Legislature(2017 - 2018)BARNES 124
04/09/2018 03:15 PM House LABOR & COMMERCE
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| Audio | Topic |
|---|---|
| Start | |
| Confirmation Hearing(s) | |
| HB193 | |
| HB358 | |
| HB376 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 358 | TELECONFERENCED | |
| + | HB 193 | TELECONFERENCED | |
| *+ | HB 376 | TELECONFERENCED | |
| + | TELECONFERENCED |
ALASKA STATE LEGISLATURE
HOUSE LABOR AND COMMERCE STANDING COMMITTEE
April 9, 2018
3:17 p.m.
MEMBERS PRESENT
Representative Sam Kito, Chair
Representative Adam Wool, Vice Chair
Representative Andy Josephson
Representative Louise Stutes
Representative Chris Birch
Representative Colleen Sullivan-Leonard
MEMBERS ABSENT
Representative Gary Knopp
Representative Mike Chenault (alternate)
Representative Bryce Edgmon (alternate)
COMMITTEE CALENDAR
CONFIRMATION(S):
Alaska State Board of Public Accountancy
Leslie Schmitz Anchorage
Karen Smith Anchorage
Alcoholic Beverage Control Board
Sara Crapuchettes Soldotna
Glenn Brady Fairbanks
State Board of Registration of Architects Engineers and Land
Surveyors
William Mott Anchorage
Luanne Urfer Eagle River
Jennifer Anderson Anchorage
Richard Jones Juneau
Board of Barbers and Hairdressers
Vershawn Idom Anchorage
Board of Chiropractic Examiners
James Morris Dutch Harbor
Board of Dental Examiners
Dominic Wenzell Girdwood
Robin Wahto Anchorage
Alaska Labor Relations Agency
Tyler Andrews Anchorage
Melinda (Mila) Cosgrove Juneau
Lon Needles Valdez
Marijuana Control Board
Loren Jones Douglas
Nicholas Miller Anchorage
Board of Marine Pilots
Peggy McLaughlin Dutch Harbor
Richard Harris Juneau
Les Cronk Ketchikan
Board of Marital and Family Therapy
Natalie Lewis Kotzebue
Board of Massage Therapists
David Edwards-Smith Soldotna
Jill Motz Wasilla
Board of Certified Direct-Entry Midwives
Dianna Kristeller Fairbanks
Kenni Linden Palmer
Board of Nursing
Starla Fox Dillingham
Linda Hutchings Soldotna
Board of Examiners in Optometry
Damien Delzer Fairbanks
Eric Lingle Juneau
Board of Pharmacy
Tammy Lindemuth Anchorage
Sharon Long Anchorage
Lana Bell Anchorage
State Physical Therapy and Occupational Therapy Board
Keith Poorbaugh Palmer
Robert Calhoon Anchorage
Board of Professional Counselors
Steven Cardwell Fairbanks
Janece Richard Anchorage
Alice Baum Anchorage
Board of Psychologist and Psychological Associate Examiners
Paul Dukarm Fairbanks
Board of Certified Real Estate Appraisers
Donald Faulkenburry Anchorage
David Derry Kenai
Wendy Lawrence Sitka
Regulatory Commission of Alaska
Janis Wilson Anchorage
Paul Lisankie Anchorage
Antony Scott Anchorage
Board of Social Work Examiners
Lisa Hay Fairbanks
Danielle LaFon Fairbanks
Board of Veterinary Examiners
Chris Michetti Anchorage
Workers' Compensation Appeals Commission
Michael Notar Juneau
Workers Compensation Board
Bradley Evans Anchorage
David Kester Anchorage
Justin Mack Anchorage
Nancy Shaw Anchorage
Jacob Howdeshell North Pole
Bronson Frye Anchorage
Robert Weel Anchorage
Pamela Cline Wasilla
- CONFIRMATION(S) ADVANCED
HOUSE BILL NO. 193
"An Act relating to insurance trade practices and frauds; and
relating to emergency services and balance billing."
- HEARD & HELD
HOUSE BILL NO. 358
"An Act relating to insurance coverage for benefits provided
through telehealth; and providing for an effective date."
