Legislature(2001 - 2002)

04/23/2002 04:37 PM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                              MINUTES                                                                                         
                     SENATE FINANCE COMMITTEE                                                                                 
                          April 23, 2002                                                                                      
                              4:37 PM                                                                                         
                                                                                                                                
                                                                                                                                
TAPES                                                                                                                       
                                                                                                                                
SFC-02 # 74, Side A                                                                                                             
                                                                                                                              
CALL TO ORDER                                                                                                               
                                                                                                                                
Co-Chair Pete  Kelly convened the meeting at approximately  4:37 PM.                                                            
                                                                                                                                
PRESENT                                                                                                                     
                                                                                                                                
Senator Dave Donley, Co-Chair                                                                                                   
Senator Pete Kelly, Co-Chair                                                                                                    
Senator Jerry Ward, Vice Chair                                                                                                  
Senator Lyda Green                                                                                                              
Senator Gary Wilken                                                                                                             
Senator Alan Austerman                                                                                                          
Senator Donald Olson                                                                                                            
Senator Loren Leman                                                                                                             
                                                                                                                                
Also Attending: DR. JOHN  MIDDAUGH, Consultant, Department of Health                                                          
and Social  Services; NANCY WELLER,  Unit Manager, State,  Federal &                                                            
Tribal  Relations, Division  of  Medical Assistance,  Department  of                                                            
Health  and  Social  Services;  JOHN  BITNEY, Legislative   Liaison,                                                            
Alaska Housing Finance Corporation, Department of Revenue                                                                       
                                                                                                                                
Attending  via Teleconference:  From Anchorage:  JENNIFER  RUDINGER,                                                          
Executive Director, Alaska Civil Liberties Union; PAULINE UTTER                                                                 
                                                                                                                                
SUMMARY INFORMATION                                                                                                         
                                                                                                                                
SB 364-MEDICAID PAYMENTS FOR ABORTIONS                                                                                          
                                                                                                                                
The Committee heard testimony  from the public and the Department of                                                            
Health and  Social Services. The bill  was reported from  Committee.                                                            
                                                                                                                                
SB 360-ALASKA NATURAL GAS PROJECT ACT                                                                                           
                                                                                                                                
This bill was scheduled but not heard.                                                                                          
                                                                                                                                
HB 160-REPORTING OF ABORTIONS                                                                                                   
                                                                                                                                
This bill was scheduled but not heard.                                                                                          
                                                                                                                                
SB 181-SMALL COMMUNITY HOUSING LOANS                                                                                            
                                                                                                                                
The Committee  heard from  the Alaska Housing  Finance Corporation,                                                             
considered  and adopted one  amendment, and  reported the bill  from                                                            
Committee.                                                                                                                      
                                                                                                                                
HB 106-FINANCIAL INSTITUTIONS                                                                                                   
                                                                                                                                
The bill was reported from Committee.                                                                                           
                                                                                                                                
                                                                                                                                
     SENATE BILL NO. 364                                                                                                        
     "An Act relating to medical services under the state Medicaid                                                              
     program."                                                                                                                  
                                                                                                                                
                                                                                                                                
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Co-Chair Kelly  stated this bill mirrors  guidelines established  by                                                            
the federal  Supreme  Court regarding  public  funding of  abortion;                                                            
moreover, it encompasses  Alaska statutes and language  incorporated                                                            
into the FY 02  State budget. He voiced the need for  "the State" to                                                            
maintain  its position  on procreation;  however,  he commented  the                                                            
Alaska  Court System  has repeatedly  undermined  the Legislature's                                                             
position  through  such  things  as  the  definition  of  "medically                                                            
necessary."  He stated  most  people think  of the  term  "medically                                                            
necessary"  as applying to  a health condition;  however, the  Court                                                            
has   repeatedly   interpreted   it   a  broad   sense   whereby   a                                                            
psychologically  upset  individual  would  qualify. He  stated  that                                                            
Section  1,  subsection  (b)  states  written   certification  by  a                                                            
treating physician  must accompany the claim submitted  to the State                                                            
for payment for a medically  necessary abortion, and he detailed the                                                            
bill's specified medical conditions.                                                                                            
                                                                                                                                
JENNIFER  RUDINGER,  Executive  Director,   Alaska  Civil  Liberties                                                            
Union, testified via teleconference  from Anchorage in opposition to                                                            
SB 364. She stated the  Union has represented Planned Parenthood and                                                            
local physicians  in abortion-related  lawsuits  against the  State.                                                            
She contented  there are language  issues she would like  to address                                                            
including:  the use of  adjectives that are  "vague and unworkable"                                                             
such   as  "significantly   aggravated,"   and   "adverse   physical                                                            
condition;" and  who would make the determination  as to the factors                                                            
that constitute  "serious  danger."  She specified  that the  Alaska                                                            
Civil Liberties  Union believes  the patient  should decide  what is                                                            
significant  "since  she  is the  one  who will  be  suffering  this                                                            
significantly aggravated health problem."                                                                                       
                                                                                                                                
