04/08/2005 03:15 PM House LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| Confirmation Hearing(s) | |
| Board of Marital and Family Therapy | |
| State Board of Registration for Architects, Engineers, and Land Surveyors | |
| Alaska Labor Relations Agency | |
| Board of Psychologist and Psychological Associate Examiners | |
| Regulatory Commission of Alaska | |
| HB29 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 29 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
HOUSE LABOR AND COMMERCE STANDING COMMITTEE
April 8, 2005
3:17 p.m.
MEMBERS PRESENT
Representative Pete Kott
Representative Bob Lynn
Representative Norman Rokeberg
Representative Harry Crawford
Representative David Guttenberg
MEMBERS ABSENT
Representative Tom Anderson, Chair
Representative Gabrielle LeDoux
COMMITTEE CALENDAR
CONFIRMATION HEARING(S)
Board of Veterinary Examiners
Alfred Agree - Trapper Creek
Timothy L. Bowser, D.V.M. - Soldotna
Cynthia Ann Trout, D.V.M. - Anchorage
- CONFIRMATION(S) ADVANCED
Board of Public Accountancy
Max E. Mertz - Juneau
Catherine L. Wilson - Tok
Carla J. Bassler - Anchorage
Kenneth L. Mayer - Kenai
Christy Morse - Anchorage
- CONFIRMATION(S) ADVANCED
Board of Marital and Family Therapy
Kerry L. Rasmussen - Ward Cove
Martha Swink - Anchorage
- CONFIRMATION(S) ADVANCED
State Board of Registration for Architects, Engineers, and Land
Surveyors
Richard C. Heieren - Fairbanks
Harley H. Hightower - Anchorage
Mark G. Morris - Juneau
- CONFIRMATION(S) ADVANCED
Board of Barbers and Hairdressers
Alice B. Massie - Wasilla
- CONFIRMATION(S) ADVANCED
Alaska Labor Relations Agency
Gary A. Atwood - Fairbanks
Aaron T. Isaacs, Jr. - Klawock
Colleen E. Scanlon - Ketchikan
- CONFIRMATION(S) ADVANCED
Board of Nursing
Terri S. Olson - Anchorage
- CONFIRMATION(S) ADVANCED
Board of Psychologist and Psychological Associate Examiners
Camille O. Carlson - Fairbanks
Destiny Sergeant - Juneau
- CONFIRMATION(S) ADVANCED
Regulatory Commission of Alaska
Anthony A. Price - Anchorage
- CONFIRMATION(S) ADVANCED
HOUSE BILL NO. 29
"An Act relating to health care insurance and to the
Comprehensive Health Insurance Association; and providing for an
effective date."
- HEARD AND HELD
PREVIOUS COMMITTEE ACTION
BILL: HB 29
SHORT TITLE: HEALTH CARE INSUR./ COMP HEALTH INS. ASSN
SPONSOR(S): REPRESENTATIVE(S) ROKEBERG
01/10/05 (H) PREFILE RELEASED 12/30/04
01/10/05 (H) READ THE FIRST TIME - REFERRALS
01/10/05 (H) L&C, HES
04/08/05 (H) L&C AT 3:15 PM CAPITOL 17
WITNESS REGISTER
ANTHONY A. PRICE, Appointee
to the Regulatory Commission of Alaska (RCA)
Anchorage, Alaska
POSITION STATEMENT: Spoke as an appointee to the RCA.
CECIL BYKERK, Executive Director
Alaska Comprehensive Health Insurance Association
(No address provided)
POSITION STATEMENT: Encouraged the committee to consider HB 29.
SALLIE STUVEK, Human Resources Director
Fairbanks North Star Borough
Fairbanks, Alaska
POSITION STATEMENT: Expressed concerns with HB 29.
CHRISTINE SASSE, Finance Director
City of Valdez
Valdez, Alaska
POSITION STATEMENT: Characterized HB 29 as an unfunded mandate,
and suggested that those who don't provide health insurance
should be required to pay the assessment rather than those who
do provide it.
MELODY DOUGLAS, Chief Financial Officer
Kenai Peninsula Borough School District
Kenai, Alaska
POSITION STATEMENT: Testified in opposition to HB 29.
RICHARD CAMPBELL, General Services Director
Kenai Peninsula Borough
Kenai, Alaska
POSITION STATEMENT: Testified in opposition to HB 29.
COLLEEN SAVOIE
Marsh Inc. USA
Anchorage, Alaska
POSITION STATEMENT: Testified in opposition to HB 29.
MATT LARKIN
Willis of Alaska Inc.
Anchorage, Alaska
POSITION STATEMENT: Expressed concerns with HB 29.
MIKE GALLAGHER, Business Manager & Secretary/Treasurer
Laborers International Union of North America Local 341
Anchorage, Alaska
POSITION STATEMENT: Testified in opposition to HB 29.
ROSEMARIE KALAMARIDES, Administrator
Alaska Teamster-Employer Welfare Trust
Anchorage, Alaska
POSITION STATEMENT: Testified in opposition to HB 29.
JOHN GEORGE, Lobbyist
American Family Life Assurance Company (AFLAC)
Juneau, Alaska
POSITION STATEMENT: Characterized HB 29 as an advance over the
current situation.
KATIE CAMPBELL, Life/Health Actuary, Division of Insurance,
Department of Commerce, Community, & Economic Development
Juneau, Alaska
POSITION STATEMENT: During discussion of HB 29, answered
questions.
LINDA HALL, Director
Division of Insurance
Department of Commerce, Community, & Economic Development
Juneau, Alaska
POSITION STATEMENT: During discussion of HB 29, she noted her
support of Representative Rokeberg's plan because the ACHIA plan
is critically important to consumers who need health coverage.
ACTION NARRATIVE
REPRESENTATIVE KOTT, acting chair, called the House Labor and
Commerce Standing Committee meeting to order at 3:24:38 PM.
