Legislature(1993 - 1994)

03/23/1993 01:40 PM L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
               SENATE LABOR AND COMMERCE COMMITTEE                             
                         March 23, 1993                                        
                            1:40 p.m.                                          
  MEMBERS PRESENT                                                              
  Senator Tim Kelly, Chairman                                                  
  Senator Steve Rieger, Vice Chairman                                          
  Senator Bert Sharp                                                           
  Senator Judy Salo                                                            
  MEMBERS ABSENT                                                               
  Senator Georgianna Lincoln                                                   
  COMMITTEE CALENDAR                                                           
  SENATE BILL NO. 171                                                          
  "An Act relating to the  contracting and financing authority                 
  of the Alaska  Industrial Development and  Export Authority,                 
  giving approval of  the issuance of the  authority's revenue                 
  bonds, and delaying the termination  date of the authority's                 
  business assistance program; and providing for  an effective                 
  SENATE BILL NO. 162                                                          
  "An  Act  relating  to  the  implementation of  the  federal                 
  emergency unemployment compensation program;  making changes                 
  relating  to unemployment  compensation  under the  extended                 
  benefits  program   and  the  supplemental   state  benefits                 
  program; and providing for an effective date."                               
  HOUSE BILL NO. 101                                                           
  "An Act relating to the adoption  of the National Electrical                 
  Code and the National Electrical Safety Code."                               
  CS FOR HOUSE BILL NO. 102(FIN)                                               
  "An Act relating  to the Alaska Labor  Relations Agency; and                 
  providing for an effective date."                                            
  SENATE BILL NO. 40                                                           
  "An Act relating  to health  insurance for small  employers;                 
  and providing for an effective date."                                        
  PREVIOUS SENATE COMMITTEE ACTION                                             
  SB 171 - No previous action to record.                                       
  SB 162 - No previous action to record.                                       
  HB 101 - No previous action to record.                                       
  HB 102 - No previous action to record.                                       
  SB 40 - See Labor & Commerce minutes dated 3/23/93.                          
  WITNESS REGISTER                                                             
  John Olson                                                                   
  Alaska Industrial Development and Export Authority                           
  480 Tudor Rd.                                                                
  Anchorage, Alaska 99503-6690                                                 
  POSITION STATEMENT:  Supported SB 171.                                       
  Ashley Reed                                                                  
  3201 C Street #300                                                           
  Anchorage, Alaska 99503                                                      
  POSITION STATEMENT:  Commented on SB 171.                                    
  Judy Knight, Director                                                        
  Employment Security Division                                                 
  Department of Labor                                                          
  P.O. Box 25509                                                               
  Juneau, Alaska 99802-1149                                                    
  POSITION STATEMENT:  Supported SB 162.                                       
  Lynda Giguere, Legislative Aide                                              
  % Representative Hudson                                                      
  State Capitol                                                                
  Juneau, Alaska 99801-1182                                                    
  POSITION STATEMENT:  Commented on HB 101.                                    
  Jan DeYoung, Administrator                                                   
  Alaska Labor Relations Agency                                                
  P.O. Box 107026                                                              
  Anchorage, Alaska 99510-7026                                                 
  POSITION STATEMENT:  Commented on HB 102.                                    
  Ken Erickson, Legislative Aide                                               
  Senator Pearce                                                               
  State Capitol                                                                
  Juneau, Alaska 99801-1182                                                    
  POSITION STATEMENT:  Commented on SB 40.                                     
  Jan Meisels                                                                  
  Health Insurance Association of America                                      
  22144 Clarendon Street, Suite 220                                            
  Woodland Hills, Ca. 91367                                                    
  POSITION STATEMENT:  Supported SB 40.                                        
  Jay Frank                                                                    
  State Farm Insurance                                                         
  Allstate Inusrance                                                           
  431 N. Franklin Street                                                       
  Juneau, Alaska 99801                                                         
  POSITION STATEMENT:  Supported SB 40.                                        
  Joe Poor, Executive Director                                                 
  Juneau Chamber of Commerce                                                   
  124 W 5th                                                                    
  Juneau, Alaska 99801                                                         
  POSITION STATEMENT:  Supported SB 40.                                        
  Reed Stoops                                                                  
  AETNA Insurance                                                              
  P.O. Box 21211                                                               
  Juneau, Alaska 99801                                                         
  POSITION STATEMENT:  Supported SB 40.                                        
  ACTION NARRATIVE                                                             
  TAPE 93-22, SIDE A                                                           
  Number 001                                                                   
  SENATOR KELLY called  the Senate Labor and  Commerce meeting                 
  to order  at 1:40  p.m. and  announced SB  171 AIDEA  BONDS;                 
  BUSINESS ASSISTANCE PROG. to be up for consideration.                        
