Legislature(1999 - 2000)
04/04/2000 09:13 AM Senate FIN
| Audio | Topic |
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
MINUTES
SENATE FINANCE COMMITTEE
April 4, 2000
9:13 AM
TAPES
SFC-00 # 76, Side A and Side B
CALL TO ORDER
Co-Chair John Torgerson convened the meeting at
approximately 9:13 AM.
PRESENT Co-Chair John Torgerson, Co-Chair Sean Parnell,
Senator Al Adams, Senator Lyda Green, Senator Pete Kelly,
Senator Loren Leman, Senator Randy Phillips and Senator
Gary Wilken
Also Attending: SENATOR ROBIN TAYLOR; JEFF JESSE, Executive
Director, Alaska Mental Health Trust Authority, Department
of Revenue; CHIP WAGONER; GAIL FENUMANI, Division of
Elections, Office of the Governor; KATHLEEN STRASBAUGH,
Assistant Attorney General, Governmental Affairs Section,
Civil Division, Department of Law; MIKE PAULEY staff to
Senator Leman; ANN CAPENETTI, Assistant Attorney General,
Legal Services Section, Criminal Division, Department of
Law;
Attending via Teleconference: From Anchorage: BLAIR MCCUNE,
Deputy Director, Public Defender Agency, Department of
Administration; DAVID HUDSON, Lieutenant, Alaska State
Trooper, Department of Public Safety; BOB LOHR, Director,
Division of Insurance, Department of Community and Economic
Development; JULIA COSTER, Assistant Attorney General,
Commercial Section, Civil Division, Department of Law
SUMMARY INFORMATION
HB 313-APPROPRIATIONS: MENTAL HEALTH
The Committee considered and adopted two amendments, heard
from the Alaska Mental Health Trust Authority and reported
the bill from Committee.
SJR 40-CONST AM: ELECTION & TERMS OF GOV & LT GOV
The Committee heard from the sponsor, the Division of
Elections, the Department of Law and a member of the
public. Two amendments were considered, one was amended and
both were adopted. The bill was reported from Committee.
SB 26-FALSE REPORT TO POLICE/HINDER PROSECUTION
The Committee heard from the sponsor, the Public Defender's
Agency, an Alaska State Trooper and the Department of Law.
The bill was held in Committee.
SB 256-PHYSICIAN NEGOTIATIONS WITH HEALTH INSURE
The Committee heard from the Department of Community and
Economic Development and the Department of Law. A committee
substitute and an amendment were adopted. The bill was held
in Committee.
SB 289-TECH & VOC EDUC/ EMPLOYMENT ASSISTANCE
This bill was scheduled but not heard.
SB 290-PUBLIC SCHOOL FUNDING & EXPENDITURES
This bill was scheduled but not heard. A new fiscal note
was distributed to members.
COMMITTEE SUBSTITUTE FOR HOUSE BILL NO. 313(FIN) am
"An Act making appropriations for the operating and
capital expenses of the state's integrated
comprehensive mental health program; and providing for
an effective date."
The Senate Finance Committee had previously heard this
bill, adopted a committee substitute, 1-LS1305\G, that
includes only the operating expenditures and was preparing
to add capital projects to the budget.
Amendment #1: This amendment replaces Sections 3 and 4 with
the following language.
Section 3. The following appropriation items are for
capital projects and grants from the general fund or
other funds as set out in section 4 of this Act by
funding source to the agencies named for the purposes
expressed and lapse under AS 37.25.020, unless
otherwise noted.
Appropriation General Other
Allocations Items Funds Funds
Senior Services Data 308,200 308,200
Integration Project
(ED 99)
Telepsychiatry Video 150,000 150,000
Communication System
Equipment (ED 99)
Appropriation General Other
Allocations Items Funds Funds
Services
Fairbanks - Reopen 495,000 495,000
Fahrenkamp Residential
Facility (ED 29-34)
Alaska Psychiatric 379,500 379,500
Institute Stop-Gap
Repairs (ED 10-25)
Mental Health Grants - 650,000 100,000 550,000
Facilities Renovation
And Deferred Maintenance
(ED 99)
Mental Health Grants - 300,000 50,000 250,000
Essential Program
Equipment (ED 99)
Housing Modifications 250,000 250,000
for Mental Health Trust
Beneficiaries (ED 99)
Spirit Camp Facility 100,000 100,000
Development (ED 36)
Fairbanks Community 150,000 150,000
Mental Health Center
Relocation (ED 29-34)
Coordination and 100,000 100,000
Resource Sharing Among
Mental Health Services
Providers (ED 99)
Appropriation General Other
Allocations Items Funds Funds
Transitional Housing 300,000 300,000
for Recovering Substance
Abusers (ED 99)
Alaska Psychiatric 1,000,000 1,000,000
Institute 2000:
Replacement of Existing
Facility (ED 10-25)
Mental Health Trust 870,000 870,000
Land Development and Value
Enhancement (ED 99)
AHFC Homeless 450,000 450,000
Assistance Program
(ED 99)
AHFC Beneficiary and 1,500,000 1,500,000
Special Needs
Housing (ED 99)
Public Facilities
Coordinated 500,000 500,000
Transportation and
Vehicles (ED 99)
Sec. 4. The following sets out the funding by agency
for the appropriations made in Sec. 3 of this Act.
