Legislature(2011 - 2012)BELTZ 105 (TSBldg)

02/15/2011 01:30 PM LABOR & COMMERCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Bills Previously Heard/Scheduled TELECONFERENCED
+= SB 70 ALASKA HEALTH BENEFIT EXCHANGE TELECONFERENCED
Heard & Held
+= SB 38 POLICE & FIREFIGHTER DEATH BENEFITS TELECONFERENCED
Moved SB 38 Out of Committee
+= SB 67 LOAN FUNDS:CHARTERS/MARICULTURE/MICROLOAN TELECONFERENCED
Moved CSSB 67(L&C) Out of Committee
                    ALASKA STATE LEGISLATURE                                                                                  
          SENATE LABOR AND COMMERCE STANDING COMMITTEE                                                                        
                       February 15, 2011                                                                                        
                           1:33 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Dennis Egan, Chair                                                                                                      
Senator Joe Paskvan, Vice Chair                                                                                                 
Senator Bettye Davis                                                                                                            
Senator Cathy Giessel                                                                                                           
Senator Linda Menard                                                                                                            
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
All members present                                                                                                             
                                                                                                                              
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
SENATE BILL NO. 38                                                                                                              
"An Act establishing a one-time occupational death benefit for                                                                  
peace officers and firefighters."                                                                                               
                                                                                                                                
     - MOVED SB 38 OUT OF COMMITTEE                                                                                             
                                                                                                                                
SENATE BILL NO. 67                                                                                                              
"An Act  establishing the commercial charter  fisheries revolving                                                               
loan fund,  the mariculture revolving  loan fund, and  the Alaska                                                               
microloan revolving  loan fund  and relating  to those  funds and                                                               
loans from those funds; and providing for an effective date."                                                                   
                                                                                                                                
     - MOVED CSSB 67(L&C) OUT OF COMMITTEE                                                                                      
                                                                                                                                
SENATE BILL NO. 70                                                                                                              
"An Act establishing the Alaska Health Benefit Exchange; and                                                                    
providing for an effective date."                                                                                               
                                                                                                                                
     - HEARD AND HELD                                                                                                           
                                                                                                                              
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: SB  38                                                                                                                  
SHORT TITLE: POLICE & FIREFIGHTER DEATH BENEFITS                                                                                
SPONSOR(s): SENATOR(s) MEYER                                                                                                    
                                                                                                                                
01/19/11       (S)       PREFILE RELEASED 1/14/11                                                                               
01/19/11       (S)       READ THE FIRST TIME - REFERRALS                                                                        
01/19/11       (S)       L&C, FIN                                                                                               
02/10/11       (S)       L&C AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
02/10/11       (S)       Heard & Held                                                                                           
02/10/11       (S)       MINUTE(L&C)                                                                                            
02/15/11       (S)       L&C AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
                                                                                                                                
BILL: SB  67                                                                                                                  
SHORT TITLE: LOAN FUNDS:CHARTERS/MARICULTURE/MICROLOAN                                                                          
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR                                                                                    
                                                                                                                                
01/24/11       (S)       READ THE FIRST TIME - REFERRALS                                                                        
01/24/11       (S)       L&C, FIN                                                                                               
02/10/11       (S)       L&C AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
02/10/11       (S)       Heard & Held                                                                                           
02/10/11       (S)       MINUTE(L&C)                                                                                            
02/15/11       (S)       L&C AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
                                                                                                                                
BILL: SB  70                                                                                                                  
SHORT TITLE: ALASKA HEALTH BENEFIT EXCHANGE                                                                                     
SPONSOR(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)                                                                      
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
DANA OWEN                                                                                                                       
Staff to Senator Egan                                                                                                           
Alaska State Legislature                                                                                                        
Juneau, AK                                                                                                                      
POSITION STATEMENT: Explained the changes in CSSB 67 (L&C)                                                                    
version M.                                                                                                                      
                                                                                                                                
SEAN RUDDY, Vice President                                                                                                      
Alaska Shellfish Growers Association                                                                                            
Anchorage, AK                                                                                                                   
POSITION STATEMENT: Supported SB 67.                                                                                          
                                                                                                                                
PAUL FUHS                                                                                                                       
Pac Alaska                                                                                                                      
Anchorage, AK                                                                                                                   
POSITION STATEMENT: Supported SB 67.                                                                                          
                                                                                                                                
                                                                                                                                
WANETTA AYERS, Director                                                                                                         
Division of Economic Development                                                                                                
Department of Commerce, Community and Economic Development                                                                      
(DCCED)                                                                                                                         
POSITION STATEMENT: Available to answer questions on SB 67.                                                                   
                                                                                                                                
ANDY MODEROW                                                                                                                    
Staff to Senator Hollis French                                                                                                  
Alaska State Legislature                                                                                                        
Juneau, AK                                                                                                                      
POSITION STATEMENT: Presented SB 70 for the sponsor.                                                                          
                                                                                                                                
RON KREHER, Acting Director                                                                                                     
Division of Public Assistance                                                                                                   
Department of Health and Social Services (DHSS)                                                                                 
POSITION STATEMENT: Answered questions regarding SB 70.                                                                       
                                                                                                                                