Ms.  Rudinger furthered  that  this  bill would  exacerbate  already                                                            
difficult dealings with  insurance companies over claim denials. She                                                            
stated  the  word  "would"  used  repeatedly  in  this  document  is                                                            
problematic,  and suggested  this word  be changed  to "could."  She                                                            
stated physicians and lawyers  often speak in probabilities and tell                                                            
clients what might happen,  not what would happen. She stressed that                                                            
if a  woman has  to wait  until the  doctor could  firmly state  the                                                            
pregnancy would  be harmful, the procedures might  be more expensive                                                            
and the abortion more dangerous to perform.                                                                                     
                                                                                                                                
PAULINE  UTTER, testified  via  teleconference  from Anchorage,  and                                                            
read a letter  from Dr. Kathleen Todd [copy not provided],  a Valdez                                                            
physician,  urging the Committee  not to pass  SB 364 as "this  bill                                                            
excludes  any  consideration  of fetal  anomalies  as  a  legitimate                                                            
reason  for abortion"  which  many women  consider  legitimate.  She                                                            
continued  that the  bill's language  additionally  would require  a                                                            
physician to  reach a point of certainty  before taking action,  and                                                            
stated the government must  stay neutral and not allow any entity to                                                            
oppose a woman's desire to have an abortion.                                                                                    
                                                                                                                                
DR.  JOHN MIDDAUGH,  Consultant,  Department  of Health  and  Social                                                            
Services,  stated  he  is a  physician  certified  in  internal  and                                                            
preventive  medicine and, on behalf  of the Department, is  speaking                                                            
in opposition  to  SB 364.  He stated,  as a physician,  the  bill's                                                            
language  is difficult to  interpret and  to apply. He additionally                                                             
stressed the bill does  not recognize the uniqueness of each patient                                                            
as "one  size"  does not  "fit all"  in health  issues. He  asserted                                                            
there  could  be  numerous  factors  involved  which  make  it  very                                                            
difficult for  physicians to be 100  percent sure of circumstances,                                                             
and he noted the  omission of language addressing  "a pregnant woman                                                            
carrying an infant" with  abnormal medical conditions that "were not                                                            
compatible  with   survival."  He  asserted  that  negotiating   for                                                            
reimbursement with an insurance  company about the abortion decision                                                            
made between the doctor  and patient is not easy to do. He urged the                                                            
Committee not to proceed with this version of SB 364.                                                                           
                                                                                                                                
Co-Chair Kelly voiced that  Dr. Middaugh's concerns are addressed in                                                            
the bill,  and  furthered that  if the  regulations  remain as  they                                                            
currently are,  "there is really nothing to stop wholesale  elective                                                            
abortions  being funded  by the State,  which is  going on now."  He                                                            
asserted the current regulation  wording "is so broad that you could                                                            
perform  an  abortion  just  about   based  on  anything  with  that                                                            
regulation."                                                                                                                    
                                                                                                                                
Dr. Middaugh replied, "the  answer would only be if in that judgment                                                            
between the  physician and the patient  resulted in a conclusion  to                                                            
meet  the medical  criteria  that  that was  a medically  needed  or                                                            
therapeutically indicated procedure."                                                                                           
                                                                                                                                
Co-Chair Kelly asked Dr. Middaugh for further clarification.                                                                    
                                                                                                                                
Dr. Middaugh  responded that  in his professional  opinion,  he does                                                            
"not believe  that there  are abortions,  elective abortions,  being                                                            
paid for  by the State."  He understood this  is the intent  of this                                                            
bill;  however,  he  voiced  "that  the  wording  that  goes  beyond                                                            
'medical  necessary'  is  very problematic,   is very  difficult  to                                                            
interpret,  and in  fact doesn't  adequately, in  its wording,  take                                                            
into  account many  of the  very serious  circumstances  that  could                                                            
arise between a physician and a patient in this area."                                                                          
                                                                                                                                
Senator   Leman    inquired   if   Dr.   Middaugh   considered    it                                                            
"inappropriate"  "to  have any  constraints  as a  matter of  public                                                            
policy" on  a patient and doctor relationship  as he understood  Dr.                                                            
Middaugh   to be  saying "leave  us alone,  I'm a  doctor, here's  a                                                            
patient, you don't know my business as well as I do."                                                                           
                                                                                                                                
