Legislature(1997 - 1998)
04/30/1997 09:16 AM Senate HES
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SENATE HEALTH, EDUCATION & SOCIAL SERVICES COMMITTEE
April 30, 1997
9:16 a.m.
MEMBERS PRESENT
Senator Gary Wilken, Chairman
Senator Loren Leman, Vice Chairman
Senator Lyda Green
Senator Jerry Ward
Senator Johnny Ellis
MEMBERS ABSENT
All members present.
COMMITTEE CALENDAR
Confirmation: University of Alaska Board of Regents, Annette
Nelson-Wright
SENATE BILL NO. 170
"An Act relating to financial assistance for students attending
certain graduate education programs; and providing for an effective
date."
- MOVED CSSB 170(HES) OUT OF COMMITTEE
SENATE CONCURRENT RESOLUTION NO. 14
Establishing the Alaska Task Force on Parity for Mental Health.
- HEARD AND HELD
SENATE BILL NO. 189
"An Act relating to eligibility for and default, collection, and
repayment of student loans; relating to nonrenewal of certain
occupational licenses for default on a student loan; and providing
for an effective date."
- MOVED SB 189 OUT OF COMMITTEE
PREVIOUS SENATE COMMITTEE ACTION
SB 170 - See Senate Health, Education & Social Services minutes
dated 4/25/97.
SCR 14 - No previous Senate action to record.
SB 189 - No previous Senate action to record.
WITNESS REGISTER
Joe Ambrose, Staff
Senator Taylor
State Capitol
Juneau, Alaska 99801-1182
POSITION STATEMENT: Reported that the Sponsor recommended the
committee move forward with the committee
substitute.
Walter Majoros, Executive Director
Alaska Mental Health Board
431 N. Franklin #101
Juneau, Alaska 99801
POSITION STATEMENT: Endorsed SCR 14.
Jan McGillivary, CEO
Alaska Mental Health Association
4050 Lake Otis #202
Anchorage, Alaska 99508
POSITION STATEMENT: Supported SCR 14.
Peter Braveman
Family Centered Services of Alaska
620 5th Avenue
Fairbanks, Alaska 99701
POSITION STATEMENT: Supported SCR 14.
Don Dapcevich, Executive Director
Advisory Board on Alcoholism & Drug Abuse
PO Box 0608
Juneau, Alaska 99811
POSITION STATEMENT: Suggested that chemical dependency be included
in SCR 14.
Ray Gillespie
Charter North Star Behavior Health Systems
9478 Riverbend Court
Juneau, Alaska 99801
POSITION STATEMENT: Supported SCR 14.
Jeff Jessee, Executive Director
Alaska Mental Health Trust Authority
3601 C Street, Suite 742
Anchorage, Alaska 99503
POSITION STATEMENT: Supported exploring mental health parity.
Diane Barrans, Executive Director
Postsecondary Education Commission
3030 Vintage Boulevard
Juneau, Alaska 99801-7109
POSITION STATEMENT: Discussed SB 189.
ACTION NARRATIVE
TAPE 97-46, SIDE A
Confirmation: University of Alaska Board of Regents
Number 001
CHAIRMAN WILKEN called the Senate Health, Education & Social
Services Committee (HES) to order at 9:16 a.m. and announced that
the Confirmation hearing of the student nominee for the UA Board of
Regents would be held first.
ANNETTE NELSON-WRIGHT , student nominee for the UA Board of Regents
informed the committee that someone approached her about seeking
the student representative position. After learning what the
position would entail, Ms. Nelson-Wright felt that it would be a
good way to become involved and make a difference. Ms. Nelson-
Wright explained that a student representative must first be
elected by the campus, then the name is forwarded to the Governor's
office who selects the final nominee. Ms. Nelson-Wright informed
the committee that she was born and raised in Anchorage where she
also attended the University of Alaska-Anchorage. Ms. Nelson-
Wright has lived in Juneau for about two years and attends the
University of Alaska-Southeast. Ms. Nelson-Wright, a junior at the
university, informed the committee that her degree path was a
Bachelor of Liberal Arts with an emphasis in Social Sciences.
