SB 9: "An Act relating to health insurance; and providing for an effective date."
00SENATE BILL NO. 9 01 "An Act relating to health insurance; and providing for an effective date." 02 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 03 * Section 1. LEGISLATIVE FINDINGS AND INTENT. (a) The legislature finds that 04 (1) access by residents to basic health care services is a natural, essential, and 05 unalienable right that is protected by art. VII, sec. 4, of the Constitution of the State of 06 Alaska; 07 (2) many small employers in the state cannot afford to provide health insurance 08 for their employees; 09 (3) the state can improve the health care services available to employees and 10 other residents of the state who are uninsured or underinsured; 11 (4) many residents under 65 years of age lack access to basic health care 12 services because they are not able to purchase health care insurance at a reasonable price or 13 because they are restricted from purchasing health insurance by the practices of the insurance 14 industry;
01 (5) lack of access to health care negatively affects the health status of the 02 uninsured by the delay or lack of medical treatment, thereby increasing the incidence of 03 disease and illness in the state; 04 (6) the cost of providing hospital care to the uninsured is a burden on all health 05 care consumers and certain businesses in the state. 06 (b) It is the intent of the legislature to promote the accessibility of health care services 07 for all of the state's citizens, a public purpose for which public money may be expended. 08 * Sec. 2. AS 21 is amended by adding a new chapter to read: 09 CHAPTER 56. STATE HEALTH INSURANCE. 10 ARTICLE 1. HEALTH INSURANCE AUTHORITY. 11 Sec. 21.56.010. CREATION AND PURPOSE. (a) The Health Insurance 12 Authority is established. The authority is a public corporation and an instrumentality 13 of the state in the Department of Commerce and Economic Development but has a 14 legal existence independent of and separate from the state. 15 (b) The purpose of the authority is to provide, on a basis calculated to reduce 16 or contain the costs of the program, a program of health insurance coverage for 17 eligible residents of the state who are not otherwise covered by a health insurance 18 plan, a self-insurance health plan, a medical assistance program, or another plan or 19 program that provides for payment by a third-party payor for health care services. 20 Sec. 21.56.020. BOARD OF DIRECTORS. (a) The authority is governed by 21 a board of seven directors. The directors are the commissioner of commerce and 22 economic development, the commissioner of health and social services, the director of 23 the division of insurance, a representative of the insurance industry, a representative 24 of health care providers, and two representatives of enrollees, appointed by the 25 governor. 26 (b) Members of the board who represent the insurance industry, health care 27 providers, and enrollees serve staggered terms of four years. A vacancy in a 28 directorship shall be filled for the unexpired term in the same manner as the original 29 appointment. 30 (c) The directors must be state residents and shall comply with the 31 requirements of AS 39.50 (Conflict of Interest). The directors of the authority serve
01 without compensation, but are entitled to travel and per diem expenses authorized by 02 law for state boards and commissions under AS 39.20.180. 03 Sec. 21.56.030. APPOINTMENT AND POWERS OF EXECUTIVE 04 DIRECTOR. The board shall appoint an executive director of the authority who serves 05 at the pleasure of the board and may be removed by the board at any time. The 06 executive director must have educational qualifications and administrative and other 07 experience that the board determines to be necessary for the performance of the duties 08 of executive director. The executive director shall appoint and may remove agents and 09 subordinate officers that the executive director considers necessary and may establish 10 divisions and subdivisions within the authority. The position of executive director is 11 in the exempt service. 12 Sec. 21.56.040. DEPUTY EXECUTIVE DIRECTOR. The executive director 13 shall appoint a person to serve as deputy executive director of the authority. The 14 deputy executive director shall perform the duties that the executive director 15 determines and shall, in the case of a vacancy in the office of executive director and 16 during the executive director's absence or disability, exercise the powers and perform 17 the duties of that office. The deputy executive director must have educational 18 qualifications and administrative and other experience that the executive director 19 determines to be necessary for the performance of the duties of deputy executive 20 director. The position of deputy executive director is in the exempt service. 21 Sec. 21.56.050. GENERAL POWERS. The authority may 22 (1) adopt regulations to implement this chapter; 23 (2) make contracts and execute all instruments necessary or convenient 24 for carrying out its business; 25 (3) acquire, own, hold, dispose of, and encumber personal property and 26 lease real property in the exercise of its powers; 27 (4) enter into agreements or transactions with a federal, state, or 28 municipal agency, or other public institution, or with a private individual, partnership, 29 firm, corporation, association, or other entity; 30 (5) procure insurance in connection with its duties in the amounts and 31 from insurers as may be necessary or desirable;
