SB 165-COMPREHENSIVE HEALTH INSURANCE FUND  3:19:36 PM CHAIR KITO announced that the first order of business would be SENATE BILL NO. 165, "An Act relating to the Alaska comprehensive health insurance fund; and providing for an effective date." 3:19:54 PM SENATOR ANNA MACKINNON, Alaska State Legislature, introduced SB 165 as prime sponsor. She paraphrased the sponsor statement [included in committee packet], which reads as follows [original punctuation provided]: In 2015, the individual health care market in Alaska was in a precarious state. There were only two insurers with current enrollees in individual healthcare plans in Alaska, and each insurer was experiencing significant losses. Average premium rate increases in 2015 were 38.7% for one insurer and 39.9% for the other. In 2016, one of Alaska's only two remaining insurers gave notice that they would be withdrawing from the Alaska individual market effective January 2017. The 29th Legislature passed HB 374 in 2016, which created the Alaska Reinsurance Program, and allowed the Division of Insurance to apply for a federal Section 1332 state innovation waiver under the Affordable Care Act (ACA). That legislation included a sunset date of June 30, 2018 to ensure that the diversion of insurance premium taxes from the general fund was not relied upon as a long-term funding mechanism. In July 2017, the waiver was approved by both the Department of Health and Social Services and the Department of Treasury based on the application submitted by the division, which requested pass- through funding for the Alaska Reinsurance Program. The federal award for this waiver was approximately $322 million over five years. The award is to be used, in conjunction with the Alaska Reinsurance Program, to continue to stabilize the individual healthcare market in Alaska. This legislation extends the sunset provision on the Alaska comprehensive health insurance fund by six years, from June 30, 2018 to June 30, 2024 to allow for the continuation of the Alaska Reinsurance Program and receipt of the federal funding. The bill also removes the requirement that funds collected under AS 21.09.210 (tax on insurers), AS 21.33.055 (unauthorized insurance premium tax), AS 21.34.180 (surplus lines tax) and AS 21.66.110 (annual tax on title insurance premiums) are to be deposited into the Alaska comprehensive health insurance fund within the general fund. Passage of HB374 by the 29th Legislature has resulted in stabilization of the individual insurance market. The Section 1332 state innovation waiver provides funding for the Alaska Reinsurance Program, through the Alaska comprehensive health insurance fund. Now this legislation is necessary to ensure the continued effectiveness of the Alaska Reinsurance Program, meet the intent of the waiver, and receive the federal funding. 3:22:21 PM CHAIR KITO asked Senator Mackinnon to explain the funding that will go back into the general fund (GF). SENATOR MACKINNON corrected the amount was $63 million. She stated $55 million was done several years ago to create the reinsurance pool. She said high-risk insurance recipients were paid for outside of the regular insurance. She explained that $63 million represents current insurance premiums that are being deposited and moved back into GF. REPRESENTATIVE WOOL asked how many people were moved from the general pool to the high-risk pool. SENATOR MACKINNON answered that 500 individuals were driving 95 percent of the high-risk costs. She deferred to Ms. Lori Wing- Heier. 3:24:04 PM CHAIR KITO opened public testimony on SB 165. [He moved to invited testimony and did not close public testimony.] 3:25:01 PM MICAELA FOWLER, Legislative Liaison, Department of Commerce, Community & Economic Development (DCCED), answered questions in the hearing on SB 165. She stated that when the original legislation passed, it directed premium tax dollars into the Alaska Comprehensive Health Insurance Fund. She added the legislation had a sunset date which would be extended in the proposed bill. The original legislation stipulated that the department would seek additional funding. She said that was carried out through a 1332 Waiver. She added that because the federal government pays a portion of premiums, the amount that is suppressed is being given back to the state for the fund for the next four years. CHAIR KITO asked about the 1332 Waiver. 3:27:04 PM ANNA LATHAM, Deputy Director, Division of Insurance, Department of Commerce, Community & Economic Development (DCCED), answered questions in the hearing on SB 165. She stated the fiscal note (FN) reflects the federal funds from the 1332 Waiver award. REPRESENTATIVE BIRCH asked how many beneficiaries are in the insurance pool. MS. LATHAM answered there are around 18,000 Alaskans in the individual market. She added the state fully funded the program in 2017. She said there had been a $55 million appropriation. She said the Division of Insurance had applied for a federal waiver which was awarded in 2018. She added that because Alaska's market is highly subsidized, 90 percent of the re- insurance program for the 5 years of the waiver is going to be federally funded REPRESENTATIVE BIRCH asked whether the Alaska Comprehensive Health Insurance Association (ACHIA) program is expanded from hundreds to thousands over the years. MS. LATHAM spoke to the Alaska Reinsurance Program for individuals with high cost qualifying conditions. When Primera see these qualifying conditions, it lowers rates for everyone in the individual market. She added the individual market has been dropping in enrollment in recent years. REPRESENTATIVE WOOL asked whether ACHIA has "morphed" into the fund or whether they are separate things. MS. LATHAM answered the small population in the ACHIA program is stable, and the reinsurance program from 2016 is a separate program. REPRESENTATIVE WOOL surmised that a few people remaining on ACHIA might qualify for the high-risk designation that would be taken out of the pool. MS. LATHAM said the division has not seen a migration to the reinsurance program. REPRESENTATIVE WOOL suggested the program was started before the division knew it was going to get a federal reimbursement. MS. LATHAM answered that is correct. She added the division knew it had to find an alternate funding source. 3:33:44 PM CHAIR KITO held over SB 165.