Oregon, there is  a technical advisory group, which  is hosted by                                                               
the  insurance  division  and  brings in  the  carriers  to  work                                                               
together on issues like this.   One issue is the supplemental re-                                                               
insurance program, and it is already  in place.  Ideas may result                                                               
in legislation that the technical  group can help draft, he said.                                                               
Secondly, the pool  can be expanded by putting in  all the people                                                               
who are in the individual  market and potentially expand the pool                                                               
to  those that  are  uninsured who  may  qualify for  significant                                                               
subsidies  so  that they  do  not  have  a lot  of  out-of-pocket                                                               
expense  to get  insurance, he  stated.   There are  a number  of                                                               
Alaskans  in the  uninsured population,  and  maybe Alaska  could                                                               
look at  merging the individual  and small group markets  at some                                                               
REPRESENTATIVE SADDLER  noted that  Ms. Hultberg  said this  is a                                                               
math problem, so [indiscernible].                                                                                               
2:58:41 PM                                                                                                                    
CHAIR OLSON  asked if  Premera and Moda  can talk  without having                                                               
the Division of Insurance in the room.                                                                                          
MR. ANDERSON said  Moda does meet with  other insurance companies                                                               
but  is bound  by restrictions  on what  can be  discussed.   "In                                                               
concept  we could  talk  about a  program as  long  as it  wasn't                                                               
related to how rates were developed."                                                                                           
2:59:45 PM                                                                                                                    
VINCE   O'SHEA,  Vice   President,  Pacific   Seafood  Processors                                                               
Association (PSPA),  said PSPA is  a trade association  with nine                                                               
members  companies that  operate in  Alaska, and  seven of  those                                                               
operate  shore-based plants,  buying  and processing  fish.   The                                                               
companies employ tens of thousands  of people and provide markets                                                               
to  Alaska fishermen.   Because  of ACA,  insurance expenses  are                                                               
rising.  He reminded the committee  that the members of PSPA "are                                                               
not price makers in  the markets that we sell to."   He said that                                                               
70 percent  of Alaska  seafood goes into  the global  market, and                                                               
PSPA produces  less than one percent  of the supply.   "So for us                                                               
to go to our customers and  say our expenses have gone up, simply                                                               
means they  will go  to somebody  else that  will meet  the price                                                               
that they're  willing to offer."   He said that  includes factory                                                               
trawlers,  which are  not covered  by  the same  rules that  PSPA                                                               
operates under.   If labor costs go up, his  members must look at                                                               
new ways  to reduce costs, and  that will include a  reduction in                                                               
employees   through  automation   and   through  exporting   work                                                               
overseas.  He  noted that Alaska is already  sending $1.4 billion                                                               
a  year worth  of seafood  to China,  South Korea,  and Southeast                                                               
Asia,  which then  gets shipped  to other  markets including  the                                                               
United States.   He said PSPA members want their  workers to have                                                               
health insurance,  "but we also need,  at the end of  the day, to                                                               
be able to  produce fish at a  price that we're able  to sell for                                                               
more than what it costs us to produce the fish."                                                                                
REPRESENTATIVE  SADDLER surmised  that  Mr.  O'Shea's message  is                                                               
that there is a national  desire to provide health insurance, but                                                               
it might be pricing your products out of the market.                                                                            
MR. O'SHEA said  health insurance alone will not  put his members                                                               
out of the market, but it will  add to the burden of competing on                                                               
the global market.                                                                                                              
3:04:24 PM                                                                                                                    
REPRESENTATIVE  MILLETT   asked  about  insurance   for  seasonal                                                               
MR. O'SHEA  said it  depends on  the company,  but under  the ACA                                                               
there  will  be   standards,  and  some  of   their  workers  are                                                               
benefitting from the program.  He  said there will be winners and                                                               
losers.  At  least one of the  companies in PSPA is  covered by a                                                               
union contract, so that goes into the equation, he added.                                                                       
3:05:48 PM                                                                                                                    
BILL  STREUR,  Commissioner,  Alaska  Department  of  Health  and                                                               
Social Services (DHSS),  noted that the committee heard  a lot of                                                               
numbers, which  seem to be  getting a little  mixed up.   He said                                                               
that the  figure for  the number of  uninsured, 134,000,  is very                                                               
close to DHSS's  estimate "of about 143,000 at the  outside."  He                                                               
added that 41,000  is very close to the total  number of eligible                                                               
people  under Medicaid  expansion, and  DHSS has  been using  the                                                               
figure of 9,000  people who would be in the  gap--those who would                                                               
be in need of  either chronic or acute medical care  (but it is a                                                               
difficult  number  to estimate).    A  consulting firm  estimated                                                               
Alaska's Medicaid  expansion to  be 44,000,  and of  those, about                                                               
19,000 would  be in the  gap population,  he stated.   "Those are                                                               
the folks  that are under  100 percent of poverty  level, largely                                                               
childless  adults, [and]  not  necessarily healthy.    I want  to                                                               
