Legislature(2009 - 2010)
04/08/2009 04:35 PM Senate FIN
| Audio | Topic |
|---|---|
| Start | |
| HB172 | |
| SB10 | |
| SB75 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SENATE FINANCE COMMITTEE
April 8, 2009
4:35 p.m.
4:35:39 PM
CALL TO ORDER
Co-Chair Stedman called the Senate Finance Committee
meeting to order at 4:35 p.m.
MEMBERS PRESENT
Senator Lyman Hoffman, Co-Chair
Senator Bert Stedman, Co-Chair
Senator Charlie Huggins, Vice-Chair
Senator Johnny Ellis
Senator Donny Olson
Senator Joe Thomas
MEMBERS ABSENT
None
ALSO PRESENT
Senator Gene Therriault; Representative Bill Thomas; Diane
Barrans, Executive Director, Postsecondary Education
Commission, Department of Education and Early Development;
Jerry Burnett, Deputy Commissioner, Division of Treasury,
Department of Revenue; Tom Obermeyer, Staff, Senator Bettye
Davis; Senator Bettye Davis; Linda Hall, Director, Division
of Insurance, Department of Commerce, Community and
Economic Development; Miles Baker, Staff, Senate Finance
Committee.
PRESENT VIA TELECONFERENCE
Lee Donner, Managing Director, First Southwest Company,
Consultant, Student Loan Corporation, Department of
Education and Early Development; Dr. Jeanie Anderson,
Katmai Oncology; Shiela Tallman, Premera Blue Cross/Blue
Shield of Alaska; Hanna Smith, Self, Fairbanks; Dr. Mary
Stewart, Medical Oncologist, Denali Oncology Group,
Anchorage; Emily Nenon, Alaska Government Director,
American Cancer Society; Dr. Lathasubarian; Pat Luby,
Advocacy Director, Alaska Association of Retired Persons
(AARP), Anchorage.
SUMMARY
SB 10 "An Act requiring health care insurers to provide
insurance coverage for medical care received by a
patient during certain approved clinical trials
designed to test and improve prevention,
diagnosis, treatment, or palliation of cancer;
directing the Department of Health and Social
Services to provide Medicaid services to persons
who participate in those clinical trials;
relating to experimental procedures under a state
plan offered by the Comprehensive Health
Insurance Association; and providing for an
effective date."
SB10 was HEARD and HELD in Committee for further
consideration.
SB 75 "An Act making and amending appropriations,
including capital appropriations, supplemental
appropriations, and appropriations to capitalize
funds; and providing for an effective date."
SB 75 was HEARD and HELD in Committee for further
consideration.
CS HB 172(FIN)
"An Act relating to an investment in the
education loan fund; relating to authority for
the commissioner of revenue to enter into a bond
purchase agreement and letter of credit with the
Alaska Student Loan Corporation; and providing
for an effective date."
CS HB 172(FIN) was HEARD and HELD in Committee
for further consideration.
HOUSE BILL NO. 172
"An Act relating to an investment in the education
loan fund; relating to authority for the commissioner
of revenue to enter into a bond purchase agreement and
letter of credit with the Alaska Student Loan
Corporation; and providing for an effective date."
4:36:36 PM
DIANE BARRANS, EXECUTIVE DIRECTOR, POSTSECONDARY EDUCATION
COMMISSION, DEPARTMENT OF EDUCATION AND EARLY DEVELOPMENT,
explained that the legislation allows the Alaska Student
Loan Corporation (ASLC) to partner with the Department of
Revenue to provide interim financing for the purpose of
originating student loans. As a result of the continuing
disruption of the capital markets, ASLC has been unable to
issue student loan backed bonds to finance new student
loans. Internal liquidity was used to finance $95 million
in new originated loans for 2008 - 2009, but these funds
will be exhausted by the 2009-2010 loan year. House Bill
172 allows the commissioner of the Department of Revenue to
invest directly in student loans with an investment cap of
$100 million. The ASLC would have to repay the obligation
in no more than five years.
Ms. Barrans said that this legislation would also authorize
the commissioner to provide a liquidity facility or letter
of credit. Under current market conditions, the cost to
acquire a letter of credit or liquidity facility in order
to issue variable rate bonds is so high that ASLC would be
unable to make student loans available on an economic basis
under existing statute. The liquidity facility or letter of
credit would act as a standby bond purchase agreement that
would allow ASLC to issue bonds that would be attractive to
investors.