Department of Administration
Mental Health Trust Authority 308,200
Authorized Receipts
Department of Corrections
Mental Health Trust Authority 150,000
Authorized Receipts
Department of Health and Social Services
General Fund / Mental Health 150,000
Mental Health Trust Authority 2,925,000
Authorized Receipts
AHFC Dividends 649,500
Department of Natural Resources
Mental Health Trust Authority 870,000
Authorized Receipts
Department of Revenue
Mental Health Trust Authority 200,000
Authorized Receipts
AHFC Dividends 1,750,000
Department of Transportation/Public Facilities
Mental Health Trust Authority 500,000
Authorized Receipts
The following summarizes the funding sources for the
appropriations made in section 3 of this act.
General Fund / Mental Health 150,000
Mental Health Trust Authority 4,953,200
Authorized Receipts
AHFC Dividends 2,399,500
Co-Chair Torgerson explained this amendment adds the
capital projects that were included in the version of the
bill passed from the House of Representatives.
Senator Green moved for adoption.
Without objection or discussion, the amendment was ADOPTED.
Amendment #2: This amendment adds $100,000 Mental Health
Trust Authority receipts funds to the Department of
Administration for Home and Community Based Care.
Senator Wilken moved for adoption and explained the purpose
of the funding is for designing a Catholic Community
Services/Southeast Senior Services, adult day care facility
to primarily serve Alzheimer patients. He stated that this
facility would promote the maximum level of independence,
allowing elders to "age in place" and prevent premature
institutionalization. He noted that the Catholic Community
Services organization is looking for alternative funding
for the actual construction of this facility. He also
stressed this item has no affect on the general fund.
Senator Phillips asked why the Alaska Mental Health Trust
Authority (AMHTA) recommended this item.
JEFF JESSE, Executive Director, Alaska Mental Health Trust
Authority, Department of Revenue, testified via
teleconference from Anchorage that when the original
proposal was made to the governor for this project, the
funding mechanism included a general fund match. Mr. Jesse
stated that once the governor decided the general funds
were unavailable, he also decided that the planning phase
of the project would not be beneficial. However, Mr. Jesse
told the Committee, the Trust decided that the design and
planning of this facility could help secure other funding.
Senator Phillips asked if this item was a capital item or
an operating expense.
Mr. Jesse answered the funding was for a capital project
the same as most other facility designing and planning are
considered capital expenditures.
There was no objection and the amendment was ADOPTED.
Co-Chair Parnell moved to allow the Division of Legislative
Finance and the Division of Legal and Research Services to
incorporate any necessary technical adjustments.
There was no objection and the motion was ADOPTED.
Mr. Jesse announced that the Trust was working to gather
the information on the homeless assistance program that
Senator Phillips had requested.
Co-Chair Parnell offered a motion to report from Committee,
CS SB 313 (FIN), 1-LS1305\G as amended with individual
recommendations.
Without objection, the bill was MOVED FROM COMMITTEE.
SENATE JOINT RESOLUTION NO. 40
Proposing amendments to the Constitution of the State
of Alaska providing that the governor, United States
senators, United States representative, and electors
of the President and Vice-President of the United
States be elected by a majority vote.
This was the second hearing for this bill in the Senate
Finance Committee.
Co-Chair Torgerson drew the Committee's attention to a
legal opinion prepared by the Division of Legal and
Research Services as requested by Senator Adams regarding
whether this resolution was considered a constitutional
amendment or a revision. [Copy on File.] Co-Chair
Torgerson noted that the opinion stated in part, ".the
three resolutions considered by the court under this test
in the Bess vs. Ulmer case, SJR 40 appears closer in terms
of the quantity and quality of change proposed to the two
resolutions held to be amendments (marriage and
reapportionment) than the resolution held to be a revision
(rights of prisoners)." Co-Chair Torgerson qualified that
the opinion also stated that the division was unsure how
the court would actually rule if the matter were litigated.
SENATOR ROBIN TAYLOR responded to three questions posed in
the previous hearing from a representative from the
Department of Law. The first question related to the
definition of "majority" where the recommendation was made
to include a definition in the constitution itself. Senator
Taylor stated that he had no objection to Senator Adams's
proposed amendment that would add that definition.
Senator Taylor responded to the Department of Law's second
inquiry about the Electoral College and its membership. He
stated that so long as the Electoral College was still in
existence, he felt that the provisions providing for this
system should be left in the legislation. His reason was
that there could be as many as nine presidential candidates
running for US President within the State Of Alaska and
without a majority requirement, the subsequent delegates to
the Electoral College would represent only a small minority
of voters.
Senator Taylor then addressed the question of run-off
elections saying he did not wish to make a decision on the
procedures of such elections at this time.
Senator Taylor spoke to another proposed amendment that
changes "procedures" to the singular "procedure". He did
not think this change was necessary, saying that the
corresponding statute is sufficient and that the Division
of Elections would establish procedure.
