04/14/2005 03:30 PM Senate STATE AFFAIRS
| Audio | Topic |
|---|---|
| Start | |
| SB24 | |
| SB94 | |
| SB12 | |
| HB95 | |
| HB116 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| * | SB 94 | ||
| HB 116 | |||
| = | SB 12 | ||
| = | HB 95 | ||
| = | SB 24 | ||
ALASKA STATE LEGISLATURE
SENATE STATE AFFAIRS STANDING COMMITTEE
April 14, 2005
3:39 p.m.
MEMBERS PRESENT
Senator Gene Therriault, Chair
Senator Charlie Huggins
Senator Bettye Davis
Senator Kim Elton
MEMBERS ABSENT
Senator Thomas Wagoner, Vice Chair
COMMITTEE CALENDAR
SPONSOR SUBSTITUTE FOR SENATE BILL NO. 24
"An Act relating to reemployment of and benefits for retired
teachers and public employees and to teachers or employees who
participated in retirement incentive programs and are
subsequently reemployed as a commissioner; repealing secs. 5, 7,
and 9, ch. 58, SLA 2001; providing for an effective date by
amending the delayed effective date for secs. 3, 5, 9, and 12,
ch. 57, SLA 2001, and repealing sec. 13, ch. 58, SLA 2001, which
is the delayed effective date for secs. 5, 7, and 9, ch. 58, SLA
2001; and providing for an effective date."
MOVED CSSSSB 24(STA) OUT OF COMMITTEE
SENATE BILL NO. 94
"An Act relating to state employee health plans that give
employees the option to select a high deductible health plan so
as to qualify to establish a health savings account."
HEARD AND HELD
SENATE BILL NO. 12
"An Act relating to the prohibition or elimination of financial
relationships with persons that conduct business in countries
that support or ignore slavery and trafficking in persons."
MOVED CSSB 12(STA) OUT OF COMMITTEE
CS FOR HOUSE BILL NO. 95(RLS) am
"An Act relating to the duties of the Department of Health and
Social Services as those duties pertain to public health and
public health emergencies and disasters; relating to medical
treatment, information, isolation and quarantine for the
prevention and management of conditions of public health
importance; relating to duties of the public defender and office
of public advocacy regarding public health emergencies and
disasters; relating to liability for actions arising from public
health procedures; making conforming amendments; relating to the
treatment and transportation of dead bodies; amending Rules 4,
7, 8, 38, 40, 65, 72, and 77, Alaska Rules of Civil Procedure;
and providing for an effective date."
MOVED SCS CSHB 95(STA) OUT OF COMMITTEE
CS FOR HOUSE BILL NO. 116(JUD)
"An Act relating to the liability of certain persons for certain
violations of alcoholic beverages laws."
MOVED CSHB 116(JUD) OUT OF COMMITTEE
PREVIOUS COMMITTEE ACTION
BILL: SB 24
SHORT TITLE: REEMPLOYMENT OF RETIREES
SPONSOR(s): SENATOR(s) STEVENS G
01/11/05 (S) PREFILE RELEASED 12/30/04
01/11/05 (S) READ THE FIRST TIME - REFERRALS
01/11/05 (S) HES, STA
01/26/05 (S) SPONSOR SUBSTITUTE INTRODUCED-REFERRALS
01/26/05 (S) HES, STA
03/07/05 (S) HES AT 1:30 PM BUTROVICH 205
03/07/05 (S) Heard & Held
03/07/05 (S) MINUTE(HES)
03/08/05 (S) FIN REFERRAL ADDED AFTER STA
03/14/05 (S) HES AT 1:30 PM BUTROVICH 205
03/14/05 (S) Heard & Held
03/14/05 (S) MINUTE(HES)
03/16/05 (S) HES AT 1:30 PM BUTROVICH 205
03/16/05 (S) Moved CSSSSB 24(HES) Out of Committee
03/16/05 (S) MINUTE(HES)
03/18/05 (S) HES RPT CS 1DP 3NR 1AM
NEW TITLE
03/18/05 (S) NR: DYSON, WILKEN, OLSON
03/18/05 (S) DP: ELTON