Senator Leman  furthered, "should we take our statutes  that we have                                                            
now that speak to medical practice and throw them out."                                                                         
                                                                                                                                
Dr.  Middaugh  responded   "it  is  absolutely  necessary   to  have                                                            
standards  of medical practice  and that it  is very appropriate  to                                                            
assure  that there  is  certification  by  a treating  physician  of                                                            
medical necessity  or therapeutically indicated."  He continued that                                                            
nationally,  physicians' competency  and exercise of their  "medical                                                            
and professional  relationship and  discharge of those obligations"                                                             
are scrutinized. He reiterated there is a need for standards.                                                                   
                                                                                                                                
Dr. Middaugh  identified language  in Section 1, subsection  (b) "as                                                            
being problematic  for physicians  to attempt to use those  wordings                                                            
in the way that they have been put forward to achieve that."                                                                    
                                                                                                                                
Section 1, subsection (b) language reads as follows.                                                                            
                                                                                                                                
          (b) A claim for payment for a medically necessary                                                                     
     abortion   that  is  submitted   to  the  Department   must  be                                                            
     accompanied   by  a  written  certification   by  the  treating                                                            
     physician  that the abortion is medically necessary  to treat a                                                            
     serious                                                                                                                    
                (1) adverse physical condition of a pregnant woman                                                              
          that                                                                                                                  
                     (A) either is caused by the pregnancy or would                                                             
          be significantly aggravated by continuation of the                                                                    
          pregnancy; and                                                                                                        
                     (B) would seriously endanger the physical                                                                  
          health of the woman if the pregnancy were not terminated                                                              
          by an abortion; or                                                                                                    
                (2) psychological illness of a pregnant woman who                                                               
          requires medication for treatment of the illness if                                                                   
                     (A) the medication required to treat the                                                                   
          illness would be highly dangerous to the fetus; and                                                                   
                     (B) the health of the woman would be                                                                       
          endangered if the medication was not taken during the                                                                 
          pregnancy.                                                                                                            
                                                                                                                                
Senator Leman asked Dr. Middaugh if he has suggested amendments.                                                                
                                                                                                                                
Dr.  Middaugh   recommended   that  deleting   all  text   following                                                            
"medically necessary" in  Section 1, subsection (b), line 12 through                                                            
subsection  (B) on  page two,  line 8,  would be  acceptable to  the                                                            
Department and to physicians.                                                                                                   
                                                                                                                                
This language reads as follows.                                                                                                 
                                                                                                                                
                "…to treat a serious                                                                                            
                (1) adverse physical condition of a pregnant woman                                                              
          that                                                                                                                  
                     (A) either is caused by the pregnancy or would                                                             
          be significantly aggravated by continuation of the                                                                    
          pregnancy; and                                                                                                        
                     (B) would seriously endanger the physical                                                                  
          health of the woman if the pregnancy were not terminated                                                              
          by an abortion; or"                                                                                                   
                (2) psychological illness of a pregnant woman who                                                               
          requires medication for treatment of the illness if                                                                   
                     (A) the medication required to treat the                                                                   
          illness would be highly dangerous to the fetus; and                                                                   
                     (B) the health of the woman would be                                                                       
          endangered if the medication was not taken during the                                                                 
          pregnancy."                                                                                                           
                                                                                                                                
Co-Chair Kelly responded  those deletions would allow "the same kind                                                            
of regulations  that have been written that deal with  psychological                                                            
health which have,  in our opinion and many at this  table, resulted                                                            
in the  lack of  abortions…its just  too broad."  He continued  that                                                            
"you could  say that  someone being  stressed out  because they  are                                                            
pregnant  works  for psychological   health."  He stated  the  State                                                            
should not be paying for  an abortion of this nature." He summarized                                                            
if the language  identified by Dr. Middaugh is deleted,  there would                                                            
be no reason to pass this bill.                                                                                                 
                                                                                                                                
Dr.  Middaugh   stated   the  standards   for   doctors  today   and                                                            
patient/doctor  interactions  "in the  process  of informed  consent                                                            
convey a far higher level  of integrity than your comment would give                                                            
them credit  to." He stressed that  the standard of performance  for                                                            
physicians  is "pretty high," and  passage of this bill without  the                                                            
language he  identified would be a  powerful affirmation  message to                                                            
the medical community and people of Alaska.                                                                                     
                                                                                                                                