4:40:42 PM
Ms. Barrans noted that the department has suspended
applications for the 2009-2010 academic year. The
suspension will continue until the loan financing situation
is resolved.
JERRY BURNETT, DEPUTY COMMISSIONER, DIVISION OF TREASURY,
DEPARTMENT OF REVENUE, explained that the Alaska Student
Loan Corporation had come to the department over a year ago
for assistance in securing funding and liquidity for the
loan program. Mr. Burnett furthered that discussions ensued
with the Office of Management and Budget and all options
were carefully considered. A direct appropriation from the
General Fund, specifically the GeFONSI pool (General Fund
and Other Non-segregated Investments) up to $100 million
was concluded to be the workable solution. He elaborated
that the plan would use GeFONSI funds to directly invest in
the Corporation's loan fund and create a liquidity facility
to back the loans. The GeFONSI pool has a current balance
of $7.2 billion and in the last 14 years has never dropped
below $600 million. The department is confident the pool
could support the $206 million provided for in the
legislation as illiquid investments. He stated that the
department would charge the corporation interest at market
rates on the loan, and still earn the 15 basis point fee on
the credit facility, which would allow it to continue to
invest in other securities.
4:43:26 PM
Co-Chair Stedman asked if Power Cost Equalization (PCE)
funds were included in the GeFONSI fund. Mr. Burnett
replied that the PCE endowment is not in the fund, however
some PCE funds are in the baseline group.
Co-Chair Stedman asked for clarification regarding the
baseline group. Mr. Burnett responded that the baseline
group contains funds that retain a relatively stable
balance over time, such as the Oil & Hazardous Substance
Response Account. The GeFONSI fund also contains
approximately 100 other funds, including the general fund,
the statutory budget reserve and the capital income
account.
Co-Chair Stedman requested additional backup and detailed
information regarding the composition of the GeFONSI Fund.
Mr. Burnett replied that he would obtain and distribute the
information. He added that GeFONSI is currently comprised
of $2.4 billion unrestricted general funds and $4.8 billion
of other encumbered funds. He emphasized that GeFONSI is a
pooled investment fund. Co-Chair Stedman inquired if the
$2.4 billion fund contained the Constitutional Budget
Reserve (CBR) and the Statutory Budget Reserve (SBR). Mr.
Burnett replied that only the SBR is included in the $4.8
billion pool of other funds. Co-Chair Stedman remarked that
the committee has concerns regarding liquidity of the
funds.
4:46:29 PM
Co-Chair Hoffman asked what the returns on the funds
amounted to over the last year. Mr. Burnett replied that he
did not have that information with him but would make it
available to the committee. Co-Chair Hoffman requested that
Mr. Burnett estimate the amount. Mr. Burnett reported that
the returns were positive; mostly short term, fixed income
investments.
Co-Chair Stedman reiterated his questions regarding PCE
funds. Mr. Burnett clarified that PCE was removed from
GeFONSI and a separate PCE endowment was created in 2005.
4:47:36 PM
Co-Chair Hoffman asked for details concerning the
guidelines and schedule ASLC has to repay the loan funds.
Mr. Burnett replied that the details of repayment had not
been negotiated. The funds will be backed by student loans
and the intent is to have the corporation refinance the
loans as soon as capital markets allow.
Co-Chair Hoffman noted the breakdown of student loans; 60
percent in state and 40 percent out of state. He asked if
the same ratio is expected if the plan is approved. Ms.
Barrans remarked that she did not expect the composition of
borrowers or borrowing behavior to change due to the
funding source. She suggested that there may be an increase
in the percentage of loans for attendance in Alaska
primarily due to the impact the current economic crisis has
on families.
Co-Chair Hoffman asked if a preference were given to
students who remain in Alaska. Ms. Barrans reported that
there is no preference to students to access the loans but
a preferred interest rate of one-half percent is granted to
students who return to or attend in Alaska.
