HOUSE FINANCE COMMITTEE April 23, 1998 8:20 A.M. TAPE HFC 98 - 121, Side 1. TAPE HFC 98 - 121, Side 2. TAPE HFC 98 - 122, Side 1. CALL TO ORDER Co-Chair Therriault called the House Finance Committee meeting to order at 8:20 A.M. PRESENT Co-Chair Hanley Representative Kelly Co-Chair Therriault Representative Grussendorf Representative J. Davies Representative Martin Representative G. Davis Representative Moses Representative Foster Representative Mulder Representative Kohring was not present for the meeting. ALSO PRESENT Senator Jerry Mackie; Jay Lively, Deputy Commissioner, Department of Health and Social Services; Bob Labbe, Director, Division of Medical Assistance, Department of Health and Social Services; Karen Pearson, Health Program Manager, Division of Public Assistance, Department of Health and Social Services; Loraine Derr, Alaska State Hospital and Nursing Home Association (ASHNHA), Juneau; Catherine Reardon, Director, Division of Occupational Licensing, Department of Commerce and Economic Development. TESTIFIED VIA TELECONFERENCE - FAIRBANKS Missy Poeschel, Fairbanks; Margaret Miller, Fairbanks; Laura Bush, Fairbanks; Sarana Schell, Fairbanks. SUMMARY HB 369 An Act relating to Medicaid coverage for certain eligible children and pregnant women; relating to primary care case management and managed care services as optional services and to premiums and cost-sharing contributions under the Medicaid program; establishing the Healthy Families Alaska program; and providing for an effective date. CS HB 369 (FIN) was reported out of Committee with a "do pass" recommendation and with (4) four fiscal notes by the Department of Health and Social Services dated 4/23/98. HB 408 An Act establishing the Alaska Seismic Hazards Safety Commission. CS HB 408 (FIN) was reported out of Committee with a "do pass" recommendation and with a new fiscal note by the Office of the Governor. SB 110 An Act relating to licensure of landscape architects. HCS CSSB 110 (FIN) was reported out of Committee with a "do pass" recommendation and with a fiscal note by the Department of Commerce and Economic Development dated 1/21/98. SENATE BILL NO. 110 "An Act relating to licensure of landscape architects." SENATOR JERRY MACKIE noted that SB 110 related to the licensure of landscape architects. In order for Alaskan landscape architects to secure federal projects, the State must provide landscape architect licensing capabilities. Alaskan landscape architects are currently excluded from participating in securing the federal jobs and the money going to companies located outside of the State. The legislation would provide the State with another tool to support the hire of Alaskan workers and companies. He added that the fiscal note indicates that in accordance with AS 08.01.065, all licensees are required to pay the costs of regulating their profession; the program would be paid entirely by program receipts. Senator Mackie requested that the Committee entertain the proposed amendment to the House Labor and Commerce version of the legislation. The deletion exemptions provide for an adequate scope of exempted criteria related to architectural landscaping. The Chairman of the Labor and Commerce Committee is in concurrence with the proposed change. Senator Mackie added that the legislation would not affect people doing landscaping in their own yards or someone else's. It would only affect those situations requiring the landscaping, engineering and/or designing of particular public projects. Representative J. Davies noted that language on Page 11, Line 10, would address concerns of Committee members. CATHERINE REARDON, DIRECTOR, DIVISION OF OCCUPATIONAL LISCENSING, DEPARTMENT OF COMMERCE AND ECONOMIC DEVELOPMENT, spoke in favor of the amendment. She pointed out that the exemptions added on Page 12, apply to architecture, engineering and land surveying. Additional exemptions would also be included for designing buildings. Existing exemptions cover anything less than a four-plex. She pointed out that the problem with the language on Page 12, Line 11, was that the word "person" could mean "business and/or corporation". Co-Chair Therriault MOVED to adopt Amendment #1. There being NO OBJECTION, it was adopted. Co-Chair Therriault questioned the up-front fees. Ms. Reardon replied that language would allow the entire group of architects, engineers and landscapers to pay fees individually, but this would instead allow a sharing of costs between the three professions. She noted that the Board of Commissions supported this language. Representative Mulder MOVED to report HCS CSSB 110(FIN) out of Committee with individual recommendations and with the accompanying fiscal note. There being NO OBJECTION, it was so ordered. HCS CSSB 110 (FIN) was reported out of Committee with a "do pass" recommendation and with a fiscal note by the Department of Commerce and Economic Development dated 1/21/98. HOUSE BILL NO. 408 "An Act establishing