04/22/2002 03:25 PM House L&C

Audio	Topic

* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled

Schedule
Detailed Minutes
Documents
Doc

pdf txt

ALASKA STATE LEGISLATURE HOUSE LABOR AND COMMERCE STANDING COMMITTEE April 22, 2002 3:25 p.m. MEMBERS PRESENT Representative Lisa Murkowski, Chair Representative Andrew Halcro, Vice Chair Representative Kevin Meyer Representative Norman Rokeberg Representative Harry Crawford Representative Joe Hayes MEMBERS ABSENT Representative Pete Kott COMMITTEE CALENDAR SPONSOR SUBSTITUTE FOR HOUSE BILL 315 "An Act allowing employers that are small businesses, small nonprofit organizations, or small associations for insurance purposes to join state employee insurance coverage as a group; and providing for an effective date." - MOVED CSSSHB 315(L&C) OUT OF COMMITTEE HOUSE BILL 520 "An Act relating to business licenses, business license endorsements, and business license and license endorsement fees, to a trade and business development fund, and to the international trade and business endowment; and providing for an effective date." - MOVED HB 520 OUT OF COMMITTEE HOUSE JOINT RESOLUTION 49 Relating to preparation of a joint state-federal research and development plan. - MOVED CSHJR 49(L&C) OUT OF COMMITTEE PREVIOUS ACTION BILL: HB 315 SHORT TITLE:GROUP HEALTH INSURANCE FOR PRIVATE GROUPS SPONSOR(S): REPRESENTATIVE(S)ROKEBERG Jrn-Date Jrn-Page Action 01/14/02 1957 (H) PREFILE RELEASED 1/11/02

01/14/02 1957 (H) READ THE FIRST TIME - REFERRALS

01/14/02 1957 (H) REFERRALS Committee STEVENS, FATE, BILL: HB SHORT TITLE:BUSINESS LICENSE FEES/BUS DEVELOPMNT FUND SPONSOR(S): LABOR & COMMERCE Jrn-Date Jrn-Page Action REFERRALS BILL: HJR SHORT TITLE:STATE-FEDERAL JOINT RESEARCH PLAN SPONSOR(S): LABOR & COMMERCE Jrn-Date Jrn-Page Action REFERRALS WITNESS REGISTER JANET SEITZ, Staff to Representative Norman Rokeberg Alaska State Legislature Capitol Building, Room 116 Juneau, Alaska 99801 POSITION STATEMENT: Testified on behalf of the sponsor 315. GUY BELL, Director Health Benefits Section Division of Retirement & Benefits Department of Administration PO Box 110203 Juneau, Alaska 99811-0203 POSITION STATEMENT: During the discussion of SS315. MARY ROSENZWEIG, Director Substance Abuse Directors Association Anchorage, Alaska 99503 POSITION STATEMENT: Testified that passage of SSHB 520 department's economic development and trade activities. CATHERINE REARDON, Director Division of Occupational Licensing Department of Community & Economic Development PO Box 110806 Juneau, Alaska 99811-0806 POSITION STATEMENT: During discussion of 520 SCOTT McMURREN McMurren & Goodman Anchorage, Alaska 99507 POSITION STATEMENT: Testified in support of ACTION NARRATIVE TAPE 02-62, SIDE A Number 0001 CHAIR LISA MURKOWSKI called the House Labor and Commerce Standing Committee meeting to order at 3:25 p.m. Representatives Murkowski, Halcro, Meyer, Rokeberg, and Crawford were present at the call to order. Representative Hayes arrived as the meeting was in progress. HB CHAIR MURKOWSKI announced that the first order of business would be SPONSOR SUBSTITUTE FOR HOUSE BILL 315, "An Act allowing employers that are small businesses, small nonprofit organizations, or small associations for insurance purposes to join state employee insurance coverage as a group; and providing for an effective date." Number 0076 REPRESENTATIVE HALCRO moved to adopt Version 22-LS1177\B, Craver, 4/18/02, as the working document. There being no objection, Version B was before the committee. REPRESENTATIVE ROKEBERG, speaking as the sponsor of informed the committee that [Version B] incorporates changes in intent language in the legislation. He highlighted the following substantive change: on page 2, line 17, the language "stop loss" was deleted and "lower cost limited benefit and high deductible" language was inserted. JANET SEITZ, Staff to Representative Norman Rokeberg, Alaska State Legislature, testified on behalf of the sponsor 315. of Alaska to obtain a policy or policies of group health care insurance for small businesses defined as two to fifty employees, nonprofit organizations, small associations for insurance purposes as a group, and special service organizations. Special service organizations can be an individual employed in one of these entities, corporations, or nonprofit organizations who deal with childcare facilities, operating a residential childcare facility, foster home, maternity home, assisted living home, community-based center, and home care. She noted that the aforementioned entities are all licensed by the state and the licensing authorities to which the bill refers. MS. SEITZ specified that this legislation is an effort to form a pool of people who would be able to provide insurance. The state would put out a request for proposals (RFP) and thus the state wouldn't self-insure this group as it does its own employees. This would be offered through private insurance carriers and the businesses and nonprofit organizations could join. As specified in the bill, the entities would have to submit a written request to the department, receive confirmation from the commissioner, and pay the premiums. Number 0311 CHAIR MURKOWSKI asked if there is any procedure in which an entity could be rejected. She related her understanding that the application has