4:50:26 PM
Co-Chair Stedman wondered what the number of student loans
is anticipated to be issued by next June. Ms. Barrans
estimated 12,000 loans would be issued at a total loan
volume of $85 - $95 million. Co-Chair Stedman asked if $100
million will be sufficient. Ms. Barrans expounded that the
corporation believes this approach is significant enough to
avoid another appropriation request next year. She stated
that if the market disruption continues and the corporation
could not successfully issue bonds in the interim that this
proposal, allowing for the internal receipt of funds,
potentially provides enough funds through the 2010-2011
cycle. She believes ASLC will be able to issue debt within
the next six months via variable rate demand bonds.
Co-Chair Stedman cited the Department of Revenue's fiscal
note (DOR 4) analysis and asked for an explanation of what
fiduciary duties apply and how that will earn a return to
the state. Mr. Burnett explained that the bill requires
that the bridge loan to the corporation be backed by
student loans. Therefore, the department will enter into a
contractual agreement with ASLC that states the terms of
repayment of the principle with interest. The loan to the
corporation will be over collateralized with respect to the
default rate on student loans and an origination fee will
be charged.
Co-Chair Stedman asked how internal policies and procedures
will be addressed. Mr. Burnett stated that new policies
will be created to be consistent with the fiduciary
requirements of the legislation. He explained that current
policies would not allow for the investment concentration
in one asset [student loans] that the bill establishes.
4:53:52 PM
Co-Chair Stedman requested the schedule of outstanding
student loans. Ms. Barrans replied that as of December 31,
2007 the balance of outstanding alternative student loans
was $561 million with $81 million of student loans in
default. She explained that she could provide a report
containing additional characteristic information and a
summary of the status of the outstanding student loans.
Co-Chair Hoffman requested the information include a
breakdown between in-state and out-of-state students. Co-
Chair Hoffman asked what other states provide state loans
that allow students to attend out-of-state institutions.
Ms. Barrans replied that all other state's alternative loan
programs allow portability. Co-Chair Hoffman wondered if
they were similar to the ASLC program. Ms. Barrans stated
that they are all similar in many respects. She exemplified
New York State's loan program that contains a fund to
guarantee those loans against default as an example that
while some elements of other states programs might be
different they all allow portability.
4:57:54 PM
Co-Chair Stedman cited the April 7th letter from ASLC (Copy
on File) to the committee. He asked for clarification of
the information submitted to the committee specifically to
the requested sum of $100 million for approximately 12,000
loans and what amount will be issued within the next year.
Ms. Barrans replied that it would be over a period of one
to two years depending on loan volume. She guessed that the
volume will drop slightly due to the tightened credit
standards being implemented. She expected the amount to
total close to $85 million next year. Co-Chair Steadman
requested the discussion focus on the issues as they relate
to a one year period.
Co-Chair Stedman asked Mr. Burnett to explain if the
economic crisis credit seize up as it relates to the Alaska
housing issue earlier this year causes exposure for the
state and if it still has an effect on current credit
conditions. Mr. Burnett responded that except for the
period of last September through December there has not
been a serious liquidity issue that cannot be met by
existing credit providers such as Alaska Housing Finance
Corporation. He stated that DOR is not considered a credit
provider.
Co-Chair Stedman queried the corporation for other ideas,
solutions, and options rather than soliciting for state
funds.
4:59:59 PM
Ms. Barrans answered that the corporation along with their
financial advisor had studied solutions other states
employed to solve this problem. She said that each case
required some financial support from their state. She
reiterated that the dilemma is that the capital markets the
student loan entities would be accessing, without
dependence on their state are no longer available at an
affordable cost. The other option discussed was for the
state to finance the program with a direct appropriation
from the general fund for a period of time. The option was
rejected because the ASLC program was initially created to
avoid dependence on the use of state general funds and the
variability of those funds from one year to the next. Ms.
Barrans stressed that this market disruption is
unprecedented. Co-Chair Stedman surmised that there are not
a lot of alternative solutions available.
Senator Huggins asked for the interest rates on in-state
and out-of-state loans. Ms. Barrans answered that the
interest rates are 6.8 percent for in-state and 7.3 percent
for out-of-state alternative loans. She added that the
loans offered through the federally guaranteed Stafford
loan program present the lowest risks to the corporation
and can be offered at interest rates of 6 percent or below.
Senator Huggins asked what the interest rates will be in
2010-2011. Ms. Barrans expected rates to remain in the same
range. She said there was a statutory cap of 8.25 percent.
5:04:08 PM
Co-Chair Hoffman requested the amount that the corporation
was able to sell the bonds for and at what interest rates
over the previous five years. Ms. Barrans replied she would
provide the information.