Amendment #1: This amendment inserts the following language
on page 1, line 16, of the resolution, following,
"elected." "The winning candidate must be the first choice
of at least 50 percent plus one of the votes cast for the
office."
Senator Adams moved for adoption and explained that the
amendment places the specific definition of majority into
the constitution.
AT EASE 9:23 AM / 9:25
Co-Chair Parnell moved to amend the amendment to delete
"first" from the inserted language. The sentence then
reads, "The winning candidate must be the choice of at
least 50 percent plus one of the votes cast for the
office."
There was no objection and the amendment was AMENDED.
Without objection, the amended amendment was ADOPTED.
Amendment #2: This amendment deletes, "and elector of
President and Vice-President of the United States," from
page 1, lines 14 and 15 of the resolution. The title then
reads, "Proposing amendments to the Constitution of the
State Of Alaska providing that the governor, United States
senators, and United States representative, be elected by a
majority vote."
This amendment also deletes, "Procedures [THE PROCEDURE]
for arriving at a majority vote, and for" and inserts, "The
procedure for" on page 1 line 16 through page 2 line 1 of
the resolution. The sentence then reads, "The procedure for
determining election contests, with right of appeal to the
courts, shall be prescribed by law."
Co-Chair Parnell moved for adoption on behalf of Co-Chair
Torgerson, the sponsor.
Co-Chair Torgerson explained this is a two-part amendment
that deletes the elections of the president and the vice-
president from the majority requirement and also removes
the procedures for arriving at the majority vote from the
constitution. He asked the resolution sponsor's opinion on
this amendment.
Senator Taylor repeated his statement about the multiple
candidates for president and vice-president on Alaska's
recent ballots. Until the country changes and removes the
Electoral College system of choosing presidents and vice-
presidents, he still wanted the majority represented.
Co-Chair Torgerson said he was unsure the voters would
understand the relationship between the votes cast for
these candidates and the representation on the Electoral
College.
Senator Leman asked how other states chose electors for
president and vice-president. He commented that there have
been some strong third-party candidates and the electorates
resulting from these races don't represent a majority of
the votes cast.
Senator Taylor thought that there were several different
methods of determining delegates amongst the states.
CHIP WAGONER testified that other states were currently
debating the same issue of majority votes and that Vermont
is one state that is including electorates in the majority
requirement.
Mr. Wagoner described the electoral process and how the
political parties select the delegates. He stated that
under the US Constitution the states have the authority to
structure the majority requirements as proposed in this
resolution. He stated that elections would not be delayed
because of the majority requirements because the voters
don't select the electorates.
Co-Chair Torgerson asked if under current practice, the
political parties hold an election to chose its delegates.
Mr. Wagoner affirmed told about how the Republican Party
chooses the electorates. He listed several Republicans who
have served as delegates and were chosen based on their
contribution to the party. He noted that in Alaska, the
party of the presidential candidate who receives the most
votes chooses all the electorates for the next presidential
election.
Co-Chair Torgerson asked if these elections were public.
Mr. Wagoner explained how the elections occur during the
Republican Party Convention. He was unsure how the
Democratic Party held its elections, noting that the last
time the delegates were chosen by the Democrats was in
1960, after John F. Kennedy received the majority of the
votes cast in Alaska.
Co-Chair Torgerson did not understand the problem that
needed to be addressed with an amendment to the state
constitution.
Mr. Wagoner reiterated that there were multiple
presidential candidates in the past several elections and
that none of these candidates received a majority of the
votes. He asserted that "majority rule is a sacred
principal of democracy" as stated by Thomas Jefferson. With
the multitude of parties entering the presidential race,
Mr. Wagoner stressed, this constitutional amendment ensures
that the majority rules.
Senator Adams asked the witness for his legal opinion on
the revision versus amendment question. He did not want to
rule out the possibility that the court would reach the
conclusion that this resolution is a revision and therefore
not eligible to be placed before the voters.
Senator Adams spoke of the short time period between
Election Day and the day the governor takes office,
questioning whether there would be time to conduct a runoff
election.
Mr. Wagoner spoke to the legal opinion request, agreeing
that the resolution would be an amendment to the
constitution. He disagreed with the Supreme Court ruling.
Senator Adams commented that he disagreed with the
opinions.
GAIL FENUMANI, Division of Elections, Office of the
Governor asked if the amendment was proposed for both the
primary and the general election or just the general
election.
Ms. Fenumani pointed out that there would be a timing
problem with holding a runoff election. She detailed the
process of certifying an election and the amount of time
required.
Ms. Fenumani then addressed the cost of holding a runoff
election noting that the cost of a runoff election would be
approximately $750,000 based on the expenditures for the
September 14, 1999 special election.
Ms. Fenumani asked if a presidential candidate did not win
in Alaska by a 50 percent plus one vote majority, would a
runoff election between the top two candidates be required.
Ms. Fenumani commented that the presidential elections are
mostly decided by the time the polls close in this state.