03/18/05 (S) AM: GREEN
03/22/05 (S) STA AT 3:30 PM BELTZ 211
03/22/05 (S) Heard & Held
03/22/05 (S) MINUTE(STA)
BILL: SB 94
SHORT TITLE: STATE EMPLOYEE HEALTH INSURANCE
SPONSOR(s): SENATOR(s) DYSON
02/04/05 (S) READ THE FIRST TIME - REFERRALS
02/04/05 (S) STA, FIN
04/14/05 (S) STA AT 3:30 PM BELTZ 211
BILL: SB 12
SHORT TITLE: LIMIT RELATIONS WITH CERTAIN NATIONS
SPONSOR(s): SENATOR(s) DYSON
01/11/05 (S) PREFILE RELEASED 12/30/04
01/11/05 (S) READ THE FIRST TIME - REFERRALS
01/11/05 (S) STA, JUD
02/08/05 (S) STA AT 3:30 PM BELTZ 211
02/08/05 (S) Heard & Held
02/08/05 (S) MINUTE(STA)
04/14/05 (S) STA AT 3:30 PM BELTZ 211
BILL: HB 95
SHORT TITLE: PUBLIC HEALTH DISASTERS/EMERGENCIES
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR
01/21/05 (H) READ THE FIRST TIME - REFERRALS
01/21/05 (H) HES, JUD
02/10/05 (H) HES AT 3:00 PM CAPITOL 106
02/10/05 (H) Moved CSHB 95(HES) Out of Committee
02/10/05 (H) MINUTE(HES)
02/11/05 (H) HES RPT CS(HES) NT 2DP 2NR 1AM
02/11/05 (H) DP: CISSNA, WILSON;
02/11/05 (H) NR: GARDNER, ANDERSON;
02/11/05 (H) AM: KOHRING
03/04/05 (H) JUD AT 1:00 PM CAPITOL 120
03/04/05 (H) Heard & Held
03/04/05 (H) MINUTE(JUD)
03/07/05 (H) JUD AT 1:00 PM CAPITOL 120
03/07/05 (H) Moved CSHB 95(JUD) Out of Committee
03/07/05 (H) MINUTE(JUD)
03/09/05 (H) JUD RPT CS(JUD) NT 1DP 6NR
03/09/05 (H) DP: ANDERSON;
03/09/05 (H) NR: GRUENBERG, KOTT, DAHLSTROM,
COGHILL, GARA, MCGUIRE
03/31/05 (H) RLS AT 9:00 AM FAHRENKAMP 203
03/31/05 (H) Moved CSHB 95(RLS) Out of Committee
03/31/05 (H) MINUTE(RLS)
04/01/05 (H) RLS RPT CS(RLS) NT 3DP 2NR 1AM
04/01/05 (H) DP: HARRIS, MCGUIRE, ROKEBERG;
04/01/05 (H) NR: COGHILL, KOHRING;
04/01/05 (H) AM: BERKOWITZ
04/01/05 (H) RETURNED TO RLS COMMITTEE
04/05/05 (H) TRANSMITTED TO (S)
04/05/05 (H) VERSION: CSHB 95(RLS) AM
04/06/05 (S) READ THE FIRST TIME - REFERRALS
04/06/05 (S) HES, JUD
04/08/05 (S) STA REPLACES HES REFERRAL
04/12/05 (S) STA AT 3:30 PM BELTZ 211
04/12/05 (S) Heard & Held
04/12/05 (S) MINUTE(STA)
04/14/05 (S) STA AT 3:30 PM BELTZ 211
BILL: HB 116
SHORT TITLE: LIABILITY FOR ALCOHOL LAW VIOLATIONS
SPONSOR(s): REPRESENTATIVE(s) MEYER
01/28/05 (H) READ THE FIRST TIME - REFERRALS
01/28/05 (H) STA, JUD
03/01/05 (H) STA AT 8:00 AM CAPITOL 106
03/01/05 (H) Moved CSHB 116(STA) Out of Committee
03/01/05 (H) MINUTE(STA)
03/02/05 (H) STA RPT CS(STA) NT 3DP 2DNP 1AM
03/02/05 (H) DP: GARDNER, GATTO, SEATON;
03/02/05 (H) DNP: RAMRAS, ELKINS;
03/02/05 (H) AM: GRUENBERG
03/21/05 (H) JUD AT 1:00 PM CAPITOL 120
03/21/05 (H) Moved CSHB 116(JUD) Out of Committee
03/21/05 (H) MINUTE(JUD)
03/22/05 (H) JUD RPT CS(JUD) NT 7DP
03/22/05 (H) DP: GRUENBERG, ANDERSON, KOTT,
DAHLSTROM, COGHILL, GARA, MCGUIRE
04/01/05 (H) TRANSMITTED TO (S)
04/01/05 (H) VERSION: CSHB 116(JUD)
04/04/05 (S) READ THE FIRST TIME - REFERRALS
04/04/05 (S) STA, JUD
04/14/05 (S) STA AT 3:30 PM BELTZ 211
WITNESS REGISTER
HEATHER BRAKES,
Staff to Senator Therriault
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Introduced CS for SSSB 24 and explained
proposed changes to CSHB 95
MIKE TIBBLES,
Deputy Commissioner
Department of Administration
PO Box 110200
Juneau, AK 99811-0200
POSITION STATEMENT: Commented on CS for SSSB 24
FRED DYSON
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Sponsor of SB 94
JIM FROGUE,
Project Director
Center for Health Transformation
Washington, D.C.