- HEARD & HELD
HOUSE BILL NO. 376
"An Act establishing a state bank; relating to insurance,
mortgage lending, securities, and permanent fund dividends; and
providing for an effective date."
- HEARD & HELD
PREVIOUS COMMITTEE ACTION
BILL: HB 193
SHORT TITLE: HEALTH CARE; BALANCE BILLING
SPONSOR(s): REPRESENTATIVE(s) GRENN
03/24/17 (H) READ THE FIRST TIME - REFERRALS
03/24/17 (H) HSS, L&C
03/08/18 (H) HSS AT 3:00 PM CAPITOL 106
03/08/18 (H) Heard & Held
03/08/18 (H) MINUTE(HSS)
03/27/18 (H) HSS AT 3:00 PM CAPITOL 106
03/27/18 (H) -- MEETING CANCELED --
03/29/18 (H) HSS AT 3:00 PM CAPITOL 106
03/29/18 (H) Moved CSHB 193(HSS) Out of Committee
03/29/18 (H) MINUTE(HSS)
03/30/18 (H) HSS RPT CS(HSS) NT 2DP 4NR
03/30/18 (H) DP: SULLIVAN-LEONARD, SPOHNHOLZ
03/30/18 (H) NR: TARR, ZULKOSKY, KITO, EASTMAN
04/03/18 (H) FIN AT 10:00 AM ADAMS ROOM 519
04/03/18 (H) <Bill Hearing Canceled>
04/09/18 (H) L&C AT 3:15 PM BARNES 124
BILL: HB 358
SHORT TITLE: INSURANCE COVERAGE FOR TELEHEALTH
SPONSOR(s): REPRESENTATIVE(s) SPOHNHOLZ
02/19/18 (H) READ THE FIRST TIME - REFERRALS
02/19/18 (H) HSS, L&C
03/08/18 (H) HSS AT 3:00 PM CAPITOL 106
03/08/18 (H) Heard & Held
03/08/18 (H) MINUTE(HSS)
03/22/18 (H) HSS AT 3:00 PM CAPITOL 106
03/22/18 (H) -- MEETING CANCELED --
03/29/18 (H) HSS AT 3:00 PM CAPITOL 106
03/29/18 (H) Moved HB 358 Out of Committee
03/29/18 (H) MINUTE(HSS)
03/30/18 (H) HSS RPT 3DP 3NR 1AM
03/30/18 (H) DP: JOHNSTON, KITO, SPOHNHOLZ
03/30/18 (H) NR: TARR, ZULKOSKY, SULLIVAN-LEONARD
03/30/18 (H) AM: EASTMAN
04/09/18 (H) L&C AT 3:15 PM BARNES 124
BILL: HB 376
SHORT TITLE: ESTABLISH THE ALASKA STATE BANK
SPONSOR(s): REPRESENTATIVE(s) TUCK
02/21/18 (H) READ THE FIRST TIME - REFERRALS
02/21/18 (H) L&C, FIN
04/09/18 (H) L&C AT 3:15 PM BARNES 124
WITNESS REGISTER
RYAN JOHNSTON, Staff
Representative Jason Grenn
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Introduced HB 193 on behalf of
Representative Grenn, prime sponsor.
DR. ANNE ZINK, MD
Matsu Emergency Department
Palmer, Alaska
POSITION STATEMENT: Testified in support of HB 193.
REPRESENTATIVE IVY SPOHNHOLZ
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented HB 358 as prime sponsor.
BERNICE NESBITT, Staff
Representative Spohnholz
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Testified on HB 358 on behalf of
Representative Spohnholz, prime sponsor.
VICTORIA KNAPP
CEO
Matsu Health Services
Wasilla, Alaska
POSITION STATEMENT: Testified in support of HB 358.
LYNN FREEMAN, MD
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 358.
CHARLES DUNCAN, Staff
Representative Chris Tuck
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Introduced HB 376 on behalf of
Representative Tuck, prime sponsor.
REPRESENTATIVE CHRIS TUCK
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Introduced HB 376 as prime sponsor.