Senator Phillips remarked that if this constitutional
election passes then the legislature could address those
questions in the next session. He stressed these details
could not be placed in the amendment. He used the 1976
constitutional amendment to establish the Alaska Permanent
Fund as an example of how the details of the board of
directors, dividends, etc. were not addressed until after
the election.
Ms. Fenumani responded that she just wanted to state these
issues on the record. She stressed that the division had
not taken a position in support or in opposition of the
resolution.
Co-Chair Torgerson asked if the witness interpreted there
would be a need for a runoff election for the president and
vice-president offices. He thought that was a "far
stretch".
Senator P. Kelly disagreed, saying that the way the
amendment was written, the matter was somewhat confusing.
Ms. Fenumani noted that if the language is intended for the
method of how electorates are chosen within party, the
question of runoff elections for president and vice-
president was answered.
KATHLEEN STRASBAUGH, Assistant Attorney General,
Governmental Affairs Section, Civil Division, Department of
Law, added that this constitutional amendment may apply to
primary as well as general elections.
Ms. Strasbaugh had concerns with mentioning the Electoral
College in the state constitution when elsewhere, only the
offices of president and vice-president are specifically
referred to. She noted that the legislature currently
dictates how the electorates are selected in AS 15.30. She
saw no reason to change this procedure. She did however,
understand the principles that the resolution's sponsor was
trying to accomplish would limit the legislature's ability
regarding runoff elections. She warned that conducting a
runoff election for the office of governor would be
difficult because of another state constitutional provision
that provides when elected officials takes office. She said
the problem continues because US Congress has determined,
in federal statutes, that the electorates must be seated by
a specific deadline as well. She ascertained that these
were fairly serious matters that could not be avoided.
Co-Chair Parnell commented on the term of office of the
governor citing Article 3 Section 4 of the state
constitution, "the term of office of the governor's four
years beginning at noon on the first Monday in December
following his election, ending at noon on the first Monday
of December four years later." He pointed out however, that
this provision only addresses the term office but does not
specify when the elected governor must be seated. He
remarked that under existing procedure, the general
election is not certified until December 13, although the
term of office still begins on the first Monday of the
month, which is an earlier date. Therefore, he surmised
that a runoff election would require no term changes even
if the elected official were not seated until a later date.
Ms. Strasbaugh referred to litigation in other states where
a problem has been identified concerning whether the state
constitution must be followed precisely. She was concerned
that Co-Chair Parnell's scenario may not be that easy. She
stressed that any changes to the election process must be
pre-cleared by the US Department of Justice.
Senator Leman took issue with the previous witness's
comment that presidential elections were decided before
Alaska's voting was completed. He clarified that while the
polls in this state closed later than in other states, all
other states still have to count absentee ballots and
certify their elections as well.
Ms. Fenumani corrected her statement to apply to the
projected outcomes only.
Senator Taylor thought that with the new computerized
systems, elections are conducted much faster. He did not
think the time it would take to conduct a runoff election
would be a hardship.
Senator Leman asked if the sponsor's intent was to include
primary elections in the majority vote requirements.
Senator Taylor answered he only wanted this to apply to the
general election saying he thought the language of the
resolution made that clear. He explained that the primary
election does not directly elect a candidate to office.
Senator Leman agreed with that analysis but noted that
sometimes others read ballot initiatives differently and
wondered if the question should be cleared up now rather
than have difficulties in the future.
Senator Taylor did not think specific clarification was
necessary referring to page one, line eight of the
resolution that specifically states, "general election"
with no mention of the primary election.
Senator Phillips commented that of all concerns the
Division of Elections pointed out, the only legitimate one
he felt was the matter of timing. He suggested this issue
should be addressed. He spoke of the 14 days needed to
receive overseas absentee ballots and of other delays.
While he agreed that the automatic voting tabulation
system, AccuVote, made in-person ballot counting easier,
absentee ballots were a different matter.
Senator Taylor responded that in some close elections there
could be a recount, a second recount and even litigation.
Therefore, he thought runoff elections could be
accomplished in a reasonable amount of time.
Senator P. Kelly was unsure that the word "general" on page
one, line eight addressed the entire issue of whether
primary elections would be subject to the majority
restrictions. He pointed out that this section, Section 3.
Election, only refers to the governor and not to the
congressional and presidential candidates. Although he
agreed with the sponsor's interpretation that this
constitutional amendment should only apply to general
elections, he was concerned how others, including the
courts, would interpret the language.
Senator Leman objected to the adoption of Amendment #2
A roll call was taken on the motion.
IN FAVOR: Senator Wilken, Senator P. Kelly, Senator
Phillips, Co-Chair Parnell and Co-Chair Torgerson
OPPOSED: Senator Green, Senator Leman and Senator Adams
ABSENT: Senator Donley
The motion PASSED (5-3-1)
Senator Phillips asked for legal opinion on the impact a
runoff election would have on the timing of swearing-in of
the governor.
Co-Chair Torgerson said he would request a legal opinion
and that it could be prepared in time for the resolution to
reach the full Senate.
Co-Chair Parnell offered a motion to report SJR 40, 1-
LS1579\A, as amended from Committee with a $1,500 fiscal
note from the Division of Elections.
