Legislature(2017 - 2018)BELTZ 105 (TSBldg)
02/27/2018 01:30 PM Senate LABOR & COMMERCE
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| Audio | Topic |
|---|---|
| Start | |
| SB205 | |
| SJR7 | |
| SB119 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 205 | TELECONFERENCED | |
| *+ | SJR 7 | TELECONFERENCED | |
| *+ | SB 119 | TELECONFERENCED | |
| + | TELECONFERENCED |
ALASKA STATE LEGISLATURE
SENATE LABOR AND COMMERCE STANDING COMMITTEE
February 27, 2018
1:32 p.m.
MEMBERS PRESENT
Senator Mia Costello, Chair
Senator Kevin Meyer, Vice Chair
Senator Gary Stevens
Senator Berta Gardner
Senator Peter Micciche
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
SENATE BILL NO. 205
"An Act relating to the Regulatory Commission of Alaska; and
relating to telecommunications regulations, exemptions, charges,
and rates."
- HEARD & HELD
SENATE JOINT RESOLUTION NO. 7
Proposing an amendment to the Constitution of the State of
Alaska prohibiting the imposition of a tax, the increase of an
existing tax, or state retail sales taxation without the
approval of the voters of the state.
- HEARD & HELD
SENATE BILL NO. 119
"An Act relating to disclosure of health care services and price
information; relating to health care insurers; relating to
availability of payment information and estimates of out-of-
pocket expenses; relating to an incentive program for electing
to receive health care services for less than the average price
paid; relating to filing and reporting requirements; and
providing for an effective date."
- HEARD & HELD
PREVIOUS COMMITTEE ACTION
BILL: SB 205
SHORT TITLE: TELECOMMUNICATIONS REGULATION/EXEMPTIONS
SPONSOR(s): SENATOR(s) MEYER
02/19/18 (S) READ THE FIRST TIME - REFERRALS
02/19/18 (S) L&C
02/27/18 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
BILL: SJR 7
SHORT TITLE: CONST. AM: VOTER APPROVAL FOR NEW TAXES
SPONSOR(s): SENATOR(s) MEYER
04/06/17 (S) READ THE FIRST TIME - REFERRALS
04/06/17 (S) L&C, JUD, FIN
02/27/18 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
BILL: SB 119
SHORT TITLE: HEALTH CARE COSTS: DISCLOSURE;INSURERS;
SPONSOR(s): SENATOR(s) HUGHES
04/24/17 (S) READ THE FIRST TIME - REFERRALS
04/24/17 (S) L&C, FIN
02/27/18 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
WITNESS REGISTER
EDRA MORLEDGE, Staff
Senator Kevin Meyer
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Delivered the sectional analysis for SB 205.
CHRISTINE O'CONNOR, Executive Director
Alaska Telecom Association
Anchorage, Alaska
POSITION STATEMENT: Testified in support of SB 205.
CHRISTINE MARASIGAN, Staff
Senator Kevin Meyer
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Delivered the sectional analysis for SJR 7:
SENATOR SHELLEY HUGHES
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Sponsor of SB 119.
BUDDY WHITT, Staff
Senator Shelly Hughes
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Delivered the sectional analysis for SB 119.
LORI WING-HEIER, Director
Division of Insurance
Department of Commerce, Community and Economic Development
Juneau, Alaska
POSITION STATEMENT: Provided supporting comments for the concept
of SB 119 and voiced concern about implementation.
JILL LEWIS, Deputy Director
Division of Public Health
Department of Health and Social Services (DHSS)
Juneau, Alaska
POSITION STATEMENT: Agreed with Ms. Wing-Heier's comments on SB
119.
ROSA AVILA, Deputy Section Chief
Health Analytics and Vital Records
Department of Health and Social Services (DHSS)
Anchorage, Alaska
POSITION STATEMENT: Agreed with Ms. Wing-Heier's comments on SB
119.
MIKE COONS, President
Alaska Chapter of the Association of Mature American Citizens
Palmer, Alaska
POSITION STATEMENT: Testified in support of SB 119.
JEREMY PRICE
Americans for Prosperity
Anchorage, Alaska
POSITION STATEMENT: Testified in support of SB 119.
PORTIA NOBLE, representing self
Anchorage, Alaska
POSITION STATEMENT: Testified in support of SB 119.
JEANNIE MONK, Vice President
Policy & Programs
Alaska State Hospital and Nursing Home Association
Juneau, Alaska
POSITION STATEMENT: Stated opposition to the incentive provision
in SB 119.
ACTION NARRATIVE
1:32:46 PM
CHAIR MIA COSTELLO called the Senate Labor and Commerce Standing
Committee meeting to order at 1:32 p.m. Present at the call to
order were Senators Gardner, Stevens, Micciche, Meyer, and Chair
Costello.
SB 205-TELECOMMUNICATIONS REGULATION/EXEMPTIONS
1:34:09 PM
CHAIR COSTELLO announced the consideration of SB 205.
1:34:21 PM
SENATOR KEVIN MEYER, Alaska State Legislature, Juneau, Alaska,
sponsor of SB 205, stated that the legislation seeks to
modernize the telecommunication statutes and adopts the
cooperative model for tariffs. The RCA will assess regulatory
costs directly to the company, rather that assessing individuals
monthly. He continued the introduction speaking to the following
sponsor statement:
The telecommunication statutes (AS 42.05) are in need
of revision due to rapid changes in technology and in
FCC regulations, which render portions of the existing
statutes obsolete and/or inefficient in the modern
telecommunications world.
All of Alaska's telecommunications providers through
the Alaska Telephone Association have worked together
to offer these suggested changes. In doing so, they
have strived to maintain important consumer
protections, appropriate RCA jurisdiction, and
consistency with FCC regulations while at the same
time allowing for greater flexibility to more rapidly
take advantage of new technology.
Some existing RCA regulations are over 25 years old
and are largely obsolete today. Customer preferences
continue to grow for broadband and mobile service
while the demand for landlines declines. In
competitive markets, carrier of last resort
requirements and alternative operator services are no
longer necessary. Placing service providers on a more
level playing field will encourage deployment of
advanced technologies and more efficient network
design.