Co-Chair Stedman asked if this bill was the only option
available to fund higher education in Alaska.
LEE DONNER, MANAGING DIRECTOR, FIRST SOUTHWEST COMPANY,
CONSULTANT, STUDENT LOAN CORPORATION, DEPARTMENT OF
EDUCATION AND EARLY DEVELOPMENT (via teleconference),
explained that the provisions of the legislation is to
provide interim financing and a stand-by bond purchase
agreement or letter of credit. He stated that if this
strategy works the corporation should be able to access
capital markets and raise capital in the open markets,
within the next six months to finance the FFELP (Federal
Family Education Loan Program) and fixed rate alternative
loans. The combined financing of both types of loans would
allow the corporation to repay the interim financing. He
agreed with Ms. Barrans that other states options to the
loan crisis all involved direct intervention, albeit
different approaches. Other plans vary in costs to the
state ranging from direct appropriation, to risk of general
obligation coverage on the debt, to plans similar to
Alaska's with the little associated risk. He exemplified
the state of Texas direct involvement to grant the state's
general obligation to the bondholders. The debt becomes a
general obligation of the state of Texas. In contrast,
Alaska's plan has no cost to the state, if the bond
purchase agreement or letter of credit is adequately rated
as anticipated, and has the potential of generating
revenue. He noted that in the event that the state has to
purchase the bonds there is an applicable interest rate
that the bonds bear to the state during the length of time
the state owns the bonds.
5:08:51 PM
Co-Chair Stedman referred to the historic balance of the
GeFONSI account indicated on the graph provided in the DOR
handout (copy on file) and asked what the minimum balance
was since 1996. Mr. Burnett replied that the minimum
balance was $600 million. Co-Chair Stedman asked when the
$100 million tied up as liquidity would be a risk to the
state especially if there are repeated requests for
additional appropriations. Mr. Burnett stated that he was
comfortable with an amount well below $600 million. Co-
Chair Stedman recapped that the department is comfortable
with the $100 million request but repeated appropriations
are not advisable. Mr. Burnett agreed that this amount
would cause concern after two years.
Ms. Barrans reminded the committee that $100 million is a
maximum cap, not per annum request. She explained that the
$100 million could be expended over a period of more than
one year. She added that the corporation does not expect to
request additional funds.
5:11:52 PM
Co-Chair Hoffman asked if the economy continues to falter
would the department return to the legislature and request
additional loan guarantees. Mr. Burnett replied that if the
markets continue to fail over a two year period the student
loan corporation will need to consider more extreme
measures such as termination of the program. He emphasized
that the state could not continue to loan under those
circumstances.
CSHB 172(FIN) was HEARD and HELD in Committee for further
consideration.
5:14:00 PM AT EASE
5:17:14 PM RECONVENED
SENATE BILL NO. 10
"An Act requiring health care insurers to provide
insurance coverage for medical care received by a
patient during certain approved clinical trials
designed to test and improve prevention, diagnosis,
treatment, or palliation of cancer; directing the
Department of Health and Social Services to provide
Medicaid services to persons who participate in those
clinical trials; relating to experimental procedures
under a state plan offered by the Comprehensive Health
Insurance Association; and providing for an effective
date."
5:17:24 PM
TOM OBERMEYER, STAFF, SENATOR BETTYE DAVIS, SPONSOR
explained that the legislation requires health insurance
providers in Alaska cover the costs of routine care,
incurred to a patient participating in an approved clinical
trial relating to cancer. He expounded that the insurer is
required to provide coverage only if the patients physician
determines there are no superior existing treatments
available and the pre-clinical data shows a reasonable
expectation that the clinical (investigative) treatment is
as efficacious as conventional therapy. Mr. Obermeyer then
read from the Sponsor Statement (Copy on File):
Clinical trials are research studies that test how
well new medical approaches work in patients. Each
study answers scientific questions and tries to find
better ways to prevent, screen for, diagnose, or treat
disease. Patients who take part in cancer clinical
trials have an opportunity to contribute to the
knowledge of, and progress against cancer. They also
receive state-of-the art treatment from experts in the
field. The National Cancer Institute, as part of the
U.S. National Institutes of Health, reports 6,000
cancer trials in the United States any one time. They
include trials in prevention, screening, diagnosis,
treatment, quality-of-life, and genetic studies.