There was no objection and the resolution MOVED FROM
COMMITTEE.
COMMITTEE SUBSTITUTE FOR SENATE BILL NO. 26(JUD)
"An Act relating to hindering prosecution and to
providing false information or reports to a peace
officer."
This was the first hearing for this bill in the Senate
Finance Committee.
Senator Leman, sponsor of the bill, stated that this
legislation expands two existing statutes that address
those people who employ deception to "thwart Alaska's
system of justice." He told of how the matter was brought
to his attention by the Anchorage Police Department.
MIKE PAULEY staff to Senator Leman explained that
individuals lie to protect another person or lie to protect
themselves. Section 1 of the bill, he said addresses lies
told to protect another and Section 2 applies to lies told
to protect oneself.
Mr. Pauley stated that existing statutes AS 11.56.770 and
780 make it a crime to hinder prosecution by rendering
assistance to another person who has committed a crime with
the intention of hindering the apprehension, prosecution,
conviction or punishment of that person. He gave the
definition of "rendering assistance to another" as
including use of deception to prevent or obstruct the
discovery or apprehension of that person. Therefore, he
explained the statute makes it a crime if a person lies to
a police officer in order to stop another person who has
committed a crime from being apprehended.
However, Mr. Pauley continued, this statute only applies if
a person lies to prevent apprehension of a person who has
committed a crime that is punishable by a prison sentence
greater than 90 days. Class B misdemeanors, such as
disorderly conduct, harassment, misconduct involving
weapons and criminal mischief, are not covered under
existing law, he stressed. While these crimes are not the
most serious offenses, he qualified; they do consume a
significant amount of law enforcement and court resources.
Mr. Pauley stated that Section 1 of this bill amends the
law to apply to all kinds of crimes, including Class B
misdemeanors.
Mr. Pauley then detailed how Section 2 of the bill amends
current statute on making false reports by adding a new
paragraph. The new language, he explained, stipulates that
a Class A misdemeanor is committed when a person who has
committed another crime, knowingly gives false information
to peace officers with the intent of avoiding apprehension,
prosecution, conviction and punishment.
Mr. Pauley noted a change to the legislation made by the
Senate Judiciary Committee in which reports about dams and
reservoirs was removed from the applicable offenses. He
stressed that the bill's sponsor did not propose this
amendment so he could not speak to the intent. He
anticipated that a representative from the Department of
Law would speak to the Committee on this matter later in
the meeting.
BLAIR MCCUNE, Deputy Director, Public Defender Agency,
Department of Administration, testified via teleconference
from Anchorage about a significant change made in the
Judiciary version. He understood the original intent of the
bill only applied to giving false information concerning a
person's identity to a peace officer. He stated that the
current version provides that any false information given
to police by someone who has committed a crime with the
intent of knowingly avoiding apprehension, prosecution,
conviction or punishment is an illegal act. He asserted
that the practice of providing false information is very
common due to fear, guilt, shame, etc. and that many people
lie to police when first confronted.
Mr. McCune shared that he had talked to the Department of
Law about the fiscal impacts and between them, had arrived
at the amounts listed on the fiscal notes as the cost to
prosecute and defend these cases.
Mr. McCune mentioned the difficulty in defending these
cases. He did not know of any other states with a similar
provision regarding providing false information although
there are perjury and unsworn falsification laws.
While Mr. McCune understood the police interest, he thought
the change to the bill to make the provision apply to any
false information given to a peace officer, made the bill
too broad.
Co-Chair Torgerson asked if the witness had reviewed the
proposed committee substitute, 1-LS0119\K.
Mr. McCune said he had reviewed the Senate Judiciary
committee substitute and was concerned about language on
page two, lines 9-11, "having committed a crime, knowingly
gives false information to a peace officer with the intent
of avoiding apprehension, prosecution, conviction, or
punishment"
Co-Chair Torgerson referred to the Public Defender's Agency
fiscal note and asked what the amount of the note would be
if the aforementioned language were deleted.
Mr. McCune responded that the omission of that language
would mostly zero out the fiscal note, although he said he
would have to look at the specific impacts. He stated that
there would still be some fiscal impact of the legislation.
DAVID HUDSON, Lieutenant, Alaska State Trooper, Department
of Public Safety testified via teleconference from
Anchorage in strong support for the committee substitute.
He stressed that the opportunity to rapidly solve criminal
cases could be jeopardized by peace officer's inability to
identify suspects or if those suspects provide false
information.
Lt. Hudson stated that this legislation strengthens the
existing crime of making a false report.
Tape: SFC - 00 #76, Side B 10:02 AM
Lt. Hudson continued by speaking about the harm to the
victims when wrong person is arrested.
Senator Leman referred to fiscal note that claims that in
as many as 40 percent of cases, people lie. He agreed with
these figures, but wondered if all who provided false
information would actually be prosecuted.
Lt. Hudson asserted that based on previous activities, the
police would attempt to charge the individuals who provided
the false information. However, he said that to follow
those charges up with prosecution would be subject to many
variables and that he predicted there would be fewer cases
prosecuted than charges brought.