LINDA HALL, Director                                                                                                            
Division of Insurance                                                                                                           
Department of Commerce, Community and Economic Development                                                                      
(DCCED)                                                                                                                         
POSITION STATEMENT: Answered questions regarding SB 70.                                                                       
                                                                                                                                
GREG LOUDON, Chairman                                                                                                           
Legislative Committee                                                                                                           
Alaska Association of Health Underwriters                                                                                       
POSITION STATEMENT: Willing to work on SB 70.                                                                                 
                                                                                                                                
SENATOR HOLLIS FRENCH                                                                                                           
Alaska State Legislature                                                                                                        
Juneau, AK                                                                                                                      
POSITION STATEMENT: Sponsor of SB 70.                                                                                         
                                                                                                                                
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
1:33:08 PM                                                                                                                    
CHAIR DENNIS EGAN called the Senate Labor and Commerce Standing                                                               
Committee meeting to order at 1:33 p.m. Present at the call to                                                                  
order were Senators Giessel, Davis, Paskvan, and Egan.                                                                          
                                                                                                                                
           SB  38-POLICE & FIREFIGHTER DEATH BENEFITS                                                                       
                                                                                                                                
1:34:20 PM                                                                                                                    
CHAIR EGAN  announced SB 38 to  be up for consideration.  He said                                                               
public testimony was closed. There were no questions.                                                                           
                                                                                                                                
SENATOR  PASKVAN  moved  to  report SB  38  from  committee  with                                                               
individual recommendations  and attached fiscal note.  There were                                                               
no objections and it was so ordered.                                                                                            
                                                                                                                                
1:35:18 PM                                                                                                                    
At ease from 1:35 to 1:36.                                                                                                      
                                                                                                                                
        SB  67-LOAN FUNDS:CHARTERS/MARICULTURE/MICROLOAN                                                                    
                                                                                                                                
1:36:35 PM                                                                                                                    
CHAIR EGAN  announced SB 67 to  be up for consideration  and that                                                               
it was requested by the Governor.                                                                                               
                                                                                                                                
DANA  OWEN,  staff  to  Senator  Egan,  presented  CSSB  67(L&C),                                                               
labeled  26-GS1728\M. He  said  there were  a  lot of  conforming                                                               
drafting changes,  because bills from the  governor are generally                                                               
drafted by the Department of  Law which uses a slightly different                                                               
drafting manual  than legislative  drafters. The  substance isn't                                                               
different, but some  of the language is. He  said the substantive                                                               
changes  start with  the  title  on page  1,  and explained  that                                                               
because  the microloan  provisions  were passed  in another  bill                                                               
those provisions  were deleted  from this bill.  On page  1, line                                                               
13, "grant" was  added to the list; that also  happens on page 5,                                                               
line 13.                                                                                                                        
                                                                                                                                
On  page 7,  the department  asked  to include  language about  a                                                               
vessel "determined to  be integral to the operation  of the farm"                                                               
that  makes these  loans available  for purchasing  a boat  for a                                                               
mariculture site.  Using these loans  for boats  was specifically                                                               
prohibited  before.  The  microloan provisions  were  deleted  in                                                               
addition to transitional language.                                                                                              
                                                                                                                                
1:39:59 PM                                                                                                                    
SENATOR  PASKVAN moved  to adopt  the committee  substitute (CS),                                                               
version M. There were no objections and it was so ordered.                                                                      
                                                                                                                                
SEAN RUDDY,  member, Kachemak Shellfish  Growers Co-op,  and Vice                                                               
President Alaska  Shellfish Growers Association,  Anchorage, said                                                               
he is  an oyster farmer in  Halibut Cove in Kachemak  Bay. He has                                                               
been an oyster farmer for eight years  and he said it takes a lot                                                               
of cash  to get  up and  rolling. If he  didn't have  some family                                                               
backing,  he would  have had  to give  up by  now. It  takes many                                                               
years to  turn a product;  you get a  portion of your  product in                                                               
two years  and you don't get  any profit for those  years. A boat                                                               
is a  significant portion  of his investment  aside from  all the                                                               
other operating costs  of equipment and fees and he  was happy to                                                               
see that  included. He  said getting  turned down  for a  loan is                                                               
almost a  formality and just  a waste of  the bank's time;  so he                                                               
was disappointed to see that language.                                                                                          
                                                                                                                                
MR. RUDDY  said oyster farming  is a "great green  industry." You                                                               
don't put  any feed in  the water; you  just put the  oysters in,                                                               
keep them clean, and keep moving  them around. So, there is a lot                                                               
of work to  do. But it's renewable and they  can conceivably keep                                                               
doing it for many years.                                                                                                        
                                                                                                                                
SENATOR  PASKVAN asked  how long  before he  had sufficient  cash                                                               
inflow to meet the annual outflow.                                                                                              
                                                                                                                                
MR. RUDDY  replied he is still  paying a crew because  he has had                                                               
to take other  jobs to get the capital he  needs to operate. This                                                               
will be the  summer that he will  take over more of  the work. He                                                               
originally started with plan of  doing it all himself, but needed                                                               
to have money to keep the operation going.                                                                                      
                                                                                                                                