the Alaska Seismic Hazards Safety Commission." REPRESENTATIVE JOHN DAVIES noted that Alaska needs to establish a Seismic Hazards Safety Commission to address a need it provide a consistent policy framework and a means for ongoing coordination of programs and public safety practices related to seismic hazards. Currently, the need is not being addressed by any State organization. The Seismic Hazards Safety Commission would encourage long-term progress toward mitigating the effects of earthquakes. Representative J. Davies continued, Alaska is on the edge of the Pacific Plate, which acts like a relentless conveyor belt, moving about six centimeters a year. It is inevitable that there will be large earthquakes. The only question is when will it occur, not if it will. Although, the State has made great improvements in disaster preparedness, there has been little corresponding improvement in measures to reduce dependence on disaster relief. Creating a seismic commission patterned after those in California, Oregon, Washington and other states on major fault lines will help address the issue. Representative J. Davies pointed out that the scientific community is working hard on earthquake predication, but is not yet a reality, except in the most general sense. Alaska needs to mitigate possible effects of earthquakes by encouraging appropriate land use and building design which can reduce loss of life and property, as well as the costs of recovery when earthquakes occur. He stressed that it costs a lot of money to rebuild after a large earthquake and, of course, there is no way to replace lost lives. It is clearly worth spending some time and money before an earthquake occurs. The Commission would help the State be better prepared. Representative J. Davies distributed a map showing the top ten quakes in the world between 1904 and 1992. [Copy on File]. Of the ten largest earthquakes, three of them have occurred in Alaska. He stressed that this is earthquake country. Most other states have seismic safety commissions except Alaska. [Copy on File]. Representative Kelly asked how this information would be gathered. Representative J. Davies replied that the group would try to assemble and assess information that is relevant to earthquake regions. Representative Martin questioned what more information is available besides the expertise already existing. Representative J. Davies explained that the question is, do cost-effective measures exist which could reduce the effects of quakes on the population. At this time, Alaska does not know what research is available and should be considered. The proposed commission could facilitate that information and transfer it to municipal building codes and land use plans. He summarized that there needs to be a bridging between the research realms and the building community. Co-Chair Therriault voiced concern with the proposed size of the commission. He MOVED an amendment to reduce the size from "11" to "9" members, 4 of which would be from the general public and with 6 members constituting a quorum. The rotation of seats would also need to be shifted, so that 3 seats would be two years, 3 seats would be four years, and the others would fall into the normal three-year pattern shift. There being NO OBJECTION, the change was adopted. Representative G. Davis asked how often the group would meet. Representative J. Davies replied they would meet 4 times a year as specified in the fiscal note. Representative G. Davis noted that he had a philosophical problem with forming another commission and believed that a group meeting that many times a year was excessive. Co- Chair Therriault pointed out that there was a sunset and that the commission would need to make progress on establishing these codes and measures. Representative J. Davies advised that two of the scheduled meetings would be by teleconferencing. Representative Kelly agreed that this was an important matter and he supported the concern. Co-Chair Therriault advised that the fiscal note would need to be recalculated in order to reflect the two less members on the commission. Representative J. Davies stated that there should only be one fiscal note originating from the Office of the Governor. Representative Mulder MOVED to report CS HB 408 (FIN) out of Committee with individual recommendations and with the revised fiscal note. There being NO OBJECTION, it was so ordered. CS HB 408 (FIN) was reported out of Committee with a "do pass" recommendation and with a fiscal note by the Office of the Governor. (Tape Change HFC 98- 121, Side 2). HOUSE BILL NO. 369 "An Act relating to Medicaid coverage for certain eligible children and pregnant women; relating to primary care case management and managed care services as optional services and to premiums and cost-sharing contributions under the Medicaid program; establishing the Healthy Families Alaska program; and providing for an effective date." MISSY POESCHEL, (TESTIFIED VIA