ANN CAPENETTI, Assistant Attorney General, Legal Services
Section, Criminal Division, Department of Law, testified
that many cases would be referred to the department.
Ms. Carpenetti stated that Section 1 of the bill "is fine."
However, she said regarding Section 2, no one wants people
to lie to police but that it was a common occurrence and in
fact, within human nature.
Ms. Carpenetti gave an example of drivers stopped by
police, who claim they "only had a couple of drinks,"
before a blood test indicates the driver consumed much
more.
Ms. Carpenetti remarked that as the previous witness
stated, arrests for false statements would be referred to
the department and even if never prosecuted, still would
require time and effort to screen. She added that for those
cases that were prosecuted, the matter would be difficult
to prove. She predicted that these cases would be even more
difficult than perjury cases.
Ms. Carpenetti then addressed the Department of Natural
Resources provision about dams and reservoirs that was
omitted in the Senate Judiciary committee substitute. She
explained that the amendment excluded giving false
information about the safety of a dam or reservoir from
this statute. She told of a conversation she had with
Charlie Cobb, a dam safety engineer with the State Of
Alaska who told her the provision was first put into
statute in 1987 as part of an act relating to dam safety.
She said Mr. Cobb told her he did not want this provision
repealed since he is the only person in the state who
performs dam inspections and has to rely on reports of
engineers. He explained to her that it is important to
encourage these engineers to tell the complete truth with
regard to the condition of the dams.
Senator Leman stated that he did not agree with the fiscal
notes and their interpretation of the number of cases this
legislation would create.
Co-Chair Torgerson ordered the bill HELD in Committee
saying he intended to work on lowering the amounts of the
fiscal notes.
COMMITTEE SUBSTITUTE FOR SENATE BILL NO. 256(HES)
"An Act relating to regulation of managed health care
and allowing physicians to collectively negotiate with
a health benefit plan that has substantial market
power."
This was the third hearing for this bill in the Senate
Finance Committee.
Co-Chair Torgerson noted written testimony dated March 31,
2000, provided by the Department of Community and Economic
Development that included a report entitled, "National Cost
of Physician Anti-Trust Waivers". [Copy on file].
BOB LOHR, Director, Division of Insurance, Department of
Community and Economic Development, testified via
teleconference from Anchorage that he had reviewed the
available cost studies related to this legislation and
found the closest match was the analysis of pending
congressional legislation, HR 1304, which was highly
studied.
Mr. Lohr gave detail on the background of the National Cost
of Physician Anti-Trust Waivers report, which he found to
be the most comprehensive study on the matter of collective
negotiation for health care. He stated that the conclusion
of the study was that there would likely be between $29 to
$95 billion, or a five to 13 percent increase to private
health insurance premiums with the passage of HR 1304. He
noted that this increase is beyond the already dramatic
increases due to the cost of health care.
Mr. Lohr told the Committee that the study analyzed the
impact of collective negotiations on the cost of services
provided. He stated that this would be the primary factor
in the increased premium costs. He said the second effect
would be increased health care utilization, or the
increased use of health services as a result of negotiated
changes in the plan. The third effect, he stated would be
the spillover affect on other health plans besides the
managed care plans. He explained this was using the
assumption that health care providers tend to provide one
level of service rather than different levels of service
according to the payment ability of each patient's
insurance plan.
Mr. Lohr pointed out that the study indicated that during
the early years of the new federal law, the increases would
be at the lower end of the predictions and in subsequent
years, at the higher range.
Senator P. Kelly asked if the witness had studied the cost
analysis done by Penn State University.
Mr. Lohr responded that he had not seen that study.
Senator P. Kelly explained this study found that the
Charles River study was full of unwarranted assumptions and
questionable methodology.
Senator Green noted the first paragraph of the written
testimony stating that the division opposed this bill
because it was thought the bill would significantly
increase health care costs. She wanted to know if the
division would take the same position for all other
potential legislation concerning insurance mandates and
changes to the insurance industry that would impose similar
standards to those proposed in this bill.
Mr. Lohr promised the division would endeavor to assess the
impact on insurance or health care costs of any proposed
legislation. As to predicting a future position on a
hypothetical bill, he said he would be difficult.
Senator Green challenged that a prediction was made on this
bill. She wanted to make sure that the same standard is
applied to any other legislation.
Senator Adams asked how the federal legislation
complemented this bill.
Mr. Lohr gave a background of the congressional
legislation, also known as the Quality Health Care
Coalition Act of 1999 and the Campbell Act after
Representative Thomas Campbell, the sponsor. This bill, he
explained would exempt health care professional from anti-
trust laws when they negotiate with health plans over fees
and other terms of any contract under which they provide
health care items or services. He said the physicians would
therefore be treated as any other group engaged in
concerted action under the National Labor Relations Act.
The physicians would also be exempted from the Sherman
Anti-Trust Act and comparable state statute, he added.
