03/22/2011 02:00 PM Senate LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| SB70 | |
| SB78 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 78 | TELECONFERENCED | |
| + | HB 28 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | SB 70 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
SENATE LABOR AND COMMERCE STANDING COMMITTEE
March 22, 2011
2:19 p.m.
MEMBERS PRESENT
Senator Dennis Egan, Chair
Senator Joe Paskvan, Vice Chair
Senator Linda Menard
Senator Bettye Davis
Senator Cathy Giessel
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
SENATE BILL NO. 70
"An Act establishing the Alaska Health Benefit Exchange; and
providing for an effective date."
- MOVED CSSB 70(L&C) OUT OF COMMITTEE
SENATE BILL NO. 78
"An Act relating to liability of certain limited liability
organizations holding liquor licenses."
- HEARD AND HELD
CS FOR HOUSE BILL NO. 28(FIN)
"An Act relating to temporary courtesy licenses for certain
nonresident professionals and to a temporary exemption from fees
and other licensing requirements for active duty members of the
armed forces."
- BILL HEARING RESCHEDULED TO 3/24/11
PREVIOUS COMMITTEE ACTION
BILL: SB 70
SHORT TITLE: ALASKA HEALTH BENEFIT EXCHANGE
SPONSOR(s): SENATOR(s) FRENCH
01/26/11 (S) READ THE FIRST TIME - REFERRALS
01/26/11 (S) L&C, FIN
02/08/11 (S) L&C AT 2:00 PM BELTZ 105 (TSBldg)
02/08/11 (S) Heard & Held
02/08/11 (S) MINUTE(L&C)
02/15/11 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
02/15/11 (S) Heard & Held
02/15/11 (S) MINUTE(L&C)
03/08/11 (S) L&C AT 2:00 PM BELTZ 105 (TSBldg)
03/08/11 (S) Bill Postponed To March 17
03/22/11 (S) L&C AT 2:00 PM BELTZ 105 (TSBldg)
BILL: SB 78
SHORT TITLE: LIQUOR LICENSE HOLDER LIABILITY
SPONSOR(s): SENATOR(s) MCGUIRE BY REQUEST
02/04/11 (S) READ THE FIRST TIME - REFERRALS
02/04/11 (S) L&C, JUD
03/22/11 (S) L&C AT 2:00 PM BELTZ 105 (TSBldg)
WITNESS REGISTER
SENATOR FRENCH
Alaska State Legislature
Juneau, AK
POSITION STATEMENT: Sponsor of SB 70.
BEVERLY SMITH
Christian Science Committee on Publication for Alaska
Juneau, AK
POSITION STATEMENT: Supported SB 70 with some additional
language.
WILLIAM STREUR, Commissioner-Designee
Department of Health and Social Services (DHSS)
Juneau, AK
POSITION STATEMENT: Opposed SB 70.
ESTHER TEMPLE
Staff to Senator McGuire
Alaska State Legislature
Juneau, AK
POSITION STATEMENT: Commented on SB 78 for the sponsor.
BOB KLEIN, Chairman
Alcohol Beverage Control Board (ABC)
Anchorage, AK
POSITION STATEMENT: Supported SB 78.
DICK ROSTEN
Attorney with Dorsey & Whitney
Representing Alyeska Resort
No address provided
POSITION STATEMENT: Answered questions on SB 78 issues.
ACTION NARRATIVE
2:19:02 PM
CHAIR DENNIS EGAN called the Senate Labor and Commerce Standing
Committee meeting to order at 2:19 p.m. All members were present
at the call to order.
2:20:14 PM
SB 70-ALASKA HEALTH BENEFIT EXCHANGE
CHAIR EGAN announced SB 70 to be up for consideration.
SENATOR PASKVAN moved to adopt CSSB 70( ), labeled 27-LS0286\I.
CHAIR EGAN objected for discussion purposes.
SENATOR FRENCH, sponsor of SB 70, that the committee substitute
(CS) is a result of many hours of work from this committee,
Senator Egan and his staff, Andy Moderow, interest groups and
members of the administration.