POSITION STATEMENT: Presented personal views on SB 94
SPENCER BEAGLE
Insurance Broker
No address provided
POSITION STATEMENT: Testified on SB 94
PETER ROVERUD
Deloit Consulting
Minneapolis, MN
POSITION STATEMENT: Testified on SB 94
LINDA HALL, Director
Division of Insurance
Department of Commerce, Community & Economic Development
PO Box 110800
Juneau, AK 99811-0800
POSITION STATEMENT: Testified on SB 94
MELANIE MILHORN, Director
Division of Retirement And Benefits
Department of Administration
PO Box 110200
Juneau, AK 99811-0200
POSITION STATEMENT: Testified on SB 94
JASON HOOLEY,
Staff to Senator Dyson
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Introduced SB 12
VERN JONES,
Chief Procurement Officer
Department of Administration
PO Box 110200
Juneau, AK 99811-0200
POSITION STATEMENT: Answered questions on SB 12
WES KELLER,
Staff to Senator Dyson
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Answered questions on SB 94
RICHARD MANDSGER, MD, Director
Division of Public Health
Department of Health &
Social Services
PO Box 110601
Juneau, AK 99801-0601
POSITION STATEMENT: Answered questions on CSHB 95
MICHAEL PAWLOWSKI,
Staff to Representative Kevin Meyer
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Introduced HB 116
ACTION NARRATIVE
CHAIR GENE THERRIAULT called the Senate State Affairs Standing
Committee meeting to order at 3:39:05 PM. Present were Senators
Davis, Huggins, Elton and Chair Therriault.
SSSB 24-REEMPLOYMENT OF RETIREES
CHAIR GENE THERRIAULT announced the first order of business to
be SB 24.
3:39:28 PM
CHAIR THERRIAULT requested a motion to adopt the proposed
committee substitute (CS).
SENATOR CHARLIE HUGGINS motioned to adopt \I version CS for SSSB
24 as the working document.
HEATHER BRAKES, Staff to Senator Therriault, outlined the
proposed changes:
· Section 1 calls for an annual report to the legislature
to explain what employers are doing to plan for shortages
in certain employment areas.
· Section 2 applies to the TRS system and mirrors Section 3
· Subsection 2(a) grandfathers any employees
hired as of 7/1/05. Those employees may
continue under the waiver for one year. On
7/1/06 that benefit would no longer be
available. An employee could continue
employment, but he/she would no longer
receive a retirement benefit while
employed.
· Subsection (b) states that an employer
must offer health insurance to the rehired
retiree just as they do for all other
employees. Furthermore, that medical
coverage would be the primary and only
coverage. An employee would no longer be
able to use the retirement medical benefit
as secondary coverage.
· Subsection (c) requires that the employer
make contributions to the unfunded
liability at the same rate that is made
for all other employees.
· Section 3 applies to the PERS system and mirrors Section
2
· Subsections 3(a)(b)(c) mirror subsections
2(a)(b)(c).
· Section 4 is a conditional retroactive date.
3:42:49 PM
CHAIR THERRIAULT recapped Ms. Brakes' explanation.
SENATOR KIM ELTON said the way he reads Section 1 is that it
would only require the TRS and PERS administrators to report on
the effect of the act on the retirement systems.
CHAIR THERRIAULT said that's correct.
SENATOR ELTON asked for clarification that it's a one year
extension for those already in the system and not a one year
extension so that employers can continue to hire new people into
the system.
CHAIR THERRIAULT said that's correct. He added there was
discussion in his office about trying to understand the reasons
why it's so difficult to fill certain positions, but that wasn't
part of the CS.
SENATOR ELTON remarked it's a good idea to know why things
happen.
CHAIR THERRIAULT responded that should already be part of the
human resource job description and duty list.
SENATOR CHARLIE HUGGINS asked whether there would be a mechanism
to rehire a retiree if this bill were to pass.
MIKE TIBBLES, Deputy Commissioner, Department of Administration
(DOA), explained that the state could still bring a retiree
back, but he/she would accrue additional retirement benefits and
the employer would be required to contribute into the system for
those benefits. The pension benefit would be suspended for the
reemployment period.
CHAIR THERRIAULT recapped the explanation.
SENATOR HUGGINS questioned whether it would be attractive for
retired teachers to come back.
MR. TIBBLES acknowledged it is a concern and the legislature
should continue to hold such discussions.
SENATOR HUGGINS added he is also concerned about the alleged
abuses to the current system.
CHAIR THERRIAULT remarked Mr. Tibbles certainly intends to push
the Administration's position that it could add sideboards to
make it acceptable for the system to go forward.
He asked Mr. Tibbles whether the changes in the CS would require
refiguring the fiscal note.
MR. TIBBLES said he would have to double check with the
division, but he believes the analysis is still correct.
CHAIR THERRIAULT noted the CS asks employees to go on the
regular health system and asks departments to make contributions
to hold the retirement system harmless. He questioned whether
that wouldn't result in some sort of fiscal impact.
MR. TIBBLES replied the State of Alaska is providing health
coverage for those who return but the concern centers on what's
happening at the municipal level. Municipalities would be
required to provide primary health coverage and not be allowed
to cost shift health coverage to the retirement account.
CHAIR THERRIAULT elaborated, municipalities chose not to
continue the regular health insurance and forced rehired people
into the retirement health insurance.
MR. TIBBLES agreed that happened in several instances.
