Legislature(2017 - 2018)BELTZ 105 (TSBldg)

02/27/2018 01:30 PM Senate LABOR & COMMERCE

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

Document Name Date/Time Subjects
SB 205.PDF SL&C 2/27/2018 1:30:00 PM
SB 205
SB 205 Sponsor Statement 2.27.18.pdf SL&C 2/27/2018 1:30:00 PM
SB 205
SB 205 Sectional Analysis.pdf SL&C 2/27/2018 1:30:00 PM
SB 205
SB205-DCCED-RCA-02-23-18.pdf SL&C 2/27/2018 1:30:00 PM
SB 205
SB 205 Modernization Act FAQ 2-15-2018 (003).pdf SL&C 2/27/2018 1:30:00 PM
SB 205
SB 205 Presentation SL&C 02.27.18.pdf SL&C 2/27/2018 1:30:00 PM
SB 205
SB 205 Telecommunications Regulatory Modernization Act 1-page v2 (002).pdf SL&C 2/27/2018 1:30:00 PM
SB 205
AT&T Support Letter for SB205.pdf SL&C 2/27/2018 1:30:00 PM
SB 205
SB 205 Suport - APT.pdf SL&C 2/27/2018 1:30:00 PM
SB 205
SB 205 Support Letter-Copper Valley Telecom.pdf SL&C 2/27/2018 1:30:00 PM
SB 205
SB205 Support TelAlaska.pdf SL&C 2/27/2018 1:30:00 PM
SB 205
SB205 Support-OTZ Telephone Cooperative.pdf SL&C 2/27/2018 1:30:00 PM
SB 205
SJR 7.pdf SL&C 2/27/2018 1:30:00 PM
SJR 7 Sponsor Statement.pdf SL&C 2/27/2018 1:30:00 PM
SJR7-LEG-LEG-02-26-18.pdf SL&C 2/27/2018 1:30:00 PM
SB 119.pdf SL&C 2/27/2018 1:30:00 PM
SB 119
SB 119 Sponsor Statement.pdf SL&C 2/27/2018 1:30:00 PM
SB 119
SB 119 Sectional Analysis.pdf SL&C 2/27/2018 1:30:00 PM
SB 119
SB 119 - Voters-Want-the-Right-to-Shop-1-22-18.pdf SL&C 2/27/2018 1:30:00 PM
SB 119
SB 119 - RTS-SpreadingLogos-DRAFT2.pdf SL&C 2/27/2018 1:30:00 PM
SB 119
SB 119 - Right to Shop Brief on ME.pdf SL&C 2/27/2018 1:30:00 PM
SB 119
MTA Support of SB 205.pdf SL&C 2/27/2018 1:30:00 PM
SB 205
SB 119 - Right to Shop FAQ.pdf SL&C 2/27/2018 1:30:00 PM
SB 119
SB 119 - Right to Shop One Pager (12-15-16).pdf SL&C 2/27/2018 1:30:00 PM
SB 119
SB 119 - RTS Healthcare Blue Book Alaska.pdf SL&C 2/27/2018 1:30:00 PM
SB 119
SB 119 - Senate Labor and Commerce Presentation 02.27.18.pdf SL&C 2/27/2018 1:30:00 PM
SB 119
Aetna Letter SB 119 2-27-17.pdf SL&C 2/27/2018 1:30:00 PM
SB 119
ASHNHA SB119 testimony 2-27-17.pdf SL&C 2/27/2018 1:30:00 PM
SB 119