SENATOR  PASKVAN  asked  what  he   thought  about  the  six-year                                                               
provision before paying back the loan.                                                                                          
                                                                                                                                
MR. RUDDY responded  that his operation was on year  eight and he                                                               
was "still  just squeaking by," but  he saw how it  could be done                                                               
in six  years if everything  was lined up properly.  He explained                                                               
you only get  a percentage of your first crop  back in two years.                                                               
It takes  a while to  build up a  farm to  the point where  it is                                                               
constantly  producing. For  the first  three years  or so  he had                                                               
problems getting seed, but now  there are more in-state nurseries                                                               
and more seed is available.                                                                                                     
                                                                                                                                
SENATOR PASKVAN said he applauded his optimism.                                                                                 
                                                                                                                                
1:45:48 PM                                                                                                                    
CHAIR EGAN  asked how  long it  takes an  oyster to  mature under                                                               
ideal conditions so he is making a profit.                                                                                      
                                                                                                                                
MR.  RUDDY  answered under  ideal  conditions,  you might  get  a                                                               
quarter of the oysters back in  two years, but all the oysters in                                                               
the  same crop  might take  different times  to mature.  It might                                                               
take as many as four or five years for some to mature.                                                                          
                                                                                                                                
1:47:26 PM                                                                                                                    
PAUL FUHS, Pac  Alaska, Anchorage, supported SB 67.  He said this                                                               
company has  about 35  acres of  state land  under lease  for the                                                               
purpose of geoduck farming.{ This  is a new industry that started                                                               
seven or  eight years ago  when they  just weren't sure  it would                                                               
work. So  considering a  bill like this  earlier might  have been                                                               
premature.                                                                                                                      
                                                                                                                                
MR.  FUHS displayed  some of  the first  harvest in  the form  of                                                               
frozen product explaining they were  farmed geoducks that are six                                                               
or seven  years old. So,  the term of the  loan in the  bill fits                                                               
the biology  of this animal.  He said they planted  about 250,000                                                               
seeds so far, but to get up  to the level similar to what British                                                               
Columbia or Washington State was  doing, they would need to plant                                                               
a half million to one million animals per year.                                                                                 
                                                                                                                                
He described the economic potential  of this industry saying they                                                               
are not  just talking about  the farm itself, but  involve people                                                               
in the community  at many levels like buying the  seed in Seward,                                                               
flying it down  to Ketchikan, hiring a local diver  and a boat to                                                               
go out and plant them, hiring  divers to harvest them, and buying                                                               
fuel. They also  use the local fish processing plant  in the off-                                                               
season, so that keeps those  workers working over the winter when                                                               
salmon isn't being  processed. That makes it a  little easier for                                                               
those companies  to manage their  processing crew and  helps them                                                               
hold  on to  their  workers.  Then the  product  gets  put on  an                                                               
airplane and  it gets shipped to  Anchorage where it gets  put on                                                               
the international flights to Japan and China, the main markets.                                                                 
                                                                                                                                
MR. FUHS said  he appreciated the Governor and  the Department of                                                               
Commerce for  bringing this bill  forward and this  committee for                                                               
hearing it. They support this bill  in its current form and would                                                               
use the  provisions to  help them purchase  more seed  and expand                                                               
the farms.  There are additional  expenses on the front  end; for                                                               
instance they  are paying about  $10,000 a  year to the  state in                                                               
lease fees  and of course,  there is  no revenue from  that until                                                               
further  down the  road. So,  a  program like  this would  really                                                               
help.  Once the  business  is up  and running,  it  would not  be                                                               
needed.                                                                                                                         
                                                                                                                                
CHAIR EGAN asked if there is more acreage available for farming.                                                                
                                                                                                                                
MR. FUHS  answered yes; there  is quite a  bit. You have  to look                                                               
for the right substrate conditions. It  has to be soft enough for                                                               
the animals  to dig in and  they siphon 85-90 gallons  of water a                                                               
day. The area needs good water  flow. Southeast has a lot of good                                                               
areas and  to meet the  best interest  findings, one has  to show                                                               
the farm is  not interfering with the commercial  dive fishery or                                                               
with any other users.                                                                                                           
                                                                                                                                
SENATOR PASKVAN asked why the wrapping was from Cabela's.                                                                       
                                                                                                                                
MR. FUHS  explained that was  just the bag  they used to  get the                                                               
frozen product  to Juneau  and the  animals are  normally shipped                                                               
alive.                                                                                                                          
                                                                                                                                
SENATOR  GIESSEL  asked  if  these  geoducks  are  indigenous  to                                                               
Alaska.                                                                                                                         
                                                                                                                                
MR. FUHS  answered yes; no other  species is allowed in.  So they                                                               
take the brood stock, harvest them  and send them to the hatchery                                                               
in Seward.  The hatchery  in Seward warms  the water  causing the                                                               
stock to spawn.  It raises them to a certain  size and sends them                                                               
down to Pac  Alaska. Alaska is too cold for  oysters to reproduce                                                               
here, he explained, and that is why importing spat is allowed.                                                                  
                                                                                                                                
1:54:01 PM                                                                                                                    
SENATOR GIESSEL asked if there  is an Alaskan market for geoducks                                                               
or is it all exported.                                                                                                          
                                                                                                                                