TELECONFERENCE), HEALTHY FAMILIES, FAIRBANKS, read a letter from one of her clients who had participated in the Healthy Families Program and which had helped her make it through serious and difficult times successfully. MARGARET MILLER, (TESTIFIED VIA TELECONFERENCE), HELATHY FAMILY SUPPORT WORKER, FAIRBANKS, testified in support of the Healthy Families Program and the success it has manifested in many children's lives. LAURA BUSH, (TESTIFIED VIA TELECONFERENCE), FAIRBANKS, spoke to the challenges that new families have in outreach. The Healthy Families Program has offered prevention and education for those potentially abusive parents. Children require special attention to begin the developmental process in an optimal fashion. The original version of HB 369 would expand Medicaid coverage to poor children with family's income of up to 200% of the federal poverty level. She continued, as more families move from welfare to work, it is appropriate to assist them in becoming self- sufficient by making affordable health care coverage available. SARANA SCHELL, (TESTIFIED VIA TELECONFERENCE), PROGRAM CONSULTANT - HEALTHY FAMILIES, FAIRBANKS, urged members to reinstate the language of the original HB 369. That would place the Healthy Families Program back into State statute and authorize Medicaid payments for those families out of work. The families, which the program works with rarely, contact the agency for help. A health care provider, with the family's consent, usually refers the family to a program assessment worker. Home visits are reserved for only those families that really need it. She stressed that the program is voluntary and there is tremendous out-reach associated with it. She urged Committee members to expand this program because it works. JAY LIVELY, DEPUTY COMMISSIONER, DEPARTMENT OF HEALTH AND SOCIAL SERVICES, provided the Committee with a background of the legislation. Last fall, Congress passed the Kennedy Hatch bill which enacted the child health insurance program. The program made federal money available to states to expand health care coverage for uninsured children. Alaska's allotment from the federal legislation is $5.6 million dollars which requires a state match of $2 million dollars. In Alaska, it is estimated that there are approximately 23 thousand uninsured children of which about 11,500 are below the 200% poverty level. Mr. Lively explained that 200% of poverty level is about $33 thousand dollars for a family of 3 or about $16 dollars per hour income. The federal law provides considerable flexibility in designing the new program. Most importantly, the State can decide the eligibility level for the child's health coverage. Mr. Lively continued, the State can determine the delivery system to be employed to implement the child's health coverage. Federal law allows using Medicaid, expanding private coverage or implementing a combination of the two. He added that within the framework, the Department proposes to increase the eligibility level for Medicaid to the 200% poverty level for all kids and pregnant women. The current version does not consider the pregnant woman and under the current Medicaid program, the State provides a minimum coverage. Mr. Lively continued, the State already has a Medicaid bureaucracy established with a payment system, enrolled providers and the administration to run the program. Using Medicaid will minimize start up costs and allow the Department to "piggy back" on an established system with a large economical benefit. Mr. Lively spoke to the relationship between child health and welfare reform. Child health coverage will provide health to families without them needing to return to cash assistance. As soon as families work their way off the cash assistance welfare, the potential is that they will be in jobs, particularly low-income jobs, which have no health care attached to them. Last year, when Congress changed the recidivism rate for Medicaid from 50% to 60% federal match, freed up general fund money in the Medicaid program. One argument was that Alaska use some of the money to expand health care coverage for those that do not have it. In addition, pregnant women are currently covered up to 133% of poverty level. The Department proposes to raise it up to 200% of poverty level. The thought was that if the kids are covered, then the prenatal piece of coverage should also be taken care of in order to guarantee good birth outcomes. He pointed out that if the Legislature does not act to authorize a child health program, the State will lose its allotment of the $5.6 million dollars. Representative Martin asked if this situation would create an anti-discrimination for all children living in the State. Mr. Lively replied that this is not an open entitlement and would be available only to those individual families below the allocated level. Co-Chair Hanley pointed out that the Healthy Families portion of the bill had been deleted in a previous