Representatives Kott, Rokeberg, Lynn, Crawford, and Guttenberg
were present at the call to order.
^CONFIRMATION HEARING(S)
3:25:25 PM
REPRESENTATIVE KOTT announced that the first order of business
would be the confirmation hearings of the governor's
appointments. He noted that everyone has been provided a copy
of the resumes of the various individuals being considered for
the various boards and commissions. He explained that each
member of the committee will have the opportunity to sign a
report recommending that the individuals' names be forwarded to
the full body of the House. However, the signature doesn't
reflect a member's intent to either vote for or against that
appointee when he or she comes up for confirmation.
^BOARD OF VETERINARY EXAMINERS
REPRESENTATIVE KOTT announced that the committee would first
take up the for which the following three appointees are being
considered: Alfred Agree, Timothy L. Bowser, and Cynthia Ann
Trout. Upon determining there was no discussion or objection to
the aforementioned names, he announced that they would be
forwarded to the full body for consideration.
^BOARD OF PUBLIC ACCOUNTANCY
REPRESENTATIVE KOTT then turned the committee's attention to the
Board of Public Accountancy for which the following appointees
are being considered: Max E. Mertz, Catherine L. Wilson, Carla
J. Bassler, Kenneth L. Mayer, and Christy Morse. Upon
determining there was no discussion or objection to the
aforementioned names, he announced that they would be forwarded
to the full body for consideration.
^BOARD OF MARITAL AND FAMILY THERAPY
3:27:13 PM
REPRESENTATIVE KOTT moved on to the Board of Marital and Family
Therapy for which the following appointees are being considered:
Kerry L. Rasmussen and Martha Swink. Upon determining there was
no discussion or objection to the aforementioned names, he
announced that they would be forwarded to the full body for
consideration.
^STATE BOARD OF REGISTRATION FOR ARCHITECTS, ENGINEERS, AND LAND
SURVEYORS
3:27:29 PM
REPRESENTATIVE KOTT continued with the State Board of
Registration for Architects, Engineers, and Land Surveyors for
which the following appointees are being considered: Richard C.
Heieren, Harley H. Hightower, and Mark G. Morris.
REPRESENTATIVE ROKEBERG commented that Mr. Hightower, a
constituent, is a highly qualified individual.
REPRESENTATIVE KOTT, upon determining there was no objection to
the aforementioned names, announced that they would be forwarded
to the full body for consideration.
^BOARD OF BARBERS AND HAIRDRESSERS
REPRESENTATIVE KOTT announced that the committee would next take
up the Board of Barbers and Hairdressers for which the following
appointee is being considered: Alice B. Massie. Upon
determining there was no discussion or objection to the
aforementioned name, he announced that Ms. Massie's name would
be forwarded to the full body for consideration.
^ALASKA LABOR RELATIONS AGENCY
3:28:30 PM
REPRESENTATIVE KOTT then turned to the Alaska Labor Relations
Agency for which the following appointees are being considered:
Gary A. Atwood, Aaron T. Isaacs, Jr., and Colleen E. Scanlon.
Upon determining there was no discussion or objection to the
aforementioned names, he announced that they would be forwarded
to the full body for consideration.
^BOARD OF NURSING
REPRESENTATIVE KOTT moved on to the Board of Nursing for which
the following appointee is being considered: Terri S. Olson.
Upon determining there was no discussion or objection to the
aforementioned name, he announced that Ms. Olson's name would be
forwarded to the full body for consideration.
^BOARD OF PSYCHOLOGIST AND PSYCHOLOGICAL ASSOCIATE EXAMINERS
3:28:54 PM
REPRESENTATIVE KOTT continued with the Board of Psychologist and
Psychological Associate Examiners for which the following
appointees are being considered: Camille O. Carlson and Destiny
Sargeant. Upon determining there was no discussion or objection
to the aforementioned names, he announced that they would be
forwarded to the full body for consideration.
REPRESENTATIVE KOTT informed the committee that all of the
appointees have been checked to verify that they qualify in
accordance with the statutes.
^REGULATORY COMMISSION OF ALASKA
3:29:27 PM
REPRESENTATIVE KOTT drew the committee's attention to the
appointment of Anthony A. Price to the Regulatory Commission of
Alaska (RCA).
ANTHONY A. PRICE, Appointee to the Regulatory Commission of
Alaska (RCA), related that his professional experience in
accounting, business management, governmental management,
investment management, and bonding and debt management provides
a unique perspective. He noted that he has experienced managing
to realize a profit and has an understanding with regard to what
investors and bond rating agencies focus on when assessing risk
and assigning ratings. Mr. Price said, "I understand that
management of governmental is different from private industry
and how it's different, and I understand the language of
business, ... accounting. In the end I believe this provides a
balance, which is valuable in carrying out the duties of a
commissioner."
REPRESENTATIVE ROKEBERG recalled that under the RCA statute
there are some positions with certain qualifying requirements.
He asked if the position to which Mr. Price has been appointed
has qualifying requirements.
MR. PRICE related his belief that was changed when the RCA was
established in 1999, and therefore there are no qualifying
positions.
3:33:18 PM
REPRESENTATIVE ROKEBERG asked if Mr. Price has any background
working with utilities.
MR. PRICE replied, yes. He specified that early in his career
he served on an audit of what was then Washington Natural Gas,
as part of Puget Power, in the Seattle area. He further
specified that he was a controller for an entity that had
garbage companies.
3:33:49 PM
MR. PRICE, in further response to Representative Rokeberg,
related that he has worked with Municipal Light & Power and
Anchorage Water and Wastewater Utilities. He specified that he
worked with the aforementioned entities at a level of bonding
and investment. Mr. Price clarified that he didn't touch on
regulatory matters in those situations. With regard to the
possibility of a conflict of interest, Mr. Price opined that he
didn't have any conflict of interest.