CHAIRMAN WILKEN asked Ms. Nelson-Wright if there were any burning
issues that she wanted to attack as a Regent. ANNETTE NELSON-
WRIGHT said that many of the issues will depend upon the students,
but Ms. Nelson-Wright believed that the university's fiscal crisis
would be a big issue.
SENATOR GREEN asked if the Student Regent served as a consultant.
ANNETTE NELSON-WRIGHT explained that the Student Regent has the
same power as the other Regents. The only difference is that a
Student Regent only has a two year term as opposed to eight years.
In response to Chairman Wilken, Ms. Nelson-Wright agreed that the
Student Regent has a full vote.
CHAIRMAN WILKEN announced the intention of the committee to forward
and endorse Ms. Nelson-Wright's nomination to the Board of Regents.
SB 170 REPAY GRADUATE EDUCATION AID
Number 107
CHAIRMAN WILKEN announced that CSSB 170(HES) was the next item of
business before the committee.
JOE AMBROSE , Staff to Senator Taylor, informed the committee that
Senator Taylor recommends that the committee move forward with the
committee substitute as adopted at the last meeting. The committee
packet contains a memo from Diane Barrans in response to Senator
Leman's question regarding federal tax implications. Mr. Ambrose
said that based on similar programs in other states there should
not be a problem. The packet should also include a new calculation
based on the new committee substitute.
SENATOR ELLIS inquired as to what the Conference Committee has done
with WAMI funding. JOE AMBROSE was unaware of the Conference
Committee's actions. WENDY REDMAN , Vice President of the
University of Alaska stated that the Conference Committee replaced
the money for the WAMI program in the Department of Education
budget that had been previously removed. CHAIRMAN WILKEN clarified
that half of the request for WAMI had been removed and all of it
was replaced. WENDY REDMAN agreed.
SENATOR GREEN moved to report CSSB 170(HES) out of committee with
individual recommendations and accompanying fiscal note. Without
objection, it was so ordered.
SCR 14 PARITY FOR MENTAL HEALTH TASK FORCE
Number 161
CHAIRMAN WILKEN announced that SCR 14 would be the next order of
business before the committee.
WALTER MAJOROS , Executive Director of the Alaska Mental Health
Board (AMHB), noted that AMHB requested that legislation regarding
mental health parity in Alaska be introduced. The AMHB is the
state planning and advocacy organization for seriously mentally ill
and emotionally disturbed children and adults in Alaska. The AMHB
strongly endorses SCR 14. Mr. Majoros explained that parity refers
to parity of insurance practices for mental health services to
receive parity with those receiving physical health services
through insurance coverage.
Mr. Majoros estimated that since 1995, 31,000 Alaskans, adults and
children, suffer from serious mental illnesses and emotional
disturbances. Many of these people require a range of mental
health treatment services, from counseling, medication, case
management, rehabilitation, crisis intervention, assessment,
hospitalization, evaluation, etc. In most cases, private insurance
does not cover mental health services and in the case that it does,
the services are very inadequate and the restrictions are greater
than that imposed on physical health services. Mr. Majoros stated
that the AMHB believes this to be a form of bias and discrimination
against those with mental illnesses and emotional disturbances.
There has been tremendous change in the efficacy of mental health
treatment. Mental health treatment now parallels physical health
treatment in terms of the ability to diagnose and treat. Further,
the developments of recent years provide a more cost effective
method of treatment.
Number 224
Mr. Majoros informed the committee that many mentally ill persons
have testified that they cannot afford to get a job because they
would have to go off Medicaid which funds mental health services.
Mr. Majoros pointed out that the mental health system supports
remaining on public assistance, Medicaid. If these individual's
had the opportunity to receive basic coverage through private
insurance, then there would not be the dependence on public
programs. Parity would decrease the reliance on public assistance
as well as creating a greater partnership between the public and
private sector in terms of meeting mental health needs in Alaska.