CSSB 10 removes important barriers to the
participation of patients in cancer clinical trials in
Alaska. It requires that applicable health care
plans, including Medicaid, cover routine patient care
costs for patients enrolled in all phases of clinical
trials, including prevention, detection, treatment,
and palliation (supportive care) of cancer. Currently
Alaska health plans may exclude coverage for routine
patient-care costs while a patient with cancer is
enrolled in a clinical trial. Providers of health care
plans often conclude that money is saved by excluding
care while patients participate in clinical trials.
But these patients, if not enrolled in clinical
trials, will continue to receive conventional therapy
at roughly the same or slightly increased costs in the
short-run.
Over 2600 Alaskans are diagnosed with cancer each
year. In FY 2007 an estimated 4,600 patients received
cancer treatments through Alaska's Medicaid program at
a cost of $21.5 million. The average payment per
beneficiary was about $4,675. The federal government
reimburses the state at about 50% of the total costs.
Without in-state facilities and support of clinical
trials participants in Alaska currently have to travel
out of state, increasing the cost of non-emergency
transportation which is about 3% of total Medicaid
costs.
Studies have shown that only 2% to 3% of adult cancer
patients and less than 0.5% Medicare patients enroll
in clinical trials of the approximately 20% who are
eligible -largely due to fear of denial of insurance.
A recent study found only slight increase in treatment
costs for adult clinical trial patients compared to
nonparticipants, $35,418 versus $33,248 or about 6.5%
increase in costs for clinical trial participants
compared to nonparticipants. Even if enrollment was
increased to the full 20%, it is unlikely that these
numbers will significantly impact overall costs to
health plans. See National Conference of State
Legislatures, "Clinical Trials: What are States Doing?
February, 2009 Update:"
www.ncsl.org/programs/health/clinicaltrials.htm.
Twenty-three or more states have passed legislation or
instituted special agreements requiring health plans
to pay the cost of routine medical care patients
receive while participating in clinical trials.
Passage of CSSB 10 will result in more successful
outcomes in cancer treatments in Alaska, increase
retention of patients in Alaska for their cancer care,
and also, after full implementation, result in cost
savings in the short and long term.
A description of "The Access to Cancer Clinical Trials
th
Act of 2009" H.R. 716, 111 Congress 2009-2010, (Rep.
Sue Myrick) per "The Hill's Congress Blog" January 30,
2009 sums up to a large extent what CSSB 10 is
attempting to do:
Clinical trials are so critical for patients and
or medical research, yet many patients find that
their health insurance won't cover the rest of
their routine cancer treatment if they decide to
enroll in clinical trials. We're not asking
insurance companies to pay for clinical trials.
This bill simply states that insurers must
continue to pay for routine treatments - that
they would be paying for regardless - if patients
enroll in a clinical trial.
No patient should ever have to fear exploring all
treatment options at the cost of losing
coverage. We should be encouraging participation
in clinical trials, not discouraging it by
removing coverage for routine care. Were it not
for patients who have enrolled in past trials,
the medial advancements we've experienced toward
finding a cure for cancer would not be possible.
5:23:29 PM
Mr. Obermeyer noted that there are two zero fiscal notes;
Department of Commerce, Community and Economic Development
and Department of Health and Social Services.
Senator Olson wondered who besides a university is carrying
out these clinical trials. Mr. Obermeyer stated he was not
able to answer. He offered that the trials must be approved
by agencies like the National Institute of Health or the
Department of Defense and are held to defined standards.
Senator Olson asked why an insurer would refuse to cover
costs if the clinical trials are funded by a university.
Mr. Obermeyer clarified that the clinical trial costs are
paid for by the research entity conducting the trial. He
stated that this legislation would ensure that associated
medical costs to the patient are covered. An example would
be a follow up visit with the patient's own oncologist.
Senator Thomas asked if the bill provides coverage for all
stages of the clinical trial. Mr. Obermeyer affirmed.
Senator Thomas noted that the bill does not require the
insurer to pay for charges that would not be covered if no
insurance existed or otherwise reimbursable charges.
5:25:55 PM
Co-Chair Hoffman stated that he provides health care
coverage for his employees in his personal business. He
addressed concern about the rising costs of premiums. He
cited a letter from Premera (copy on file) dated April 7th
that states concerns that the legislation would force a
premium increase for small group and individual
policyholders. He asked about keeping the premium costs
down for providers.