to be filed and those groups defined in the legislation would be [in the pool]. MS. SEITZ replied yes. She pointed out that on page 3, subsection (d) states that a qualified entity must certify that it's going to meet the definition, agree to pay the premiums, sign a statement under penalty of unsworn falsification and fraud in order to register. REPRESENTATIVE ROKEBERG pointed out that in his eight years serving on the House Labor and Commerce Standing Committee he has fought to allow private insurance companies to enter the State of Alaska. However, there has been a great deal of frustration with regard to the escalation of insurance costs. The affordability of health insurance costs for nonprofits in this state is coming in to question now, which is also the case for small businesses. This has become a very serious problem, he said. Representative Rokeberg expressed his hope that having a larger number of people covered and a well designed menu with a potentially higher stop loss deductible and various other menus, will allow a lower cost, more affordable, and higher quality plan to be offered. He noted that the state is redefining what it takes to be a multiple employer welfare arrangement (MEWA). Therefore, this legislation attempts to bring together those people who can't readily join together and offer them a mechanism to lower their health costs. REPRESENTATIVE CRAWFORD recalled the discussion with regard to [the definition of "association for insurance purposes"]. He also recalled that the House State Affairs Standing Committee discussed eliminating the upper limit defining how many employees an entity could have and be considered [an association for insurance purposes]. REPRESENTATIVE ROKEBERG related that it would probably work to amend the language such that it referred to business enterprises with two to fifty employees, which would be consistent with the state's insurance statutes. Then nonprofit organizations could be exempt from the cap. MS. SEITZ pointed out that Version B only limits the two to fifty employees for an association for insurance purposes and businesses. Nonprofit organizations don't have an employee cap included in the definition on page 4, lines 2-4. CHAIR MURKOWSKI directed attention to page 3, line 15, which refers to "composed of businesses or nonprofit organizations or both". Therefore, she questioned how the employee cap wouldn't be required for nonprofit organizations. MS. SEITZ pointed out that page 3, lines 14-19, is the definition of "association for insurance purposes". In that particular group the combined total can be two, but not more than fifty employees. An "association for insurance purposes" can be a group of businesses or nonprofits or both. However, if an entity is simply a nonprofit, then that entity would fall under the definition on page 4 that doesn't specify an employee limit. In response to Representative Rokeberg, Ms. Seitz reiterated that the definition on page 3, line 19 is the definition of the "association for insurance purposes" if the groups come together. CHAIR MURKOWSKI interjected that an "association for insurance purposes" is different than a nonprofit organization. REPRESENTATIVE HAYES inquired as to whether there is anything under the [definition of] "association for insurance purposes" that [would allow] a self-insured individual to join under the large umbrella of "association for insurance purposes". MS. SEITZ explained that a business that wants to join an "association for insurance purposes" could be a group of people who come together and form an association for insurance purposes. Furthermore, a special services organization that is a single employee and meets the definition would qualify. Number 0815 GUY BELL, Director, Health Benefits Section, Division of Retirement & Benefits, Department of Administration, said that he would discuss the process were this legislation enacted. He informed the committee that it would be the department's intent to work with interested groups and a professional benefits consultant to design a plan(s) that would meet the identified needs of those groups with which the department is working. The plan would be developed by either a survey or focus groups or a combination of the two. With the assistance of [the survey and/or the focus groups], the department would develop an RFP for a fully insured product(s). The best proposal would then be selected. There is a process of approval of the participants through the commissioner of the department. At that point, those who participate would pay premiums directly to the insurance company and the participants would work directly with the insurer. He noted that the premiums wouldn't be paid through the State of Alaska. The department would have a limited role as a continuing liaison [in plan design] with nonprofits and businesses that participated. MR. BELL informed the committee that [this legislation] doesn't contemplate a state subsidy. The fiscal note reflects the funds necessary for startup costs. Furthermore, there is no state liability for this because the liability would be taken on by the insurance company insuring the health plan. This proposed plan would be completely separate from any state health plan. He explained that this proposed plan would effectively be private