MR. FUHS replied  there is a small Alaskan market.  It is used in                                                               
sushi and is called "mirugai." Some people make a stew.                                                                         
                                                                                                                                
WANETTA  AYERS,  Director,   Division  of  Economic  Development,                                                               
Department  of  Commerce,   Community  and  Economic  Development                                                               
(DCCED), offered to answer questions  regarding SB 67. There were                                                               
no questions.                                                                                                                   
                                                                                                                                
1:56:09 PM                                                                                                                    
SENATOR PASKVAN  moved to  report CSSB  67(L&C), version  M, from                                                               
committee  with individual  recommendations  and attached  fiscal                                                               
note(s). There were no objections and it was so ordered.                                                                        
                                                                                                                                
1:56:36 PM                                                                                                                    
At ease from 1:56 to 1:57 p.m.                                                                                                  
                                                                                                                                
             SB  70-ALASKA HEALTH BENEFIT EXCHANGE                                                                          
                                                                                                                                
1:57:42 PM                                                                                                                    
CHAIR EGAN announced SB 70 to be up for consideration.                                                                          
                                                                                                                                
ANDY MODEROW, staff  to Senator Hollis French, sponsor  of SB 70,                                                               
showed  the front  page of  the "Massachusetts  Health Connector"                                                               
website  at  www.mahealthconnector.org  that he  would  refer  to                                                               
during his presentation. It was established  in 2006 as a part of                                                               
their reform effort and it  would give the committee some insight                                                               
into how an exchange could function in Alaska.                                                                                  
                                                                                                                                
MR. MODEROW explained at first  there are different categories to                                                               
click on depending  on whether one is an  individual, an employee                                                               
or an employer.  He clicked on the individual  and family button,                                                               
and noted that "exemptions from  the mandate option" was a choice                                                               
and  explained   that  although  Massachusetts   established  its                                                               
exchange  before federal  health  care reform,  they  did have  a                                                               
requirement  to  obtain  coverage. Just  like  the  Massachusetts                                                               
Connector,  SB  70  sets  up the  mechanism  which  would  exempt                                                               
individuals from the  federal requirement to have  coverage if an                                                               
affordable product is not available to them.                                                                                    
                                                                                                                                
2:01:05 PM                                                                                                                    
The "start  now" button brings  up the  question: How big  is the                                                               
group you are  applying with? For the purpose  of this experiment                                                               
he said he would use the size  of three and that page informs you                                                               
that in Massachusetts if you  have household income below $54,936                                                               
you   might  be   eligible  for   subsidized  health   care.  The                                                               
Massachusetts reform offers subsidies up  to about 300 percent of                                                               
the federal  poverty level, but  under federal  reform, subsidies                                                               
will be offered up  to 400 percent. These will be  in the form of                                                               
tax credits. So the household  income which would qualify for the                                                               
subsidies (for a  family of three) would be  $74,000. For today's                                                               
purpose he assumed the test family does not qualify.                                                                            
                                                                                                                                
The  website says  that  the open  enrollment  period is  closing                                                               
today. These are  the windows of times for people  to enroll in a                                                               
health  insurance  policy within  the  connector.  They open  and                                                               
close so that  people don't wait until they get  sick to purchase                                                               
coverage. SB  70 has the same  provision. The next page  asks for                                                               
zip code, the  type of coverage, and birth dates  for purposes of                                                               
calculating premiums.                                                                                                           
                                                                                                                                
2:02:48 PM                                                                                                                    
Once  those  are  entered, three  broad  categories  of  policies                                                               
appear for  review. After choosing  the "view all  plans" option,                                                               
one sees the  lowest cost up to the highest  cost premiums within                                                               
the chosen  category. The  low cost  plan is  $680 per  month for                                                               
three people. You can further  narrow down your search and choose                                                               
what premium  costs you want to  pay. If you are  concerned about                                                               
your deductible, you  can choose between none, $250,  and $500 or                                                               
$2-4000.  A  grid  across  the   top  shows  things  like  annual                                                               
deductible,  the price  of  a doctor  visit,  and emergency  room                                                               
visits. He pointed out that like  SB 70, Massachusetts also has a                                                               
telephone call center if someone needs help.                                                                                    
                                                                                                                                
MR.  MODEROW  then  selected three  plans  from  three  different                                                               
private  health insurers  to  compare,  and that  went  on for  a                                                               
number of  pages. Enrollees can find  out if a certain  doctor is                                                               
provided   within  an   insurer's  network,   for  instance.   In                                                               
particular,  he  pointed  out the  "special  considerations"  box                                                               
that,  for example,  lets one  see if  the plan  provides limited                                                               
doctors and  limited hospitals.  This page  had a  little warning                                                               
for  a  consumer  to  make  him aware  that  money  is  saved  by                                                               
selecting  this plan.  He  emphasized that  the  purpose of  this                                                               
legislation and  this effort is  not to choose plans  for people,                                                               
but to help them be aware of what they are choosing.                                                                            
                                                                                                                                