Mr. Obermeyer responded that overall cost may not be that
great. He related that presently cancer patients needing
treatment are getting their routine treatments covered by
their insurance provider. Insurers might realize a cost
savings by allowing patients participation in trials.
Routine follow up care is required regardless of whether a
patient participates in a trial or not. He summized that SB
10 requires that routine follow up care charges will be
covered if a patient chooses to participate in a clinical
trial and the trial will not be considered experimental by
the insurer. He felt passage of the legislation was in the
best interest of the patient and advancement of medicine.
5:29:38 PM
SENATOR BETTYE DAVIS, responded to Co-Chair Hoffman's
question. She affirmed that she had been contacted by
Premera stating their concerns that not all phases of a
clinical trial be covered [phases 1 and 4]. She emphasized
that based on doctor's testimony in the Senate Health
Social Services committee from around the state they
determined that all phases are important and that their
costs are being overstated by insurers. She qualified that
Premera did not enter into a constructive dialogue with her
office regarding the legislation except to recommend the
exclusion of those two phases.
Co-Chair Stedman asked if the legislation has an impact on
state employees. Senator Davis answered that it has no
impact on state employee plans. She explained that when
state employee plans come up for review in July they may
opt in to new programs.
th
Co-Chair Hoffman cited the Premera letter of April 7,
2009. He reported that Premera's concerns are for treatment
efficacy and patient safety.
Mr. Obermeyer spoke to the concerns raised in the Premera
th
letter dated April 7, for mandatory coverage for phases
one and four. He pointed out that in phase one trials are
offered to a very limited number of participants. The
medications administered are done typically to determine
safe dosage levels. Many of the drugs administered are
approved by the FDA. He stated that phase four trials
generally involve follow up paid for by the pharmaceutical
firms to determine the efficacy of the treatment. He
concluded that given the small number of participants any
added expense to insurers would be minimal. He reminded the
committee that oncologists advised extending insurance
coverage to all phases of the trial. They agreed it would
be in the best interest of the patient and based on their
experience additional cost is minimal.
5:33:31 PM
Co-Chair Stedman referred to page 2, line 29 and asked for
clarification. He wondered if this alluded to experimental
treatments received in phase one trials. Mr. Obermeyer
pointed out that the section, starting on line 27,
describes exclusions to the bill. Co-Chair Stedman stated
that he was under the impression that all phase one trials
are experimental.
Mr. Obermeyer reiterated that many drugs used in phase one
trials already have FDA approval. He exemplified that in
one trial an approved drug for colon cancer was
administered to a brain cancer patient with positive
results.
Senator Olson asked if stem cell research is included in
this bill.
5:35:57 PM
Mr. Obermeyer believed it was not.
Senator Huggins cited a letter from the NFIB dated January
th
20, (copy on file) that the legislation excludes state
employee plans. He opined that if it excludes government
plans it does not provide a level playing field. Senator
Davis asserted that the bill will require Medicaid to
provide coverage but does not mandate the state to
participate. She reasoned that the state might opt in
because it is in the best interest of the employees.
5:38:25 PM
DR. JEANIE ANDERSON, KATMAI ONCOLOGY (via teleconference),
testified in support of the legislation. She clarified an
earlier discussion regarding clinical trial settings. She
said that most of the clinical trials in Alaska are also
open to participants throughout the country in university
and community institutions. All of these institutions
require that the routine medical costs are covered by the
patient's insurer. This is care the patient would receive
regardless of whether one is a participant in a study or
not.
Dr. Anderson noted that Medicare has included coverage for
clinical trial participation since 2000. She countered the
concerns raised by Blue Cross/Blue Shield by asserting that
patient safety and efficacy of treatment is maximized by
patient participation in clinical trials without any
significant cost increase. The medical community benefits
by maximizing cancer treatment knowledge without increasing
costs. She included details in previous written testimony.
[Testimony on SB 280, from 4/3/08 was provided to the
committee by Senator Davis (copy in file).]