He said the changes start on page 2 where the makeup of the
board that will oversee the operations of the exchanges is
changed. The board was originally 13 members and that has been
reduced to 7. He thought it was a good change that streamlines
the operations of the board. The voting members now include the
Department Health and Human Services (DHSS) commissioner or his
designee, one representative of small employers, one
representative of the health care insurance business, one member
with expertise in health plan financing, one member with
expertise in health plan administration, a health care actuary
or someone with similar economic experience, and one consumer
representative. In addition to those members, the director of
the Division of Insurance will act as a non-voting member.
Also, now on line 9, page 3, subsection (i) confirms that board
members won't be civilly or criminally liable for the acts they
take within the scope of their employ, a standard liability
exemption for state employees who work within the scope of their
duties. Also on lines 18-20, page 3, all numbers were renumbered
because (a)(2) was deleted.
The next substantive change was on line 31, page 3 - line 4,
page 4, and it requires the Division of Insurance to implement
procedures relating to health plan certification,
recertification and decertification - something the division is
very familiar with and uniquely qualified to undertake. On page
4, lines 10-14, language requires the division to determine the
level of each qualifying plan that will be offered within the
exchange.
Language on page 6, lines 13-17, places the Navigator Grant
Program under the Division of Insurance, again to give the
division a strong voice in the operation of the exchange and
allow them to help the program take effect. Also on page 6,
lines 26-28, the legislation directs complaints about health
benefit plans to the Division of Insurance and not to the
federal government as the old draft did.
2:24:11 PM
On page 7, lines 1-4 require the Division of Insurance to review
the rate of premium growth both inside and outside the exchange,
a crucial aspect to see if it's working - keeping premiums at a
reasonable level and providing recommendations about whether or
not expanding the size of a small employer from 50-100 people
for the purpose of SHOP marketplace makes sense for Alaska.
Before, this responsibility rested with the exchange board and
it would now go to the Division of Insurance to strengthen their
voice in the exchange's operation.
Lines 5-8 on page 7 require the division to develop policies and
procedures to minimize adverse selection within the exchange and
between plans sold inside and outside the exchange.
2:25:28 PM
Lines 26-29 on page 7 give the board the authority to establish
advisory groups to provide expertise and input about exchange
operations. Advisory groups can be rather informal; they are
collections of interested, knowledgeable individual citizens who
can provide expertise and advice to the board about the
operation of the exchange.
On page 8, lines 1-13 establish a new annual accounting report;
it reviews new enrollment, changes in enrollment, tax credits
and individual responsibility exemptions broken down by insurer
and by benefit plan where applicable. Again, it's the overseeing
of what the exchange's effect on the marketplace of insurance
has statewide both in and outside the exchange.
Also on lines 14-23 on page 8 require the exchange to cooperate
with an investigation by the Division of Insurance; this makes
it explicit. It also requires cooperation with federal
investigations.
2:26:42 PM
Lines 2-5 on page 9 state that the exchange will rely on the
Division of Insurance determination relating to the potential
for Interstate compacts. This goes back to the idea of pooling
and of buying insurance across state lines and is something that
small states like Alaska may be able to benefit from.
Also on page 9, lines 6-28 require the exchange board to
establish a plan of operation, which is reviewed and approved by
the director of the Division of Insurance. If a suitable plan
isn't developed, the new subsection allows for the director to
adopt reasonable regulations to carry out the responsibilities
of the exchange.
SENATOR FRENCH said lines 17-18 on page 14 at the end of the
bill solve the so-called "AFLAC problem," which is when
insurance companies don't offer plans inside the exchange and
don't want to pay for its operation. This seems fair; so only
those companies offering plans inside the exchange will be
assessed a fee to run it.
On page 14, lines 24-25 were changed to give the Division of
Insurance authority to adopt regulations to implement their
authority under the legislation. Similarly, lines 25-17 on page
19 were changed to give the director of the Division of
Insurance the ability to adopt regulations that also make it
clear that such regulations won't be effective until the
effective date of the statutory changes.