[Although no formal motion was made, the committee treated Mr.
Price's name as forwarded to the full body for consideration.]
HB 29-HEALTH CARE INSUR./ COMP HEALTH INS. ASSN
3:35:14 PM
REPRESENTATIVE KOTT announced that the final order of business
would be HOUSE BILL NO. 29, "An Act relating to health care
insurance and to the Comprehensive Health Insurance Association;
and providing for an effective date."
3:35:37 PM
REPRESENTATIVE ROKEBERG explained that the Alaska Comprehensive
Health Insurance Association (ACHIA), established in 1993, is
Alaska's high risk pool that's required under the Health
Insurance Portability and Accountability Act (HIPAA). This high
risk pool provides health insurance for those who can't
otherwise obtain insurance, and it restricts their premiums to
150 percent of the average health insurance premium in the
state. Although ACHIA is a much-needed program, under its
current structure it only affects those health insurance covered
lives that are underwritten for individual or small group
policies. All the larger insured covered lives in the state are
exempt from payment of the assessments, which are carried out by
the pool periodically. For example, the estimated assessment
for fiscal year (FY) 2004 was $5 million. Therefore, not all
the people who could avail themselves of ACHIA are paying into
the pool.
3:38:38 PM
REPRESENTATIVE ROKEBERG informed the committee that when former
Governor Knowles allowed the bargaining units of the state to
leave the common pool of state employees, many of those folks
and the state were exempt from paying into the high risk pool.
At that time, the high risk pool lost $400,000 annually in
assessment money. The aforementioned loss had to be spread
amongst the insurers and smaller employers. Therefore, HB 29
intends to obtain greater equity in spreading the cost [of
ACHIA]. Representative Rokeberg noted that there is a committee
substitute (CS) and two amendments for the committee's
consideration. He pointed out that the CS is drafted such that
it covers retirees, even those in the state programs. He
announced that he will offer a conceptual amendment to remove
all retirees from this coverage. He explained that the purpose
of HB 29 is to spread the cost to those who can benefit from the
program and the retirees don't need this coverage due to the
insurance they have. He then referenced a document entitled,
"Analysis of Change in the Assessment Formula", which was
provided by the Division of Insurance. The revised page 5
illustrates a difference, of which he wanted members to be
aware. For example, it shows that under HB 29 the State of
Alaska will be assessed at $1.47 million, but it would decrease
to $277,000 with the adoption of the amendment [eliminating
retirees from this].
3:40:47 PM
REPRESENTATIVE ROKEBERG moved to adopt CSHB 29, Version 24-
LS0191\I, Bullock, 3/17/05, as the working document.
REPRESENTATIVE GUTTENBERG objected in order to hear the
differences encompassed in Version I. Upon realizing that this
was the first hearing of HB 29, Representative Guttenberg
withdrew his objection. Therefore, Version I was before the
committee.
The committee took an at-ease from 3:42 p.m. to 3:43 p.m.
3:43:20 PM
REPRESENTATIVE ROKEBERG moved that the committee adopt
Conceptual Amendment 1, which would remove state retirees from
the provisions of HB 29. There being no objection, Conceptual
Amendment 1 was adopted.
CECIL BYKERK, Executive Director, Alaska Comprehensive Health
Insurance Association, informed the committee that he has been
involved with ACHIA since its inception in 1992. Originally,
the program started out to specifically take care of uninsurable
individuals. However, in 1996/1997 the federal government
passed HIPAA, through which the state is now required to provide
a mechanism that provides for continuity and portability of
coverage for those coming out of the employer marketplace.
Individuals whose coverage is terminated are eligible to enroll
in ACHIA without serving any preexisting condition requirements.
3:46:47 PM
MR. BYKERK pointed out that about two years ago the federal
government established the Trade Adjustment Act (TAA), which
provides similar ability for displaced workers or workers for
companies whose pension plan is being taken care of by the
Pension Benefit Guarantee Corporation (PBGC). Therefore, the
ACHIA eligibility group has grown over the years such that it
totals about 500 people who work the program. However, ACHIA's
assessment base, as was mentioned by the sponsor, is one of the
things that hasn't grown. The premiums, which are a bit higher
than standard premiums, are capped at 150 [percent] of the
standard premium in the marketplace. From an actuarial
perspective the cost of the individuals in the pool is much
greater than the premium allowed. The losses, as a result of
charging lower premiums, are covered by the assessments, which
HB 29 addresses. Currently, the assessments are spread across
those individuals who purchase insured products, primarily
individuals and small group carriers. Therefore, it's a limited
spread with regard to who ends up paying for these assessments.
Mr. Bykerk noted that large companies avoid the assessments or
contribute a fraction relative to the premiums an individual or
small group pays.
3:49:28 PM
MR. BYKERK added that HIPAA has added a feature such that those
people who are coming out of plans that aren't contributing to
ACHIA are eligible in the program. Mr. Bykerk, in conclusion,
encouraged the committee to consider HB 29.
3:50:16 PM
REPRESENTATIVE ROKEBERG requested that Mr. Bykerk explain the
premium costs to the TAA people and how it works with the U.S.
Department of Labor. He indicated that the U.S. Department of
Labor subsidizes a part of that.
MR. BYKERK answered that although the regular HIPAA and TAA
people are eligible immediately without having to be certified,
the TAA people have to be certified by the [U.S.] Department of
Labor. Upon certification, the TAA people are eligible for a
subsidy of the premium, which is a subsidy portion of the
premium that ACHIA charges. He related his belief that the
aforementioned subsidy is for a limited duration. Mr. Bykerk
recalled that the subsidy is somewhere around two-thirds and the
individual pays around one-third, and that runs for a few years
after which the individual is required to pay the balance. The
federal government, he stated, isn't contributing to ACHIA, save
indirectly by subsidizing the eligible individuals.