5:41:48 PM
SHIELA TALLMAN, PREMERA BLUE CROSS/BLUE SHIELD OF ALASKA
(via teleconference), testified in opposition to the
legislation. She referenced the letter of April 7, 2009 to
the committee and reiterated Premera's concerns mandating
phases one and four of clinical trials. She considered
phase one trials experimental and questioned whether all
policy holders should be funding basic development of these
drugs, devices and procedures for the manufacturer. Patient
safety must also be considered. In phase four trials,
Premera would cover medically necessary treatment only if
existing medical treatments are not determined more
effective. She surmised that mandates can increase the cost
of health insurance. Specific costs will be difficult to
project in this instance.
5:45:29 PM
HANNA SMITH, CANCER RESEARCH REGISTERED NURSE, FAIRBANKS
(via teleconference) testified in support of the
legislation. She recounted an experience with her
hospital's participation in a clinical trial deemed
beneficial for a patient. She asserted that the
administrative costs incurred to appeal the patient's four
previous denials by the insurer was the only related cost
increase. It cost the insurer substantially less to cover
the patient as part of the trial.
5:49:05 PM
DR. MARY STEWART, MEDICAL ONCOLOGIST, PRESIDENT, DENALI
ONCOLOGY GROUP, ANCHORAGE (via teleconference), spoke in
support of SB 10. She echoed the importance and benefits of
phase one and four clinical trials, especially the
knowledge gained by the medical oncology community for new
and more effective beneficial cancer treatments. She
emphasized that trials do not cost more.
5:51:45 PM
EMILY NENON, ALASKA GOVERNMENT RELATIONS DIRECTOR, AMERICAN
CANCER SOCIETY CANCER ACTION NETWORK (via teleconference),
stated support for the legislation. Ms Nenon cited a paper,
submitted by The American Cancer Society (ACS) (copy on
file). The paper compiled results that determine costs
associated with routine cancer care provided in a clinical
study are comparable to the costs of standard care. She
emphasized the importance of covering all phases of the
trial treatment. She believed the legislation would protect
patients while maintaining access to insurance and quality
care.
5:57:01 PM AT EASE
5:57:11 PM RECONVENED
DR. LATHASUBARIAN, MEDICAL ONCOLOGIST, ANCHORAGE, SELF (via
teleconference), testified in support of SB 10. She
emphasized that insurers have been a barrier to patient's
participation in clinical trials. She asserted the
necessity of clinical trials in cancer research as the only
way to develop new lifesaving or life extending therapies.
She concluded that the medical and societal benefits of the
research and care advancements discovered in clinical
trials are immeasurable.
6:01:24 PM
PAT LUBY, ADVOCACY DIRECTOR, ALASKA ASSOCIATION OF RETIRED
PERSONS (AARP), ANCHORAGE (via teleconference), testified
in support of SB 10. Mr. Luby pointed out that if patients
pay health insurance premiums they should have the right to
the coverage paid for that includes routine cancer care.
6:02:53 PM
LINDA HALL, DIRECTOR, DIVISION OF INSURANCE, DEPARTMENT OF
COMMERCE, COMMUNITY AND ECONOMIC DEVELOPMENT, spoke
specifically to the issue of mandated programs and the
costs associated with mandates. Ms. Hall stated she did not
know what the cost of the program would be for health care
insurers. She noted with regards to the zero fiscal note
for the Division of Insurance (FN 2) that it is only a
reflection of their administrative costs. She suggested the
committee analyze the benefit of the mandate and segment of
the population being served in relation to any increase in
premium costs. Ms. Hall referred to a pie chart, "Health
Coverage of Alaska's Population" (copy on file) and noted
the 32% unregulated segment. She reiterated that this
legislation would only impact the individual and small
group rate payers reflected mostly in this group. The small
group segment consists of small private sector employers
who are likely to drop employee health coverage as premium
costs rise. She concluded by suggesting the committee
examine the broader picture of who the mandate benefits and
what segment of the population bears the cost.
6:07:57 PM
Senator Ellis queried about the logic of a cancer victim
requesting participation in a clinical trial but being
denied payment for routine treatments by the insurance
company even if it is cost effective to the insurer.
Ms. Hall conjectured that there may have been costs beyond
the routine care being offered. She contended that she can
not explain insurance company logic. Senator Ellis restated
his earlier point and alleged that the insurer was acting
unethically. Ms. Hall stated that different insurance
companies have different coverage forms particularly for
individuals and small groups that potentially contain
adverse selection. She pointed out that Alaska's statutes
provide for oversight and review. If a procedure or trial
is not covered, it has a specific exclusion and contractual
provision known in advance.