2:07:25 PM                                                                                                                    
He pointed out the extensive  details of plans that are available                                                               
for   side-by-side  comparison.   The  "NCQA   rating"  [National                                                               
Committee  for Quality  Assurance] is  an insurance  report card,                                                               
which  lets   the  consumer  know   how  the  carrier   has  been                                                               
performing. After  choosing a plan,  (he chose the  bronze medium                                                               
plan), the  next page provides  a summary of the  selection. Next                                                               
one can confirm their choices.                                                                                                  
                                                                                                                                
MR. MODEROW  explained in SB  70, section  (a) 11 (page  4, lines                                                               
18-24)  determines  eligibility  for   state  and  local  medical                                                               
assistance  programs  such  as  Medicaid  and  Denali  Kid  Care.                                                               
Section (a) 12 provides for  a calculator which tells someone how                                                               
much they are eligible for in benefits.                                                                                         
                                                                                                                                
The  legislative  also  provides  for free  choice  vouchers  for                                                               
employers to  provide payment assistance  to an  employee without                                                               
sponsoring an  entire plan. They  can offer their  employees $100                                                               
towards the premiums of  a plan and give it to  them in this form                                                               
which will then be spent within the connector.                                                                                  
                                                                                                                                
This  bill also  sets  up  the "SHOP"  program  which would  help                                                               
create  a  new  pool  for  small  employers  and  connects  small                                                               
businesses with large  tax incentives to sponsor a  plan of their                                                               
own.  For those  wanting to  do  their own  experimenting on  the                                                               
website, Mr. Moderow included the zip code he used of 02043.                                                                    
                                                                                                                                
SENATOR PASKVAN asked if he had  compared the cost of these plans                                                               
with any available in Alaska.                                                                                                   
                                                                                                                                
MR.  MODEROW  answered no,  and  that  Massachusetts has  a  very                                                               
different set up for the price  of premiums than Alaska does. So,                                                               
he didn't do a side-by-side on  that front, but other websites in                                                               
Alaska  sponsored by  private  insurers do  that  - usually  with                                                               
their own options.                                                                                                              
                                                                                                                                
2:10:54 PM                                                                                                                    
MR.  MODEROW  continued with  an  overview  of the  fiscal  notes                                                               
attached to  SB 70.  There is  a $5-million  set-up cost  for the                                                               
exchange and  a $2.1-million annual  operating cost. He  said the                                                               
state is eligible to receive federal  grants to set up the health                                                               
exchange  program.   A  $1-million   dollar  planning   grant  is                                                               
available to  the state  until Friday. After  that there  are two                                                               
additional levels of grants that pay for the set up costs.                                                                      
                                                                                                                                
As far  as operating costs, SB  70 allows for grants  from state,                                                               
local or other  entities, and also allows the  exchange to charge                                                               
assessments or  user fees  to health  care insurers  or otherwise                                                               
generate funding necessary to support  its operations. The fiscal                                                               
note at  this time assumes the  operation costs will come  out of                                                               
the  general fund,  but that  language  could be  changed by  the                                                               
committee.                                                                                                                      
                                                                                                                                
MR. MODEROW  emphasized that Senator  French would be  pleased to                                                               
work with the committee on amendments.                                                                                          
                                                                                                                                
CHAIR EGAN turned the gavel over to Senator Paskvan.                                                                            
                                                                                                                                
2:13:15 PM                                                                                                                    
RON  KREHER,  Acting  Director, Division  of  Public  Assistance,                                                               
Department of Health  and Social Services (DHSS),  said he wanted                                                               
to address  the fiscal note that  is based on an  assumption that                                                               
the health  information exchange  will be passing  information to                                                               
the  Division  of Public  Assistance  after  it does  an  initial                                                               
determination  of eligibility  for Medicaid  and Denali  Kid Care                                                               
recipients. The  fiscal note is  intended to provide  the funding                                                               
necessary to  build the interface  required for this  exchange of                                                               
information.  The assumption  is that  this will  be a  straight-                                                               
forward file  exchange and developers  of the  health information                                                               
exchange  have  make sure  that  the  business requirements  they                                                               
recover   are   transferable   to  the   division's   eligibility                                                               
information system  so a case can  be set up in  their system. He                                                               
also  noted that  an on-line  form could  be developed,  but this                                                               
would have additional costs.                                                                                                    
                                                                                                                                
SENATOR PASKVAN asked if it would  be useful for Alaskans to have                                                               
the system in place.                                                                                                            
                                                                                                                                
MR. KREHER replied that it would  be another access point for low                                                               
income  Alaskans,  people  who  might  not  know  they  are  even                                                               
eligible for Medicaid  or Denali Kid Care, until  they go through                                                               
the Exchange.                                                                                                                   
                                                                                                                                
SENATOR GIESSEL asked if the fiscal note is $460,000.                                                                           
                                                                                                                                
MR. KREHER confirmed that it is.                                                                                                
                                                                                                                                
SENATOR GIESSEL  asked if the  data would download into  the DHSS                                                               
data system, which is called MMIS.                                                                                              
                                                                                                                                