3:52:28 PM
MR. BYKERK, in response to Representative Rokeberg, clarified
his earlier statement that the federal government isn't
contributing to the fund to help ACHIA with its losses, although
it is helping the individuals to pay part of their premium. He
explained that the individual pays his or her portion to an
agency, which then pays the full premium back to ACHIA. Mr.
Bykerk said that the federal government's unfunded mandate isn't
contributing to help cover the losses the program is incurring.
3:53:50 PM
REPRESENTATIVE ROKEBERG related his understanding, "Under the
TAA, ... an individual ... can go to basically any insurance
carrier that they would, and then there is the subsidy under the
federal labor law; is that correct? But ... they only enter the
pool if they ... are high risk individuals?"
MR. BYKERK related his belief that individuals are eligible to
enter ACHIA the same way HIPAA eligibles are, without regard to
whether the individual is eligible for other coverage. However,
he emphasized that individuals would be encouraged to go to
other coverage because a healthy individual may be able to
purchase coverage cheaper. There is no requirement for
individuals to go into the market and get declined.
REPRESENTATIVE ROKEBERG commented that [ACHIA] is a U.S.
Department of Labor program intended to assist those who were
displaced by imports. "This is very important to the working
people of Alaska," he opined.
3:55:17 PM
SALLIE STUVEK, Human Resources Director, Fairbanks North Star
Borough, said that she has concerns with this legislation. She
related her belief that for self-insured plans HB 29 will
increase the cost to the plan. Ms. Stuvek said that she didn't
see any benefit to self-insured programs.
REPRESENTATIVE ROKEBERG asked if those who leave the employ of
the Fairbanks North Star Borough can maintain their insurance.
MS. STUVEK replied no, adding that Comprehensive Omnibus Budget
Reform Act (COBRA) coverage is offered. She mentioned that many
of the employees leaving borough employment go directly into
retirement and thus receive coverage through the Public
Employees' Retirement System (PERS).
3:56:56 PM
CHRISTINE SASSE, Finance Director, City of Valdez, characterized
HB 29 as an unfunded mandated because of the requirement to
provide information that will generate administrative costs.
The aforementioned will increase costs as will the assessment.
The only way [the City of Valdez] can pay for those increases is
through taxes. Currently, [the City of Valdez] is limited in
its ability to increase taxes. Furthermore, the PERS situation
adds to the financial attack [the City of Valdez is
experiencing]. Moreover, the costs [of the ACHIA program] can't
be controlled as is evidenced by the increases [in those
utilizing] the program. Ms. Sasse opined that [the City of
Valdez] doesn't believe it's contributing to the problem because
it provides health insurance for both part-time and full-time
employees. Also, after an employee leaves the employ of the
city he or she can choose COBRA and upon retirement, the
employee goes into the PERS program. Therefore, those who don't
provide insurance should be assessed, she opined.
3:59:41 PM
REPRESENTATIVE ROKEBERG inquired as to how the City of Valdez
provides its insurance.
MS. SASSE answered that the City of Valdez is self-insured with
stop-loss insurance.
REPRESENTATIVE ROKEBERG acknowledged that HB 29 does apply to
stop-loss carriers, and therefore there would be an increase in
the stop-loss costs.
4:00:18 PM
MELODY DOUGLAS, Chief Financial Officer, Kenai Peninsula Borough
School District, informed the committee that the Kenai Peninsula
Borough School District has a self-insured program. Ms. Douglas
testified in opposition to HB 29. She opined that requiring
contributions will discourage entities from establishing self-
insured programs. Furthermore, an unintended consequence of HB
29 may be to encourage entities to not provide health care
benefits at all.
RICHARD CAMPBELL, General Services Director, Kenai Peninsula
Borough, testified in opposition to HB 29 on the grounds of cost
and fairness. Mr. Campbell informed the committee that everyone
who works for the Kenai Peninsula Borough is provided full
insurance, no matter how uninsurable in the private market.
Furthermore, when folks leave the employ of the borough, COBRA
is offered at rates comparable to what's paid for regular
employees. "We not only don't benefit from the existence of
this plan, I think we actually help keep people off this type of
plan," he opined.
4:02:45 PM
COLLEEN SAVOIE, Marsh Inc. USA, informed the committee that
Marsh USA provides consulting services for a number of self-
funded health plans, which would be hurt by HB 29. Although Ms.
Savoie didn't dispute the need for ACHIA itself, she specified
two significant problems with the legislation. First, the
proposed funding is an unfair assessment because it essentially
taxes employers and other entities that already provide health
benefits to its employees or members. Echoing earlier
testimony, Ms. Savoie suggested that the aforementioned will
actually discourage employers from providing coverage rather
than encourage them to do so. Even if the ACHIA tax is paid
through a stop-loss carrier, it will still be passed on to the
underlying plan. The aforementioned ultimately hurts health
plan participants because as the amount of the assessment
increases, the health plans that are already struggling with the
cost of providing benefits are going to find it more difficult
to continue to provide those benefits to their members. In
fact, some of those employers will drop coverage while others
may reduce benefits or increase employee costs. The legislation
actually recognizes the aforementioned in that it stipulates
that the additional cost can't be passed on to the employee for
participants of a State of Alaska sponsored plan.
MR. SAVOIE said that the second significant problem she has with
HB 29 is that it appears to impose a significant administrative
burden for those entities that must comply. For example,
members of self-funded governmental plans that have purchased
stop-loss coverage would be captured twice, and it appears they
would still have to comply with the reporting requirement.
Although it seems that each individual will be counted once for
assessment purposes, it's unclear as to how each person will be
counted. Ms. Savoie concluded by specifying that she is opposed
to HB 29 because it's already difficult and expensive for
employers to provide health coverage to their employees.