SENATOR FRENCH said the last two changes were conforming to the
adopted practice with respect to, for example, the Board of
Fisheries which has the power to adopt their regulations or the
Board of Game's identical power.
2:28:53 PM
He said language on page 19, line 31, had been modified to make
the transitional provisions related to board terms effective on
July 1, 2011. Before, those provisions had an immediate
effective date.
2:29:21 PM
SENATOR MENARD asked since the seventh person, either the CEO or
executive director, won't have voting privileges, how would the
board be able to break a tie.
SENATOR FRENCH answered that his understanding is subsection (b)
on page 2, lines 14-17, puts the commissioner of DHSS on the
board, but he isn't numbered; then six more members are listed
for a total of seven. So, the board has a natural tie-breaking
function within itself.
SENATOR MENARD said she missed that.
2:31:44 PM
BEVERLY SMITH, Christian Science Committee on Publication for
Alaska, said she is the legislative and media representative in
Alaska. She asked to add one more duty to the Alaska Health
Benefit Exchange Board. She read from a handout she had given
the committee two weeks ago that explained:
The Alaska Health benefit Exchange Board shall
consider the extent and circumstances under which
benefits for spiritual care services that are
deductible under section 213(d) of the Internal
Revenue Code as of January 2, 2010 will be made
available under the exchange.
She said the handout provides the explanation and justification
for this request and in her words:
The goal of health care reform is coverage for all. In
2014 when everyone is required to purchase insurance,
the premiums should be of value to every individual.
That includes those who rely on spiritual care for
their health care. Each person should be able to use
that insurance that they have paid for to pay for the
health care they have found most effective.
There are federal insurance programs and some state
plans that offer benefits for spiritual care, and on
the back of the handout I have listed some examples of
spiritual care coverage. Alaska Care, here in the
state, provides state employees and retirees' benefits
for costs of Christian Science practitioners
authorized by the First Church of Christ Scientist in
Boston. And I think the Insurance Exchange should
offer the public the same programs that are available
to state workers and retirees.
Some parameters that are set in the amendment would
include those spiritual care services that are
recognized by the IRS as medical deductions. Those are
- and I checked with Washington, D.C. - Christian
Science, Religious Science and Navajo Healing
Services.
2:35:09 PM
MS. SMITH said the reason they are asking for this consideration
now instead of after the exchange is set up is because when the
state of Massachusetts was setting up its exchange, church
officials went to legislators and were told to not worry about
it, but wait until the legislation goes through and then deal
with the insurance exchange companies. So, they did that. Then
the insurance companies said they needed to only offer the
benefits that were directed to them in statute by the
legislature. So, here they are front loading this legislation to
provide the possibility of having the insurance companies in the
exchange provide benefits for spiritual care so that all
citizens have access to the health care of their choice. Ms.
Smith said this is an issue of fairness and many have found
spiritual healing to be effective. She didn't see that this
would add anything to the fiscal note.
2:37:05 PM
SENATOR MENARD asked if Kansas, Missouri, Oregon, Illinois,
California, Oklahoma, Colorado, Texas [mentioned in the handout]
are the states that have allowed Christian Science, religious
science and Navajo Healing Services to do this.
MS. SMITH answered no; these are examples of states that allow
coverage for Christian Science care in their state plans. Right
now the federal government, through the IRS, allows those three
particular entities to claim their health care expenses as
medical deductions in their income taxes.
SENATOR MENARD asked which states put it into an exchange.
MS. SMITH replied that she is aware of one recently, Utah, which
passed a bill setting up a task force to investigate setting up
the exchange. It isn't as far along as Alaska is, but spiritual
care is an accepted consideration.
SENATOR MENARD asked if Alaska would be the first to actually
follow through should this pass out.
MS. SMITH replied yes and she thought that would be great.
SENATOR DAVIS asked if they tried to get Christian healing
practices in the Massachusetts bill after it was passed.
MS. SMITH replied yes, but they weren't able to get it in.