NANCY  WELLER, Unit  Manager,  State,  Federal &  Tribal  Relations,                                                            
Division  of Medical  Assistance,  Department of  Health and  Social                                                            
Services, informed  the Committee that the Department  is presenting                                                            
an  indeterminate   fiscal  note  for  this  bill   because  of  the                                                            
difficulty in determining  a "believable estimate" as the Department                                                            
has no  knowledge  of how this  legislation  would affect  decisions                                                            
made between a woman and  her doctor regarding a medically necessary                                                            
abortion nor how many women  would elect to carry a baby to term and                                                            
have Medicaid cover the cost of the birth.                                                                                      
                                                                                                                                
AT EASE 5:00 PM/ 5:03 PM                                                                                                        
                                                                                                                                
Senator Ward offered a  motion to "move SB 364 out of Committee with                                                            
individual recommendations and accompanying note."                                                                              
                                                                                                                                
A roll call was taken on the motion.                                                                                            
                                                                                                                                
IN  FAVOR: Senator  Green,  Senator  Leman, Senator  Olson,  Senator                                                            
Ward, Senator Wilken, Co-Chair Kelly                                                                                            
                                                                                                                                
OPPOSED: Senator Austerman, Co-Chair Donley                                                                                     
                                                                                                                                
ABSENT: Senator Hoffman                                                                                                         
                                                                                                                                
The motion PASSED (6-2-1)                                                                                                       
                                                                                                                                
SB 364 was REPORTED  from Committee with accompanying  indeterminate                                                            
fiscal  note,  dated 4/22/02,  from  the  Department of  Health  and                                                            
Social Services.                                                                                                                
                                                                                                                                
                                                                                                                                
     SENATE BILL NO. 181                                                                                                        
     "An  Act  making  the interest  rate  for  the  Alaska  Housing                                                            
     Finance  Corporation's small  community housing mortgage  loans                                                            
     the  same as  the interest  rate  on mortgage  loans  purchased                                                            
     under the corporation's  special mortgage loan purchase program                                                            
     from  the  proceeds of  the  most recent  applicable  issue  of                                                            
     taxable bonds before the origination or purchase of the small                                                              
     community housing mortgage loans."                                                                                         
                                                                                                                                
                                                                                                                                
This  was the fifth  hearing  for this  bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Co-Chair  Kelly noted this  is the second  year of hearings  on this                                                            
bill and that  several Committee members have been  working with the                                                            
Alaska  Housing Finance  Corporation  (AHFC)  to address  the  rural                                                            
housing loan program concerns raised by Committee members.                                                                      
                                                                                                                                
Co-Chair Donley stated  the bill addresses the two following issues:                                                            
the  first  regarding  loans  used to  build  "very  very  expensive                                                            
houses"  by limiting  the subsidized  portion  of the  loan to  that                                                            
portion up  to the statewide housing  average; and the second  issue                                                            
expanding  the  non-owner  occupied  language  to  allow  the  Rural                                                            
Housing Assistance Loan  Fund program (HALF) to be "utilized for low                                                            
cost loans for teacher housing" in rural and small communities.                                                                 
                                                                                                                                
Co-Chair Donley  moved to adopt CS SB 181, 22-LS0488\G  as a working                                                            
draft.                                                                                                                          
                                                                                                                                
There being no objection, Version "G" was ADOPTED.                                                                              
                                                                                                                                
Senator Green inquired  if the language allowing for teacher-housing                                                            
loans applies  to houses owned by one party but rented  or leased to                                                            
teachers.                                                                                                                       
                                                                                                                                
Co-Chair Donley responded  if a certified teacher occupies the home,                                                            
the home would qualify for financing under the loan program.                                                                    
                                                                                                                                
Senator Green  asked if this language  includes "classified"  school                                                            
employees.                                                                                                                      
                                                                                                                                
Co-Chair Donley clarified it only applies to teachers.                                                                          
                                                                                                                                
Senator Green asked if  a person in the process of acquiring teacher                                                            
certification would qualify.                                                                                                    
                                                                                                                                
Co-Chair  Kelly  believed  this scenario  would  be  a subject-need                                                             
certification and voiced support for their inclusion.                                                                           
                                                                                                                                
Senator Green voiced this would be an important provision.                                                                      
                                                                                                                                
Co-Chair Kelly concurred.                                                                                                       
                                                                                                                                
JOHN   BITNEY,   Legislative   Liaison,   Alaska   Housing   Finance                                                            
Corporation, Department  of Revenue suggested adding language to the                                                            
owner-occupied  portion  of the  program on  page one,  line 13.  He                                                            
informed  the Committee "that  definitions  and subsequent  parts of                                                            
statutes allow  for up to a duplex;" therefore, wording  the section                                                            
to allow for a "single-family  or a duplex would have that same cut-                                                            
off level."                                                                                                                     
                                                                                                                                