SENATOR ELTON observed that if you were to replace the current
retire/rehires in one year, the employee cost to the state would
go up.
3:51:41 PM
CHAIR THERRIAULT noted there were no further questions and asked
the will of the committee.
SENATOR HUGGINS motioned to report SB 24, as amended, and
attached fiscal note from committee with individual
recommendations.
CHAIR THERRIAULT asked Mr. Tibbles to review the fiscal note.
He announced that there being no objection, CSSSSB 24(STA) moved
from committee.
SB 94-STATE EMPLOYEE HEALTH INSURANCE
CHAIR THERRIAULT announced SB 94 to be up for consideration.
3:52:34 PM
SENATOR FRED DYSON, Sponsor, thanked Senator Davis as co-
sponsor. He described the legislation as significant to Alaskans
and said it might have a most salutary affect on the
accelerating cost of medical care and the state budget.
He suggested that tens of millions of dollars could be saved by
moving to health savings accounts. Recent federal legislation
makes it possible for individuals to put pre-tax dollars into a
high deductible health plan as a part of a health savings
account.
He reported that in certain instances the savings have been as
high as 40 percent. Health savings accounts are attractive
because: money that isn't used for health care may be rolled
forward; the money may be invested in any type investment scheme
and may be used for retirement; individuals are given
responsibility and incentive to make good decisions about their
own health care.
He said he would like the committee to hear from experts in the
field.
3:55:34 PM
JIM FROGUE, Project Director, Center for Health Transformation,
advised that the views he would express were his alone and
didn't necessarily reflect center policy.
Because the American work force is mobile and specialized and
huge corporations no longer employ workers for life, it's time
to move to defined contributions and away from defined benefits.
Health savings accounts as the wave of the future, he asserted.
Health savings accounts offer the following benefits to
individuals:
· Maximize the choice of health care providers and all
providers take cash.
· Portable between jobs and changes in employment status.
· Less expensive to buy insurance with a high deductible
health plan.
· Provide individuals incentive to use health care services
appropriately.
· Create push toward transparency in quality and pricing.
· Provide potential for young workers to accumulate a nest
egg.
The Rand Corporation Health Insurance experiment followed the
medical habits of 7,000 people in 6 cities from 1974-1982.
Participants were placed in 4 different insurance arrangements.
At one extreme a group had every dollar of health care covered
by the plan. At the other extreme the group had a 95% co-
insurance payment of up to $1,000. The researchers found the
following:
· Families with free medical coverage spent 50% more than
families on the least generous plan.
· Hospital admission rates were 30% to 50% higher for those
in the free plan than for those in the other groups.
The researchers reached the following conclusions:
· The use of medical services responds to the amount paid
out-of-pocket.
· "The average persons health changed very little despite
rather large changes in use caused by the insurance plan."
In designing health savings account options for state employees
he encouraged the following to maximize enrollment:
· Discriminate in favor of low-income and unhealthy workers.
· Provide wide dissemination of information so there is
transparency of pricing and quality.
· Legislators should enroll to show faith in the new system.
In conclusion he described a 20-year old worker with a $2,000
deductible health savings account. If the worker contributed
$2,000 and spent $1,000 every year for 40 years, the account
would grow to $127,000 if a 5 percent yield were assumed. That's
the kind of retirement security most people want, he said. "This
is the answer to the health care crisis in the United States."
4:12:55 PM
CHAIR THERRIAULT asked him to go over the difference in
matching.
MR. FROGUE emphasized that so far this is his own idea.
Basically the idea is to allow a higher match to lower income
and or ill workers. He offered the following example:
A single person making $22,000 per year would only
have to pay $53 per month pre-tax to fund a health
savings account up to a maximum allowable amount of
$2,650 in 2005. That's assuming that with some of the
savings the state got for moving to a much higher
deductible policy it would put $750 for free into that
worker's account. Subtract that from $2,650 - that
equals $1,900. If you offer a 2 to 1 match the monthly
contribution would be about $53 pre tax. After federal
tax was taken out that would probably be about $40 to
$45.
CHAIR THERRIAULT noted there were no questions from the
committee.
4:17:13 PM
SENATOR DYSON asked if health insurance premiums could be paid
out of a health saving account.
MR. FROGUE replied no.
SENATOR DYSON questioned whether he was aware of any unions or
union workers who had embraced the concept of health savings
accounts.
MR. FROGUE answered no then gave an example why he believes that
health savings accounts would be most beneficial to union
workers.
SENATOR DYSON asked if it's correct that if an employer spends
$600 to $800 a month to ensure an employee and family and that
employee chooses a health savings account with a monthly premium
of $200 or $300, the employer could offer the employee the
option of taking the savings the employer has in wages or a
contribution to the employee's health savings account.
MR. FROGUE said that's true.
4:22:52 PM
CHAIR THERRIAULT said he understands that you might want to
offer a higher match for lower salaried employees but he wasn't
sure how it would work for less healthy employees. He questioned
whether a determination on match would be made based on evidence
of a pre-existing condition.