MR. KREHER responded  that they are referring to  the Division of                                                               
Public Assistance  Eligibility Information  System, which  is the                                                               
platform they  use to determine  elegibility for  specific public                                                               
assistance cases  such as  Medicaid and  DKC. But  the MMIS  is a                                                               
larger  data  base  that  tracks coverage  that  is  outside  the                                                               
Division of  Public Assistance. It  is currently  being enhanced.                                                               
He  assumed  that  MMIS  would drive  off  of  their  eligibility                                                               
information  system and  should  track information  - amounts  or                                                               
payments,  coverage  and  costs  -  about  Medicaid  DKC-eligible                                                               
folks.                                                                                                                          
                                                                                                                                
SENATOR GIESSEL  said she knows that  MMIS needs to be  made more                                                               
robust, and asked  how more data would be  manageable within this                                                               
system.                                                                                                                         
                                                                                                                                
MR. KREHER  replied he  is not  the right  person to  answer that                                                               
question.                                                                                                                       
                                                                                                                                
2:17:58 PM                                                                                                                    
LINDA  HALL,  Director,  Division  of  Insurance,  Department  of                                                               
Commerce, Community  and Economic  Development (DCCED),  said the                                                               
exchange would be housed in the DCCED.                                                                                          
                                                                                                                                
SENATOR MENARD joined the committee.                                                                                            
                                                                                                                                
MS. HALL  said there are  two fiscal notes; because  the exchange                                                               
language is in Title 21, which  is the Insurance Code, there is a                                                               
zero fiscal note  from her and the commissioner  to describe what                                                               
the bill does  and why the fiscal note is  zero, which is because                                                               
they don't  really have  any involvement  in the  actual exchange                                                               
itself. Since the exchanged will be  is housed in the DCCED there                                                               
is  another  fiscal  note  of   roughly  $1.6  million  from  the                                                               
department. That  is the estimate  for the required  resources to                                                               
meet the core  functions of the exchange including a  staff of 12                                                               
people -  an executive director  and assistants, web  people, and                                                               
costs  for   board  meetings.  They  estimated   monthly  two-day                                                               
meetings,  at  least  originally,  to  get  an  exchange  up  and                                                               
running,  up to  and including  a  grant to  navigators which  is                                                               
provided in  the bill  itself. Program  receipts are  the funding                                                               
source. The federal  bill contains a provision  that the exchange                                                               
be self-funding by  January 1, 2015. It can  charge insurers user                                                               
fees that  she assumed could  then be  passed on to  consumers as                                                               
part of premiums.                                                                                                               
                                                                                                                                
SENATOR DAVIS asked if the state  is applying for the federal $1-                                                               
million grant for start-up costs of the exchange.                                                                               
                                                                                                                                
MS.  HALL answered  the  planning  grant can't  be  used for  the                                                               
operation  of the  exchange, and  once it  is up  and running  it                                                               
would become self funding.                                                                                                      
                                                                                                                                
SENATOR DAVIS asked  if she feels comfortable that  the state has                                                               
the  money available  to establish  the exchange  without getting                                                               
the $1 million grant from the federal government.                                                                               
                                                                                                                                
MS. HALL  replied that  review is  still going  on as  to whether                                                               
Alaska will apply for the planning grant.                                                                                       
                                                                                                                                
SENATOR PASKVAN  asked if there are  other monies at risk  if the                                                               
$1 million is not applied for by Friday.                                                                                        
                                                                                                                                
MS.  HALL answered  yes; establishment  grants  are available  to                                                               
establish  the exchange,  not to  fund the  board and  employees,                                                               
which would be an ongoing expense.                                                                                              
                                                                                                                                
SENATOR PASKVAN  asked how  much in  grant funds  are at  risk if                                                               
planning funds are not applied for.                                                                                             
                                                                                                                                
MS. HALL  answered no dollar amount  is put on those.  States can                                                               
apply  for funds  in two  stages, one  is the  early stage  where                                                               
planning  hasn't been  done and  those  can only  be applied  for                                                               
every six  months. Phase  two is more  like a  three-year funding                                                               
that would allow the exchange to  be up and running; when and how                                                               
much depends  on where one  is in  the planning process.  She was                                                               
not aware of any maximum limits  set on those funds and explained                                                               
that  they are  dependent upon  the  type of  exchange the  state                                                               
decides  to develop,  the government  structure that  exists, and                                                               
what the governing body thinks the exchange should do.                                                                          
                                                                                                                                
SENATOR  PASKVAN asked  who would  best  be able  to advise  this                                                               
committee by Friday  what the risk is if  the initial application                                                               
isn't in by then.                                                                                                               
                                                                                                                                
2:26:01 PM                                                                                                                    
MS. HALL  answered she didn't think  anyone else was in  a better                                                               
position to  advise the committee.  She suggested  contacting the                                                               
Department of Law or the Governor's Office.                                                                                     
                                                                                                                                
2:26:47 PM                                                                                                                    
SENATOR GIESSEL said she added  up the four fiscal notes attached                                                               
to SB 70 and that they totaled $5 million.                                                                                      
                                                                                                                                
SENATOR PASKVAN  asked if those are  the state monies at  risk if                                                               
the federal monies are not applied for and received.                                                                            
                                                                                                                                