insurance subject to the Employee Retirement and Income Security Act of 1974 (ERISA) and would be fully insured. Number 0955 REPRESENTATIVE MEYER surmised then that this proposed plan may be similar to what the state employees have, but may be better or worse depending upon what is negotiated between the parties; the state won't have any involvement. MR. BELL agreed and pointed out that when the department issues the RFP it will have specific plan designs in mind, which may include an array of options. There will also be a price scheme that will be anticipated before issuing the RFP. REPRESENTATIVE MEYER related his understanding that the savings to the nonprofits or associations will be in regard to the ability of various groups to come together as one in order to obtain more affordable rates. MR. BELL replied yes. By pooling, risk is reduced as would administrative overhead, he said. In further response to Representative Meyer, Mr. Bell confirmed that the cost to the state would be for the one staff person overseeing the program and some contractual services for a benefits consultant for plan design. Number 1052 REPRESENTATIVE HALCRO inquired as to whether the $133,000 of upfront costs would be reimbursed over the course of the coming years. MR. BELL answered that the department doesn't contemplate a reimbursement to the general fund (GF) for that. The costs in future years would be a small assessment that the department would make against the plan in order to cover the department's modest ongoing costs. REPRESENTATIVE HALCRO asked what would happen if no one responds to the RFP; would the $132,000 worth of work be for naught. MR. BELL agreed, but indicated that the cost could be less than the full amount. He related his belief that if there were no responses, the department would try to determine why there were no responses and then put out a modified RFP. Number 1139 REPRESENTATIVE MEYER inquired as to how many people this legislation would cover. MR. BELL answered that potentially this could cover quite a large number of people, although it's hard to say how many will participate. In further response to Representative Meyer, Mr. Bell said that the department believes there should be enough interested people that there should be some interest in bidding on the RFP. Number 1188 MARY RAYMOND, The Ark, testified via teleconference. She remarked that this [legislation] is something to be excited about because health insurance is of grave concern. Ms. Raymond informed the committee that she is a coordinator for a small assisted living home for which this matter is of concern. The premiums [for the small assisted living home] are small in light of what individuals receive in payments. Ms. Raymond concluded by thanking the committee for this legislation, which she hoped would [come to fruition]. Number 1250 MARY ROSENZWEIG, Director, Substance Abuse Directors Association, testified via teleconference. She began by saying that this legislation comes along at a very critical time for those agencies delivering substance abuse treatment and prevention programs around the state. Ms. Rosenzweig informed the committee that the association has approximately 57 programs statewide. That membership was surveyed with regard to insurance premiums [which produced the following information]. Over a two-year period, insurance premiums on average have increased 36 percent per employee. The premiums for health insurance amounted to about 5.8 percent of the agency's operating budget in the year 2000. In 2002 health insurance premiums are 7.6 percent of the [association's] operating budget. Ms. Rosenzweig said, "This means that the state is not getting good value for its dollar; it means less services that they're able to purchase for the same dollar." These sudden increases have resulted in reducing the level of benefits by cutting prevention and screening programs and dental and vision coverage. Furthermore, deductibles are increasing. Over the past two years deductibles have risen from an average of $300 to $408. Ms. Rosenzweig stated, "For our industry, we have not been able to increase the wage scale in years because the payors are not paying any more for the services." This industry is at a critical time with work force retention; employees can't stay where there is no health insurance. Ms. Rosenzweig urged the committee to provide relief and assistance that costs the state little. In response to Representative Rokeberg, Ms. Rosenzweig agreed to provide her information to his office. Number 1412 SANDY TURLEY, Seaview Community Services, testified via teleconference. She informed the committee that Seaview Community Services is a nonprofit human services agency in Seward. Ms. Turley read the following testimony: Seaview employees were covered by Humana and so Humana withdrew their insurance coverage from all of Alaska in 2000. As a small agency with 40 employees, finding an alternative was difficult. We were fortunate to be eligible to join the United Way Nationwide Group - Blue Cross Blue Shield plan out of Maryland. In FY [fiscal year] '01 while we were on the United Way's Blue Cross Blue Shield, our rates were the best we had ever had. The Alaska United Way agencies were forced out of the national BCBS [Blue Cross Blue Shield] plan as of December 31, 