Adoption of these recommended statutory changes will
result reduced regulatory cost charges for consumers.
1:36:35 PM
EDRA MORLEDGE, Staff, Senator Kevin Meyer, Alaska State
Legislature, Juneau, Alaska, paraphrased the following sectional
analysis of SB 205.
Section 1 Municipal powers and duties. AS 29.35.070
Public Utilities. Section 7 repeals AS 42.05.810,
therefore it is removed from reference in this section
of the statute.
Section 2 Alaska Public Utilities Regulatory Act. AS
42.05.141 Adds two new subsections (e) and (f) to the
general powers and duties of the RCA. These
subsections state that the Commission may not
designate a local exchange carrier or an interexchange
carrier as the carrier of last resort, and that the
Commission may designate an eligible
telecommunications carrier consistent with the federal
code that allows for federal subsidies under the
Universal Service Fund.
A carrier of last resort is a telecommunications
company that commits (or is required by law) to
provide service to any customer in a service area that
requests it, even if serving that customer would not
be economically viable at prevailing rates.
The Universal Service Fund is a system of
telecommunications subsidies and fees managed by the
U.S. Federal Communications Commission intended to
promote universal access to telecommunications
services at reasonable and affordable rates for all
consumers.
Section 3 - Alaska Public Utilities Regulatory Act. AS
42.05.711 Exemptions. This section exempts
telecommunications carriers from the Act except for
the following provisions:
• AS 42.05.141(f) New section in the bill
(Section 2 above)
• AS 42.05.221 Requiring a Certificate of
Public Convenience and Necessity
• AS 42.05.231 Provision for applying for the
certificate
• AS 42.05.241 Conditions of issuing/denial of
a certificate
• AS 42.05.251 Allow public utilities to obtain
a permit for the use of streets in
municipalities
• AS 42.05.254 Regulatory cost charge
• AS 42.05.261 Prohibits a public utility from
discontinuing or abandoning service for which a
certificate has been issued
• AS 42.05.271 Allows the RCA to amend, modify,
suspend or revoke a certificate
• AS 42.05.281 Prohibiting a sale, lease,
transfer or inheritance of certificate without
RCA permission
• AS 42.05.296 Requirements for providing
telephone services for certain impaired
subscribers
1:41:26 PM
At ease
1:44:34 PM
CHAIR COSTELLO reconvened the meeting.
MS. MORLEDGE continued the sectional analysis of SB 205.
Continuation of Section 3
• AS 42.05.306 Allows discounted rates for
customers receiving benefits from a social
services assistance program administered by the
state or federal government
• AS 42.05.631 Allows a public utility to
exercise the power of eminent domain
• AS 42.05.641 Extends RCA's jurisdiction to
public utilities operating in a municipality
• AS 42.05.830 Requires the RCA to establish
exchange access charges to be paid by long
distance carriers to compensate local exchange
carriers for the cost of originating and
terminating long distance services
• AS 42.05.840 Allows the RCA to establish a
universal service fund
• AS 42.05.860 Prohibits a carrier from
restricting the resale of telecommunications
services
Section 4 AS 42.05.820 No Municipal Regulation. In
addition to a long distance telephone company, this
section amends AS 42.05.820 to add 'local exchange
carrier' that is exempted in whole or in part from
this chapter from being regulated by a municipality.
MS. MORLEDGE said Section 5 and a corresponding repealer in
Section 7 will be removed due to an open docket with the RCA
that deals with exchange access charges and the administration
of those charges.
Section 6 AS 42.05.890 Definitions. This section
defines "local exchange carrier," "long distance
telephone company," and "long distance telephone
service."
Section 7 Repealers. This section repeals the
following provisions:
• AS 42.05.145 Telecommunications regulation
policy; restriction on regulation of telephone
directories.
• AS 42.05.325 Registration and regulation of
alternate operator services.
• AS 42.05.810 Competition
• AS 42.05.850 Exchange carrier association.
Allows the RCA to require a trade association to
assist in administering access charges and may
require the association to file tariffs and pool
costs and revenue. [This will be removed in a
future version of the bill.]
Section 8 Transition language requiring
telecommunications utilities to continue paying the
annual regulatory cost charge (RCC) until July 1,
2019.
1:48:46 PM
CHRISTINE O'CONNOR, Executive Director, Alaska Telecom
Association, Anchorage, Alaska, testified in support of SB 205.
She recognized the member companies in the audience and
clarified that all the statutes addressed in SB 205 relate to
local landline service or long-distance access through a
landline.
MS. O'CONNOR presented a brief PowerPoint to help explain how SB
205 simplifies and modernizes the telecommunications statutes.
Slide 2 depicts the roster of ATA members that are unanimous in
support of SB 205. These are landline, long distance, wireless,
and broadband companies.
Slide 3 highlights the transformation of the telecommunications
industry. Landlines still exist and are important, but consumer
preferences are focused on wireless and broadband service.
Currently, 48 percent of the population has a landline and 52
percent of adults are in wireless only households. The
underlying networks are essential but the landline service (the
piece regulated by Alaska statutes) is an increasingly smaller
portion of the market and resources are consumed to monitor and
report on the competition. For example, in 1999 there was $64
million in long distance revenues within the state and in 2016
that had dropped to $16 million.
The national trends are similar. Forty-one states have reduced
or eliminated oversight of retail landline telecommunications
services. The National Regulatory Research Institute (NRRI)
monitors the status of regulations throughout the U.S. and
issues annual reports. They recommend that state commissions
focus on the quality of the networks, consumer complaints, and
interactions with providers and consumers to identify needs. She
said those elements and strong consumer protections remain,
regardless of the changes in SB 205.
She displayed slide 5 that depicts a map of the U.S. from the
NRRI showing the states that have reduced regulation.
1:52:35 PM
MR. O'CONNOR reviewed the obsolete statutes addressed in SB 205.