Furthermore, HB 29 has the potential to increase both the
administrative and financial burden.
4:05:19 PM
MS. SAVOIE, in response to Representative Rokeberg, specified
that she is concerned about the self-funded governmental plans
that are considered members. However, for assessment purposes,
it appears that each covered participant should only be assessed
once. If the self-funded government purchases stop-loss
insurance, would the tax be paid by the stop-loss carrier or by
the self-funded governmental plan, she asked. She further asked
who would determine the aforementioned. Even after that's
determined, she said it appears that the self-funded
governmental plan will still have to comply with the reporting
requirements.
REPRESENTATIVE ROKEBERG related his understanding that Ms.
Savoie's concern regarding double assessment was corrected in
Version I. Representative Rokeberg recalled that Ms. Savoie
indicated that it's unfair to do what's proposed in HB 29.
However, he pointed out that the covered lives under individual
and small group plans are paying 100 percent of the assessment,
and thus the intention of HB 29 is to spread those assessment
costs throughout all people in the state with insurance.
MR. SAVOIE agreed that it's also unfair for those who are
covered under fully insured plans to have to pay this burden.
The fundamental problem, she opined, is that it would require
employers, whether fully insured or self-funded providing
benefits through stop-loss insurance, to pay for benefits of
individuals other than their covered participants.
REPRESENTATIVE ROKEBERG interjected, "But that's what the people
that are paying the assessment now are in that position.
Therefore, we're just trying to spread the risk and the cost out
over a larger number of people." He estimated that there are
some 400,000 people now paying the assessment.
MR. SAVOIE opined that it would seem fairer to assess the burden
by spreading it over all businesses in Alaska or those
businesses that don't currently provide benefits to their
employees.
REPRESENTATIVE ROKEBERG commented that HB 29 attempts to
implement a small fix in order to help everyone in the state.
MS. SAVOIE reiterated that her concern is that each employer who
is attempting to do the right thing by offering health care
coverage is [being assessed].
REPRESENTATIVE ROKEBERG reiterated that some 400,000 people are
paying into [ACHIA], but he believes some 600,000 should be
paying to help out this [high-risk] pool.
4:09:26 PM
REPRESENTATIVE CRAWFORD inquired as to how the assessment is
figured, and asked whether the assessment is made per person or
per a dollar amount.
REPRESENTATIVE ROKEBERG related his understanding that the
assessment is based upon the number of covered lives.
REPRESENTATIVE CRAWFORD pointed out that many of the different
union health plans aren't confined to the state alone. For
example, the ironworkers' union covers the Pacific Northwest and
thus many ironworkers come up to Alaska from Portland and
Seattle to work and vice versa. In such cases, who would be
considered an Alaskan, he asked.
4:11:28 PM
REPRESENTATIVE ROKEBERG deferred the aforementioned question to
Ms. Campbell.
REPRESENTATIVE KOTT returned to the public testimony portion of
the meeting.
MATT LARKIN, Willis of Alaska Inc., informed the committee that
Willis of Alaska Inc. represents over 20 self-funded health
plans that would be impacted by HB 29. Mr. Larkin noted his
agreement with the testimony from Fairbanks, Valdez, the Kenai
Borough and its school district, as well as from Marsh USA Inc.
Mr. Larkin highlighted that in Alaska there are very few options
with health insurance, which has lead to the evolution of self-
funding in Alaska. With regard to an earlier comment that large
businesses and companies are avoiding the assessment by using
self-funded plans, he didn't believe any of Willis of Alaska's
clients would be considered large businesses or companies rather
they are smaller, mid-size employers. The [proposal embodied in
HB 29] would result in making the self-funding option less
attractive, more expensive, and more burdensome. Mr. Larkin
agreed with the notion that HB 29 is basically a tax on people
who are already paying for their fair share for the uninsured
problem. Therefore, imposing a tax on these self-funded
employer plans makes the situation unfair. Although there has
been testimony that another piece of legislation would be
necessary to assess the funding from employers that don't
sponsor the plan, Mr. Larkin opined that it would be fair.
REPRESENTATIVE ROKEBERG commented that it has been the goal of
the legislature and the House Labor and Commerce Standing
Committee to lower barriers for entry of new health underwriters
or all insurance carriers in the state. He then turned to the
issue of the limited number of companies writing insurance,
particularly health insurance, in Alaska. Representative
Rokeberg asked whether Mr. Larkin, as an independent insurance
broker, would mention the existence of the ACHIA pool to a
health insurance underwriter who is considering entering the
Alaska market to write individual and small group coverage "as a
burden or cost that they would have to bear up here."
4:16:54 PM
MR. LARKIN answered, "I would say they would have to bear it,
but it's the same cost they would have to bear in 49 other
states ...." He related his understanding that assessing high
risk pools on self-funded employers hasn't been done elsewhere,
although the State of New York has something similar. With
regard to why there aren't more health care providers in Alaska,
he opined that it has more to do with the location and the
population as well as the fact that the provider community in
Alaska hasn't accepted managed care.
REPRESENTATIVE ROKEBERG said that with HB 29 he intends to
create fairness by spreading out [the cost of the high risk
pool] further rather than concentrating on those in one
category.
MR. LARKIN remarked that Representative Rokeberg's logic is
drawn from the notion that HB 29 would level the playing field.
Currently, the playing field isn't level because the carriers
receive much larger discounts at facilities than do self-funded
employer plans. He opined that self-funded employer plans still
exist because they are able to run their plans more efficiently.
This assessment levied on the carriers can be viewed as a cost
of doing business. Mr. Larkin highlighted that the carriers are
making a profit off delivering benefits while self-funded plans
aren't in the business of making a profit. Although one might
argue that it's simply being passed on to the smaller employers,
to the extent that's the case the [carrier] still has to remain
competitive because of the self-funded market in the state.