MS.  HALL responded  that the  Department of  Administration's $3                                                               
million  fiscal  note is  for  hardware,  software and  bandwidth                                                               
development and that would be  an implementation cost potentially                                                               
covered  by an  establishment grant.  She wouldn't  speak to  the                                                               
Division of  Public Assistance  note, but she  thought it  was an                                                               
implementation grant also. The DCCED  fiscal note is ongoing, and                                                               
by  federal  law  that  is supposed  to  become  self  supporting                                                               
through user fees.                                                                                                              
                                                                                                                                
SENATOR PASKVAN reiterated  that if the state does  not apply for                                                               
the $1 million  grant funds by Friday, then  another potential $5                                                               
million in development money is at risk?                                                                                        
                                                                                                                                
MS. HALL answered that she wasn't  sure that the DCCED would have                                                               
development  costs,  because  those  are  considered  operational                                                               
fees. What  is potentially at  risk is the hardware  and software                                                               
development. But  without applying for  the grant, she  could not                                                               
be certain.                                                                                                                     
                                                                                                                                
SENATOR PASKVAN  asked if it  is fair to say  it is closer  to $3                                                               
million than $5 million, based on the information she now knows.                                                                
                                                                                                                                
MS. HALL answered yes.                                                                                                          
                                                                                                                                
2:30:11 PM                                                                                                                    
SENATOR DAVIS asked Ms. Hall  what would be her recommendation at                                                               
this time,  or if  has she  made a recommendation,  as to  the $1                                                               
million if the deadline is Friday.                                                                                              
                                                                                                                                
MS.  HALL  replied  that  is  a policy  decision  that  is  being                                                               
reviewed. Her department  has not taken a position  on this bill.                                                               
They  still  have concerns  and  are  willing  to work  with  the                                                               
sponsor  on this  version of  an exchange.  She is  not making  a                                                               
recommendation of any kind. Policy is made by the governor.                                                                     
                                                                                                                                
CHAIR  EGAN asked  if the  policy decision  would be  made before                                                               
Friday.                                                                                                                         
                                                                                                                                
MS. HALL answered that was her understanding.                                                                                   
                                                                                                                                
2:32:03 PM                                                                                                                    
SENATOR  GIESSEL said  she  enjoyed poking  around  on an  actual                                                               
exchange website.  She noted  this exchange  is not  about health                                                               
care, but about buying an  insurance product. But the composition                                                               
of the  board that  the bill  proposes has a  lot of  emphasis on                                                               
health  care   providers.  That  got  her   wondering  where  the                                                               
actuarial  expertise  would be,  and  she  looked at  the  Alaska                                                               
Comprehensive   Health   Insurance   Association   (ACHIA)   that                                                               
currently  provides health  care insurance  for high  risk people                                                               
who  don't qualify  for other  types of  insurance. That  board's                                                               
composition  is  much  more  focused  on  finance  and  insurance                                                               
expertise. She wondered if Ms.  Hall could comment on the analogy                                                               
between  this proposed  insurance  exchange and  the ACHIA  board                                                               
that has been functioning effectively for quite a while.                                                                        
                                                                                                                                
MS.  HALL responded  that ACHIA  is under  Title 21  and operates                                                               
differently  than  the exchange  under  this  bill. Her  division                                                               
approves AHCIA's  plan of  operation and  the board  members. She                                                               
agreed  with   Senator  Giessel  about  the   exchange  being  an                                                               
Amazon.com of  the health insurance  world. Ms. Hall  stated that                                                               
she  has looked  at legislation  being  proposed in  a number  of                                                               
states, and  there are more people  on this board than  most. She                                                               
didn't think health care  providers necessarily understand health                                                               
care insurance. Consumers  would be purchasing a  product that is                                                               
not significantly  different from  what is available  today; it's                                                               
just a different place to buy it.                                                                                               
                                                                                                                                
SENATOR   GIESSEL   also  observed   that   the   board  has   no                                                               
representative from  the Division  of Public Assistance,  and she                                                               
thought  that would  be an  important  addition to  it. She  also                                                               
noted that language  on page 12, line 23, says  that the exchange                                                               
board  would   also  promulgate   regulations  -   pertaining  to                                                               
insurance -  that would be sold  through the exchange -  and that                                                               
seems duplicative of what the Division of Insurance (DOI) does.                                                                 
                                                                                                                                
MS. HALL  said she  was surprised  at that  language as  well and                                                               
while her division  can adopt regulations, she didn't  know a lot                                                               
about  other   boards'  authority,  but  ACHIA   does  not  adopt                                                               
regulations.                                                                                                                    
                                                                                                                                
2:37:32 PM                                                                                                                    
SENATOR  GIESSEL  said  if  the committee  wanted  to  follow  it                                                               
through, language on  page 13, line 16, talks  about the exchange                                                               
adopting  regulations and  page 15  defines the  qualified health                                                               
plan that  this exchange board  would be approving  and providing                                                               
regulations for. Under  SB 70, the exchange  board would actually                                                               
be certifying health  benefit plans - again  duplicating what the                                                               
Division of Insurance does already.                                                                                             
                                                                                                                                
MS.  HALL responded  that one  of  her visions  of operating  the                                                               
exchange would be  that the board would use the  resources of the                                                               
DOI, because that evaluation is best done by insurance experts.                                                                 
                                                                                                                                
2:39:54 PM                                                                                                                    
SENATOR DAVIS asked  why Ms. Hall had not stated  her concerns to                                                               
the committee at an earlier meeting.                                                                                            
                                                                                                                                