She explained that the long-distance competition statutes AS
42.05.800-810 require the RCA to manage competition in the
landline long distance market. This is left over from the era
when long distance competition was developing. It was hugely
competitive, and the RCA played a critical role in adopting,
monitoring, and managing regulations. The statute and the
regulations are still in place and require annual reports and
tariff filings. A lot of resources are expended for a small
piece of the market. SB 205 removes the outdated regulation of
long distance retail competition.
She reviewed tariff regulation. She related that as the market
has changed, cooperatives are able to manage their own tariffs
if their members grant approval. They can post the rates on
their websites and roll out new bundles and different service
offerings for landlines. Any privately-owned companies must
still file some form of tariff filing with the RCA. Depending on
the operating location, the filing can be a simple informational
filing or one that takes 45 days to review. That is a
considerable delay for changing services for a customer for a
new bundle. A full rate case has a statutory timeline of over
420 days. SB 205 proposes that all companies would operate the
same as the cooperatives. With membership permission,
cooperatives have been doing this successfully for over 15
years.
MS. O'CONNOR displayed a snapshot of the telecom filings that
still must go through the commission. She said this is an
inefficient and unnecessary process for both sides. SB 205
proposes moving these to the cooperative model.
1:55:29 PM
MS. O'CONNOR said SB 205 also proposes a change to the carrier
of last resort designation. This is a duplicative designation
that was used in the past to guarantee that at least one
provider in an area would be available to offer service upon
request. The Certificate of Public Convenience & Necessity
designates an area where service is required and prevents the
abandonment of service without permission from the RCA. An
application to discontinue service is rigorously evaluated with
the public interest in mind. Federal rules designate that a
company must also apply through the FCC to abandon service in an
area.
She said she does not consider SB 205 a deregulation bill
because the RCA retains strong authority to ensure that Alaskan
consumers continue to have service. The bill adds efficiencies
and saves resources while maintaining essential consumer
protections. These include the Certificate of Public Convenience
and Necessity, Eligible Telecommunications Carrier, RCA Consumer
Protection & Information Section, Attorney General Consumer
Protection Unit, and FCC Consumer Complaint Center.
1:58:50 PM
MS. O'CONNOR said SB 205 is structured to right-size the
regulation. SB 205 maintains essential RCA oversight, removes
obsolete statutes, adopts the cooperative model for tariffs,
requires RCA and FCC approval before discontinuing service,
reduces costs and delays of regulation for RCA and providers,
eliminates regulatory surcharges on consumer bills, and shifts
actual costs to providers. The benefits to consumers are
eliminating the regulatory cost charge. Now the cost to regulate
telecommunication companies is funded by a surcharge on
customers' bills. After some transition, the RCA will bill the
cost of services directly to the companies.
2:00:14 PM
CHAIR COSTELLO asked if the RCA has taken a position on the
bill.
MS. O'CONNOR said not yet; she will present the bill to the RCA
tomorrow morning during the public meeting.
CHAIR COSTELLO asked how SB 205 would impact SB 80, a bill she
introduced on behalf of a member of the RCA. SB 80 takes a
portion of the surcharge from landline fees and shifts it to the
cellphone environment to help pay for the materials that deaf
and hard of hearing Alaskans need for their devices.
MS. O'CONNOR said SB 205 would not affect SB 80 and Alaska
Telecom Association supports the much-needed change proposed by
that bill. TRS services currently are funded by a separate
surcharge on a consumer's bill, not the regulatory cost charge.
2:01:57 PM
SENATOR MEYER said his concern is whether the bill would impact
RCA budget. He offered his understanding that RCA now
automatically receives the $0.16 RCC charge on consumers'
monthly bill, whereas SB 205 provides that the RCA will need to
bill the telephone companies directly.
MS. O'CONNOR said that's correct. She explained that the bill
provides a transition period for the RCA to get the mechanism in
place to bill actual charges. Because fewer filings will be
necessary, this should be more equitable. The RCA has the
statutory authority to bill any telecom generated activity
directly to the company, not the consumer.
SENATOR MEYER asked if the list on slide two includes all the
telephone providers in the state.
MS. O'CONNOR replied Circle Telephone Company and Verizon are
not on the list because they are not official members. Both
operate in Alaska and ATA keeps them updated. Circle is a very
small company and Verizon doesn't offer landline service in
Alaska.
SENATOR MEYER noted that the rural providers are listed so the
concerns about future development and infrastructure in rural
areas should be addressed.
MS. O'CONNOR advised that the federal funding those companies
receive has very stringent requirements for the deployment of
broadband.
2:04:36 PM
SENATOR MICCICHE asked if consumer groups are aware of the bill
and if any have voiced concern about the changes.
MS. O'CONNOR said she hasn't received any comment from consumer
groups and she doesn't expect any objection because the strong
RCA consumer protection role is unchanged.
2:05:25 PM
SENATOR STEVENS asked if the legislation has any connection to
or effect on 911 service.
MS. CONNOR said no; that is a separate surcharge that the bill
does not change.
SENATOR GARDNER directed attention to Section 7 that repeals AS
42.05.145 and asked for an explanation of the restriction on
regulation of telephone directories.
MS. O'CONNOR explained that the provision removes the obligation
for companies to deliver a phonebook to consumers. Companies are
adjusting their phonebooks to meet the needs of consumers,
including online options.
2:07:09 PM
CHAIR COSTELLO found no one who wished to comment, and closed
public testimony on SB 205.
[SB 205 was held in committee.]
2:07:40 PM
At Ease
SJR 7-CONST. AM: VOTER APPROVAL FOR NEW TAXES
2:09:58 PM
CHAIR COSTELLO reconvened the meeting and announced the
consideration of SJR 7.
2:10:23 PM
SENATOR MEYER advised that he took over as prime sponsor of SJR
7 after the initial sponsor resigned his seat. He introduced the
legislation speaking to the following sponsor statement:
This bill proposes an amendment to the Constitution of
the State of Alaska regarding the power of taxation.
If passed, the Division of Elections Director would
place a question on the ballot that goes before the
voters at the next general election. The question
would amend Article IX, sec. 1 to require a majority
of voters to approve any law establishing a tax, tax
increase, or another revenue-producing measure.