4:18:50 PM
MR. LARKIN said, "To the extent that we diminish the self-funded
... employer plan as an option, we simply strengthen the hand of
the cartel ... of the health insurance carriers."
REPRESENTATIVE ROKEBERG noted his disagreement. He asked if Mr.
Larkin would advise any of his clients with an individual who
had separated from service, exhausted COBRA benefits, and had a
preexisting condition to turn to ACHIA.
MR. LARKIN replied yes, if there was no other option after
exhausting COBRA benefits and the individual couldn't obtain
coverage on an individual basis. He charged that at that point,
the fully insured carriers would also advise such clients to
turn to ACHIA because an individual can't utilize ACHIA until
being declined from two fully insured carriers.
4:19:59 PM
MIKE GALLAGHER, Business Manager & Secretary/Treasurer, Laborers
International Union of North America Local 341, informed the
committee that Local 341 represents about 2,200 members. He
noted that he is also a trustee on the Alaska Laborers Health &
Welfare plan. Mr. Gallagher said that he opposes HB 29, which
he characterized as an unfair tax. He pointed out that all
health plans in the state are struggling because of increased
costs. This proposal will be unfair to employers because that's
to whom this will be passed. Mr. Gallagher related his
understanding that [HB 29 would] tax employers who provide
insurance today. However, that isn't fair because many
employers don't provide any insurance to their employees and
don't pay anything. Although he said that he supported ACHIA,
everyone should pay for it rather than just those who provide
insurance. He suggested that those not providing insurance
should pay this tax and perhaps an even larger tax than that
proposed in HB 29.
REPRESENTATIVE ROKEBERG clarified that he is attempting to have
everyone pay for ACHIA. With regard to the fact that some
states have chosen to fund programs such as this with general
fund revenues. If there was a statewide type tax, he would
advise the GF to pick up the difference and thus everyone would
pay for it. Representative Rokeberg informed the committee that
at least three states do the aforementioned. In fact, HB 29 is
patterned after the State of Oregon's similar mechanism.
4:22:47 PM
ROSEMARIE KALAMARIDES, Administrator, Alaska Teamster-Employer
Welfare Trust, informed the committee that there are about 8,000
covered lives in the aforementioned plan. Ms. Kalamarides
related Alaska Teamster-Employer Welfare Trust's opposition to
HB 29 because it will increase stop-loss costs. She echoed
earlier testimony that those employers and unions already
providing insurance are already paying too much. For example,
the union funds are asking employers to pay between $5.00-$6.00
an hour per employee, which is a high cost that will only
increase. Ms. Kalamarides suggested considering what other
states, such as California and Hawaii, are doing. She explained
Hawaii's "play or pay plan" in which [large] employers who don't
provide health coverage pay into a [high risk] pool, which she
opined would be much fairer than HB 29. Ms. Kalamarides pointed
out that union contractors in the state are facing increased
costs. In fact, in some cases the teamsters are deciding to
forego wage increases in order to fund health benefit increases.
Therefore, they are being asked to pay more. She emphasized
that those employers providing health care coverage end up
paying for the coverage of those employers who don't. She
suggested that if those employers who don't provide benefits
did, then they would be funding this pool. In fact, she further
suggested that the aforementioned would provide a larger pool
than under the current proposal. She asked if any review of
such had taken place.
4:25:35 PM
REPRESENTATIVE ROKEBERG, turning to Ms. Kalamarides' question
regarding the mechanisms of other states, said that such hasn't
been reviewed and is worthy of review.
4:27:25 PM
JOHN GEORGE, Lobbyist, American Family Life Assurance Company
(AFLAC), commended Representative Rokeberg for trying to
[develop] a solution. He said that although HB 29 may not be
the only solution or the perfect solution, it would certainly be
an advance over the current situation. Mr. George informed the
committee that AFLAC only writes a few policies in Alaska that
qualify as health insurance, but the company is required to pay
an assessment based on the entire premium it writes in the
state. Therefore, AFLAC's health policy premium is about $7,500
and its assessment amounts to about $88,000. The
aforementioned, per AFLAC's opinion, doesn't seem to be
appropriate. Mr. George related that the basic concept of the
sponsor is to spread the costs [of the high risk pool] among a
larger group. He mentioned that [ACHIA] isn't a welfare program
but rather a social program and thus it's appropriate to spread
the cost through a larger group. As has been related, these
people are paying 150 percent of the premium of a regular health
insurance policy. Although [ACHIA provides] a subsidy, it
certainly isn't welfare because the individual is doing his or
her part as well.
4:30:07 PM
MR. GEORGE opined that health insurance is expensive and no one
wants to pay more. However, everyone who has a health insurance
policy is already paying more, and had no choice in the matter.
He further opined that those folks are being assessed more than
their fair share. With regard to the notion that HB 29 proposes
an unfunded mandate, he agreed because no one wants to fund it.
In fact, he didn't believe, when placed on the ballot, that
voters would support paying for it. Mr. George then pointed
out that people who buy health insurance policies from an
insurance carrier already pay a premium tax, which is passed on
to the policyholder. However, self-insured unions and
municipalities don't pay a premium tax. With regard to the
savings that self-insured entities show, he attributed those, in
part, to the fact that they aren't subject to the regulations or
the 2.7 percent premium tax to which insurers are subject.
4:32:03 PM
REPRESENTATIVE GUTTENBERG related his belief that most of the
people [in the high risk pool] will come from [entities] that
don't offer health insurance. The [ACHIA plan] subsidizes those
who don't want to offer health insurance to their employees. He
pointed out that those with health insurance are paying not once
but twice for these uninsured individuals. Representative
Guttenberg said that he didn't know why the legislature isn't
addressing those companies that don't offer health insurance.
MR. GEORGE acknowledged that the aforementioned is a possible
solution, and if such legislation were introduced it would
provide something else to talk about.