2:39:55 PM
SENATOR PASKVAN said he understood systems that say prayer can
heal, but the question that one ultimately has to come back to
is, "We're a civil law authority; we're not religious leaders
here. So, the question is what standard of medical
treatment/care is it that is being followed. Given otherwise, I
see no objective treatment standard other than just a belief
system."
MS. SMITH answered right now they are going with what the
federal government has recognized as acceptable for medical
deductions through the IRS and with various insurance companies
that do grant benefits for spiritual care. There is a record of
healing and it has been recognized as effective. Christian
Science healing practitioners have to meet standards and are
granted authorization through the church.
SENATOR PASKVAN asked if anything in the law currently prohibits
anyone from participating in a prayer healing process.
MS. SMITH answered that everyone is allowed to participate in
whatever faith tradition they have, but only certain ones are
granted this recognition through the IRS.
SENATOR PASKVAN asked if the ultimate intent is to have
government monies be used for "that healing ceremony."
MS. SMITH replied no. But she knows that those who do not have
insurance now would be able to purchase it through the exchange.
And those that do not have the money to purchase would get some
subsidy. That would be where government money would be involved,
she guessed. She reiterated that citizens should be able to get
benefits that they pay for and should be able to have choice in
their health care benefits.
SENATOR MENARD asked her to clarify exactly what she was asking
for.
MS. SMITH replied that she wanted consideration of spiritual
benefits to be included in this package; whether it's through
her proposed amendment or some other vehicle the committee
thinks would work.
SENATOR MENARD said she wanted the sponsor to respond.
2:45:30 PM
SENATOR FRENCH said this is a difficult question and better
suited for a separate piece of legislation that will focus on
the issue of the efficacy of spiritual healing and whether it's
something insurance companies should reimburse practitioners
for. That is ultimately what it would lead to.
2:47:55 PM
SENATOR PASKVAN moved to adopt Amendment 1 as follows:
27-LS0286\I.1
Bailey
3/22/11
AMENDMENT 1
OFFERED IN THE SENATE BY SENATOR PASKVAN
TO: CSSB 70(L&C), Draft Version "I"
Page 10, line 10, following "entities":
Insert "; the exchange shall make records of
application for or receipt of grants or donations
under this paragraph available to the public on the
exchange's Internet website within 30 days after
application or receipt"
He explained that the purpose of this amendment is to require
timely disclosures of any contributions that may come into this
exchange - within 30 days on its website. The exchange on page
10, lines 9-10, is given the ability to "apply for and receive
grants or donations from federal, state, local government
foundations, or private entities." The idea is to make these
monies are "transparent and open."
SENATOR MENARD reasoned that she runs "a pretty efficient
office" and sometimes "30 days just came and went," and she
preferred going to 60 days.
SENATOR PASKVAN responded that if the exchange found 30 days to
be an impossible burden, he hoped they would advise them of it.
The intent of this bill is if there are donations from private
entities and decisions that are coming out of that exchange that
they be transparent - "a paper trail in and decisions out."
SENATOR FRENCH said he supported the amendment.
SENATOR MENARD moved to adopt Amendment 1. There were no
objections and it was so ordered.
SENATOR GIESSEL said she just got copy of a letter addressed to
Senator French from the Governor's Office, dated March 11. The
last paragraph summarizes it:
No health insurance exchange legislation is necessary
during this 2011 legislative session. We have the
internal capacity through DHSS and DCCED to complete
the planning work for the insurance exchange mandated
by federal law. Accordingly, I do not support SB 70 on
policy grounds, nor do I believe a state statute is
required for the state to begin implementation.
She hadn't seen this until an hour ago, and asked the sponsor
for his comment.
2:52:59 PM
SENATOR FRENCH thanked her for bringing it up. His reply to
governor was sent a day later that had several thoughts. As a
member of the legislative branch of government, he was sure she
was jealous of their prerogatives and power. He was certain she
would be hesitant to cede to the governor the authority to set
up a structure like this. He pointed out the collaborative
nature of the committee process, the back and forth of ideas,
the compromise that takes place when they do business in public,
on the record, with the cameras running - open to any suggestion
the public may bring forward - as opposed to what would be a
closed-door, top-down, agenda-driven operation from inside the
governor's office.