MS. HALL  said she has had  one meeting with the  sponsor and has                                                               
discussed some  of her concerns with  him, and that she  is still                                                               
in the process of working him.                                                                                                  
                                                                                                                                
SENATOR DAVIS  said people with  ACHIA are currently  providing a                                                               
good service, but  under the new regulations they  might go away.                                                               
She asked  Ms. Hall if that  was true, what department  would run                                                               
the exchange.                                                                                                                   
                                                                                                                                
MS. HALL said  she believed ACHIA would go away.  The federal law                                                               
says that  as of January  1, 2014, preexisting conditions  can no                                                               
longer be  used to deny  coverage. Once  that is in  place, there                                                               
will be  no reason to have  a high risk pool.  She explained that                                                               
right now  Alaska has two high  risk pools - federal  money given                                                               
to  an entity  that  ACHIA also  manages known  as  ACHIA fed,  a                                                               
preexisting  insurance  plan that  about  half  the states  have.                                                               
Unfortunately, health  insurance in Alaska is  very expensive and                                                               
even though the  new ACHIA federal plan is based  on the standard                                                               
rate, only 28  people in Alaska are in that  plan. She stated the                                                               
price  of insurance  in Alaska  is still  not affordable  and the                                                               
underlying cause of it is not  being tackled. She noted the ACHIA                                                               
federal plan has been effective since July 1, 2010.                                                                             
                                                                                                                                
2:45:27 PM                                                                                                                    
SENATOR  DAVIS  asked if  the  state  doesn't establish  its  own                                                               
exchange that the federal government will do it for us.                                                                         
                                                                                                                                
MS. HALL answered yes.                                                                                                          
                                                                                                                                
SENATOR  DAVIS responded,  "It  looks like  that  is where  we're                                                               
headed then."                                                                                                                   
                                                                                                                                
2:46:21 PM                                                                                                                    
GREG LOUDON, Chairman,  Legislative Committee, Alaska Association                                                               
of Health  Underwriters, said  he has  been tasked  with managing                                                               
the association's  position regarding an exchange.  They had been                                                               
working on  this issue for about  one year already and  are aware                                                               
that if Alaska doesn't set  up an exchange the federal government                                                               
will do it. In short, the  state has to show substantial progress                                                               
in setting up an exchange  by January 1, 2013. The million-dollar                                                               
grant that  has been referred to  is for planning. SB  70 appears                                                               
to  be fully  formed and  appears  to go  past planning,  already                                                               
resembles  the  Massachusetts   exchange.  Federal  officials  in                                                               
Washington, D.C.  have said that  Massachusetts is at one  end of                                                               
the budget spectrum and Utah is at the other.                                                                                   
                                                                                                                                
MR. LOUDON  explained that the Massachusetts  exchange employs 45                                                               
people with  an annual  budget of  $45 million  and Utah  has two                                                               
employees with  a budget  of $2  million. Their  philosophies are                                                               
dramatically  different  and he  hoped  to  see a  detailed  work                                                               
product about what perspective the state wants to take.                                                                         
                                                                                                                                
SENATOR  PASKVAN  asked  how many  other  states  have  insurance                                                               
exchanges in place.                                                                                                             
                                                                                                                                
MR. LOUDON replied  that 14 or 15 states are  in the process, but                                                               
only Utah  and Massachusetts  have them  now. California  has had                                                               
two that failed, but is putting another one together.                                                                           
                                                                                                                                
SENATOR PASKVAN asked  how many people the  Alaska exchange would                                                               
cover.                                                                                                                          
                                                                                                                                
MR. LOUDON replied  the regulators would like to  cover all those                                                               
who  are not  currently  covered, which  would  be about  300,000                                                               
individuals.                                                                                                                    
                                                                                                                                
2:52:07 PM                                                                                                                    
SENATOR PASKVAN  asked if  the exchange  would cover  more people                                                               
than are currently covered in Massachusetts.                                                                                    
                                                                                                                                
MR. LOUDON  replied that Massachusetts  has more people,  so that                                                               
is not accurate.                                                                                                                
                                                                                                                                
2:52:50 PM                                                                                                                    
SENATOR FRENCH, sponsor of SB 70,  said he wants to work with the                                                               
committee  on this  complex  legislation, and  that  he wants  an                                                               
exchange that works for this unique state.                                                                                      
                                                                                                                                
SENATOR PASKVAN  recapped that Ms.  Hall had concerns but  was in                                                               
touch with Senator French's office.                                                                                             
                                                                                                                                
SENATOR  MENARD emphasized  talking  with Ms.  Hall  should be  a                                                               
priority  for Senator  French  so that  this  legislation can  be                                                               
moved on.                                                                                                                       
                                                                                                                                
SENATOR FRENCH said he appreciated  the comments and would have a                                                               
frank dialogue with Ms. Hall.                                                                                                   
                                                                                                                                
SB 70 was held in committee.                                                                                                    
                                                                                                                                
2:55:30 PM                                                                                                                    
There being  no further  business to  come before  the committee,                                                               
Senator Paskvan adjourned the meeting at 2:55 p.m.                                                                              

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