SENATE BILL NO. 160 "An Act establishing an Alaska health care program to ensure insurance coverage for essential health services for all residents of the state; establishing the Alaska Health Care Board to define essential health care services, to certify health care plans that provide essential health care services, and to administer the Alaska health care program and the Alaska health care fund; establishing the Alaska health care clearinghouse to administer the Alaska health care program under the direction of the Alaska Health Care Board; establishing eligibility standards and premium assistance for persons with low income; establishing standards for accountable health care plans; creating the Alaska health care fund; providing for review of actions and reporting requirements related to the health care program; and providing for an effective date." SENATOR HOLLIS FRENCH, Sponsor, introduced SB 160. He stated that Starbucks pays more for health insurance than they pay for coffee. General Motors pays more for health insurance than it does for steel. The reason the bill is before the Committee is because Corporate American has decided that there needs to be something done to reduce the cost of health insurance before it drives businesses out of business. Senator French explained that the genesis of the bill began when Mitt Romney became governor of Massachusetts and faced the loss of millions of dollars in "dish funds", funds that the federal government pays to cover hospitals for the costs of the uninsured. Governor Romney formulated a new, consumer-driven approach to address health insurance. Senator French termed SB 160 a consumer-driven bill that allows individuals to make choices about their health insurance. It is that market force that will help keep health insurance costs down. Senator French reported that there are 100,000 Alaskans without health insurance. Over 50 percent have jobs. This bill would use federal, state, and employer money to make the cost of health insurance affordable. Senator French drew attention to the controversial aspects of the bill. The first is "individual mandate". There is a call in the bill for every single citizen to acquire health insurance. This is necessary to spread out the risk, which will lead to lower costs. The upside is "guaranteed issue": everyone who applies is guaranteed coverage in the form of a voucher. 9:29:19 AM Senator French dispelled the myths about the bill. It does not require those currently insured to change policies. It should bring policy costs down by up to 15 percent, which is about equal to the amount those who are insured have to pay for those who are not insured. He gave an example of the uninsured receiving care at emergency rooms resulting in a loss of revenue to hospitals. It was estimated that in 2007 Providence Hospital spent $90 million on the uninsured. Senator French reported on what the bill would not do: create more doctors in Alaska or deal with Medicare reimbursement rates. He opined that eventually there would be a solution to the problem of the uninsured. He requested the Committee take a hard look at the bill, which he termed a work in progress. He stressed the importance of policy decisions that will be made by the Senate Finance Committee. 9:32:37 AM Senator French referred to a chart entitled "Alaska Health Care: The Framework For Change" (copy on file.) There is an Alaska Health Care Board, which certifies private health care plans. There is a fund that holds vouchers, similar to the federal plan, based on a sliding scale. He described the various plans based on income level. Certified private health insurance plans are made available for purchase using vouchers. 9:34:41 AM Senator French addressed the fiscal notes. The Administration expects the plan to cost $333 million in FY 2010. Senator French thought that figure to be wildly overstated. He pointed out on page 2 of fiscal note #1, it says that "the estimated cost for insurance premiums is $11,000 per person per year, based on the State of Alaska employee insurance plan." He pointed out several errors in that assumption. No one is paying $11,000 per person; that amount will cover a family of four. The fiscal note incorporates Indian Health Service recipients. The bill does not mandate that those individuals join the plan. Also, the fiscal note does not take into account that there is an enormous amount of money being paid for uncompensated care, which causes an increase in health insurance premiums of about 15 percent. 9:37:13 AM Senator Thomas asked if there is a minimum requirement of services and if the Alaska Health Care Board would set up the policies to be selected by the uninsured. Senator French said those requirements are found on page 7 of the bill in Section 231.54.250, essential health care services. It does not set the level of the deductible or the copayment. Senator Olson asked if the program was all-inclusive. Senator French said it was comprehensive, just like a regular health insurance policy. Senator Olson asked if Providence Hospital was in favor of the bill. Senator French said they were and he referred to a letter of support. He further explained that hospitals like the idea of health insurance for all. Insurance companies are also in favor of such a plan. 9:40:03 AM Senator Huggins requested information about Massachusetts' universal health care plan. Senator French explained that over a year ago, Massachusetts instituted universal health insurance using the mechanism of the state income tax to require insurance. They started with a base of 600,000 uninsured and lowered that number by one third. They are spending about $900 million a year. He said a comparable cost to Alaska for a similar program would be about $150 million. Other states are considering similar plans. Senator French mentioned a difficulty with that plan. Now it is more difficult to see a primary care physician. Senator Huggins referred to Canada's plan and the difficulty of getting into see a doctor. SB 160 was heard and HELD in Committee for further consideration. AT-EASE: 9:42:43 AM RECONVENED: 9:46:53 AM