MR. FROGUE said he was thinking about someone who had higher
costs such as a diabetic. As far as pre-existing conditions,
this isn't about medically underwritten policies. This is about
group policies with a higher deductible plan, he said.
CHAIR THERRIAULT asked why every employee wouldn't ask for the
higher match.
MR. FROGUE responded the matching idea is his own and it's
simply a matter of offering an incentive to people that have
higher costs to encourage them to take advantage of the match.
There were no further questions for Mr. Frogue.
CHAIR THERRIAULT asked Mr. Beagle to testify.
4:26:20 PM
SPENCER BEAGLE, independent insurance agent in Alaska and member
of Alaska Health Underwriters Association, reported that he
markets health savings accounts to individuals and small groups.
He asked whether the state contributes toward the employees'
portion or cost of the health insurance.
SENATOR DYSON replied the employer could do either or both.
MR. BEAGLE asked if state employees pay any portion of their own
health insurance.
SENATOR DYSON said yes.
MR. BEAGLE asked if it's a percentage or a flat dollar amount.
SENATOR DYSON said he wasn't sure but he though it is a flat
dollar amount. He asked him to talk about the type of products
industry is marketing that would be available in Alaska.
MR. BEAGLE responded he deals with small groups and isn't aware
of any large group markets for health savings accounts. Large
groups are those with more than 50 employees. For small groups
he has three different insurance carriers whose programs he
markets to employers.
He's found that in switching from a traditional true indemnity
plan to a health savings account program the employer typically
saves close to 50% of the original premium. He gave an example
and said that employer used some of the savings and funded part
of the employees' depository account, which more than offset the
employees' higher deductible. It was a win-win situation for the
employee and employer.
Health savings accounts on the individual market are a good way
for individuals to become self-insured. It allows individuals to
put away pretax dollars and fund their own health insurance
without the use-it-or-lose-it provision. It's sort of a medical
IRA and it simply makes sense to have a high dollar deductible
plan where you protect your major assets in the event of a
catastrophic condition.
MR. BEAGLE questioned whether the state is looking at becoming
self-insured or is it looking at an indemnity carrier.
4:31:30 PM
SENATOR DYSON responded it's been disappointing that the
Murkowski Administration hasn't jumped on the idea of health
savings accounts. Present legislation requires the state to come
up with an option for state employees, which would provide your
industry with the potential for 40,000 customers additional, he
said.
MR. BEAGLE questioned whether there would be just one group
plan.
SENATOR DYSON said it's not a given.
MR. BEAGLE said there are many individual plans available and if
the state continues to contribute at the same level whether the
employee participates in the health savings account or not a
portion could be placed in the employee depository account.
SENATOR DYSON suggested that he and others in the industry offer
the state a good package for the group of 40,000 employees.
MR. BEAGLE clarified that he's an insurance broker/agent and not
a company, but he didn't see any problem with that. He said he'd
be happy to contact carriers and ask them to put together
proposals for state employees.
4:34:42 PM
CHAIR THERRIAULT observed that the state has policy calls to
make before it goes in that direction
PETER ROVERUD, Deloit Consulting, informed the committee that
Deloit Consulting has been the benefits consultant for the
Alaska Retirement and Benefits Office for a number of years. He
offered the opinion that health savings accounts are a good
idea.
Currently state employees have a choice of three different plans
that are self-funded through the Retirement and Benefits Office.
Because the premiums and benefits for FY 06 have been set, he
warned that the legislation could have an adverse impact on
those rates if health savings accounts were implemented for
2006.
There is concern associated with the potential for offering
health savings accounts in 2006 as a forth option. The reason is
that high deductible plans are frequently more attractive to
young or healthy people so some of those people that have no
claims would choose to move into that plan. This anti-selection
could impact all the premiums in 2006.
Another comment is that health savings accounts are a relatively
new concept so there is an informational challenge associated
with educating people. That's been demonstrated in the questions
and answers put forth in the hearing today, he said.
Finally, the tools aren't in place yet for knowing how much
different providers charge for particular procedures.
Although health savings accounts will become more popular in
years to come, less than 5% of the population participates in
this kind of plan today.
4:38:07 PM
SENATOR KIM ELTON asked if the possible impact on premiums
wouldn't go beyond 2006 if high deductible health savings
accounts were implemented. He assumed that if you take young and
healthy people out of the other three plans the costs for those
plans would be higher in out years as well.
MR. ROVERUD said his comment stemmed from the fact that the
premiums had already been set so a shift to the new plan might
result in incremental costs to the system. He acknowledged that
the costs could be higher in the out years as well.
SENATOR ELTON pointed out that the bill says the state shall
provide a high deductible plan and the employee may establish a
health savings account. How many employees might choose a high
deductible plan and not establish a health savings account, he
asked. They could pay tax on the money and then use it for
something other than a health savings account.