Mr. Majoros noted that much of SCR 14 is based on the federal
legislation, the Mental Health Parity Act of 1996. The Mental
Health Parity Act is the first national parity legislation that has
been passed. Furthermore, the Mental Health Parity Act establishes
a requirement for parity on lifetime and annual dollar limits for
expenditures for mental health services for recipients of all
insurance programs, but with many exceptions. Mr. Majoros
mentioned that small businesses of 50 or less employees are exempt
from the program. Furthermore, there is no requirement to have
mental health coverage; an employer could choose not to have such
coverage or drop that coverage. Employers can adjust co-insurance,
deductibles, service and medical necessity definitions all of which
can be different from those for physical health services. If
employers can document that the net increase in premiums are
greater than one percent, the employer can be exempt. Mr. Majoros
believed that this could be the beginning of parity, but recipients
of mental health services are not parallel with recipients of
primary health care services. Therefore, Mr. Majoros indicated the
necessity for a task force to review the federal legislation.
Number 274
Mr. Majoros informed the committee that 13 states have passed or
proposed mental health parity laws and in total 35 states are
considering this issue. SCR 14 is an opportunity to create a
public-private partnership to transfer some of the cost for mental
health services to the private sector which can save money. The
present situation is an obstacle for mental health consumers and
beneficiaries to become independent. Currently, those folks are in
a double bind, in other words, those folks cannot get off Medicaid
coverage nor can they get a job because there is no private sector
insurance to meet their needs. SCR 14 would eliminate the view
that mental health services are different than primary health care,
it is part of primary health care.
SENATOR WARD inquired as to who was responsible for drafting SCR 14
and who determined the make-up of the group. WALTER MAJOROS
explained that he was part of a group of people reviewing drafts.
The make-up of the task force was determined by the group, not
anyone specific. Currently, the trend is to have as many mental
health consumers on the task force. This resolution was modelled
somewhat after resolutions in other states.
Number 319
SENATOR GREEN informed the committee of a conflict due to her
husband's employment and requested that she not be required to
vote. SENATOR WARD objected. Therefore, Senator Green will be
required to vote.
SENATOR GREEN noted that her staff had discussed with the AMHB the
possibility of the AMHB creating its own task force, to which there
did not seem to be a problem. Senator Green said that when she was
on the Governor's Council for Handicapped & Gifted, the council
dealt with many issues that were similar to this. The council
joined with other boards to report on health care; is that possible
with this? WALTER MAJOROS agreed that there are many issues that
AMHB and the Governor's Council take up independently. The task
force was chosen because it is a national model. Furthermore, it
is difficult to generate a consensus on major mental health issues.
Mr. Majoros emphasized the importance of having the Legislature's
involvement and endorsement from the start in order to increase the
likelihood of passing the legislation and building consensus.
SENATOR GREEN believed that the task force could be accomplished
through the AMHB without a resolution. Senator Green suggested
that course be taken.
In response to Chairman Wilken, WALTER MAJOROS stated that he was
the Executive Director of the AMHB.
CHAIRMAN WILKEN noted that SCR 14 does not expect any General Fund
money to be provided for the task force. Is there federal or other
state money available for those expenses? WALTER MAJOROS deferred
to Jeff Jessee from the Alaska Mental Health Trust Authority.
Several discussions have occurred with the authority who supports
the task force, although there is no guarantee that the authority
would be involved with the cost of the task force. Mr. Majoros
mentioned that the AMHB will do a formal proposal to the authority
during its budget process this year.
Number 381
JAN MCGILLIVARY , CEO of the Alaska Mental Health Association(AMHA),
informed the committee that she was the Coordinator for the
Building Bridges Campaign for mental health. The coalition
represents about 40 community based mental health services which
are grantees of the Division of Mental Health & Developmental
Disabilities. Ms. McGillivary supported SCR 14 and the attempt to
join the national movement on this issue. Ms. McGillivary was sure
that the task force will find that overall use of medical benefits
will drastically decrease once discrimination is eliminated from
the insurance benefits arena.