ACTION NARRATIVE
3:17:26 PM
CHAIR SAM KITO called the House Labor and Commerce Standing
Committee meeting to order at 3:17 p.m. Representatives
Josephson, Wool, Birch, Sullivan-Leonard, and Chair Kito were
present at the call to order. Representative Stutes arrived as
the meeting was in progress.
^CONFIRMATION HEARING(S)
CONFIRMATION HEARING(S)
Alaska State Board of Public Accountancy
Alcoholic Beverage Control Board
State Board Architects, Engineers and Land Surveyors
Board of Barbers and Hairdressers
Board of Chiropractic Examiners
Board of Dental Examiners
Alaska Labor Relations Agency
Marijuana Control Board
Board of Marine Pilots
Board of Marital and Family Therapy
Board of Massage Therapists
Board of Certified Direct-Entry Midwives
Board of Nursing
Board of Examiners in Optometry
Board of Pharmacy
State Board, Physical Therapy and Occupational Therapy
Board of Professional Counselors
Board of Psychologist and Psychological Associate Examiners
Board of Certified Real Estate Appraisers
Regulatory Commission of Alaska
Board of Social Work Examiners
Board of Veterinary Examiners
Workers' Compensation Appeals Commission
Alaska Workers' Compensation Board
3:18:21 PM
CHAIR KITO advised that he had asked the members to submit the
names of all appointees to testify directly, and nine
individuals were brought before the committee. In the interest
of making the record complete, he said he would read the
appointee names and boards and commissions in which they are
being proposed, as follows:
Alaska State Board of Public Accountancy
Leslie Schmitz Anchorage
Karen Smith Anchorage
Alcoholic Beverage Control Board
Sara Crapuchettes Soldotna
Glenn Brady Fairbanks
State Board of Registration of Architects Engineers
and Land Surveyors
William Mott Anchorage
Luanne Urfer Eagle River
Jennifer Anderson Anchorage
Richard Jones Juneau
Board of Barbers and Hairdressers
Vershawn Idom Anchorage
Board of Chiropractic Examiners
James Morris Dutch Harbor
Board of Dental Examiners
Dominic Wenzell Girdwood
Robin Wahto Anchorage
Alaska Labor Relations Agency
Tyler Andrews Anchorage
Melinda (Mila) Cosgrove Juneau
Lon Needles Valdez
Marijuana Control Board
Loren Jones Douglas
Nicholas Miller Anchorage
Board of Marine Pilots
Peggy McLaughlin Dutch Harbor
Richard Harris Juneau
Les Cronk Ketchikan
Board of Marital and Family Therapy
Natalie Lewis Kotzebue
Board of Massage Therapists
David Edwards-Smith Soldotna
Jill Motz Wasilla
Board of Certified Direct-Entry Midwives
Dianna Kristeller Fairbanks
Kenni Linden Palmer
3:21:11 PM
REPRESENTATIVE SULLIVAN-LEONARD objected to Kenni Linden,
Palmer, Alaska.
CHAIR KITO advised there would be a separate motion regarding
her objection.
CHAIR KITO continued reading the list of appointees.
Board of Nursing
Starla Fox Dillingham
Linda Hutchings Soldotna
Board of Examiners in Optometry
Damien Delzer Fairbanks
Eric Lingle Juneau
Board of Pharmacy
Tammy Lindemuth Anchorage
Sharon Long Anchorage
Lana Bell Anchorage
State Physical Therapy and Occupational Therapy Board
Keith Poorbaugh Palmer
Robert Calhoon Anchorage
Board of Professional Counselors
Steven Cardwell Fairbanks
Janece Richard Anchorage
Alice Baum Anchorage
Board of Psychologist and Psychological Associate
Examiners
Paul Dukarm Fairbanks
Board of Certified Real Estate Appraisers
Donald Faulkenburry Anchorage
David Derry Kenai
Wendy Lawrence Sitka
Regulatory Commission of Alaska
Janis Wilson Anchorage
Paul Lisankie Anchorage
Antony Scott Anchorage
Board of Social Work Examiners
Lisa Hay Fairbanks
Danielle LaFon Fairbanks
Board of Veterinary Examiners
Chris Michetti Anchorage
Workers' Compensation Appeals Commission
Michael Notar Juneau
Workers' Compensation Board
Bradley Evans Anchorage
David Kester Anchorage
Justin Mack Anchorage
Nancy Shaw Anchorage
Jacob Howdeshell North Pole
Bronson Frye Anchorage
Robert Weel Anchorage
Pamela Cline Wasilla
3:23:20 PM
The committee took an at-ease from 3:23 p.m. to 3:30 p.m.