  SENATOR PEARCE said if enacted,  SB 171 would accomplish two                 
  key  objectives   for  the  Alaska   Industrial  Development                 
  Authority (AIDA).   Section 1 gives legislative  approval to                 
  AIDA to authorize the issuance of bonds up to $40 million to                 
  finance the acquisition, design,  and construction of public                 
  use   aircraft   fueling   facilities   at   the   Anchorage                 
  International Airport.                                                       
  Section 2  of the  bill extends  the sunset  date of  AIDA's                 
  business assistance fund to July 1, 1996.                                    
  SENATOR  PEARCE noted  there were  two proposed  amendments.                 
  The first tightens the Title and  the other deletes the word                 
  JOHN OLSON, Deputy Director of  Development, AIDA, supported                 
  SB 171 although  it originated  through the legislature  and                 
  not the Governor's office as is usual.                                       
  SENATOR RIEGER asked if these  bonds are payable by  statute                 
  solely  out  of the  revenue proceeds  of  the owner  of the                 
  project.   MR.  OLSON explained  they would use  the general                 
  obligation of the Authority as credit  for the bonds.  Under                 
  this program the  project would have  to cost less than  $10                 
  million.  The only way they  can issue revenue bonds greater                 
  than $10 million is if AIDA owns the project.                                
  Number 176                                                                   
  SENATOR  RIEGER said  he wanted to  be sure  the legislature                 
  could  issue,  if  they  choose,  revenue bonds  instead  of                 
  authorizing general obligation  bonds.   MR. OLSON said  the                 
  legislature  can authorize  revenue  bonds,  but AIDA  still                 
  wants the option to use the  g.o. capacity of the Authority,                 
  should it be necessary, to finance projects.                                 
  SENATOR KELLY asked  if he was  implying AIDEA might not  be                 
  able to sell revenue bonds based on these two projects?  MR.                 
  OLSON replied  they do  not know,  yet, about  the depth  of                 
  credit of either entity they are dealing with.                               
  SENATOR KELLY asked what  was the contribution of  MIDREX to                 
  the Point McKenzie project.  MR. OLSON explained the portion                 
  of the project AIDA  would finance is the dock  and load-off                 
  system.   The infra-structure  to the  port might need  some                 
  improvements, but that is to be done by the borough.                         
  ASHLEY REED, representing the Mat-Su Borough, said the roads                 
  and utility extensions are already in place.                                 
  SENATOR SHARP asked if Tesoro presently utilized the Port of                 
  Anchorage for  supplying fuel?   MR. OLSON  said he  thought                 
  Tesoro  supplied  fuel  by  pipeline,  although  fuel   will                 
  eventually  get  to the  new  system  through  the  Port  of                 
  Number 249                                                                   
  MR.  REED explained  that  all the  refiners  have the  same                 
  ability to use the Anchorage Port  facilities and do so now.                 
  The fuel is off-loaded there and is piped to the airport.                    
  SENATOR SHARP said he saw an advantage being given to Tesoro                 
  if they have  a direct line  from their refinery right  into                 
  the tank farm partially financed by AIDA.                                    
  MR. OLSON said  this project is  supported by MAPCO, but  he                 
  would find out more about the operations of the pipeline.                    
  MR. OLSON said the $40 million was to be used at the airport                 
  on the west side of the north-south runway.                                  
  SENATOR RIEGER wanted  to know  what statute covered  AIDA's                 
  bonding  authority  and  SENATOR  KELLY  wanted  the Nikiski                 
  Pipeline question  answered.   SENATOR SALO  said she  would                 
  like to see the questions answered before the bill was moved                 
  to Finance.                                                                  
  SENATOR RIEGER stated  he had strong reservations  on adding                 
  to the state's ownership of projects.                                        
  SENATOR PEARCE said  she doubted if there  were any airlines                 
  who would cooperate in owning  the facility at the  airport.                 