4:34:24 PM
REPRESENTATIVE ROKEBERG refuted Representative Guttenberg's
statement that the problem is with those [employees of
employers] who aren't paying for health insurance who enter
ACHIA. Representative Rokeberg pointed out that ACHIA is only
provided for those who will pay for the high premium, and
furthermore these individuals have to have been refused coverage
from two carriers. He emphasized that [ACHIA] covers people who
want to pay, but can't obtain coverage. Representative Rokeberg
clarified that HB 29 is not intended to reform the health care
insurance system in the state or country.
REPRESENTATIVE GUTTENBERG informed the committee that in his
union and other trade unions there is no exemption for high
risk, rather the employee joins [the union] and receives
coverage. However, other employers [won't] employ a high-risk
individual.
REPRESENTATIVE ROKEBERG interjected that the high-risk
individual then can seek coverage from ACHIA.
REPRESENTATIVE CRAWFORD posed a situation in which an individual
had a condition that kept him or her from getting private
insurance. However, it would seem that individual, if working
for McDonald's, would be insurable. He asked if that would be
correct.
4:37:41 PM
REPRESENTATIVE ROKEBERG reminded the committee that in order to
participate in ACHIA one must be able to pay the higher premium.
Therefore, ACHIA isn't necessarily for individuals with lower
income or employees of small businesses without insurance
coverage, except that those people could afford to purchase an
individual policy. He pointed out that the pool actually pays
for the difference between the premium the individual pays and
the actual cost, which is substantial.
4:38:35 PM
MR. LARKIN interjected that frequently individuals with high
medical claims don't have to pay the cost for ACHIA because the
treating physician understands that the individual doesn't have
insurance, and therefore will pay the premium for the
individual. In other words, the individual's medical bills are
so high that the cost for the [ACHIA] premium is miniscule
compared to the individual's need for treatment, and thus the
provider will cover that. The provider does the aforementioned
for COBRA premiums as well.
4:39:34 PM
MR. GEORGE pointed out that there are a lot of small businesses
that can't afford to pay for health insurance for the employees
for which they can barely pay. He suggested that any further
burden on these small businesses could put them out of business
and result in more unemployment. Furthermore, he wasn't sure
that there are enough large employers to assess.
REPRESENTATIVE ROKEBERG related his understanding that a small
business that can afford to have health insurance is paying the
ACHIA assessment through its underwriters, while the large self-
insureds, such as BP, ConocoPhillips Alaska, Inc., and the
Teamsters Union, aren't [paying the ACHIA assessment through
their underwriters].
MR. GEORGE agreed, adding that individuals who need the coverage
but whose employer can't afford it, leave the individual to pay
for it out of his or her own pocket.
4:41:16 PM
KATIE CAMPBELL, Life/Health Actuary, Division of Insurance,
Department of Commerce, Community, & Economic Development
(DCCED), turned to Representative Crawford's earlier question
regarding how this proposal would work if there were employers
in another state that employed Alaskan workers. She likened it
to the situation that the insurance company has when insuring an
out-of-state employer with a number of Alaska employees. In
such a case, the [employer] is only assessed for the Alaska
employees not for all the employees in the plan. In further
response to Representative Crawford, she said that she didn't
know of an exact formula to determine which employee is an
Alaskan, but she said that where the employee considers his or
her primary residence would be reviewed. Ms. Campbell clarified
that this legislation doesn't apply to self-funded or self-
insured plans [nor] the large nongovernmental union plans. She
further clarified that Version I merely assesses stop-loss
insurers and insurance companies. If the stop-loss insurers
pass that on to the employers, then that's how [the employer]
would end up paying a share.
4:43:36 PM
REPRESENTATIVE CRAWFORD specified that the concern was that if
[a company] had stop-loss insurance, then it would be required
to pay [the assessment]. When one refers to "very large", he
said he wasn't sure what that meant. He informed the committee
that altogether, the Pacific Union Ironworkers number about
3,000 of which less than 300 reside in Alaska. The two options
[the Pacific Union Ironworkers] have discussed have been to
either eliminate the stop-loss insurance or drop Alaska
ironworkers from the Pacific Northwest. Representative Crawford
then recalled Mr. George's testimony which related that AFLAC
was assessed $88,0000 with premiums of $7,500. However, he
opined that the premiums were actually $7.5 million.
MS. CAMPBELL then explained that AFLAC writes a substantial
amount of other types of business besides medical. For example,
AFLAC writes disease-specific policies and those are being
assessed as if they were a medical policy. With regard to
Representative Crawford's correction, Ms. Campbell related her
understanding that Mr. George was saying that AFLAC has $7,500,
for example, of major medical premium and that qualifies them as
a member. However, under the current assessment formula and no
matter what kind of health insurance type business they write,
AFLAC is assessed on everything - not just the $7,500.
4:46:39 PM
REPRESENTATIVE CRAWFORD expressed curiosity with regard to how
this would work if the ironworkers were going to be assessed
$88,000 and the cost spread among 150 ironworkers.
REPRESENTATIVE ROKEBERG deferred to Ms. Campbell and asked that
she address the range of cost per covered life and what would
constitute an ERISA-exempt organization.
MS. CAMPBELL related her understanding that no state can
regulate self-funded employer plans and union plans under the
Taft Hartley Act. The state can regulate it's own governmental
plans. She specified that the state can't regulate union and
self-funded single large employer type plans, such as that of
BP.
REPRESENTATIVE ROKEBERG commented that some of the entities "we"
are trying to get to, we can't get to; and the labor unions are
probably exempt under ERISA.
MS. CAMPBELL agreed that [the state] cannot regulate or assess
the union plans, only the stop-loss carriers can be assessed.
Therefore, to the extent that the union plans purchase stop-loss
insurance, the state can regulate stop-loss insurance and assess
stop-loss carriers. In further response to Representative
Rokeberg, Ms. Campbell confirmed that the aforementioned is true
even for nongovernmental union organizations.