MR. ROVERUD replied the details haven't been defined, but he
didn't believe the proposed legislation says the state would
continue to contribute the same amount that it's contributing
today. The Office of Retirement and Benefits would have to
decide what the plan would look like, he said. As far as
selecting the high deductible plan and not setting up a health
savings account, his experience is that most do set up an
account. He suggested the Retirement and Benefits Office could
help employees take the option to set up the health savings
account. Not taking that option could have a heavy financial
impact in the event of a serious accident or illness.
SENATOR ELTON asked if it would be wise for the state to require
employees to establish a health savings account if they select a
high deductible plan.
MR. ROVERUD said that would probably be a good idea.
4:42:40 PM
SENATOR CHARLIE HUGGINS asked for information on the "Section
125 plan."
MR. ROVERUD explained a Section 125 FSA (Flexible Spending
Account) is considered a qualified account. Currently the state
offers flexible accounts. Employees couldn't have a FSA
alongside a HSA unless the FSA was limited purpose meaning it
could only be used for ancillary payments for such things as
vision, dental or preventative care benefits.
CHAIR THERRIAULT asked Ms. Hall to come forward.
4:44:20 PM
LINDA HALL, Director, Division of Insurance, said SB 94 doesn't
affect the agency, which regulates insurers offering private
insurance plans. She said she is seeing more health savings
account products in the marketplace in Alaska and other states.
Health savings accounts are becoming more popular with not just
the traditional insured populations. There is evidence that
currently uninsured small employers have determined that through
the cost of these products they can afford to offer health
insurance for employees.
Not only is the cost savings of the health insurance piece
attractive, but there's also an emphasis on cost containment. As
people become more involved in decisions about their own health
care they are much more likely to pay attention to cost of
service. That's one of the benefits of this type of arrangement,
she said.
4:46:49 PM
SENATOR DYSON offered the opinion that health savings accounts
are a huge option for non-profits and are likely to profoundly
reduce the number of uninsured people in the state. He's looking
at ways for Alaskans to contribute their permanent fund dividend
to their health savings account.
CHAIR THERRIAULT asked Ms. Millhorn to come forward.
MELANIE MILLHORN, Director, Division of Retirement and Benefits,
said the division supports vehicles such as health savings
accounts as well as the opportunity for cost containment and
cost savings for the active plan. The division believes health
savings accounts go hand in hand with consumer driven health
care. Research indicates that this is a powerful vehicle for
employers to contain healthcare costs.
The compounded increases in the retiree health plan average
about 10%. For FY 06 the increase for the active plan is 10.05%.
For the three separate plans the member contribution amount is
$820. If a member selects the economy plan and preventative
dental, no out of pocket deduction occurs. If the standard or
premium plan is selected, the member pays the buy-up portion.
For the standard plan the cost is $898 per member/month and for
the premium plan its $980 per member/month.
Because premiums will increase year-to-year, this is the kind of
vehicle to look at and pursue. The agency would like to work
with Deloit Consulting to develop a design for a high deductible
plan.
"For 2004 the claims experience for our select benefits is $50
million and we need to be able to use any mechanism and those
instruments available to us to be able to reduce those costs,"
she said.
SENATOR DYSON acknowledged there is justification for the
administration having moved slowly, but it's also unfortunate
that 12 new bargaining agreements have been entered into
recently, which means that offering a new plan will be limited
to when those contracts come up again. He asked how many
employees aren't under a bargaining unit.
MS.MILLHORN said about 5,300 are under select benefits, but she
isn't sure how many are under non-covered.
SENATOR DYSON said with this legislation the department would be
encouraged to work on offering products to the people who are
under a bargaining unit as well as those who are not.
He reiterated this is a win-win situation. Employees get the
advantage of portability and the opportunity to make decisions
for themselves; providers get paid right away; and the client-
patient is given incentive to carefully review their bills.
He urged the committee to let his staff know what other
information it would like.
CHAIR THERRIAULT asked if the rates for employees not covered by
a collective bargaining agreement are negotiated out for a year
in advance.
MS. MILLHORN answered no, but the division would need the time
to work with Deloit Consulting to create a new high deductible
plan and reconfigure the existing plans.
CHAIR THERRIAULT questioned whether there might not be contract
problems with the insurance provider. The provider has figured
the premium that's required for each employee knowing the size
of the pool and if a portion of that pool were placed in a
different plan that would probably have an impact.
MS. MILLHORN said AETNA, the third party administrator,
processes claims based on a per-member-per-month administrative
fee and that wouldn't change.
SENATOR ELTON reiterated his concern that some people might
select the high deductible option and not open a health savings
account. That would have a ripple affect throughout the Alaska
healthcare system. He asked her to discuss that with Deloit and
decide whether the options shouldn't be coupled.
It's also important to know and understand the effect on
employees who don't opt for the high deductible plan. He
anticipates that creating a pool of younger and/or healthier
people would have a cost to the people in the other pools. We
need to understand that to make an intelligent decision on
whether or not this is a good idea at this time, he said.
MS. MILLHORN responded the division expects a linkage to occur
between a high deductible plan and a health savings account. The
bill links the two and the division would do whatever is
necessary to ensure that the plan's interests and the members'
interests are protected. That must include a linkage.