There are a number of ways governments have weighed
the opinion of its people on taxes. Many may be
familiar with the Anchorage Municipality which uses an
advisory vote on any tax increase. Or the proposition
process that may alter or do away with a tax. In the
state of Colorado, voters enshrined the Taxpayer's
Bill of Rights (TABOR) into the state constitution in
1992. The premise was simple, if lawmakers want to
raise taxes or issue debt, they should ask voters for
permission.
It has been many years since the State of Alaska has
levied an individual income tax on its citizens. There
has been much discussion in this era of budget
deficits on revenue generation by the implementation
of and/or increase in taxes. The intention of this
legislation is to explore the idea that before
enacting a new tax, be it an individual income or
statewide sales tax, it should be ratified by a vote
of the people. Voters are being asked to approve
budget timelines, spending caps, and per diem
spending; it makes sense that we consult the people of
Alaska on taxation.
SENATOR MEYER noted that he introduced SB 130 that would have
placed an advisory vote in statute but placing it in the
constitution is probably a better idea.
2:13:45 PM
CHRISTINE MARASIGAN, Staff, Senator Kevin Meyer, Alaska State
Legislature, Juneau, Alaska, delivered a sectional analysis for
SJR 7 stating the following:
Section 1 regards taxing power. The law establishing a
tax, a tax increase, or another revenue producing
measure shall not take effect until approved by the
voters of the state by a majority of the votes cast on
the proposed law.
Section 2 simply states that amendment will be put
onto the ballot in the next general election in
conformity with [Art. XIII, Sec. 1 Constitution of the
State of Alaska].
2:14:31 PM
SENATOR STEVENS asked if this applies to any kind of tax as well
as any change to an existing tax.
SENATOR MEYER replied that is the way the resolution is
currently written, but his intent is to focus solely on the
broad-based sales and income taxes.
CHAIR COSTELLO asked it was the intent to provide no public
education; it would be available for any group to promote.
MS. MARASIGAN said that when the sponsor consulted the Division
of Elections regarding SB 130 he was advised that the matter
would simply be placed on the ballot. That did not bring an
additional cost. The division also broke down what it would cost
to place the measure on the ballot in a special election.
CHAIR COSTELLO asked if the sponsor had received comments that
this might conflict with the legislature's power to budget and
tax.
MS. MARASIGAN admitted to running into constitutional roadblocks
when she and the sponsor initially had conversations with
legislative legal about drafting SB 130. They were offered two
options: option 1 was to take an advisory vote, and option 2 was
to amend the constitution.
2:18:35 PM
CHAIR COSTELLO stated she would hold SJR 7 in committee.
2:18:44 PM
At ease
SB 119-HEALTH CARE COSTS: DISCLOSURE;INSURERS;
2:20:58 PM
CHAIR COSTELLO reconvened the meeting and announced the
consideration of SB 119.
2:21:11 PM
SENATOR SHELLEY HUGHES, Alaska State Legislature, Juneau,
Alaska, sponsor of SB 119, stated that decades of taskforces,
commissions, and studies have tried to tackle the issues
associated with health care cost and access. A lot of good ideas
were shared around those tables but there was a tendency not to
rock the boat. As a result, health care costs have continued to
rise. She identified providers and health care insurers as major
contributors in the matter of rising costs and told the members
that there are specific things the legislature could do to nudge
down health care costs in Alaska. Other states are moving
forward with changes that are making a difference. She continued
the introduction of SB 119 speaking to the following sponsor
statement:
Alaska's health care costs are among the highest in
the nation and continue to rise. Through free market
principles, SB 119 will bend the cost curve down over
time to help relieve the disproportionate burden of
health care costs on family budgets, seniors on fixed
incomes and employers providing insurance coverage to
their employees.
Senate Bill 119 will provide Alaskans with the
information they need to plan financially for their
health care decisions. The bill requires health care
providers and facilities to list meaningful cost
information online and onsite. The bill also requires
a health care provider and an insurance company
disclose full cost information within five days of
request by a patient specific to their condition,
including any expected out of pocket costs.
The bill also adds a mechanism so insurance companies
will provide an incentive a shared savings check
to policyholders who choose an in-network provider who
charges below the average in-network cost. Employers
providing insurance coverage for employees will also
be eligible for some of the shared savings. This
approach will bring down the high cost of healthcare
in Alaska by encouraging consumers to shop and
providers to compete for Alaska's healthcare dollars.
35 states have either passed or are currently working
on healthcare cost transparency legislation. SB 119 is
among the most innovative approaches as a result of
the incentive provision, and is expected to bend the
cost curve more effectively than other efforts because
of this.
The Alaska Health Care Consumer's Right to Shop Act
will empower Alaskans with the tools needed to make
healthcare choices that are right for them.
SENATOR HUGHES identified two things that have allowed the
uncontrolled escalation of health care costs in Alaska: 1)
prices aren't clear up front, and 2) there is a third-party
payer system. Consumers are confused and don't know where to go
which results in very little medical shopping. In other sectors
people can find out what they are getting into and make informed
decisions. It hasn't worked that way with health care. The
health care industry has been shielded in a way that has kept
the market forces from flowing freely. This has also hurt other
business sectors.
She said the health care pie in Alaska is too large and SB 119
proposes shrinking it through natural market forces. The
providers and insurers will gradually see fewer dollars. She
clarified that this gradual reduction will allow time for this
adjustment. She pointed out that health care has weathered the
current recession on the backs of family budgets and businesses.
SB 119 seeks to lessen that burden and make things fairer. She
noted that the Alaska Health Care Commission convened recently
to address price and quality transparency and in January the
Alaska Policy Forum specified price transparency and the right
to shop as important factors in addressing cost.
2:31:24 PM
SENATOR HUGHES presented a brief PowerPoint to explain the Right
to Shop Act. It rewards patients who pick high quality and low-
cost health care.
She reported that from 1999 to 2016, employee pay has increased
60 percent and health insurance premiums have increased 213
percent. In 2006, employee out-of-pocket costs were $2,972 and
over 10 years those increased 78 percent to $5,277. In that same
10-year period, employers health insurance premiums increased 58
percent. She pointed out that those increased premiums could
otherwise have gone into growing the businesses and creating new
wealth. Further, the premiums go to insurance companies outside
the state and just some of that returns to providers in Alaska.