4:49:03 PM
MS. CAMPBELL, in regard to the range of incidence, pointed out
that she has an analysis illustrating the impact on the stop-
loss carriers. The assessment of the stop-loss carriers, under
Version I with the amendment not including State of Alaska
retirees, as a percentage of premium being paid for stop-loss
coverage would be about 4.5.
4:50:02 PM
MS. CAMPBELL, in further response to Representative Rokeberg,
informed the committee that all of the stop-loss insurers that
have reported on the [division's] survey would be assessed a
total of about $1.9 million for all of the stop-loss insurers.
The aforementioned represents about 4.5 percent of stop-loss
premiums. Ms. Campbell related that the stop-loss insurers are
paying in assessment is about 1.2 percent of their premium.
Therefore, HB 29 would result in an increase to approximately
4.5 percent of premium.
REPRESENTATIVE ROKEBERG asked if the division tried to relate
this to an individual covered life cost in any of the
categories. He recalled that about three years ago there was a
similar bill for which he recalled [the individual covered life
cost] was about $0.96.
REPRESENTATIVE CRAWFORD surmised then that [an entity] can look
at its current stop-loss cost and take 3.5 percent, which would
be the additional [cost] under HB 29.
MS. CAMPBELL clarified that the stop-loss premiums would
increase by about 3.5 percent of an entity's current total cost.
In regard to Representative Rokeberg's question [regarding the
individual covered life cost], Ms. Campbell said that a rough
calculation specifies that it would be about $1.60 a month per
covered person for those plans with stop-loss coverage.
REPRESENTATIVE ROKEBERG expressed interest in honing in on that
information because it may put things into perspective for some
people.
4:52:55 PM
REPRESENTATIVE ROKEBERG referred to page 5 of the document
entitled, "HB 29 Analysis of Change in Assessment Formula".
The document relates that Premera Blue Cross has 83,000 covered
lives with a current share of 62.01 percent and a current amount
assessed at $3,100,000. If HB 29 were to pass, the assessment
for Premera Blue Cross would drop to 32.8 [percent] or about
$1.5 million. Therefore, there is a potentiality of lowering
the cost to those in that category by spreading the cost. He
then asked if the aforementioned would be a correct assessment.
[MS. CAMPBELL] indicated that it would be correct.
REPRESENTATIVE ROKEBERG asked if, before the union trusts and
the state employees stepped out, the state was paying in excess
of $400,000 into ACHIA.
MS. CAMPBELL recalled that in 1997 [ACHIA] had about a $30
million premium base. Although she couldn't remember the exact
portion of the assessment, she said she believes Representative
Rokeberg is correct.
REPRESENTATIVE ROKEBERG clarified that the whole state [became
self-insured] and even the noncovereds became self-insured and
moved out from under the ACHIA assessment. He related his
understanding that under HB 29 the fiscal note to the state will
be in the amount of $277,000.
4:54:57 PM
MS. CAMPBELL agreed that would be the approximate cost.
REPRESENTATIVE ROKEBERG said that although one can characterize
HB 29 as a tax, it's a tax on a greater number of people. "But
we do have a provision in here that any makeup you can't charge
it back to the [state] employee, is that correct," he asked.
4:55:23 PM
MS. CAMPBELL agreed, specifying that it was the AS 39 provisions
in HB 29.
REPRESENTATIVE ROKEBERG stated that HB 29 is important
legislation, although it may not be the entire answer. He
expressed interest in hearing from small governments and
organized labor with regard to suggestions to solve this growing
dilemma. He noted his agreement with the notion that there is a
major problem in this country with increasing health care costs
and the cost of insurance. Representative Rokeberg requested
that Ms. Campbell explain the terms of the HIPAA requirements
and the state's alternative.
4:56:35 PM
MS. CAMPBELL informed the committee that in 1996 the president
signed the law requiring portability of health coverage among
employers and established guarantee issue requirements. The law
requirement means that coverage had to be guaranteed to
employees who left employment [no matter] the reason. The
qualified high risk pool was one of the mechanism that the
federal government allowed states to use. She highlighted that
anyone who comes into the state's pool is guaranteed to be
accepted and doesn't have to sit out any type of preexisting
condition waiting period. If the state hadn't adopted an
alternative mechanism, the insurance carriers would've had to
offer different individual plans that would have to guarantee
issue.
REPRESENTATIVE ROKEBERG opined that with the guaranteed benefit
option people wouldn't have to have insurance until they were
sick, and then they could run out and purchase insurance.
4:58:51 PM
MS. CAMPBELL said that there have been attempts to place
constraints around that. The insurance companies were having
problems writing in this [high risk] market because if people
with health conditions could always be guaranteed coverage, then
they could wait until a condition arose and then purchase
insurance.
REPRESENTATIVE ROKEBERG interjected that then insurance wouldn't
work because there wouldn't be any monies to pay for it until
there was an incident for which coverage was necessary.
Therefore, by default the state has a high risk pool to offer
when there is no other viable tool.
4:59:36 PM
LINDA HALL, Director, Division of Insurance, Department of
Commerce, Community, & Economic Development (DCCED), commented
that she supports Representative Rokeberg's plan because the
ACHIA plan is critically important to consumers who need health
coverage. She then commended Ms. Campbell for her diligent work
with applications for federal grants. In fact, last year [the
division] was awarded in excess of $500,000 in a federal grant
that was applied toward funding the ACHIA plan. Therefore, the
division is also looking for other ways to bring in funds for
ACHIA.
5:00:46 PM
REPRESENTATIVE KOTT announced that HB 29 would be held over.
ADJOURNMENT
There being no further business before the committee, the House
Labor and Commerce Standing Committee meeting was adjourned
5:01:11 PM.
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