6:11:56 PM
Senator Ellis argued that he would have been reluctant to
support the legislation if it mandated coverage for
experimental procedures with extravagant associated costs.
He emphasized that the bill requires coverage for routine
care that the patient is entitled to and has paid for in
their premiums and that the insurer's payment denials are
indefensible.
th
Senator Huggins referred to the January 20 letter stating
that the legislation is a mandate to small business and not
to programs provided by the state. He asked Ms. Hall if
this was accurate. Ms. Hall affirmed. Senator Huggins
wondered why the legislation is not a mandate to all state
plans. Ms. Hall responded that the state plan is not
considered insurance and is not regulated by the Division
of Insurance. She explained that the mandate in the
legislation is specific to Title 21 oversight, which has no
regulatory authority over the various state plans. She
pointed out that the legislature and or collective
bargaining units could choose to include coverage of the
mandate in the select benefits section of the state's
plans.
6:14:46 PM
Senator Olson referred to cancer treatment and the three
common treatments: chemotherapy, surgical, and radiation.
He asked if the plan covers all three.
Senator Davis replied that she did not know the answer.
She shared that the bill has circulated through the
legislature for three years. She felt that participation in
these programs is very important and lifesaving. She felt
that the bill has been thoroughly vetted from the health
and insurers' standpoint and determined cost is minimal to
the insurer. She asked for the Committee's consideration
of SB 10 in a timely manner.
SB 10 was HEARD and HELD in Committee for further
consideration.
6:19:37 PM AT EASE
6:27:43 PM RECONVENED
SENATE BILL NO. 75
"An Act making and amending appropriations, including
capital appropriations, supplemental appropriations,
and appropriations to capitalize funds; and providing
for an effective date."
6:27:55 PM
Senator Hoffman MOVED to ADOPT Work Draft 26-GS1003\C,
Kane, 4/8/09. There being NO OBJECTION, it was so ordered.
MILES BAKER, STAFF, SENATE FINANCE COMMITTEE, explained
that the appropriations in version C, CSSB 75(FIN) are
depicted in the summary handouts "2009 Capital Budget
Agency Summary, Senate Structure" and "Capital Budget
Statewide Totals, Senate Structure" (copies on file). He
explained that the various columns correspond to the
sections noted in the CS.
6:33:22 PM
Mr. Baker called attention to the Funds Transfer section on
page 62, Section 14, subsections (a) through (e). He called
attention to subsection (a) the transfer of income from the
Amerada Hess earnings to the capital income fund estimated
at $21 million. He also pointed out that Section 17, page
64, contains the legislative re-appropriations based on
lapsing or unexpended unobligated prior year appropriations
based on consultations with each individual member broken
out by House district.
Mr. Baker cited Section 37, page 75 the re-appropriation of
legislatures lapsing operating appropriations from
Legislative Council, Legislative Budget and Audit
Committee, and legislative operating appropriations. He
summarized that most of the re-appropriated money will be
spent on capital improvements in the Capitol Building and
noted that $300,000 is re-appropriated to Legislative
Council to develop a statewide energy plan.
6:36:03 PM
Mr. Baker noted that Section 39, page 76, delineates the
appropriations of the federal Coastal Impact Assistant
Program. He explained that these funds are to help mitigate
the impact of oil and gas development. The larger boroughs
in the state receive 35 percent of the funds directly via a
federal designation, Costal Political Subdivisions. This
group is expected to receive approximately $29 million. The
amount that is passed through the state is estimated to be
$53.6 million. The distribution of these funds is detailed
in Section 39.
6:39:29 PM
Co-Chair Stedman summarized that the capital bill totals
approximately $1.8 billion, which includes the DOT federal
economic stimulus funds. He stated that out of the $1.8
billion roughly, $483 million are state funds and $1.3
billion are federal funds. This bill produces less spending
than the administration's original proposal of $513.14
million.
Co-Chair Stedman voiced that this capital budget represents
a balance between the need to stimulate the economy without
consuming the state's savings accounts too precipitously.
CSSB 75 was HEARD and HELD in Committee for further
consideration.
6:42:57 PM
ADJOURNMENT
The meeting was adjourned at 6:42 PM.
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