She said patients should know that they have an opportunity to
save and they should be aware of price differences. Of the $3
trillion that is spent nationwide on health care, $1 trillion is
shoppable and half of that could be saved by shopping for a
lower cost option.
SENATOR HUGHES described the three pillars of right to shop.
• The right to know: Patients can find out the estimated
price ahead of time from their insurance plan and compare
providers to find one that works for them.
• The right to save: Patients share in savings if they shop
for a high-value provider (i.e. high quality, lower cost).
• The right to pick: Patients' access to high-value providers
is protected, whether the provider is in- or out-of-
network.
She explained that the tools available for shopping customize
information for the policy holders, but they are limited in
Alaska. She presented data to illustrate that Alaska needs Right
to Shop. Conservatively, Alaska spends $6.9 billion per year on
health care. Of that, $2.3 billion is shoppable and about half
or $1.1 billion could be saved by implementing SB 119. She noted
that Maine passed Right to Shop legislation in 2017.
2:35:24 PM
CHAIR COSTELLO asked if her office produced the PowerPoint or if
the Right to Shop is a national movement.
SENATOR HUGHES said her office worked with think tanks on the
presentation and customized it for Alaska.
CHAIR COSTELLO asked Mr. Whitt to comment on that after the
presentation.
SENATOR HUGHES said her office used information from the
Foundation of Government Accountability, Kaiser Permanente, and
others.
SENATOR HUGHES continued the presentation citing data from the
Foundation of Government Accountability that shows that 77
percent of Americans want the right to shop in health care. She
displayed a chart that illustrates that this is a bipartisan
issue. Voters are more likely to support Right to Shop
legislation when they learn it could mean lower out-of-pocket
costs for individuals with chronic health conditions.
CHAIR COSTELLO observed that Right to Shop reflects a different
kind of transparency. The online tool provides information
specific to an individual as opposed to showing what is being
charged to anybody by anyone.
SENATOR HUGHES said the bill has a degree of both. A
policyholder that uses the tool gets information that applies
only to them, but then Section 1 requires a certain number of
codes to be posted that anyone could view. Because two-thirds of
businesses in Alaska do not offer employer insurance, there is
value in having that information available. She said she wasn't
sure about the best way to make that work.
CHAIR COSTELLO asked if there was any conversation about health
care consumers posting what they paid for a health care service
that can be shared amongst the population.
SENATOR HUGHES said she had heard about efforts to compile
information for an application, but she was not aware of one
specific to Alaska.
2:40:36 PM
SENATOR HUGHES said SB 119 is unique in that it has an incentive
piece that has bipartisan support. When asked, more than 50
percent of consumers would consider switching providers for a
savings of as little as $50 on a non-emergency procedure.
Incentives matter and they work. She said the third-party payer
system is expensive, confusing, and harmful. She cited the
following 2017 data from the Foundation of Government
Accountability:
• 62 percent of voters say it would be tough to pay their
entire deductible in one month.
• 63 percent know prices differ wildly for the same care. For
example, a knee surgery could vary from $20,000 to
$120,000.
• 69 percent think insurers are not working to keep their
costs down.
2:41:58 PM
SENATOR HUGHES displayed a graphic that shows that MRI in one
location may be $359 compared to $2,272 in another location. The
takeaway is that prices vary widely for equivalent services. She
cited the following 2017 data from the Foundation of Government
Accountability:
• 98 percent of insurers have a cost tool but only 2 percent
of members use it. She offered the explanation that the
system is too complicated and there is no incentive.
• Right to Shop works.
• Incentives matter.
She opined that few consumers use the tool because the system is
too complicated and there is no incentive to do so. In 2014,
about 50 percent of insurance companies in other states readily
provided information through a tool or otherwise. In Alaska, it
was just 29 percent. As mentioned before, incentives work. Even
a $50 savings would motivate people to do some research.
She displayed a list of the potential savings between high-cost
and lower-cost in-network facilities, specific to Anchorage. For
knee arthroscopy, there could be a price difference of $15,869;
for cataract surgery, there could be a price difference of
$7,204; for shoulder MRI, there could be a price difference of
$2,038; and for a colonoscopy, there could be a price difference
of $2,894.
CHAIR COSTELLO asked who collected that information because her
family has found it's difficult to impossible to get prices for
service at a certain Anchorage facility.
SENATOR HUGHES replied the information comes from Health Care
Bluebook. She offered to follow up on how the research was done.
2:44:46 PM
SENATOR GARDNER shared that she was able to get a price once she
had the procedure code and zip code, but the actual bill didn't
match what she was told. When she questioned the difference, one
facility removed the extra charge and the other did not. Also,
consumers may not know to ask the cost of the things that are
related to the service such as the cost for the facility, the
surgeon, and the anesthesiologist. She said she appreciates the
bill but worries that providers may post costs and then bump up
the cost for things that aren't posted but related.
SENATOR HUGHES advised that the bill asks insurance companies to
also provide cost information so that consumers can get a better
estimate.
She cited Health Care Bluebook data that states that one large
public entity paid $30,000 in cash incentives and captured over
$800,000 in savings. She said her office would try to find out
the name of the public entity. She said this is an option for
Alaska's state employee health insurance. New Hampshire paid $1
million in incentives and saved $12 million. She said she
understands that the Department of Administration (DOA) has
looked at this and isn't entirely supportive, but she believes
there is potential to save. She pointed to a graph on the same
slide that illustrates that out-of-network care can save money.
The data comes from a facility in a large U.S. market. She
displayed a graph that shows that more than three-fourths of
voters support the Right to Shop to help small businesses deal
with rising health care costs, freeing up money to hire more
workers. She displayed the final slide that shows which states
have passed or are considering full Right to Shop legislation or
one or more of the three pillars right to know, right to save,
and right to pick. In the 2017/2018 legislative cycle, 17 states
are considering Right to Shop legislation.