JULIA COSTER, Assistant Attorney General, Commercial
Section, Civil Division, Department of Law, testified via
teleconference from Anchorage referencing Senate Health and
Social Services committee substitute. She stated she would
limit her comments to the collective bargaining issues
proposed in the committee substitute. She said the
department has serious legal and policy concerns with the
collective bargaining because it may result in substantial
harm to consumers in the form of increased health care cost
and reduced health care options.
Ms. Coster also voiced concerns about the level of state
involvement provided in the bill, saying it may not be
sufficient for active state supervision to immunize
physicians from federal anti-trust enforcement.
Ms. Coster stated that the department agrees with previous
testimony given to the Committee by a representative of the
US Federal Trade Commission (FTC) as well as two letter
submitted by the federal agency regarding similar
collective negotiating legislation in the State of Texas
and in Washington DC. [Copies on file.]
She referenced the FTC's prior investigations and
enforcement actions that have found an increase in health
care costs and a possible decrease in health care services
where collective negotiation is allowed as potential harm
to consumers.
Ms. Coster agreed with Mr. Lohr's conclusion that costs
would likely increase in Alaska if this legislation were
passed.
Ms. Coster pointed out that while there are two primary
limits to collective bargaining contained in the bill,
these limits are insufficient to protect consumers from
substantial mark-ups. The first limitation, she said is the
definition of "market share" as 15 percent, with the
provision that any health care plan that has over 15
percent of the market share could be subject to physicians
forming a group for the purpose of collective negotiations.
She explained the second limitation as where a health care
plan has less than five percent of the market share, the
physician group may not exceed 30 percent of the market in
that service area.
Ms. Coster said these limitations are not based on accepted
concepts of market power. For instance, she stated that a
15 percent of the market is not ordinarily presumed to
constitute market power. She also stressed that the
limitation of physicians groups to 30 percent of the
providers would not affect the group's ability to raise
prices. She said these two factors could result in 100
percent of physicians located within a geographic service
area negotiating with a health care plan that is only five
percent of the market share. She also talked about the
impact a physicians group could have on a small health care
provider.
Ms. Coster next addressed the prohibition on boycotts and
concerted actions by physicians saying that when
negotiating on price terms, there is no affective
prohibition on boycotting. She was unsure if the omitting
of such a stipulation was an oversight or a deliberate
action. She admitted that the bill does contain a provision
for concerted actions, but was unsure if it was sufficient.
Ms. Coster stated that another area of concern is the
provision in the bill that relates to community issues
under the State Action Doctrine. In order to obtain
immunity from federal prosecution, she said, state
officials must actively supervise the process and ensure
competitive conduct. She cautioned that the courts have set
high standards for this activity. She explained that the
courts have ruled that the state agency must have and
exercise ultimate control over the challenge conduct and to
exercise sufficient independent judgement and control so
that the details of the rates and prices have been
established and is the product of deliberate state
intervention. An agreement by the parties is not sufficient
to prevent anti-trust actions, she stressed. She went into
more detail about the requirements of the state to oversee
the negotiation process. She added that the legislation
fails to place the burden of proof on the parties that
propose a contract but instead on the Attorney General's
Office. However, she admonished, the time frame allotted
for state review was not adequate and the legislation does
not provide the Department of Law with any of the
information necessary to make an analysis nor any
investigative authority to obtain that information.
Co-Chair Torgerson stated his intent to adopt a proposed
committee substitute as a working draft.
Senator P. Kelly suggested taking from the previous
testimony, all the warnings of potential problems and
instead to focus on the actual detriments to constituents.
He compared the statements to the tort reform arguments
heard during a previous legislative session when that
matter was being considered.
Senator P. Kelly returned to his earlier reference to the
Penn State University study that questioned the findings of
the study cited by the Division of Insurance. He then
clarified that the FTC as an agency, did not testify on
this bill but rather an individual who works at the
commission gave testimony. Therefore, Senator P. Kelly
surmised that the FTC has not stated a pro or con position
on the legislation.
Senator P. Kelly pointed out letter from the Department of
Law, which listed concerns with the bill. [Copy on file.]
He also noted letter from the Division of Legislative Legal
and Research Services that disputes many of the claims of
the Department of Law. [Copy on file.]
Senator P. Kelly suggested simply placing a sunset clause
on this legislation to see what would actually happen. He
warned of the results of the mergers of many large
insurance companies. He felt that doctors should be allowed
to speak out for the benefit of their patients and should
not have to chose between salary and their ethics oath. He
asserted that every argument made against this bill is
refuted in some way.
Senator Adams agreed with the suggestion of a sunset
clause. He asked if this bill would change the services or
goods delivered to consumers in Alaska by federal medical
programs. He stressed that it was difficult for him to
understand the effect this legislation would have on
Alaskans as well as the amount of funds needed from the
state.
Mr. Lohr responded that the bill would change the price of
goods and services delivered in Alaska. If the prices did
not increase, he wondered what the point of the bill would
be with regards to increased market leverage.
Senator Adams asked what impact this bill would have on
federal programs.
Mr. Lohr said he would have to research before offering an
assessment. He said he would provide that information to
the Committee.