2001, in the middle of our fiscal year, without expenses and revenues already budgeted. As we begin looking for alternatives, there were few options and the rates we were quoted were astronomical. The best rates were 150 percent more than the United Way Blue Cross Blue Shield rates. We worked for three months to come up with an affordable plan. We were forced to drop dental, prevention, prescription, mental health, and chemical dependency coverage in order to be able to continue to offer health care to our employees that we could afford [and] that was within our budget. The additional cost was shared by the employees with an increased copay and by the agency with an increased premium cost. We could not maintain the same level of coverage because neither agency or the employees could bear the cost of the increase. We had 22 employees on insurance in December and now, in April, we only have 13. We are currently at risk of not qualifying for group rates because of not enough enrollees. The rise in health care costs and decrease in coverage are an immediate and serious threat to recruitment and retention. I fear that dissatisfied employees will start looking for other jobs with better insurance and that we will be unable to hire new people because our insurance is just not competitive. As a small agency, losing one ore two key positions can threaten our ability to provide services for an entire program. Passage of House Bill 315 is a solution to the serious problem of affordable health insurance for our agency. Number 1529 SUSAN SCUDDER, Executive Director, Council on Domestic Violence & Sexual Assault, Department of Public Safety (DPS), explained that the Council on Domestic Violence administers state and federal funds to more than 21 programs around the state. These are community-based nonprofit programs that have experienced amazing increases in their health insurance costs over the past few years. The increases have reached the point at which staff positions have been cut in order to maintain the same level of health insurance, which results in fewer services to the community. Ms. Scudder emphasized the importance of these programs having qualified staff that can obtain benefits. She noted that these jobs aren't the best paying jobs and thus when the benefits are cut, it becomes nearly impossible to recruit good people for these jobs. Number 1664 MARIE DARLIN, AARP, said that AARP is thankful that this legislation has been introduced because this has been of concern in reviewing the long-term care needs. Many small organizations are attempting to meet [long-term care] needs and often [these small organizations are] home and community-based care. These home and community-based care organizations have always had the concerns surrounding employee benefits. [Without benefits], these organizations lose employees and the organization's ability to provide services is lost. Therefore, AARP urges the committee's support of HB CHAIR MURKOWSKI announced that the final order of business would be HOUSE BILL, "An Act relating to business licenses, business license endorsements, and business license and license endorsement fees, to a trade and business development fund, and to the international trade and business endowment; and providing for an effective date." Number 2061 AMY ERICKSON, Staff to Representative Lisa Murkowski, Alaska State Legislature, informed the committee that 520] development in the state. Those benefiting from this service will fund the program. CHAIR MURKOWSKI related that Representative Lancaster has been concerned that the licensing fees have remained unchanged since pre-statehood days, which she indicated was probably the initial [impetus] for HB Number 1933 JEFF BUSH, Deputy Commissioner, Office of the Commissioner, Department of Community & Economic Development, informed the committee that the department is supportive of HB number for the [International Trade and Business Endowment] and thus the endowment earnings are replaced with $300,000 of constant and predictable income through the business licensing program. Mr. Bush said that HB accounted for separately and dealt with as a completely independent program. REPRESENTATIVE HAYES recalled that with the increase in the fee for a tobacco endorsement there was discussion that some people would drop [the tobacco endorsement because of the increase]. Therefore, he questioned whether these people would now be impacted by HB CHAIR MURKOWSKI recalled that the endorsement procedure is different than the business license procedure. Therefore, although a business may have various endorsements for its outlets, only one business license would be required per business. Number 1012 MS. REARDON, in response to Representative Rokeberg, confirmed that the business licenses are biennial licenses, per Therefore, the $25 annual increase under HB MR. BUSH answered that one of Representative Lancaster's motivations with this bill was to find a way to fund the program and Legislative Finance advised him that the business license may be a method of funding for this program. Mr. Bush said that this program was created through a lot of work of the past several years and it still isn't operational on a statewide basis. Although everyone who has viewed demos of the program or has worked with