  She noted that  the expansion at  the Anchorage Airport  can                 
  not  continue  until  the  fuel  tanks  are  moved  and  the                 
  environmental clean-up happens.                                              
  SENATOR  RIEGER moved  to  pass SB  171 from  committee with                 
  individual recommendations.  There were no objections and it                 
  was so ordered.                                                              
  Number 368                                                                   
  SENATOR KELLY  announced SB 162 EMERGENCY  UNEMPLOYMENT COMP                 
  PROGRAM to be up for consideration.                                          
  JUDY   KNIGHT,   Director,  Employment   Security  Division,                 
  explained  SB  162   allowed  the   state  to  continue   to                 
  participate  in  the  Emergency   Unemployment  Compensation                 
  Program  passed  by Congress  in  1991.   She  reviewed  the                 
  provisions in the bill and  explained that Extended Benefits                 
  is financed half from  Alaska's UI trust fund and  half from                 
  federal receipts.   She  said they  did  not anticipate  any                 
  additional cost associated with the  program if you consider                 
  the total bill.   In fact, there would be  approximately $18                 
  million  in  savings to  the  UI  Trust Fund.    The federal                 
  government  covers   100%  of  the   Emergency  Unemployment                 
  Compensation.    The  State  chose  to participate  in  that                 
  program and not pay extended benefits.                                       
  SENATOR  KELLY asked  what happens if  they don't  pass this                 
  bill.  MS. KNIGHT explained that the State would not receive                 
  the  administrative  dollars that  go  with the  program for                 
  Unemployment Insurance, as well as  all the other employment                 
  and training  provisions.   This program  does significantly                 
  save state funds.                                                            
  SENATOR  KELLY   expressed  his  dissatisfaction   with  the                 
  administration introducing this bill so late in session.                     
  Number 515                                                                   
  SENATOR   RIEGER  wanted   a  response  sometime   from  the                 
  administration on  what the benefit  might be of  putting in                 
  repealers so it wouldn't be a permanent law.                                 
  SENATOR SHARP said he wanted this program to sunset the same                 
  time as the federal program sunsets.                                         
  SENATOR KELLY asked if unemployment  benefits would stay the                 
  same  if this  bill was  enacted.  MS.  KNIGHT said  no they                 
  wouldn't.  She  didn't think it would have any effect on the                 
  unemployment rates that employers pay as long as we continue                 
  participation in the Emergency Unemployment Compensation.                    
  Number 581                                                                   
  SENATOR  SALO moved  to  pass  SB  162 from  committee  with                 
  individual recommendations.  There were no objections and it                 
  was so ordered.                                                              
  TAPE 93-22, SIDE B                                                           
  Number 580                                                                   
  SENATOR KELLY announced  HB 101 NATIONAL ELECTRICAL  CODE to                 
  be up for consideration.                                                     
  LYNDA GIGUERE,  Legislative Aide for  Representative Hudson,                 
  said HB 101 would allow the Department of Labor to adopt the                 
  National  Electrical  Safety  Code.    The  State  has  been                 
  adopting these Codes  since 1969  and they thought  allowing                 
  the Department to do  it would be more efficient.   There is                 
  an amendment to correct a possible constitutional problem.                   
  MS. GIGUERE explained that using "shall mandate the adoption                 
  of future additions..."  could be  construed as creating  an                 
  unconstitutional delegation  of legislative  authority to  a                 
  non-governmental agency.                                                     
  SENATOR  KELLY said they  would have Legal  Services look at                 
  this particular  issue and come back to  the bill at a later                 
  time and announced  HB 102  PANEL MEMBERS ON  AK LABOR  REL.                 
  AGENCY to be up for consideration                                            
  Number 554                                                                   
  JAN  DEYOUNG, Alaska  Labor  Relations Agency,  supported HB
  102, because  it would assist  them in  managing their  work                 
  load.    She said  in 1990  an  Executive Order  created the                 
  Alaska  Labor  Relations Agency  from three  other agencies.                 
  She  said  their caseload  had  increased  by 50%  from  the                 
  previous year.                                                               
  Number 525                                                                   
  SENATOR RIEGER asked why the Chairman  was designated by the                 
  Governor rather than elected by the membership.  MS. DEYOUNG                 
  said  the reasoning behind that wasn't explained to her, but                 
  she thought the  appearance of neutrality would  be enhanced                 
  if  a public member would serve as  the Chairman.  There was                 
  further  discussion  on the  makeup  of the  Agency members.                 