01 (6) provide a health insurance program through the purchase of health 02 insurance plans from the private sector, including managed health care plans; the 03 financial assumptions underlying these purchasing arrangements shall be made on an 04 actuarially sound basis; 05 (7) design and revise a basic schedule of health care services that 06 enrollees in the health insurance program are entitled to receive, including those 07 services that are typically included in employer sponsored health benefit plans in the 08 state; the authority may adopt schedules of covered health care services that differ 09 from the basic schedule and that apply to specific classes of enrollees; 10 (8) provide a health insurance plan for individuals who are uninsured; 11 the health insurance shall emphasize preventative and primary care by requiring 12 nominal copayments for that coverage, and, shall deemphasize inpatient hospital care 13 by requiring a large deductible and copayment for that coverage; 14 (9) provide a group health insurance plan to employers who have at 15 least one but not more than 15 full-time employees and who have not offered a group 16 health insurance plan to their employees within the previous year; 17 (10) negotiate with hospitals in the state to obtain a discount on charges 18 for inpatient and outpatient care; 19 (11) maintain a prudent level of reserve funds to protect the solvency 20 of the health insurance fund established under AS 21.56.080; and 21 (12) conduct studies concerning the status of health care in the state, 22 including the effect on consumers and businesses of programs established under this 23 chapter. 24 Sec. 21.56.060. TYPES OF INSURANCE PLANS. (a) The authority shall 25 make available health care insurance to all eligible residents who are not covered by 26 a health insurance plan, a self-insurance plan, or the medical assistance program under 27 AS 47.07. The authority may not operate as an insurance company but shall make 28 health insurance plans available to eligible residents of the state through the purchase 29 of health insurance plans, including managed health care plans, from private health 30 insurance companies. The authority shall endeavor to purchase health insurance plans 31 in an economical manner and shall enroll individuals in managed health care plans
01 when practical. 02 (b) The authority shall make available group health insurance for employees 03 and dependents to an employer who has at least one but not more than 15 full-time 04 employees, who elects to participate, and whose employees have not participated in a 05 group health insurance plan in the previous year. Group health insurance shall be 06 made available by the purchase of group health insurance plans from private health 07 insurers. The authority may require employers participating in the group health 08 insurance plan to contribute up to 50 percent of the premium cost of the insurance. 09 An employer who elects to participate must enroll at least 75 percent of the full-time 10 employees of the employer in the health insurance plan offered by the authority. 11 Sec. 21.56.070. PURCHASE OF INSURANCE. (a) The authority shall 12 (1) subject to appropriation, negotiate with and purchase, on the terms 13 that it considers to be in the best interest of the authority and its enrollees, from health 14 insurance companies licensed in this state, policies of group general or blanket 15 insurance providing hospital, surgical, medical, and other health insurance benefits 16 covering all eligible residents and their dependents not enrolled in a health insurance 17 plan, self-insurance health plan, or the medical assistance program; 18 (2) execute all agreements or contracts pertaining to the policies or 19 amendments to them for and on behalf and in the name of the authority; the authority 20 may negotiate a contract for a term not exceeding three years that it considers to be 21 the most advantageous to the authority and its enrollees; 22 (3) endeavor to contract with health insurance companies only for 23 managed health care plans or for health insurance plans that employ other methods to 24 reduce costs of health care services; 25 (4) offer an individual enrollee a choice of at least two plans providing 26 health care insurance benefits; not more than 30 percent of the enrollees may be 27 enrolled in a health insurance plan of a single health insurance company, unless the 28 authority determines that it is in the best interest of enrollees to enroll more than 30 29 percent of enrollees in a health insurance plan of a single health insurance company; 30 (5) adopt regulations regarding eligibility criteria, enrollment, 31 contribution, and termination policies;
01 (6) establish procedures by which individuals who participate or are 02 seeking to participate in the health insurance program of the authority may appeal 03 determinations of noneligibility, enrollment, contribution, and termination; 04 (7) allow, on an annual basis, an opportunity for enrollees to transfer 05 their enrollments among participating health insurance plans; 06 (8) establish a schedule of premium contributions, copayments, 07 deductibles, or coinsurance amounts to be paid by individual enrollees and for group 08 health insurance purchased by the authority; the schedule must establish a sliding scale 09 of payments for enrollees based on family income and size and other factors 10 determined to be appropriate by the authority; the schedule must require enrollees to 11 pay 100 percent of the premium contributions if their income substantially exceeds the 12 nonfarm poverty guidelines of the United States Office of Management and Budget; 13 (9) in coordination with the Department of Revenue, allow an enrollee 14 to annually contribute the enrollee's permanent fund dividend towards the premium 15 amount paid by the individual enrollee; and 16 (10) require a health insurance company that provides health care 17 benefits under this chapter to establish grievance procedures that are approved by the 18 authority. 19 (b) A health insurance plan provided by the authority to its enrollees through 20 a contract with a health insurance company shall provide a reasonable range of health 21 care services to enrollees, access to an adequate range of health care providers, and at 22 a minimum, the following benefits: 23 (1) inpatient and outpatient acute hospital services; 24 (2) inpatient and outpatient physician services; 25 (3) diagnostic and screening tests; 26 (4) preventive care; 27 (5) prenatal and well-baby care; and 28 (6) medically necessary emergency health services. 29 Sec. 21.56.075. PREMIUM SUBSIDY. An employer who elects to participate 30 in the group health insurance offered by the authority and who in the previous calendar 31 year had a net business income of less than $20,000 as verified by federal income tax
