HB 157-LIFE & HEALTH INSURANCE GUARANTY ASSN.  9:33:07 AM CHAIR COSTELLO announced the consideration of HB 157. 9:33:34 AM REPRESENTATIVE SAM KITO, Alaska State Legislature, Chair, House Labor and Commerce Committee, introduced HB 157 speaking to the following sponsor statement: House Bill 157 updates the Alaska Life and Health Insurance Guaranty Act (Act) to conform to the National Association of Insurance Commissioners Life and Health Guaranty Model Act. These changes update the Act and improve uniformity nationwide in the administration of life and health guarantee associations. The Alaska Life and Health Insurance Guarantee Association (Association) is composed of insurers who transact life insurance, health insurance, or annuities in Alaska. The purpose of the Association is to guarantee that residents and certain nonresidents will continue to receive benefits in the event one of the members becomes impaired or insolvent. In order to accomplish this, the Act directs the insurers to form a board and collect assessments from members to pay for the operations of the Association and obligations of insolvent or impaired members. House Bill 157 amends terms for consistency with the model act, raises payment limits, adds language clarifying what products are included and excluded from the protections under the Act, and adds language clarifying that medical and hospital service corporations and their products are subject to the provisions of the Act. House Bill 157 amends the powers and duties section for the Association to follow the model act, authorizes the board to increase assessments, grants the Association the ability to develop procedures to remove an Association governor for cause, and adds new definitions. 9:34:49 AM LORI WING-HEIER, Director, Division of Insurance, Department of Commerce, Community and Economic Development (DCCED), stated that there are two insurance guarantee associations in Alaska. One was formed for property and casualty and one was formed for life and health. She agreed with Representative Kito's explanation that if an insurance company becomes insolvent, one of the associations steps in and assesses the member insurers up to two percent to pay the claims that have been presented to the insolvent insurer. She advised that about three weeks ago a long-term care insurer went insolvent nationwide and about 36 consumers in Alaska were at risk of not having their claims paid. The claims totaled about $2 million. The association sent out assessment letters to collect the money and they will hold it and pay the claims as they are presented. She reported that this has happened to workers' compensation insurers and property insurers in the past even though the Division of Insurance closely monitors insurance company financials. She summarized that, "These two associations are the protections that stop consumers from not having any recourse from which to collect the claims they may have presented to the insurance company prior to the insolvency." MS. WING-HEIER said SB 157 does two things. It updates the Act to conform with the current National Association of Insurance Commissioners (NAIC) model law, and it brings hospital medical service corporations in as member insurers. She noted that most of the changes are technical and offered to walk through the sectional analysis. 9:37:52 AM SENATOR HUGHES joined the committee. SENATOR GARDNER asked what the hospital medical service corporations think of the bill. MS. WING-HEIER said Premera Blue Cross is the only hospital medical service corporation in Alaska and their representative is on line to comment on the bill. She added that the representative will probably say Premera doesn't oppose the bill entirely, but would like to wait for the new model law that has not been released. It brings in life insurance companies to address long term care, which is a problem nationwide. These claims are huge and health care insurers alone cannot sufficiently address these policies. 9:40:38 AM CHAIR COSTELLO opened public testimony on HB 157. SENATOR STEVENS joined the committee. 9:40:48 AM SHEILA TALLMAN, Senior Manager of Legislative Policy, Premera Blue Cross, Seattle, Washington, stated that Premera recognizes that the instability in health care and long-term care insurance markets is occurring and solvency is a concern. She advised that the National Association of Insurance Commissioners (NAIC) has been discussing this issue since early this year and is considering updates to their life and health guarantee association models to respond to the changing marketplace for life, health, and long-term care policies and to address insolvencies. Premera is working with Blue plans in other states and with the Blue Cross Blue Shield Association to provide comments on new approaches that will not negatively impact costs to consumers. She said it is Premera's view that some of the changes in House Bill 157 would negatively impact Premera customers through an assessment and increased rates when there is an insolvency. MS. TALLMAN urged the committee to consider the work NAIC is doing right now before making any changes to Alaska's guarantee association that may not be consistent with the forthcoming model. She opined that there may be other ways of tackling insolvency issues, particularly in a state with limited competition in the health care market when the policies at the crux of the issue typically are not offered by health insurance companies. She concluded advising that the new administration in D.C. is open to new ideas that offer long term solutions and increased competition in insurance markets and Premera urges legislators to take time before implementing new ideas there too. SENATOR GARDNER asked if she has a sense of the timeline for the new model through NAIC. MS. TALLMAN said she has heard that the intent is to have something ready by the end of 2017. 9:43:58 AM CHAIR COSTELLO noted that David Phifer and Donald Thomas were available to answer questions. SENATOR GARDNER asked Mr. Phifer or Mr. Thomas would advise waiting until the model law is released or moving forward now. 9:44:31 AM DONALD THOMAS, Executive Director, Alaska Life and Health Insurance Guarantee Association, Anchorage, said he was not aware until this hearing that a new model law was being prepared. The association administers the law and he doesn't have a feel for the timeline. 9:45:44 AM CHAIR COSTELLO closed public testimony on HB 157 and held the bill in committee for further consideration.