committee hearing and that the new federal fund program is just for kids, and does not extend to pregnant women. The bill as it exists at this time, deals only with new federal money passed by Congress to raise the poverty rate of kids up to 200%. The other portions could be addressed by the Legislature. Mr. Lively clarified that currently the State covers pregnant women at 133% poverty level, children 0-6 at 133% poverty level, children 6-14 at 100% poverty level and children from 14-18 at 70% poverty level. At this time, it is a varied level depending on the age. He stressed that this system is complicated for the families and the Department to keep track off. Co-Chair Hanley advised that the bill as currently written would cover all kids from 1- 18 to 200% at poverty level. BOB LABBE, DIRECTOR, DIVISION OF MEDICAL ASSISTANCE, DEPARTMENT OF HEALTH AND SOCIAL SERVICES, responded to comments by Representative Martin regarding "pregnant women" versus "pregnancy". He stated that "pregnant women" are part of the federal grouping which the State has been allowed to cover. This is a category of clients based on being pregnant. LORAINE DERR, ALASKA STATE HOSPITAL AND NURSING HOME ASSOCIATION (ASHNHA), JUNEAU, noted that Alaskans share a common goal of safe, healthy children and that ASHNHA incorporates that goal into its mission of improving health care of all individuals. Last year, the federal government made additional funding available for the purchase of insurance for children's health care coverage. HB 369 would allow the State to take advantage of those funds. Ms. Derr continued, there is a direct correlation between lack of prenatal care and giving birth to a low birth weight infant, and low birth weight accounts for 10% of all health care costs for children. ASHNHA requests to have pregnant women included in the funding. She pointed out that Alaska's hospitals continue to report growth in uncompensated care from $122 million dollars in FY93 to $177 million dollars in FY95, as a result of serving uninsured and underinsured Alaskans who cannot pay their medical bills. It shows that more Alaskans need care and are not able to pay for it. Raising the poverty level to 200% for children up to the age of 19 will go a long way toward making sure that health care coverage is available to children. Co-Chair Hanley referenced Amendment #1. [Copy on File]. He questioned Section (d) and asked if that section could be addressed by waiver. Mr. Labbe replied that in the area of managed care, when a client participates, historically, they would need to file for a federal waiver. At present time, most states are doing this as a matter of course through a normal state plan process. The Department has been advised that this is required. Co-Chair Hanley wanted to be assured that the language would keep the same priority listings and would not allow the Department "open-ended" options. He asked if the way that section was written would allow the Department to add new options or change the priorities of the options list. Mr. Labbe replied that the Department would not be able to add new options or change the priorities. Co-Chair Hanley MOVED to adopt Amendment #1. (Tape Change HFC 98- 122, Side 1). Following discussion regarding concerns of Representative Martin, Representative Mulder recommended changing the language on Page 2, Line 6, of the amendment deleting "for" and inserting "and". He felt that change would clarify that the services are not optional and must be consistent with State law. Mr. Labbe responded that it was unfortunate that primary care case management was being considered as optional services; in the past, the Department was required to receive a waiver for a Medicaid client to register. The only way in which the federal government could move it to the State would be to consider it a new type of State service. He noted that it is not a service in that sense. What is being managed are services which the State covers, some of which are mandatory and some of which are optional. This legislation requests the authority to organize these systems that way. Representative J. Davies believed that the proposed amendment would make an unintended change for services which already exist. With such a change, the Department would be required to undertake three things, whereas, with original language, there would only be two requirements. Co-Chair Therriault agreed that without the punctuation, it is clearer that the reference is to an existing set of services. There being NO OBJECTION, Amendment #1 was adopted. Co-Chair Hanley commented that under the current system, abortions are covered under Medicaid for rape, incest or life of the mother. He asked to which poverty level would that continue to occur. Mr. Lively replied at the 133% poverty level, the Medicaid level and the one used in Alaska. Co-Chair Hanley pointed out that Alaska has not chosen one for abortion. He clarified that the