2:49:12 PM
SENATOR GARDNER asked if right to know (full transparency) has
all three elements.
SENATOR HUGHES said no. The right to know is getting prices from
insurance companies and posted prices; right to save is the
incentive; and right to pick is the cost for out-of-network
service that would apply to the consumer's out-of-pocket limit.
SENATOR GARDNER asked if Maine was the only state that had
implemented all three elements.
SENATOR HUGHES said yes; it's a fairly new concept but a lot has
happened in the last two years. She added that the incentives
that New Hampshire implemented show promise. Prices are nudging
down.
CHAIR COSTELLO asked Mr. Whitt to walk through the sectional
analysis.
2:51:30 PM
BUDDY WHITT, Staff, Senator Shelly Hughes, advised that Mr.
Allumbaugh was available online to answer questions about the
policy and how it has worked in other states. He paraphrased the
following sectional analysis for SB 119:
Sec. 1, Page 1, Lines 7-10 Adds the Alaska Health Care
Consumer's Right to Shop Act to the uncodified law of
the State of Alaska.
Sec. 2, Page 1, Line 11 Page 3, Line 20 Authorized
the Department of Health and Social Services to
collect and analyze data relating to health care
services and price information.
Sec. 3, Page 2, Line 12 Page 3, Line 20 Adds a new
section to Title 18 for health care services and price
information.
a. Health care provider shall compile a list
annually by procedure code of the top 25 health
care services from each of the six category I CPT
code sections.
b. The provider or facility will publish the
lists above, by providing it to the department
for publishing it on their website, by posting it
for public review in the facility or office where
the service(s) are performed and by posting it on
their website.
c. The health care provider or facility may
include a disclaimer noting the price paid may be
higher or lower than listing of service due to
unforeseen needs or complications.
d. The department shall compile the information
provided by the provider or facility and post it
on the department's website for public view.
e. If the provider performs less than 25 of the
services from each CPT code category, then they
will compile a list based upon the total number
of services that they provide.
f. Failing to comply with this section will
result in a civil penalty of $50 per day for each
day after March 31st that the facility or
provider has failed to provide the information.
This civil penalty will not exceed $2,500
annually. An appeal process is allowed under this
section
Sec. 18.23.405 Page 3, Line 21 Page 4, Line 28 This
section is added to specify the provider and/or
facilities responsibility to provide cost information
to patients or potential patients who have health
insurance coverage.
a. Within five business days of request, a
provider must give a good faith estimate of the
total charges of the healthcare service requested
if the total of the charges exceeds $250.
b. The estimate of charges must include the
network status of the provider under the
patient's plan, whether the services of another
provider are necessary and if they are, a
separate request to that additional provider must
be made.
c. If the patient is uninsured, the health care
provider must include information about financial
assistance that may be available, as well as the
internet website that provides information about
standard charges for the type of care the patient
is seeking.
d. The patient may request the information in
writing or electronically.
e. Estimate of charges must represent a good
faith effort to provide accurate information, is
not legally binding and is not guaranteed due to
unforeseen conditions.
f. This section does not apply to emergency
medical conditions.
Sec. 18.23.420 Page 4, Line 29 Page 5 This section
gives definitions of terms.
Sec. 4, Page 6 Page 7, Line 4 Adds healthcare
insurance incentive program to the list of items to be
included in the director's annual report.
Sec. 5, Page 7, Line 5 Page 10, Line 19 Adds a new
section to AS 21.96. This section establishes news
provisions for health care insurance companies to
operate in the state of Alaska. This section deals
with private health insurance policies not pre-empted
by ERISA or any other federal laws.
Sec. 21.96.200 Page 7, Lines 6 14 A health care
insurer shall establish an interactive online tool so
that the covered person may request and obtain
information about the amount paid to in network
providers by the insurance company for specific health
care services and be able to compare prices among
network healthcare providers.
Sec. 21.96.205 Page 7, Line 15 31
a. Upon request of a covered person, a health
care insurer shall provide within five days a
good faith estimate of out of pocket expenses
that a covered person will have to pay for a
specific covered medically necessary benefit.
b. This section does not prohibit the health
insurance provider from imposing fees for
unforeseen services or additional costs that come
up but were not covered in the estimate provided
in Section (a).
c. The health care insurer shall disclose that
this is an estimate and the actual cost may be
different if unforeseen services or costs arise.
Sec. 21.96.210 Page 8 Page 9, Line 3
a. The health care insurance company shall set up
an incentive plan for a covered person who elect
to receive a health care service from a health
care provider that charges less than the average
in network price paid by the insurer for that
service. At a minimum the health care services
that apply to this section shall include:
1. Physical and Occupational Therapy Services
2. OBGYN Services
3. Radiology and Medical Imaging Services
4. Laboratory Services
5. Infusion Therapy Services
6. Dental Services
7. Vision Services
8. Behavioral Health Services
9. Inpatient and Outpatient Surgical
Procedures: and
10. Outpatient non-surgical diagnostic tests
and procedures
b. The insurer shall provide to the covered
person a cash payment based upon the shared
savings that result from the covered person
choosing the provider whose price falls below the
average cost to the insurance company for that
service. For those whose insurance is provided as
part of a group plan offered by their employer,
the shared savings will be split at least equally
between the patient, the employer and the
insurance company. For those who secured health
care insurance on their own without an employer
or some other third party, the cash payment will
be calculated with at least 50% of the shared
savings going to the policy holder.
c. The health care insurer will base average
price paid to in network providers within a
reasonable period of time, but not to exceed one
calendar year.
Sec. 21.96.215, Page 9, Lines 4 8 The incentive
program will be made available as a part of all
qualified plans in the state and will notice it at
time of initial enrollment or annual renewal.
Sec. 21.96.220, Page 9, Lines 9 13 Before offering
an incentive program, the health insurance company
shall file a description of the program with the
Director for approval.
Sec. 21.96.225, Page 9, Lines 14 20 If a covered
person participates in an incentive program and
chooses an out-of-network provider that results in a
savings to the health care insurer, the health care
insurer will treat the amount paid for the health care
service as though it was provided by an in-network
provider or facility.