  SENATOR KELLY directed his staff to prepare an amendment  on                 
  this issue.                                                                  
  SENATOR KELLY announced a recess from 2:40 - 2:45 p.m.                       
  SENATOR  KELLY announced SB  40 GROUP HEALTH  INS. FOR SMALL                 
  EMPLOYERS to be up for consideration.                                        
  KEN  ERICKSON, Aide to  Senator Pearce, said  SB 40 promotes                 
  availability  of   health  insurance   coverage  for   small                 
  employers and  reforms the  small employer health  insurance                 
  market.    It  provides  guaranteed  availability of  health                 
  insurance  regardless  of  health  risk  and  without  added                 
  expense to the state.                                                        
  Number 458                                                                   
  JAN MEISELS,  Health Insurance Association of  America, said                 
  the reason  this bill focuses on small  employers is because                 
  they have some unique problems. One of them is the high turn                 
  over rate of  employees; 90%  of Alaskan are  employed by  a                 
  small  employer with 2  - 25 employees.   She said this bill                 
  does not mandate anything, but allows an employer who wishes                 
  to provide  insurance  to be  able  to get  that  insurance.                 
  Insurance companies will  no longer  "cherry pick."   Groups                 
  will be guaranteed renewed coverage, even with high risk and                 
  high  health claims.   The  pre-existing 12-month  exclusion                 
  period  goes  with  the  employee  if  he  changes  jobs  or                 
  Number 396                                                                   
  There are also  premium pricing  limits, which doesn't  mean                 
  the  state is  setting insurance  company rates.    It means                 
  there is a limit  for every carrier who sets  their premiums                 
  on what they can charge from their best group to their worst                 
  She then  did a sectional  analysis of the  bill.   She said                 
  there   are  provisions   for   reinsurance  of   high  risk                 
  individuals.   The insurance company  has to  pay the  first                 
  $5,000  claim  before the  reinsurance  board goes  into it.                 
  There is a  premium for the  reinsurance that the  insurance                 
  company  pays.    They are  constrained  within  the premium                 
  pricing limits  in  how much  they  recoup from  the  policy                 
  MS. MEISELS  explained SB  40 established  a Health  Benefit                 
  Committee that would recommend to the Reinsurance Board what                 
  benefits should be included in the basic and standard plan.                  
  This bill sets  up a fair  marketing standard by  preventing                 
  "gaming" by insurance companies who may  want to drop a high                 
  risk group for  a year.  It also prevents  agents from being                 
  rewarded for not bringing in a "bad group."                                  
  Number 232                                                                   
  MS. MEISELS reviewed the proposed amendments which were pro-                 
  consumer and technical (see attachment).  She said they were                 
  from the  National Association of  Insurance Carriers (NAIC)                 
  She explained  that "capitation" means per-head.   So an HMO                 
  would pay a physician  a certain amount a month  whether you                 
  see the physician or not.                                                    
  SENATOR SALO asked her to further  explain the 12 month pre-                 
  existing  clause.   MS.  MEISELS  said  this  meant that  an                 
  insurance company  could exclude coverage for a pre-existing                 
  condition  for  up to  12 months,  but  would have  to cover                 
  everything else  and would  have to  cover the  pre-existing                 
  condition after the 12 months and this exclusion is portable                 
  to another job and another insurance company.                                
  TAPE 93-23, SIDE A                                                           
  Number 001                                                                   
  JAY FRANK,  representing State  Farm and  Allstate Insurance                 
  Companies, supported SB 40 wholeheartedly.                                   
  SENATOR KELLY  noted  that  John  George,  representing  the                 
  American Council of Life Insurers, supported SB 40.                          
  JOE  POOR, Executive Director,  Juneau Chamber  of Commerce,                 
  supported SB 40 and encouraged it's passage.                                 
  Number 62                                                                    
  REED STOOPS, representing AETNA Insurance Company, supported                 
  SB 40.                                                                       
  SENATOR SALO  asked what you  could anticipate as  a premium                 
  for some sort of basic coverage.                                             
  MS.  MEISELS said  she didn't  have  a specific  figure, but                 
  referred her to the  "Market Test Report" which lead  her to                 
  believe the cost was not going to be as high as assumed.                     
  SENATOR KELLY said  it was 3:30  p.m., thanked everyone  for                 
  coming and adjourned.                                                        

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