program have received it well, it's impossible to maintain without an ongoing funding source. REPRESENTATIVE ROKEBERG surmised then that the endowment would [generate] about $250,000 a year. MR. BUSH confirmed that would be the case at 5 percent. In further response to Representative Rokeberg, Mr. Bush said that the program's budget was to be $496[,000]. Number 0255 REPRESENTATIVE HAYES recalled that the Senate proposed using the $5 million currently in the endowment for tourism. Therefore, this endowment isn't really protected. MR. BUSH acknowledged that there is a proposal to use the endowment's funds to pay for the emergency funding that the tourism industry requested after the events of September 11, CHAIR MURKOWSKI, upon determining there was no one else to testify, closed public testimony. REPRESENTATIVE HAYES remarked that it's sad when entities with no vision take money and fill a void elsewhere rather than where the money is necessary. He expressed the need [for legislators] to be truthful with constituents with regard to the state of Alaska's budget. He indicated his dislike of the with the budget. Therefore, he recommended that if the money in the endowment is going to be used for something else, then it should be laid on the table. Furthermore, in such a case the endowment should be eliminated and a steady stream of money should be created for the [programs] desired. Number 0110 REPRESENTATIVE HAYES moved to report HB 520] receipts, which is unconstitutional. He then noted his support of the Alaska Economic Information System. Number 0189 CHAIR MURKOWSKI remarked that she wasn't sure whether Representative Rokeberg supported or opposed the HB 520. REPRESENTATIVE MEYER said he didn't think business is overwhelmingly opposed to increasing the license fee or there would have been testimony to indicate so. Furthermore, the [Alaska Chamber of Commerce] usually puts out something for the businesses. REPRESENTATIVE ROKEBERG interjected that he had not heard 520 until the related his belief that no one in the state knows this is happening; small businesses are working. REPRESENTATIVE MEYER indicated that businesses join the [Alaska Chamber of Commerce] so that someone watches out for things such as this. Number 0336 REPRESENTATIVE HALCRO agreed that folks are tired of piece meal approaches. "The fact is until such time as we get some leadership in this building to ... chart a course for the future and determine how we're going to pay for some of these programs like the information services, we're left with this as our only device," he charged. He pointed out that the prior legislation, SSHB 315, fiscal note. Therefore, he saw two options. One of which would be to start asking people to pay their fair share now or stop trying to solve the world's problems for nothing. REPRESENTATIVE CRAWFORD noted his agreement with Representative Rokeberg in that HB against HB that doesn't come as part of a [long-term fiscal] plan. REPRESENTATIVE ROKEBERG, with regard to SS HB 4 fiscal note. Number 0569 REPRESENTATIVE HAYES restated his motion to report HJR CHAIR MURKOWSKI announced that the final order of business would be HOUSE JOINT RESOLUTION 49, Relating to preparation of a joint state-federal research and development plan. AMY ERICKSON, Staff to Representative Lisa Murkowski, informed the committee that this legislation, sponsored by the House Labor and Commerce Standing Committee, was brought to the committee by Mead Treadwell, Artic Research Commission. She provided the following testimony: This [resolution] acknowledges the importance of research and development as a means to drive and diversify Alaska's economy. It further recognizes that Alaska's economy is heavily dependent on the research and development activities of public, private, and academic sectors to attract investment, jobs, and revenue to the state. This resolution requests that state and federal agencies work in tandem to develop a joint research and development plan to help expand and diversify Alaska's economy, strengthen and maintain its research institutions, and protect the health of Alaskans and Alaska's environment, and request the plan be presented to the legislature in 2003 to identify areas of high economic potential from resource development and tourism on state and federal lands. MS. ERICKSON noted that the companion bill in the Senate to which there were two amendments in Senate committees. She pointed out that the acronym WAMI was used and is incorrect because it's now WWAMI (Washington, Wyoming, Alaska, Montana, Idaho Medical Education Program). Furthermore, she wasn't sure how well known the program is to merely use the acronym. MS. ERICKSON, in response to Chair Murkowski, explained that one of the amendments in the Senate deleted "and the Conservation and Reinvestment Act" on page 2, line 8, after "Oil Spill Recovery Institute". She indicated that there was confusion regarding whether that is actually in law. Furthermore, on page 2, line 30, the language "in the state" was replaced with "waters and the air space of Alaska". Number 0785 REPRESENTATIVE HAYES noted his support of ADJOURNMENT There being no further business before the committee, the House Labor and Commerce Standing Committee meeting was adjourned at 5:15 p.m.

Document Name Date/Time Subjects