3:30:02 PM
CHAIR KITO moved to advance the governor's named appointees to a
joint session of the House of Representatives and Senate for
consideration, other than the name that received an objection,
Kenni Linden. He reminded the members that signing the reports
regarding these appointments to the boards and commissions are
merely forwarded to the full legislature for confirmation or
rejection. There being no objection, the names of the
appointees were advanced to the joint session of the House of
Representatives and the Senate.
3:31:00 PM
The committee took an at-ease from 3:31 p.m. to 3:33 p.m.
3:33:06 PM
CHAIR KITO noted that there was an objection to the appointee to
the Board of Certified Direct-Entry Midwives, Kenni Linden. He
reminded the committee that a member's signature on the report
does not reflect an intent by any of the members to vote for or
against this individual during the joint session of the House of
Representatives and the Senate for the purposes of approval.
3:33:47 PM
REPRESENTATIVE SULLIVAN-LEONARD spoke to her objection and
stated that she received hundreds of e-mails and telephone calls
from her constituents who have voiced their objection to this
member being included in a midwifery board, which is
significant. In reviewing the composition of the midwifery
board itself, there is representation from the Mat-Su Valley,
which is an important component to review when looking at each
board. The member from Mat-Su is a midwife, the position that
Ms. Linden has applied for is a public seat.
3:35:39 PM
The committee took an at-ease from 3:35 p.m. to 3:36 p.m.
3:36:08 PM
A roll call vote was taken. Representatives Josephson, Wool,
Stutes, and Kito voted in favor of advancing the name of Ms.
Kenni Linden. Representatives Sullivan-Leonard and Birch voted
against it. Therefore, the appointee's name was advanced to the
joint session of House of Representative and the Senate for
consideration by a vote of 4-2.
3:36:41 PM
The committee took an at-ease from 3:36 p.m. to 3:39 p.m.
HB 193-HEALTH CARE; BALANCE BILLING
3:39:04 PM
CHAIR KITO announced that the next order of business would be
HOUSE BILL NO. 193, "An Act relating to insurance trade
practices and frauds; and relating to emergency services and
balance billing."
3:39:21 PM
RYAN JOHNSTON, Staff, Representative Jason Grenn, introduced HB
193 on behalf of Representative Grenn, prime sponsor. He
paraphrased the sectional analysis [included in committee
packet], which reads as follows [original punctuation provided]:
Section 1: Establishes a "Hold Harmless" standard for
insurance providers in the situation where a covered
person receives medical care from an out-of-network
medical provider in an emergency situation. An
insurance provider will hold a covered person harmless
to ensure that the covered person only pay what would
have been paid if the medical provider was an in-
network provider.
Outlines the standards to establish the situations
where a medical provider cannot balance bill a covered
person. An insurance provider shall pay a non-network
health care provider if the health care provider
renders to a covered person;
• emergency services or treats an emergency medical
condition
• services at an in-network facility
• services for which a referral was made by an in-
network health care provider to an out-of-network
health care provider without the explicit written
consent of the covered person.
The covered person is still required to pay the in-
network rates for the deductible, coinsurance and
copayment. The amount paid by the covered person is
required to be counted towards the covered persons
deductible.
The final payment determined for the medical provider
will subtract any amount paid by the covered person.
The insurance provider is to pay the greater of three
possible amounts;
• the median negotiated contract rate generated
using the in-network health care providers for
the service provided;
• That is equal to the 80th percentile of charges
for the services calculated using a method that
establishes a statistically credible profile that
reflects the general cost differences between the
geographical area where the service was preformed
and the other geographical areas when performed
by a health care provider in the same or similar
specialty; or
• That would be paid under Medicare for the service
provided.