CHAIR THERRIAULT warned that the language doesn't say that. It
says, "A health plan with a high deductible that qualifies..."
It doesn't say requires.
SENATOR ELTON read, "The state shall allow the option of a high
deductible and employee may use the tax advantages of a health
savings account."
MS. MILLHORN acknowledged she misread that portion, but her
expectation is that they would be linked.
CHAIR THERRIAULT noted that the "shall" and "may" language is in
the findings and intent section and it doesn't mean anything. He
was looking at page 2, line 20 that contained the word
"qualifies" and that means "may."
SENATOR ELTON agreed.
MS. MILLHORN said her response to the second question related to
impact is that that's a plan-design plan-configuration analysis
that the benefit actuary would engage in.
MR. ROVERUD said he and Ms. Millhorn have had discussions about
pricing so that other plan offerings wouldn't be adversely
impacted. They would work with Ms. Millhorn to evaluate the
options.
SENATOR ELTON said depending on how long the study takes, it
might be appropriate to establish an effective date if the bill
moves forward.
CHAIR THERRIAULT agreed.
He informed Mr. Keller that findings and intent don't show up in
statute and the purpose and intent section in the bill reads
like a sponsor statement. He asked if any part needed to be
retained.
WES KELLER, Staff to Senator Dyson, stated there is nothing in
the statement of purpose and intent included in the bill that
needs to be retained.
CHAIR THERRIAULT asked if he would agree that on page 2, line 20
the word "qualifies" should be changed to "required" so that a
person who selects the high deductible plan would be required to
establish a health savings account.
MR. KELLER agreed then noted the drafting error on page 2, line
1. After the word "cover" insert ", at a minimum,".
CHAIR THERRIAULT asked about an effective date.
MR. KELLER responded the sponsor has no preconceived idea about
that.
5:07:30 PM
CHAIR THERRIAULT set SB 94 aside for further action.
SB 12-LIMIT RELATIONS WITH CERTAIN NATIONS
5:07:30 PM
CHAIR THERRIAULT announced SB 12 to be up for consideration. He
asked for a motion to adopt the \I version as the working
document.
SENATOR CHARLIE HUGGINS so moved.
JASON HOOLEY, Staff to Senator Dyson, explained the bill was
introduced to support the federal effort to combat human
trafficking for sexual and labor purposes.
The U.S. State Department compiles an annual report giving a
tier ranking to foreign countries based on its tolerance for
human trafficking. Tier 3 includes the most egregious countries
that have the most permissive climate for trafficking. SB 12
relies on those rankings and allows state procurement agencies
to restrict business with those countries.
The \I version makes the following changes:
Sections 2, 3, and 4 have identical language and relate to the
procurement agencies for the legislative branch, the court
system, and the executive branch respectively. It mandates that
state procurement agencies conduct no business with companies
headquartered in Tier 3 countries. They are given flexibility to
restrict business as they see fit with companies that conduct
business but aren't headquartered in Tier 3 countries.
Section 5 deals with the fiduciaries of state funds. The Alaska
Permanent Fund Corporation (APFC) found previous versions
problematic, but has indicated that the proposed language in the
\I version would not pose a problem to its investment scheme.
The proposed language says that a fiduciary of a state fund
shall restrict direct financial investments with countries in
Tier 3. That's the section in statute that deals with the
Prudent Investor Rule.
CHAIR THERRIAULT asked for elaboration on direct financial
investment.
MR. HOOLEY replied the word "countries" is used rather than
"organizations" so that the state isn't making direct investment
in the countries or governments themselves as compared to
businesses located there.
CHAIR THERRIAULT asked whether business through a corporation,
investment in a corporation, or joint ownership of property with
the corporation would be allowed.
MR. HOOLEY responded that's our intent.
CHAIR THERRIAULT asked if anything in the findings section
needed to be kept.
MR. HOOLEY said it isn't essential.
SENATOR ELTON asked if there's a definition for "headquarters".
MR. HOOLEY responded he didn't have a definition but he would
look into that with legal services.
SENATOR ELTON questioned whether the problems originally voiced
by the APFC wouldn't apply to the PERS/TRS fund managers as
well.
MR. HOOLEY acknowledged that the PERS/TRS boards hadn't been
contacted yet, but he'd be happy to do so.
CHAIR THERRIAULT asked for verification that the APFC had
reviewed Section 5 and had expressed no concern.
MR. HOOLEY replied he received a letter from the corporation
expressing the view that the \I version would not affect the
APFC's investments or fiduciary contracts.
CHAIR THERRIAULT asked for a copy of the letter for the bill
file.
CHAIR THERRIAULT moved to strike Section 1. There being no
objection, Section 1 was deleted.
He noted two zero fiscal notes.
5:17:55 PM
SENATOR ELTON asked if Mr. Jones had a definition for
"headquarters" and whether it would include subsidiaries or
wholly owned subsidiaries of larger corporations.
MR. JONES, Chief Procurement Officer, Department of
Administration, said he was wrestling with how to make that
determination. However, he understands the intent and would give
it his best shot.