Senator P. Kelly asked for a direct assessment on general
cost increases as well. He noted the claim that the costs
would rise was based on a study that has been found to be
at fault.
Mr. Lohr thought the Charles River study did provide a
clear statement on its assumptions and methodology, which
allows it to be criticized. He said that other testimony
presented to the Committee regarding cross-impacts was
based on non-germane studies and provided no information
about the studies themselves or the methods employed.
Therefore, he said those claims were more difficult to
assess.
Co-Chair Torgerson asked if the witness had the Penn State
University study.
Mr. Lohr did not, but would obtain a copy.
Co-Chair Torgerson asked if the proposed committee
substitute, LS-1291\I, incorporated all previously
submitted amendments except for Amendment #1.
Senator P. Kelly explained that the committee substitute
does incorporate the amendments but that it does not
provide for a sunset date. He detailed the changes
beginning with Section 2, which was removed in the
committee substitute. He noted this language was present in
a similar House bill that addressed contracts between
doctors and insurance providers.
Senator P. Kelly stated that throughout the committee
substitute, references to the commissioner of the
Department of Natural Resources was changed to the
Department of Law.
Senator P. Kelly continued that a new subsection was added
to provide for active state oversight of the contract
negotiations as required by the States Action Doctrine.
Senator P. Kelly pointed out that a cleanup was made in
last page of the bill, which he said was not germane to the
legislation. He did not detail what language was removed.
Senator P. Kelly next stated the committee substitute added
clarification to the description of the substantial market
power within the geographic service area. This allows the
legislation to more individualize the grouping of
physicians into their own service area to the market power
of the insurance companies within that area, he explained.
He said this was to avoid grouping of all physicians in the
state into one large group.
Senator P. Kelly relayed that there was some question over
the covered lives and the total population in the
geographical service area. He said language was inserted
in the committee substitute on page three, lines 20 and 24,
to give a more defined number.
Senator P. Kelly concluded with a comment about the sunset
clause. [Indiscernible]
Senator P. Kelly commented that the biggest concerns
addressed in the committee substitute were switching the
contract portion to the Department of Law and the matter of
the geographic service areas.
Senator P. Kelly moved to adopt the committee substitute,
LS-1291\I, as a work draft.
Senator Adams would not object to adoption but asked for
time to review the committee substitute before reporting
from Committee. He said he preferred a sunset clause of two
or three years rather than five years to give the
legislature a chance to review impacts on consumers and, if
necessary, take action at an earlier time.
Senator P. Kelly commented that the next legislature has
the ability to repeal this law if it were shown to be
detrimental. Secondly, he stated the health care market is
evolving. He stressed that Health Management Organizations
(HMO) could begin doing business in the state in the next
few years and if the sunset clause were enacted before the
arrival of HMOs the problem of payment to physicians could
arise again.
Senator Leman asked if the committee substitute adequately
addressed the concerns about market share raised by the
Department of Law.
Senator P. Kelly asserted that he thought the matter of
market share was adequately addressed in the committee
substitute. He commented that he felt that the entire
state could be considered one market share. However, he
said the committee substitute narrowed the scope to the
area within the market that the physicians actually
practicing. He qualified that for some specialties, such as
cardiology, the practicing area for a physician could
encompass the whole state, but that that issue was
addressed in the committee substitute.
There was no objection and the committee substitute,
Version "I" was adopted as a workdraft.
Senator P. Kelly verified that the proposed amendments #1
through #5 were included in the committee substitute.
AT EASE 10:43 AM / 10:46 AM
Co-Chair Torgerson noted remaining bills scheduled on the
day's agenda, SB 289 and SB 290, would not be heard at this
meeting.
Co-Chair Torgerson noted a new fiscal note for SB 290 was
distributed to members to fund pupil transportation at the
full amount requested of $5,079,900.
Debate resumed on SB 256.
Senator P. Kelly told the Committee that Becky Cerney,
Director of State Legislation, American Medical Association
was available on teleconference from Chicago, Illinois to
address any of the questions raised.
AT EASE 10:47 AM
Amendment #6: This amendment deletes "geographic"
everywhere it appears in the committee substitute. The
term, "geographic service area" now reads, "service area".
Senator P. Kelly moved for adoption and explained the
amendment is to address concerns voiced by the Department
of Law and the Division of Legal and Research Services.
Without objection, the amendment was ADOPTED.
Co-Chair Torgerson stated his intent to allow members a
couple of days to review the committee substitute before
the Committee takes further action.
Senator Adams requested information on how the states of
Washington and Oregon handle collective negotiating by
physicians. He wanted to know what fees could be negotiated
under the other's provisions.
Senator P. Kelly clarified there is a difference between
collective bargaining, which applies to labor unions and
collective negotiating. He stated that the physicians under
this legislation would not be allowed to engage in the same
activities as collective bargaining units. He suggested
that members mentally replace "collective negotiating"
whenever they hear "collective bargaining" in discussions
about this bill.
Co-Chair Torgerson ordered the bill HELD in Committee.
ADJOURNED
Senator Torgerson adjourned the meeting at 10:51 AM.
SFC-00 (7) 04/03/00
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