clarify  that because  that  9,000 number  that  we were  talking                                                               
about  is  folks  that  may  have an  acute  or  chronic  medical                                                               
condition that prevents them from being  able to work."   He said                                                               
that is  where there has been  difficulty in looking at  that gap                                                               
population  to  see what  the  healthcare  needs  would be.    He                                                               
offered to  create a  table that includes  the figures  that were                                                               
spoken about today.                                                                                                             
REPRESENTATIVE MILLETT  asked how many people  qualify for Indian                                                               
Health Services out of the 143,000 uninsured people.                                                                            
COMMISSIONER STREUR said he does  not have that number today, but                                                               
"for some  reason 40 percent  of that sticks  in my mind."   That                                                               
would be the percentage of  those covered under the Indian Health                                                               
Services, he clarified.                                                                                                         
REPRESENTATIVE MILLETT  asked, "Between the 44,000  and the 9,000                                                               
that  we're talking  about that  are  uninsured ...  have any  of                                                               
those  been  identified  as being  covered  under  Indian  Health                                                               
Services  or  are  they just  eligible  for  Medicaid  expansion,                                                               
whether or not they qualify  for the benefits under Indian Health                                                               
COMMISSIONER STREUR  said the 44,000 includes  tribal members who                                                               
would be eligible [for Medicaid  expansion], and the 9,000 leaves                                                               
out  tribal members--"We're  talking about  folks who  we believe                                                               
have extremely limited access to healthcare."                                                                                   
REPRESENTATIVE MILLETT  asked if the  state is doing  anything to                                                               
identify those people who are  covered by Indian Health Services,                                                               
and getting them in contact with those benefits.                                                                                
COMMISSIONER STREUR said  DHSS and the Indian  Health Service are                                                               
working on that.   In the Medicaid population alone,  "we have to                                                               
do a  better job of  ensuring that Indian Health  Service members                                                               
are receiving  services within  the IHS system."   He  added that                                                               
about 40 percent  of the total expenses "we" pay  in Medicaid for                                                               
tribal members is  delivered in the IHS system and  60 percent is                                                               
going outside the tribal system.                                                                                                
REPRESENTATIVE SADDLER  asked about the progress  of the Medicaid                                                               
Reform Advisory Group.                                                                                                          
COMMISSIONER STREUR said  the meeting in October may  be the last                                                               
one   before  giving   recommendations   to   the  governor   and                                                               
legislature.   He added  that he  believes the  report is  due in                                                               
3:12:21 PM                                                                                                                    
REPRESENTATIVE REINBOLD  asked how  the healthcare  providers are                                                               
doing in the marketplace.                                                                                                       
COMMISSIONER  STREUR  said  the  United States  has  the  highest                                                               
healthcare costs  in the world, and  Alaska is one of  the states                                                               
with the highest  healthcare costs in the country,  so "I believe                                                               
that  the  providers are  doing  well."    All of  the  hospitals                                                               
participate  in Medicaid  and nearly  all of  the physicians  do.                                                               
"We  have incredible  access,  but  we also  pay  140 percent  of                                                               
Medicare,"  he  said.    Most  states pay  about  70  percent  of                                                               
Medicare, "so we're paying about double," he added.                                                                             
REPRESENTATIVE REINBOLD asked if there are enough providers.                                                                    
COMMISSIONER STREUR said  he cannot answer that with  any kind of                                                               
authority.   He noted  that there are  challenges with  access to                                                               
care, and  that may  be in regards  to medical  specialties, like                                                               
finding a dermatologist  in Southeast Alaska, but  because of the                                                               
innovations  of  the  tribal partners,  the  development  of  the                                                               
clinics in the rural areas,  and the sophistication of the tribal                                                               
health centers  in rural  Alaska, "we  do have  incredible access                                                               
for the amount of road systems we have in this state."                                                                          
REPRESENTATIVE REINBOLD asked  if Commissioner Streur anticipates                                                               
a shortage of providers because of the Affordable Care Act.                                                                     
COMMISSIONER  STREUR  said he  cannot  answer  that; however,  he                                                               
believes  that with  additional Alaskans  getting insured,  there                                                               
will be a greater need for care.                                                                                                
3:16:15 PM                                                                                                                    
CHAIR OLSON noted  that tomorrow there will  be public testimony.                                                               
He said he  had invited Senators Begich and  Murkowski today, but                                                               
they did not attend.                                                                                                            
3:17:14 PM                                                                                                                    
There being no  further business before the  committee, the House                                                               
Labor and  Commerce Standing Committee  meeting was  adjourned at                                                               
3:17 p.m.                                                                                                                       

Document Name Date/Time Subjects
Labor and Commerce 10-7-2014 Div of Insurance Presentation ACA.pdf HL&C 10/7/2014 1:00:00 PM
Affordable Care Act
Labor and Commerce 10-7-2014 Press Release Premera 9-5-2014.pdf HL&C 10/7/2014 1:00:00 PM
Affordable Care Act
Additional Supplemental bulletins and letters for the Labor Commerce hearing on October 7 2014.pdf HL&C 10/7/2014 1:00:00 PM
Affordable Care Act
Written Testimony by Kraig Anderson-Moda to HL&C Committee 10-7-2014.pdf HL&C 10/7/2014 1:00:00 PM
Affordable Care Act