Co-Chair  Donley qualified  this would be acceptable  as long  as it                                                            
specifies owner-occupied duplex.                                                                                                
                                                                                                                                
Mr. Bitney  responded this is addressed  in subsequent statute  that                                                            
defines the term "housing" under this section.                                                                                  
                                                                                                                                
Co-Chair  Donley stated  he would  support this  change if it  would                                                            
generate AHFC's support for the bill.                                                                                           
                                                                                                                                
Mr. Bitney  stated this  change would  further define  the bill  and                                                            
allow AHFC  "to apply the  same threshold level  for a duplex  as we                                                            
would for a single family" home.                                                                                                
                                                                                                                                
Amendment   #4:  This  amendment   further  defines  the   types  of                                                            
qualifying housing  for AHFC small community loans  by inserting "or                                                            
owner occupied duplex"  following "single-family house" on page one,                                                            
Section 1, lines 13 and 14.                                                                                                     
                                                                                                                                
Co-Chair Donley moved for adoption of Amendment #4.                                                                             
                                                                                                                                
There being no objection, Amendment #4 was ADOPTED.                                                                             
                                                                                                                                
Mr. Bitney  stated  AHFC has  been working  with  the Department  of                                                            
Labor and Workforce  Development to  develop a "working number"  for                                                            
the  subsidized  loan  program,  and the  Department  of  Labor  and                                                            
Workforce Development  has provided  an estimate of $185,000  as the                                                            
statewide average sales price of a single family home.                                                                          
                                                                                                                                
Senator  Olson inquired  how  the transient  nature  of teachers  in                                                            
small communities  would affect the  provision for teacher  occupied                                                            
housing.                                                                                                                        
                                                                                                                                
Co-Chair Donley responded Section 2 of the bill allows for non-                                                                 
owner occupancy  of a house if a teacher occupies  it. He elaborated                                                            
that a  community, a private  individual, or  a teacher could  build                                                            
the house as long as a teacher occupies it.                                                                                     
                                                                                                                                
Mr.  Bitney explained  to  the Committee  that  the  intent of  this                                                            
program is  to offer to the  borrower a commitment  for a period  of                                                            
time,  usually 160  to  180 days,  during  which they  could  secure                                                            
construction financing  from a commercial bank. He stated, "once the                                                            
terms of  the commitment  have been met,  the construction  has been                                                            
done, then  the takeout on  the loan." He  remarked this  commitment                                                            
practice is the industry standard for new home construction.                                                                    
                                                                                                                                
Co-Chair Donley  offered a motion to move "CS SB 181  as amended and                                                            
the accompanying  zero fiscal  note from  Committee with  individual                                                            
recommendations."                                                                                                               
                                                                                                                                
There  being  no objections,  CS  SB  181 (FIN)  was  REPORTED  from                                                            
Committee  with  a new  zero  fiscal  note dated  1/28/02  from  the                                                            
Department of Revenue.                                                                                                          
                                                                                                                                
                                                                                                                                
     SENATE CS FOR CS FOR HOUSE BILL NO. 106(JUD)                                                                               
     "An  Act  relating  to the  authorizations  for  certain  state                                                            
     financial  institutions  of  certain  powers  and limitations;                                                             
     relating  to confidential records  of depositors and  customers                                                            
     of certain financial  institutions; relating to the examination                                                            
     of  certain institutions  subject  to  AS 06;  relating to  the                                                            
     Alaska  Banking Code,  Mutual  Savings Bank  Act, Alaska  Small                                                            
     Loans  Act, and  Alaska Credit  Union Act;  relating to  credit                                                            
     cards;  amending  Rule 45,  Alaska  Rules of  Civil  Procedure,                                                            
     Rules 17  and 37, Alaska Rules of Criminal Procedure,  and Rule                                                            
     24, Alaska Bar Rules; and providing for an effective date."                                                                
                                                                                                                                
                                                                                                                                
This was  the second  hearing for  this bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Senator  Leman  offered a  motion  to report  SCS  CS  HB 106  "from                                                            
Committee with individual  recommendations and the accompanying zero                                                            
fiscal note."                                                                                                                   
                                                                                                                                
There  being no  objection,  SCS CS  HB 106  (FIN) with  a new  zero                                                            
fiscal  note, dated  2/26/02 from  the Department  of Community  and                                                            
Economic Development was REPORTED from Committee.                                                                               
                                                                                                                                
ADJOURNMENT                                                                                                                 
                                                                                                                                
Co-Chair Pete Kelly adjourned the meeting at 05:15 PM.                                                                          

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