PETER BRAVEMAN , Family Centered Services of Alaska, informed the
committee that he had a mentally ill sister in another state and
would be speaking from that perspective as well as a provider.
Current insurance company practices discriminate against consumers
which perpetuates the stigma consumers and families live with. Mr.
Braveman stated that his sister receives woefully inadequate
services, costly, and crisis driven services. Often his family
does not interrupt a crisis for his sister because insurance
benefits will run out or the insurance does not cover actions until
in crisis.
As a provider, Mr. Braveman sees consumers that do not have a
choice when the insurance ends and the consumer must use publicly
funded grantees and have limited access to other community
providers. Such situations tax public mental health providers.
Mr. Braveman supported SCR 14.
Number 427
DON DAPCEVICH , Executive Director of the Advisory Board on
Alcoholism & Drug Abuse, noted that the Advisory Board on
Alcoholism & Drug Abuse has an interest in being part of the task
force. This issue is equally important for chemical dependency
programs as for mental health programs. Mr. Dapcevich indicated
that the Mental Health Trust Authority would be interested in
chemical dependency being added to the task force. Mr. Dapcevich
encouraged the committee to include chemical dependency as a
participant in the task force. During this era of welfare reform,
quality services both in the private and public sector are
necessary and SCR 14 would be a vehicle for that. Private sector
involvement in chemical dependency has significantly diminished in
Alaska due to the insurance practices of the predominant carriers.
The predominant carriers have severely restricted access to the
resources of insurance companies for third party payments.
Mr. Dapcevich noted that this would require minimal costs. In
terms of insurance premiums to include mental health and chemical
dependency treatment services, Mr. Dapcevich had received two
different studies which reported that the cost ranges from .4
percent to .7 percent increase in premiums. This is a minimal cost
when considering the quality of services and the decrease in
dependency on public funded services. Mr. Dapcevich reiterated the
need to include chemical dependency and noted that he would provide
the committee with a letter with the specific language changes to
the resolution to include chemical dependency.
RAY GILLESPIE , Charter North Star Behavior Health Systems,
supported SCR 14. Gathering the facts about parity is good public
policy. Mr. Gillespie said that he did not have any preconceived
notions regarding the findings, conclusions, or resulting public
policy recommendations. With regard to why this task force could
not be done by a private organization, Mr. Gillespie believed that
the findings would be more credible if the findings came from a
group such as the Parity Task Force established by the Legislature.
CHAIRMAN WILKEN announced that SCR 14 will be held to the next
scheduled meeting. With regard to Senator Ward's question about
the authors of SCR 14, Chairman Wilken informed the committee that
those involved were Mr. Majoros from the AMHB, Ms. Macklen from the
Coalition of Mental Health Organizations, and Mr. Jessee from the
Mental Health Trust Authority.
JEFF JESSEE , Alaska Mental Health Trust Authority, said that the
trustees are supportive of exploring mental health parity. The
resolution may allow the possibility to review strategic options
for introducing parity legislation. SCR 14 has the potential to
significantly increase the availability of mental health services.
The trustees view the resolution as a way to spread some of the
risk across a larger constituency and perhaps, reduce the fiscal
demands on both the state General Fund and on the Trust Authority
funds.
CHAIRMAN WILKEN said that SCR 14 would be held.
SB 189 EDUC.LOAN REPAYMNT\ELIG.; OCC. LIC.
Number 508
CHAIRMAN WILKEN announced that SB 189 was the next order of
business before the committee. Chairman Wilken recalled that
during the first few days of session there was a briefing about the
student loan program. During that briefing Chairman Wilken was
struck by the losses to the student loan program which are
unacceptable. Chairman Wilken then had discussions with Ms.
Barrans which determined that the student loan program should not
be a give away program. Ms. Barrans worked on SB 189. Chairman
Wilken informed the committee of a 1994 student loan program study
which found that corresponding with late borrower's is the most
significant cost to the program.