Medical providers are required to send all bills to
the insurance provider, except for the deductible,
coinsurance and copayment.
Contains a clause that if a covered person knowingly
elects to use an out-of-network medical provider then
they can be balanced billed for the services.
Section 2: Health care insurance plans obtained under
AS 39.30.090 or provided under AS 39.30.091 will be
subject to the requirements of secs. 21.36.512 and
21.36.513.
Section 3: Bans the practice of "Balance Billing" by a
medical provider under the criteria of section 1 of
the bill. Stipulates that the medical provider can
still bill for the deductible, coinsurance and
copayment.
States that a medical provider will be paid according
to section 1 of the bill.
Section 4: Establishes the punishment for medical
providers under the Unfair Trade Practices and
Consumer Protection.
3:43:23 PM
REPRESENTATIVE BIRCH asked whether the bill sponsor has heard
concerns about equity for small businesses.
MR. JOHNSTON answered that was the motivation behind Section 2.
He said that requiring private insurers to follow the directive,
the state plan should be held to the same standard. He said
some aspects could not be addressed at the state level.
REPRESENTATIVE BIRCH asked about the fiscal note (FN).
MR. JOHNSTON answered it should be a cost savings for the state.
He said that currently the Division of Retirement and Benefits
pays 100 percent of the billed amount in an emergency situation.
He added the state does hold state employees harmless. He
stated the proposed bill states that it has to be in the state
in which the service was rendered, for example for an emergency
room visit in Oregon, the state would just use Oregon's 80
percentile. He said the language could be made clearer.
3:46:27 PM
DR. ANNE ZINK, MD, Matsu Emergency Department, testified in
support of HB 193. She presented a PowerPoint presentation on
"HB 193: A Patient Protection Bill,[included in committee
packet]. She said the question is what is right for the patient.
She stated the bill would end the "surprise insurance gap." She
described a scenario of someone in an emergency situation and
the subsequent related billing for services. She explained the
scenario in terms of in and out of network services. She
explained that the bill would put a ban on balance bill, ending
the "surprise insurance gap." She underlined that in order to
preserve a safety net for patients, the system has to be
geographically relevant.
REPRESENTATIVE WOOL asked about health spending versus health
costs.
DR. ZINK answered she was speaking to health spending.
3:56:56 PM
DR. ZINK spoke to "Alaska and the 80th Percentile Regulation:
Myth and Reality." She said Alaska is not the most expensive
area in the country for health care, as it follows the District
of Columbia. She said that rural states pay more for
physicians. She remarked that the 80th percentile rule did not
change the Alaska per capita private health insurance spending
curve. She added that Connecticut and New York established the
80th percentile as a benchmark for payment in 2014 and many
states are considering similar patient protection measures. She
underlined there were no increases in charges after the 80
percentile was adopted.
DR. ZINK pointed out that the National Insurance Commissioners
model legislation regarding out-of-network balance billing
stated as a guide:
A. For the purposes of this subsection, "usual and
customary cost" shall mean the eightieth percentile
of all charges for the particular health care
service performed by a provider in the same or
similar specialty and provided in the same
geographical area as reported in a benchmarking
database maintained by a nonprofit organization
specified by the commissioner. The nonprofit
organization shall not be affiliated with a
carrier.
4:00:02 PM
DR. ZINK went on to explain how emergency costs are coded
between Anchorage, Alaska, and Seattle, Washington, for in-
network and out-of-network services. She showed that
emergency costs are already the same or less that
th
neighboring states. She said that the 80 percentile is a
patient protection issue.
CHAIR KITO asked whether Americas Health Insurance Association
had indicated it would be harder to bring physicians into the
network if the proposed bill were to pass. He asked Dr. Zink to
give her thoughts.
DR. ZINK answered she does not have concerns. She explained
that if there is a relatively good out-of-network minimum, it
encourages providers to be in-network.
REPRESENTATIVE BIRCH asked where the hospitals fit into the
issue.
DR. ZINK shared her understanding the hospitals would be held to
the same provision in the proposed bill.