income level for the General Relief Medical (GRM) and the income level for publicly funded abortions would be the same as the Medicaid level. He believed that if the poverty level were raised for pregnant women to 200%, it would also be raised for abortions to that level. Mr. Lively agreed that was correct that the Medicaid eligibility would become the cited level. Representative Martin referenced the letter from a previous DHSS Commissioner, Ted Mala, stipulating that no private information can be given to the Department. He thought that the Department was prohibited from inquiring about the financial status of a woman. Mr. Lively replied that there is an income and eligibility test done on each person coming on to the Medicaid program. Representative Grussendorf pointed out that the bill was directed toward assisting children. He stated that increasing the level to 200% would make it easier for pregnant women to make a choice to keep the child as there would be extra financial assistance to keep the child healthy. Co-Chair Hanley stated that he would not offer Amendment #2. [Copy on File]. Representative Foster MOVED to adopt Amendment #2 for the purpose of discussion. Representative J. Davies stated that there would be a cost effectiveness associated with incorporating the amendment. He pointed out that if the legislation were able to avert two Fetal Alcohol Syndrome (FAS) outcomes, the entire state match would be paid. Representative Kelly disagreed, stating that by adding pregnant women to the legislation could result in negative ramifications. Representative Grussendorf criticized that many of our State's residents were being punished, first through the cut to the General Relief Medical and now an unwillingness to allow the funding level to be increased for those women who want to have their children but would not qualify under the 200% level. Co-Chair Hanley inquired what percentage of women between 130% and 200% poverty level, currently have coverage for pregnancy related services. Mr. Lively commented that the Department's research covers the number of persons who do not have coverage which is 870. Co-Chair Hanley voiced concern, under the federal bill, if you currently have coverage for kids, and you are at 180% poverty level, you could not access this new money. He noted that if the poverty level was increased to 200% for Medicaid, there would then be some pregnant women who have insurance, who could opt to access this program through Medicaid. The federal restrictions are specifically related to the kid's portion and not to the pregnant woman portion. Mr. Labbe agreed that if the Department goes to the 200% poverty level, there may be some women who are insured who would drop their coverage, although, he noted that it would be unlikely to transfer Medicaid for only the pregnancy. Retaining their coverage, does not mean that they would not be eligible for Medicaid. In those situations, Medicaid is the payer of "last resort". Co-Chair Hanley doubted if most employers offer as good of coverage as Medicaid does. He believed that some employers could drop their coverage for the pregnant employee making under the poverty level. Representative J. Davies questioned why we would not want to pick the kids up before they are born at the 200% level rather than waiting. Representative Foster WITHDREW the MOTION to adopt Amendment #1. There being NO OBJECTION, it was withdrawn. Co-Chair Hanley asked what percentage of the new kids who qualify, already have some level of insurance. Mr. Lively did not know, pointing out that there is a sizeable number of kids who currently are not covered at all. Co-Chair Hanley cited that above 70% of all children has some form of insurance coverage. The legislation would cover approximately 11-15% who do not have any coverage. He believed that we could create a system in which the government would be providing better service to children than those with that already have coverage. Representative J. Davies MOVED to add the Healthy Families Program back into the bill. Co-Chair Hanley OBJECTED. Representative J. Davies stated that the action would create a statutory framework which is already occurring. Co-Chair Hanley countered that would make that program Medicaid eligible which would establish an entitlement program. A roll call vote was taken on the motion. IN FAVOR: Grussendorf, J. Davies OPPOSED: G. Davis, Foster, Kelly, Martin, Mulder, Therriault, Hanley Representatives Kohring and Moses were not present for the vote. The MOTION FAILED (2-7). Co-Chair Hanley MOVED to report CS HB 369 (FIN) out of Committee with individual recommendations and with the accompanying fiscal notes. There being NO OJBECTION, it was so ordered. CS HB 369 (FIN) was reported out of Committee with a "do pass" recommendation and with four fiscal notes by the Department of Health and Social Services dated 4/9/98. ADJOURNMENT The meeting adjourned at 10:40 A.M. H.F.C. 13 4/23/98