DIANE BARRANS , Executive Director of the Postsecondary Education
Commission (PSEC), noted that the committee packet contains
pertinent statistics. At the December 1996 meeting, the PSEC did
approve a legislative agenda of which a portion is included in
SB 189. Ms. Barrans informed the committee that for the past six
years, the PSEC's annual financial statements have reflected
operational losses which have not been offset by general fund
appropriations. The cumulative effect has gradually threatened the
corporation's ability to continue to issue additional debt. Both
the corporation and the commission have sought ways in which to
reverse this effect. Ms. Barrans acknowledged that the Legislature
has provided the program with some collection methods such as the
confiscation of permanent fund dividends and license revocation.
These tools have proven effective in reducing the programs default
rate by 8 percent since FY92, however the default rate remains
around 18 percent which is unsustainable. Ms. Barrans pointed out
that the 18 percent default rate represents about $115 million in
loans. SB 189 includes mechanisms that will be effective in
reducing defaults and dollars lost to the loan programs.
Ms. Barrans informed the committee that the program experienced a
$2.6 million deficit in FY96 which eroded the asset base of the
corporation. Ms. Barrans expected that loss to increase to about
$4 million in FY97 because of the increased borrowing volume due to
higher loan limits. SB 189 is timely. Ms. Barrans provided the
committee with articles regarding the beneficial effects of
alternative student loan program collections and federal student
loan program collections.
CHAIRMAN WILKEN asked Ms. Barrans to discuss the letter from Smith
Barney which is included in the committee packet.
DIANE BARRANS informed the committee that Smith Barney is the
senior underwriter for the corporation. The letter suggests that
applicants be pre-screened and that credit underwriting standards
be implemented. Ms. Barrans stated that the commission has
discussed a broad screening that would not screen out those with
minor credit issues. Smith Barney indicated that pre-screening of
applicants could reduce the default rate by 3 percent. Smith Barney
discussed enhanced collection tools such as license renewal
intervention, commercially diligent loan collection, wage
garnishment, and the continued use of PFD garnishment. All those
tools should increase the recovery rate on defaulted loans. Ms.
Barrans explained that although 18 percent of the loans are in
default, collection on those defaulted loans occurs and the actual
loss to nonpayment is about 12 percent.
TAPE 97-46, SIDE B
Number 591
Ms. Barrans noted that the Smith Barney letter discusses increasing
interest rates. There are two ways to improve the return rate on
loans: increase the interest rate for the repayment period; have
interest begin accruing when the student receives the funds. Ms.
Barrans pointed out that there are substantial interest free
periods while a student continues his/her education. However, the
corporation pays interest on the loan during the entire time which
results in a loss to the corporation. Ms. Barrans stated that the
most benefit to the corporation would be to allow interest to
accrue throughout the life of the loan. SB 189 is a compromise
that would increase the repayment stream from interest income,
therefore the cap is increased from 2.5 percent to 3 percent. In
1997 and 1998, Ms. Barrans anticipated an 8.6 percent interest rate
on loans. Therefore the additional .5 percent would result in a
9.1 percent interest rate. Ms. Barrans pointed out that the
interest rate that the student actually pays is a little less than
9.1 percent due to the interest free periods on the loan. The
Smith Barney letter does mention that Tile 4 loans are an option.
If the corporation were to offer both state funded and federally
funded loans, this would offer loans that would be almost fully
insured by the federal government.
SENATOR GREEN said that SB 189 takes a new avenue. Currently, the
loan has been available upon request. SB 189 would require a
credit check and worthiness. Senator Green inquired as to what the
fiscal note covered. DIANE BARRANS explained that the fiscal note
covers the cost of electronically running a tape of the
corporation's applicant pool against a credit bureau.
CHAIRMAN WILKEN clarified that SB 189 would not require that every
applicant be screened, but only those with prior credit history.
DIANE BARRANS informed the committee that the commission had
discussed screening those applicants 21 or older due to the lack of
credit of applicants under the age 21. No credit is good credit;
an applicant will not be turned away because of the lack of credit.
Ms. Barrans noted that policy is not stipulated in SB 189, but this
is the approach the commission would put in place.