Sec. 21.96.230, Page 9, Lines 21 23 The incentive
program will not be treated as an administrative
expense by the insurer for rate development or rate
filing purposes.
Sec. 21.96.235, Page 9, Line 24 Page 10, Line 9 a.
Provides instruction for the health care insurance
company to provide an annual report concerning the
incentive program. b. Provides instruction for the
division of insurance to provide an aggregate report
annually to the legislature on health care insurance
incentive programs in the state.
Sec. 21.96.300, Page 10, Lines 10 19 Establishes
definitions for terms in this section.
Sec. 6, Page 10, Lines 20 22 Adds Sec. 29.35.142 to
the list of home rule powers under AS 29.10.200.
Sec. 7, Page 10, Line 23 Page 11, Line 5 The
authority to regulate the disclosure or reporting of
price information for health care services is reserved
to the state of Alaska.
Sec. 8, Page 11, Line 6 Page 13, Line 22 Health Care
Insurance policies obtained by the Department of
Administration under AS 39.30.090 must be in
compliance with requirements under AS 18.23.400, AS
18.23.405 and AS 21.96.200 AS 21.96.300.
Sec. 9, Page 13, Line 23 Page 14, Line 2 Language
added to AS 39.30.91 providing additional guidance for
the Department of Administration for compliance with
requirements under AS 18.23.400, AS 18.23.405 and AS
21.96.200 AS 21.96.300.
Sec. 10, Page 14, Lines 3 8 Amended language to the
uncodified law of the State of Alaska allowing for the
Department of Commerce, Community, and Economic
Development to adopt regulations necessary to
implement this act.
Sec. 11, Page 14, Line 9 Section 10 of this Act takes
effect immediately.
Sec. 12, Page 14, Line 10 Except for the provision
above, the act has an effective date of January 1,
2018.
MR. WHITT noted that the effective date would need to be changed
to reflect the current year.
3:02:08 PM
SENATOR GARDNER referenced the language [in Sec. 21.96.210] on
page 8 and asked what the phrase "at least equally" means.
MR. WHITT said the idea was to give the insurance companies some
leeway to decide how to structure their incentive plan to
attract market share.
SENATOR GARDNER said she assumes that language in the bill says
the employer and the patient will each get one-third and the
insurance company has discretion to use its third as it sees
fit.
MR. WHITT replied, "That's what it should say.
CHAIR COSTELLO asked Lori Wing-Heier and Jill Lewis to comment
on SB 119.
3:05:19 PM
LORI WING-HEIER, Director, Division of Insurance, Department of
Commerce, Community and Economic Development (DCCED), Juneau,
Alaska, said there is no doubt that everyone is concerned about
the cost of health care. There is a give and take with insurance
companies and providers and in the last few months conversations
have started with the Alaska Comprehensive Health Insurance
Plan. Members of the legislature, the administration, and
private employers are taking part. The governor's announcement
in Washington, D.C. that he wants to address health care,
including transparency, is an important step in these
conversations. When there is talk about transparency, health
care is the one industry where the up-front cost is not known.
That is an historical truth. Generally, the division has found
that it's because consumers have only been concerned about the
deductible. Now that deductibles are large, premiums are huge,
and there are copayments, everyone wants to know the cost of
services and the best bang for the buck. She cautioned that
changing the way that health care is delivered will require time
and there will be costs associated with getting the system up
and running. Nevertheless, the overall concept of transparency
is something that everyone who talks about health care supports.
She said the incentive piece isn't a bad idea (the right to
shop, the right to know) but a few kinks need to be worked out.
She hasn't seen that the individual market is part of other
states, but the division and the sponsor's office will research
that further to see that the individual market is included, not
just group health care. The additional research will ensure that
this doesn't inadvertently drive costs up for the state and it
doesn't drive costs up for insurers which will come back to the
employers that are providing health care.
MS. WING-HEIER said the idea of the database is great and some
insurers already have it available. Discussions across the state
demonstrate a need for an all-claims-paid database, but there
hasn't been a decision about how that will work or who will host
it or how the data would be populated.
3:08:50 PM
JILL LEWIS, Deputy Director, Division of Public Health,
Department of Health and Social Services (DHSS), Juneau, Alaska,
agreed with Ms. Wing-Heier's comments and offered to answer
questions related to SB 119.
3:09:13 PM
ROSA AVILA, Deputy Section Chief, Health Analytics and Vital
Records, Anchorage, Alaska, agreed with Ms. Wing-Heier's
comments and offered to answer questions related to SB 119.
3:09:46 PM
CHAIR COSTELLO opened public testimony on SB 119.
3:10:16 PM
MIKE COONS, President, Alaska Chapter of the Association of
Mature American Citizens (AMAC), Palmer, Alaska, said AMAC
supports SB 119 as one of the tools to help address the rising
costs in Alaska by allowing free market principles to apply to
the health care industry in the state. AMAC supports consumers
being able to make informed decisions by knowing costs before
they receive the service. They also support increased
competition in the health care market. The hidden costs in the
third-party payer system has stymied free market principles that
operate in other sectors, so the shared savings incentive piece
is an important element. He said he believes that SB 119 will
have a positive impact on people who have health savings
accounts and it will cut administrative costs to providers.
3:13:54 PM
At ease
3:14:44 PM
CHAIR COSTELLO reconvened the meeting and asked Mr. Allumbaugh
to provide his phone number. [He did so.]
3:15:35 PM
JEREMY PRICE, Americans for Prosperity, Anchorage, Alaska, said
this free market advocacy association is consistently supportive
of measures like SB 119 to address the ever-rising cost of
health care. He said we won't get to the root of the problem of
rising health care costs until Alaskan consumers and Americans
generally have greater control and ownership. Incentivizing
competition and giving consumers the ability to price compare
are steps in the right direction. He expressed support for
greater transparency, greater competition, and greater choice
for the consumer. SB 119 is a positive step toward those goals.