4:04:45 PM
REPRESENTATIVE WOOL asked Dr. Zink to explain the database she
mentioned in her presentation.
DR. ZINK answered that the proposed bill does not specify how
geographic relevance and a non-profit database would be
established.
REPRESENTATIVE WOOL asked about non-emergency medical services.
DR. ZINK answered that anything a patient feels is an emergency
has to be examined. She said the issue of emergency definitions
is defined in federal law.
CHAIR KITO mentioned a scenario in which an insurance employee
made a point of asking the anesthesiologist whether he or she is
in or out of network before proceeding.
DR. ZINK added that at time the person who is in network is not
available for the procedure and someone who is out-of-network is
used.
REPRESENTATIVE WOOL asked whether the answer is to ask the
medical professional prior to any procedure whether they are in-
network.
DR. ZINK answered in the affirmative. She added that is why it
is so important to pass the proposed legislation, as in an
emergency that scenario would not be possible.
4:11:14 PM
CHAIR KITO opened public testimony on HB 193.
CHAIR KITO held over HB 193.
HB 358-INSURANCE COVERAGE FOR TELEHEALTH
4:11:39 PM
CHAIR KITO announced that the next order of business would be
HOUSE BILL NO. 358, "An Act relating to insurance coverage for
benefits provided through telehealth; and providing for an
effective date."
4:11:51 PM
REPRESENTATIVE SPOHNHOLZ, Alaska State Legislature, presented HB
358 as prime sponsor. She paraphrased the sponsor statement
[included in committee packet], which reads as follows [original
punctuation provided]:
HB 358 will enhance access to health care services,
primarily mental health and primary care, for Alaskans
who have insurance plans with Moda, Premera Blue
Cross, United Healthcare, and Aetna Life Insurance, to
name a few. HB 358 does this by requiring the insurers
previously listed to provide insurance coverage for
health care services provided through telehealth.
Increasing access to health care services throughout
Alaska is crucial. Because of our unique
geographical landscape and our rural and aging
communities spread out across the state,
telehealth can enhance access to health care and
improve clinical outcomes.
Here are some of the advantages of telehealth:
• Better access and privacy in rural, remote, and
urban areas of Alaska
• Early intervention which can lead to savings
• Greater access for referrals to providers who
specialize in treating specific health issues
• Better, and potentially quicker, access means a
potential reduction in suicides, domestic
violence and other serious events
• Zero impact on state budget
Under HB 358, telehealth benefits for all covered
health care services, including mental health
benefits, will be reimbursable for health care
providers licensed in the state without an initial in-
person appointment. Depending on the patient's needs,
a telehealth appointment can provide education,
reviewing of prescriptions and checking symptoms, all
at a distance on a secure system.
Health care services delivered via telehealth is
happening all over the country, and Alaska is at the
forefront of providing telehealth services for urban,
rural, aging, and the underserved communities across
the state.
4:13:10 PM
BERNICE NESBITT, Staff, Representative Spohnholz, testified on
HB 358 on behalf of Representative Spohnholz, prime sponsor.
She paraphrased the sectional analysis, which read as follows
[original punctuation provided]:
Section 1.
AS 21.42.422 has been amended to require insurance
coverage for benefits provided via telehealth.
Section 2.
AS 21.42.422 is a new subsection that defines health
care insurer as a person transacting the business of
health care insurance except for a nonfederal
governmental plan. It also adds the definition of
telehealth under 47.05.270(e) as the practice of
health care delivery, evaluation, diagnosis,
consultation, or treatment, using the transfer of
health care data through audio, visual, or data
communications, performed over two or more locations
between providers who are physically separated from
the recipient or from each other or between a provider
and a recipient who are physically separated from each
other.
Section 3
The changes to Section 1 of this bill applies to
health care insurance plans that are offered, issued,
delivered, or renewed on or after the effective date.
Section 4
The effective date is July 1, 2019.
MS. NESBITT shared that she had heard from the major
providers in the state, and none had expressed opposition
to the proposed legislation.