5:20:30 PM
CHAIR THERRIAULT noted the bill has a Judiciary Committee
referral.
SENATOR HUGGINS motioned to report CSSB 12, as amended, and
attached fiscal notes from committee with individual
recommendations.
CHAIR THERRIAULT announced that without objection, CSSB 12(STA)
moved from committee.
CSHB 95(RLS)-PUBLIC HEALTH DISASTERS/EMERGENCIES
5:21:31 PM
CHAIR THERRIAULT announced HB 95 to be up for consideration. He
noted the proposed committee substitute (CS) removed most of the
intent language.
HEATHER BRAKES, Staff to Senator Therriault and the Senate State
Affairs Committee verified that point. In addition she said the
drafters expressed the opinion that an amendment made on the
House floor was located in the wrong place.
Page 2, line 26 is a new paragraph (4). The drafters suggest
that be moved up to line 22 following "state employee;" and
amended slightly to read, "state employee and except that,".
SENATOR KIM ELTON moved the \I version as the working document.
Without objection the motion carried.
CHAIR THERRIAULT restated the amendment that legislative legal
suggested and asked for a motion.
SENATOR BETTYE DAVIS so moved.
CHAIR THERRIAULT announced that without objection the amendment
was adopted.
He noted the only other change related to language consistency.
There was question about the difference between "significant
risk to public health" versus "substantial risk to public
health." It appears that "significant" is a lower standard than
"substantial." The Department of Law has said that "significant"
is used to cast the net broadly to decide who will be put into
quarantine. To get out of quarantine the hurdle is higher and so
that's when "substantial" is used.
RICHARD MANDSGER, MD, Director, Division of Public Health,
Department of Health & Social Services, agreed.
DR. MANDSGER pointed to the inconsistency on page 13, line 22
dealing with an affidavit from a judge. For consistency the word
"significant" should be used rather than the word "substantial."
CHAIR THERRIAULT said you want the lower threshold for taking
someone in.
DR. MANDSGER agreed.
CHAIR THERRIAULT said the policy question is whether the
committee is comfortable with a lower threshold for taking
people into quarantine and a higher threshold for the person to
prove they should be released.
SENATOR CHARLIE HUGGINS moved to strike the word "substantial"
from page 13, line 22 and insert "significant".
CHAIR THERRIAULT announced that without objection, the motion
carried.
DR. MANDSGER expressed satisfaction with the policy call because
it makes for consistency in application.
CHAIR THERRIAULT referenced page 15, line 14 and questioned
whether "substantial" is the appropriate word.
DR. MANDSGER replied the same explanation applies. The
substantial test is the risk of transmission - the
contagiousness of the disease.
5:30:05 PM
There were no further questions.
CHAIR THERRIAULT noted the zero fiscal note and asked for the
will of the committee.
SENATOR BETTYE DAVIS motioned to report SCS CSHB 95(STA), \I
version as amended, and attached fiscal notes from committee
with individual recommendations.
CHAIR THERRIAULT announced that without objection, it was so
ordered.
CSHB(JUD) 116-LIABILITY FOR ALCOHOL LAW VIOLATIONS
CHAIR THERRIAULT announced HB 116 to be up for consideration.
5:31:37 PM
MICHAEL PAWLOWSKI, Aide to Representative Kevin Meyer, informed
members that under current statute a licensee may sue a person
aiding in compliance checks for any of four reasons.
· If a minor knowingly enters or remains on a licensed
premise.
· If a minor solicits another to purchase alcohol for them.
· If a person purchases alcohol for a minor.
· If a minor presents false identification to a licensee.
The difficulty relates to the fact that youths working with law
enforcement were not exempted when the civil liability
provisions were added to statute. HB 116 seeks to remove from
civil liability the youths working with law enforcement officers
investigating and enforcing compliance with the state alcoholic
beverage laws.
He noted the written testimony from Jessica Paris with the
National Council on Alcoholism and Drug Dependence.
5:33:38 PM
CHAIR THERRIAULT remarked the legislature dealt with similar
legislation related to tobacco products. He asked about changes
that were made to the original bill and whether it conformed to
that legislation.
MR. PAWLOWSKI replied HB 116 doesn't conform to the tobacco
legislation. Representative Meyer's original intent was to
create an exception in AS 04.16.049, which relates to a minor
remaining on a licensed premise. Because there are different
types of compliance checks, Section 2, amending AS 04.16.060 was
added to address the other issues brought up in a compliance
check.
The House Judiciary Committee changed lines 7 and 13 on page 1.
The word "supervises" was added to ensure that the police
maintain close supervision of the activity.
There were no further questions.
CHAIR THERRIAULT noted the zero fiscal note and asked for the
will of the committee.
SENATOR CHARLIE HUGGINS motioned to report CSHB 116(JUD) and
attached fiscal note from committee with individual
recommendations.
CHAIR THERRIAULT announced that without objection, it was so
ordered.
There being no further business to come before the committee,
Chair Therriault adjourned the meeting at 5:37:33 PM.
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