3:16:53 PM
PORTIA NOBLE, representing self, Anchorage, Alaska, spoke in
support of incentives and the free market principles of shopping
for services. Having providers and health care facilities
publish prices gives consumers both information and the
opportunity to shop for the best price. She shared that she has
received discounts for services by paying cash. This is a great
incentive and a tool that many uninsured Alaskans use. She
offered her belief that over 80 percent of Alaskans want the
option to choose.
3:18:32 PM
JEANNIE MONK, Vice President, Policy & Programs, Alaska State
Hospital and Nursing Home Association (ASHNHA), Juneau, Alaska,
noted that ASHNHA submitted written comments on SB 119. She said
ASHNHA agrees with the points Ms. Wing-Heier made and supports
the provisions relating to the right to know and insurance
companies working with patients. The area of most concern is the
right to pick, specifically the section that focuses on
discounts to out-of-network providers. She said this could
undermine the established contracts between insurers and
providers. ASHNHA would recommend deleting that section.
Regarding the right to save, if the goal is to incentivize
competition in the state, ASHNHA would recommend adding language
that focuses on making this an in-state competition. ASHNHA is
concerned about inadvertently dismantling parts of the health
care system in the interest of giving people a $50 rebate. Costs
in Alaska will always be higher than the costs in Seattle and if
people have an incentive to go outside their community it could
jeopardize critical access hospitals that are already on the
margin financially. She summarized that ASHNHA supports all the
provisions in SB 119, except the incentive program. It could
disrupt the access to care in Alaska and erode the health
infrastructure.
3:20:35 PM
SENATOR HUGHES refuted opposing testimony stating that many
services in Alaska are three or four times higher than similar
services in Seattle and it's not justified. She said she was
open to changing the bill but if it's watered down or made a
pilot program it would kill its purpose. Providers would argue
that they are already highly regulated by government and that's
true for a segment of their patients. But things can be loosened
for their other patients. Providers will also argue that posting
prices will take away from time to treat patients but that's a
baseless argument because other service sectors do it. Rural
critical care hospitals do not need to close their doors if some
patients select service elsewhere. They can innovate and reduce
prices. Insurance companies that complain that this will be an
administrative burden, advocated for the regulation laden
Affordable Care Act. She clarified that the out-of-network
provision asks that it apply to the consumer's out-of-pocket
limit.
3:23:26 PM
CHAIR COSTELLO held SB 119 in committee with public testimony
open.
3:23:40 PM
There being no further business to come before the committee,
Chair Costello adjourned the Senate Labor and Commerce Standing
Committee meeting at 3:23 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 205.PDF |
SL&C 2/27/2018 1:30:00 PM |
SB 205 |
| SB 205 Sponsor Statement 2.27.18.pdf |
SL&C 2/27/2018 1:30:00 PM |
SB 205 |
| SB 205 Sectional Analysis.pdf |
SL&C 2/27/2018 1:30:00 PM |
SB 205 |
| SB205-DCCED-RCA-02-23-18.pdf |
SL&C 2/27/2018 1:30:00 PM |
SB 205 |
| SB 205 Modernization Act FAQ 2-15-2018 (003).pdf |
SL&C 2/27/2018 1:30:00 PM |
SB 205 |
| SB 205 Presentation SL&C 02.27.18.pdf |
SL&C 2/27/2018 1:30:00 PM |
SB 205 |
| SB 205 Telecommunications Regulatory Modernization Act 1-page v2 (002).pdf |
SL&C 2/27/2018 1:30:00 PM |
SB 205 |
| AT&T Support Letter for SB205.pdf |
SL&C 2/27/2018 1:30:00 PM |
SB 205 |
| SB 205 Suport - APT.pdf |
SL&C 2/27/2018 1:30:00 PM |
SB 205 |
| SB 205 Support Letter-Copper Valley Telecom.pdf |
SL&C 2/27/2018 1:30:00 PM |
SB 205 |
| SB205 Support TelAlaska.pdf |
SL&C 2/27/2018 1:30:00 PM |
SB 205 |
| SB205 Support-OTZ Telephone Cooperative.pdf |
SL&C 2/27/2018 1:30:00 PM |
SB 205 |
| SJR 7.pdf |
SL&C 2/27/2018 1:30:00 PM |
SJR 7 |
| SJR 7 Sponsor Statement.pdf |
SL&C 2/27/2018 1:30:00 PM |
SJR 7 |
| SJR7-LEG-LEG-02-26-18.pdf |
SL&C 2/27/2018 1:30:00 PM |
SJR 7 |
| SB 119.pdf |
SL&C 2/27/2018 1:30:00 PM |
SB 119 |
| SB 119 Sponsor Statement.pdf |
SL&C 2/27/2018 1:30:00 PM |
SB 119 |
| SB 119 Sectional Analysis.pdf |
SL&C 2/27/2018 1:30:00 PM |
SB 119 |
| SB 119 - Voters-Want-the-Right-to-Shop-1-22-18.pdf |
SL&C 2/27/2018 1:30:00 PM |
SB 119 |
| SB 119 - RTS-SpreadingLogos-DRAFT2.pdf |
SL&C 2/27/2018 1:30:00 PM |
SB 119 |
| SB 119 - Right to Shop Brief on ME.pdf |
SL&C 2/27/2018 1:30:00 PM |
SB 119 |
| MTA Support of SB 205.pdf |
SL&C 2/27/2018 1:30:00 PM |
SB 205 |
| SB 119 - Right to Shop FAQ.pdf |
SL&C 2/27/2018 1:30:00 PM |
SB 119 |
| SB 119 - Right to Shop One Pager (12-15-16).pdf |
SL&C 2/27/2018 1:30:00 PM |
SB 119 |
| SB 119 - RTS Healthcare Blue Book Alaska.pdf |
SL&C 2/27/2018 1:30:00 PM |
SB 119 |
| SB 119 - Senate Labor and Commerce Presentation 02.27.18.pdf |
SL&C 2/27/2018 1:30:00 PM |
SB 119 |
| Aetna Letter SB 119 2-27-17.pdf |
SL&C 2/27/2018 1:30:00 PM |
SB 119 |
| ASHNHA SB119 testimony 2-27-17.pdf |
SL&C 2/27/2018 1:30:00 PM |
SB 119 |