4:15:52 PM
VICTORIA KNAPP, CEO, Mat-Su Health Services, testified in
support of HB 358. She stated there is a need for psychiatric
providers in the state. She said the demand is higher than the
availability. She explained that the company had moved towards
telehealth to meet that need. She said often patients go
without evaluations because their provider will not pay for
evaluations via telehealth.
4:17:55 PM
LYNN FREEMAN, MD, testified in support of HB 358. She indicated
she was testifying from the private provider perspective. She
described her patient pool. She said some are in chronic pain
and were facing surgery. She said pain can be made worse by
having to drive to appointments.
4:20:25 PM
CHAIR KITO opened public testimony on HB 358.
CHAIR KITO held over HB 358.
HB 376-ESTABLISH THE ALASKA STATE BANK
4:20:42 PM
CHAIR KITO announced that the final order of business would be
HOUSE BILL NO. 376
"An Act establishing a state bank; relating to insurance,
mortgage lending, securities, and permanent fund dividends; and
providing for an effective date."
CHARLES DUNCAN, Staff, Representative Chris Tuck, Alaska State
Legislature, introduced HB 376 on behalf of Representative Tuck,
prime sponsor. He paraphrased the sponsor statement [included
in committee packet], which reads as follows [original
punctuation provided]
The Alaska State Bank is designed to create the legal
ability to access Federal Reserve and United States
Treasury monetary policy funds and use fractional
reserve banking methods to promote a science,
education and infrastructure recovery.
As federal fiscal policy funding continues to decline
for state governments and as Federal Reserve support
for liquidity in the monetary base continues to be
maintained at high historical levels, the opportunity
is opened for state governments to create new legal
mechanisms to access monetary policy. Fiscal policy is
taxation and spending by government and monetary
policy is control of the money supply and interest
rates.
In the traditions of Benjamin Franklin and the
Reconstruction Finance Corporation, local decision-
making is a requirement in guiding monetary policy and
the best method to do that today is to create state
development banks.
The basic proposal is to use existing state
development institutions to create packages of state,
municipal, borough, port authority, and development
finance authority bonds, grants and shares that are
rediscounted through the Federal Reserve and combined
with federal bonds and Treasury currency. The Alaska
State Bank then leverages or transfers the packages
back to the State of Alaska, municipalities, boroughs,
port authorities, development finance authorities,
local banks, credit unions, universities,
corporations, small business and entrepreneurship.
The Alaska State Bank will begin as an infrastructure
bank that leverages loans with our local banks and
then evolve into a full featured development bank in
the future. The first goal will be to access Federal
Reserve funds to provide reserve and capital
requirements for the Alaska State Bank. Very low
interest rates combined with the function of the grant
and equity process will guarantee payment stability
and long-term investments into jobs, science,
technology, education and infrastructure.
The Alaska Permanent Fund or other existing State of
Alaska financial institutions will not be required by
statute to dedicate reserve or capital requirements
and there will not be mandatory state revenue deposits
into the state bank. Maintaining existing financial
agreements while using the self-interest of voluntary
participation will be important keys for insuring
long-term financial success.
Self-interest will identify partnerships with our
local banks in retailing some of the new funds.
Local banks and credit unions will become more
valuable assets for increasing transactions efficiency
and helping to choose viable loan partners.
Creating an infrastructure development bank with the
legal ability to access federal and Federal Reserve
monetary policy funds is a much better solution to
Alaska's fiscal crises than increasing personal
taxation or confiscating the Permanent Fund Dividend.
Less than $5 billion per year in total transactions
will make the Alaska State Bank the primary solution
to Alaska's fiscal crisis.
4:25:27 PM
REPRESENTATIVE CHRIS TUCK, Alaska State Legislature, introduced
HB 376 as prime sponsor. He shared the Alaska State Bank
project was modelled on the Bank of Japan and the Reconstruction
Finance Corporation established after the U.S. Civil War. He
said at one time the state had a foundation which contributed to
science and technology. He mentioned the Committee for
Measurable Objectives. He spoke to infrastructure needs of the
state. He said the state could access federal funds using
fractional reserve banking practices.