CHAIRMAN WILKEN stated that he did not intend to narrow the window
for applicants to begin a college career, but once the education is
completed the person is responsible for repayment.
Number 550
SENATOR ELLIS requested Ms. Barrans inform the committee about
credit worthy cosigners. DIANE BARRANS stated that any entity with
a credit screening can establish parameters. A credit bureau
assigns points to certain types of repayment behavior. Ms. Barrans
said that by regulation, the commission would decide what is
egregious bad debt. If an applicant failed to meet that test, the
applicant could apply with a co-signer that would have to meet that
test.
CHAIRMAN WILKEN inquired as to the .5 percent ceiling on profit.
Can the corporation make a profit of up to .5 percent on the loan
portfolio? DIANE BARRANS said that it was about a two percent
spread. Ms. Barrans stated that Bond counsel would have to provide
an opinion as to what can be earned without endangering the
corporation's tax exempt status. CHAIRMAN WILKEN asked if the
corporation's goal is to profit or break even. DIANE BARRANS
replied that the goal is to break even with SB 189. Ms. Barrans
said that if the corporation's goal was profit, that would require
a thorough public policy decision from the Legislature and the
public. CHAIRMAN WILKEN noted the request for the board to provide
a resolution in support of SB 189. DIANE BARRANS noted that the
commission is on record as supporting everything except the .5
percent which was not before the commission at the December
meeting. Ms. Barrans said that the resolution could be requested
at the board's June meeting.
SENATOR GREEN discussed the ability to revoke occupational license
which in other legislation has come to include recreational
licenses as well. Senator Green recommended that sports fishing
licenses be exempted from those licenses that can be revoked under
SB 189. Senator Green asked if all the appeals come through Ms.
Barrans' office and has that always been the case; is there another
method of recourse? DIANE BARRANS said that all appeals come
through her office. Ms. Barrans explained that certain appeals do
go to a hearing officer and the commission has stipulated that
appeal process by regulation. Those appeals going to a hearing
officer occur when a person requests a write off of his/her loan
due to medical circumstances. If a person's PFD is garnished, a
hearing officer process would occur. SB 189 would use the
administrative appeal process with the executive director, with the
exception of the PFD garnishment.
In response to Senator Green, DIANE BARRANS explained that in the
last six months the loan program has increased the level of
correspondence to the borrower. The number of written notices sent
out has doubled. This process is still being reviewed. Ms.
Barrans acknowledged that the process can be improved so that
before a loan goes to a collection agency, all internal measures
have been exhausted. Ms. Barrans emphasized that people are
learning that an Alaska student loan is a real debt.
Number 473
With regard to licenses, Ms. Barrans pointed out that the
commission only reviews licenses that were funded with the
education for which the loan paid. The commission is not reviewing
the revocation of any recreational licenses. Furthermore, some of
the occupational licenses have been excluded if the license is not
centrally administered.
CHAIRMAN WILKEN noted that in conversations in the past, he
requested that there be methods by which to measure the success of
SB 189 which is discussed in the packet. Chairman Wilken requested
that Ms. Barrans develop that more using 1998 as the base year and
comparing today to 1998 and where the program would be in 2002.
TERESA WILLIAMS said that she was available for any questions.
CHAIRMAN WILKEN inquired as to the importance of SB 189 getting
through this year. DIANE BARRANS emphasized that getting SB 189
through this year would be extremely helpful. Ms. Barrans informed
the committee that the commission is well into the application
process for the 1997-98 year. All of the contracts are written and
prepared by early February. Ms. Barrans pointed out that the
collection tools would be available immediately upon receipt, but
the interest rate would not effect borrowers until the 1998-99
year. If SB 189 is passed before the end of this session, then all
the terms could be incorporated in concrete language in next year's
promissory notes.
SENATOR LEMAN moved to report SB 189 out of committee with
individual recommendations and accompanying fiscal notes. Without
objection, it was so ordered.
There being no further business before the committee, the meeting
was adjourned at 10:15 a.m.
| Document Name | Date/Time | Subjects |
|---|