SENATOR FRENCH said he has a great amount of respect for the
DHSS commissioner and the people who work within the
administration that and they had been very helpful with this
specific bill. But there is a reason why the legislature has its
power and duties and they have theirs; they administer the laws
the legislature writes. He thought that collaboratively the 60
of them could come up with a better health care exchange than
the administration could acting essentially alone without
legislators' input.
SENATOR GIESSEL commented that originally it was in the hands of
the governor. It was only the introduction of the bill that
brought it to the legislative arena. "A bill was not required
for the establishment of the exchange," she said. The governor
indicated, with the ruling of his attorney general, that he
would implement an exchange and she is questioning the necessity
of going through the lengthy process of passing legislation.
SENATOR FRENCH responded that he didn't know of any other
governor that had taken the position that no enabling
legislation is necessary. Some governors are opposed to the
Affordable Care Act; they don't like the individual mandate or
the changes in the reforms. Some are opposed to the whole idea
of insurance reform and getting affordable insurance in the
hands of every citizen. Then there are shades of opposition down
the line and Alaska's governor has been fairly blunt about
pushing back against what he sees as an unconstitutional act.
Senator French said he has a different view and has publicly
disagreed. He thought the federal bill envisioned each state
creating its own health care exchange through the collaborative
process of legislation. If he had thought at the beginning of
the session when the governor was "standing four-square opposed
to the federal bill" that he intended to create a health care
exchange through his own administration, perhaps he would not
have filed the bill. But he did, because he thinks it's
important that everyone has a voice and does their job to put
the exchange into effect in a way that they all think is best.
If the governor "winds up creating something exactly like my
bill, God bless him and we can all go forward and have a health
care exchange that works for Alaskans." In the meantime, they
have a duty to continue their work.
2:57:25 PM
CHAIR EGAN asked if the administration supports SB 70.
WILLIAM STREUR, Commissioner-Designee, Department of Health and
Social Services (DHSS), replied no.
CHAIR EGAN asked now that the Florida court has ruled that the
Patient Protection and Affordable Care Act must be accepted by
law, if the administration intends to comply with that mandate
or to provide an insurance exchange if SB 70 doesn't pass. Is he
aware that the federal government might institute one if the
state declines to do so?
COMMISSIONER STREUR replied that the administration is in the
process of planning an exchange for the State of Alaska and will
continue with that until legislation is either overturned or new
rules come forward regarding it. They do not want the federal
government involved in any way.
CHAIR EGAN asked how the administration's exchange would differ
from SB 70.
COMMISSIONER STREUR answered that he didn't know, because the
design of the exchange is still in the planning stages. One of
their issues with this bill is that they need the latitude to
design what is best for the State of Alaska based on best
practices they see in various developing exchanges.
CHAIR EGAN asked if he is saying the administration has the
authority to establish that now.
COMMISSIONER STREUR replied, "We believe the administration has
the authority to plan for and design and implement the exchange.
However, to go live with the exchange we are probably going to
need legislation; we are going to need statute. We are going to
need something, because it has to be self-funded and there are
many rules around that that are best established through
legislation."
SENATOR DAVIS said that doesn't keep this legislation from
moving forward, because something has to be out there by 2014 or
the federal government will do it for us.
COMMISSIONER STREUR replied that by 2014 the state needs an
exchange that is up and running; by January 2013 they have to
have a "solid plan" in place to implement the exchange.
SENATOR DAVIS moved to report CSSB 70(L&C) as amended from
committee with individual recommendations and attached fiscal
note(s). There were no objections and it was so ordered.
3:01:14 PM
At ease from 3:01 to 3:03 p.m.
3:03:40 PM
SB 78-LIQUOR LICENSE HOLDER LIABILITY
CHAIR EGAN announced SB 78 to be up for consideration. [27-
LS0282\M version was before the committee.]