4:29:39 PM
REPRESENTATIVE STUTES said [the aim of the proposal is] to
facilitate access through the federal banking system. She asked
whether the Alaska state bank could "handle any of the marijuana
dollar."
REPRESENTATIVE TUCK answered it is not the focus of the bank.
He said it would be the "insulating institution between them and
the federal government." He said the proposed bank could help
with required reports. He described ways in which the proposed
bank could help the industry.
REPRESENTATIVE BIRCH said it seems like a terrible idea. He
said he spends his time trying to restrain the growth of state
government. He asked about the genesis of the proposal.
REPRESENTATIVE TUCK answered that the proposal would be allowing
money to be created in Alaska through the Federal Reserve. He
stated it cannot be done with Alaska Industrial Development and
Export Authority (AIDEA) or Alaska Housing Finance Corporation
(AFHC) because those institutions cannot work with fractional
reserve banking.
REPRESENTATIVE BIRCH asked about liability.
REPRESENTATIVE TUCK said that one way that money is being
created is through the Federal Reserve buying up debt. He said
the idea is to take advantage of that to expand the monetary
supply in Alaska.
MR. DUNCAN said the proposal would be asking for money from the
Federal Reserve. He said there are three ways to access that
money loan guarantees, capital purchase in which the Fed buys
bonds, and credit stimulus.
REPRESENTATIVE TUCK said it is called the capital stimulus
method, but it is really a debt stimulus method.
4:38:18 PM
CHAIR KITO asked whether there are any other financial entities
that have access to the proposed type of financing.
MR. DUNCAN answered that a bond-creating institution such as
AIDEA can access two of the methods mentioned. He reiterated
those institutions cannot act with fractional reserve bank. He
explained that is what the proposal is.
CHAIR KITO suggested the proposal would open access to reserves
to which the state does not currently have access.
MR. DUNCAN answered that is correct.
4:40:13 PM
REPRESENTATIVE BIRCH stated he is not comfortable with using
debt to acquire more debt. He asked how the proposal would
produce new money.
REPRESENTATIVE TUCK said the aim is to create money in Alaska.
He said banks have a lot of surplus. He said the bank would be
an infrastructure and development driver. He spoke to using the
university system to enhance development.
MR. DUNCAN answered the central issue in monetary policy is what
the money is being increased for. He said the proposal is to
subsidize science and technology rather than speculation.
4:44:14 PM
REPRESENTATIVE STUTES asked for a simple explanation of the
proposal and how it would access federal dollars.
MR. DUNCAN answered that currently there is a debt-based
monetary system. He said the state institutions create bonds.
Those bonds are put into an account with the Alaska State Bank.
The bank issues stock, and that package is put on account with
the Federal Reserve. The account is considered the capital and
reserve requirement for loaning new money.
REPRESENTATIVE TUCK said that is where the confusion comes in.
CHAIR KITO shared his understanding that the proposal is to
create a revolving loan fund. The bonds on account with the
Federal Reserve, which in turn gives credit on the bonds. The
money is then lent out for other things.
REPRESENTATIVE STUTES said it sounds like the state would then
always owe someone money.
CHAIR KITO said that with the proposed bank, the federal
government would loan money based on the bonds on account with
the state bank.
REPRESENTATIVE STUTES suggested the bonds sold would then be
sold to the Fed.
MR. DUNCAN corrected that the bonds would be on account with the
Fed, not sold to it.
REPRESENTATIVE TUCK added that AIDEA could do the same thing but
does not. He added the Fed prefers to have the bonds on
account.
CHAIR KITO asked whether it would be correct to say that the
bonds would be used as collateral.
REPRESENTATIVE TUCK answered in the affirmative.
4:49:20 PM
REPRESENTATIVE SULLIVAN-LEONARD asked about a fiscal note.
MR. DUNCAN said the fiscal note would be the next step in the
process. He said the total cost would not be great. He
explained there would be four boards for the bank.
4:50:42 PM
CHAIR KITO opened public testimony on HB 376.
CHAIR KITO held over HB 376.
4:51:28 PM
ADJOURNMENT
There being no further business before the committee, the House
Labor and Commerce Standing Committee meeting was adjourned at
4:51 p.m.