ESTHER TEMPLE, staff to Senator McGuire, sponsor of SB 78, said
the intent of this bill is to provide equal treatment to limited
liability companies (LLC) and foreign LLCs in the liquor
liability context as they are treated in the business generally.
She explained that presently persons engaged in businesses
commonly use LLCs instead of corporations while leaving intact
the limited liability of the LLC members for all other business
purposes. Currently, AS 04.21.035 is an exception to the
protections against individual liability offered to partners of
properly registered and maintained LLPs and LLCs. In other
words, partners and members of LLPs and LLCs are not relieved of
the obligation or the liability otherwise imposed upon a liquor
license holder under Title 4. So, in order to avoid that result
owners of liquor businesses that hold a liquor license that seek
limited liability protection have to do business through a
corporate entity.
She said that businesses have increasingly turned to LLCs as a
preferred entity for doing business in order to have greater
management and efficiency without sacrificing the limited
liability protection from business creditors that are afforded
to owners of corporations.
MS. TEMPLE said that LLCs are commonly used in Alaska as well as
in the United State as limited liability protection entities in
place of corporations. Therefore, SB 78 would amend existing
statute to state that the liability will be imposed only on
partners of a limited liability partnership or a foreign limited
liability partnership, but will no longer apply a LLC or a
foreign LLC. If passed, SB 78 would encourage business
development by reflecting the fact that LLCs are more similar to
those used in the business world as an alternative to
corporations and are less commonly used as alternatives to sole
proprietorships or general partnerships, which pass on general
liability to their owners.
3:06:55 PM
SENATOR PASKVAN asked if a foreign corporation can own a liquor
license. He knows that state-formed corporations can own a
liquor license. The reason he asked is because "foreign LLPs"
are included in the language of SB 78.
MS. TEMPLE answered that she didn't know that answer, but would
look into it for him.
CHAIR EGAN asked if anyone in the audience could answer.
3:08:30 PM
BOB KLEIN, chairman, Alcohol Beverage Control Board (ABC), said
he is an industry member because he is the Brown Jug Liquor
Stores director of sales in Anchorage. He is also a member of
CHARR and serves on their Government Affairs Committee.{
MR. KLEIN related that he was on the ABC board when LLCs were
first introduced into Title 4 language. Their intent at the time
was to give LLCs the same protections as partnerships and
corporations. Recently he found that they missed the mark,
because of inexperience and it now makes sense to insert Senator
McGuire's changes.
SENATOR PASKVAN said he agreed with him. He asked if a foreign
LLP could own a liquor license.
MR. KLEIN responded that he didn't know the answer.
3:11:08 PM
DICK ROSTEN, Attorney, Dorsey & Whitney, representing Alyeska
Resort as well as other holders of liquor licenses said the
answer is yes; foreign corporations can own a liquor license if
they are qualified to do business in Alaska.
SENATOR PASKVAN asked if they do it by forming an Alaskan
entity.
MR. ROSTEN replied that they use a different process. Any
corporation that is not formed in Alaska is known under our
statutes as a "foreign corporation" whether they were formed in
Canada or in Nevada or Delaware. They go through a qualifying
process followed by a certificate of authority to own a business
in Alaska.
SENATOR PASKVAN asked if the assets of either the foreign entity
or an Alaskan entity are equally subject to a judgment.
MR. ROSTEN answered yes: whoever holds a liquor license,
regardless of whether it's an Alaskan domestic corporation or a
Nevada corporation, for example, those assets would be at risk.
SENATOR PASKVAN asked if that is established as part of the
process of qualifying to do business in Alaska by the foreign
entity.
MR. ROSTEN answered yes.
3:13:44 PM
CHAIR EGAN thanked everyone for their comments and closed public
testimony. He announced that SB 78 would be held, and finding no
further business to come before the committee, he adjourned the
meeting at 3:15 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 70 CS v I.PDF |
SL&C 3/22/2011 2:00:00 PM |
SB 70 |
| SB 70 version I - changes from original.pdf |
SL&C 3/22/2011 2:00:00 PM |
SB 70 |