01 returns, shall receive a premium subsidy of the employer's contribution equal to the 02 following: 03 (1) in the first year of participation, 50 percent of the employer's 04 contribution; 05 (2) in the second year of participation, 25 percent of the employer's 06 contribution. 07 Sec. 21.56.080. HEALTH INSURANCE FUND. The health insurance fund 08 is established as a separate account in the general fund. The fund shall be 09 administered by the authority and used to purchase insurance under AS 21.56.070. 10 The fund consists of appropriations by the legislature and private grants or 11 contributions. 12 Sec. 21.56.250. DEFINITIONS. In this chapter, 13 (1) "authority" means the Health Insurance Authority created in 14 AS 21.56.010; 15 (2) "eligible resident" means a resident who is less than 65 years of age 16 and whose gross family income at the time of enrollment is less than twice the 17 nonfarm poverty guidelines of the United States Office of Management and Budget; 18 (3) "enrollee" means a person who becomes a member of an insurance 19 program of the authority either individually or as a member of a family; 20 (4) "full-time employee" means an employee who works more than 30 21 hours in a week; 22 (5) "health care services" means supplies, care, and services of medical, 23 surgical, optometric, dental, podiatric, chiropractic, psychiatric, therapeutic, diagnostic, 24 preventive, rehabilitative, supportive, or geriatric nature, including inpatient and 25 outpatient acute hospital care and services, and services provided by a community 26 health center, or by a health maintenance organization; 27 (6) "health insurance" means an individual or group contract or other 28 plan providing coverage of health care services that is issued by a health insurance 29 company, a hospital service corporation, a medical service corporation, or a health 30 maintenance organization; "health insurance" includes disability insurance under 31 AS 21.12.050;
01 (7) "health insurance company" means a company that engages in the 02 business of health insurance; 03 (8) "health maintenance organization" means a company that provides 04 or arranges for the provision of health care services to enrolled members in exchange 05 primarily for a prepaid per capita or aggregate fixed sum; 06 (9) "hospital service corporation" has the meaning given in 07 AS 21.87.330; 08 (10) "managed health care plan" means a health insurance plan that 09 provides or arranges for, supervises and coordinates health care services to enrolled 10 participants, including plans administered by health maintenance organizations and 11 preferred provider organizations; 12 (11) "medical service corporation" has the meaning given in 13 AS 21.87.330; 14 (12) "resident" means a person living in the state as defined by the 15 authority by regulation; it does not include a person who moved to the state for the 16 sole purpose of securing health insurance under this chapter; confinement of a person 17 in a nursing home, hospital, or other medical institution in the state is not by itself 18 sufficient to qualify the person as a resident. 19 * Sec. 3. AS 36.30.015(e) is amended to read: 20 (e) The board of directors of the Alaska Railroad Corporation, [AND THE 21 BOARD OF DIRECTORS OF] the Alaska Aerospace Development Corporation, and 22 the Health Insurance Authority shall adopt procedures to govern the procurement of 23 supplies, services, professional services, and construction. The procedures must be 24 substantially equivalent to the procedures prescribed in this chapter and in regulations 25 adopted under this chapter. 26 * Sec. 4. AS 36.30.850(b) is amended by adding a new paragraph to read: 27 (30) contracts of the Health Insurance Authority (AS 21.56). 28 * Sec. 5. AS 39.25.110 is amended by adding a new paragraph to read: 29 (30) the executive director, deputy executive director, and other staff 30 of the Health Insurance Authority. 31 * Sec. 6. AS 39.50.200(b) is amended by adding a new paragraph to read:
01 (55) Health Insurance Authority (AS 21.56) 02 * Sec. 7. PHASE-IN COVERAGE. (a) Notwithstanding AS 21.56.060, the Health 03 Insurance Authority shall, subject to appropriation, establish phase-in coverage for state health 04 insurance required by this Act on a regional, statewide, or population basis that is designed 05 to test the relative advantages and disadvantages of providing health insurance, particularly 06 managed health care plans, to persons lacking health insurance. Phase-in coverage shall be 07 established through contracts with health insurance companies, hospital service corporations, 08 medical service corporations, or health maintenance organizations. The authority shall use 09 phase-in coverage as part of a plan to provide health insurance to the uninsured on an orderly 10 and gradual basis. Phase-in coverage shall be purchased for a period not to exceed four years; 11 coverage found by the authority to be an efficient and effective method of providing health 12 care services to the uninsured may be purchased by the authority on a permanent basis, under 13 the provisions of AS 21.56. 14 (b) The authority shall require that an insurer with which it contracts under this 15 section submit annually to the authority a report of the demographics and utilization patterns 16 of the enrollees. 17 * Sec. 8. COMMISSION CREATED. (a) The Commission on Health Insurance Reform 18 is established to 19 (1) examine and determine what alternatives, if any, exist to provide citizens 20 of the state with an improved health care delivery and health care insurance system; 21 (2) recommend improvements to the competitive environment in the health 22 insurance system; 23 (3) review the affordability and availability of actuarially sound nongroup and 24 Medicare supplementary health insurance coverage; and 25 (4) study the implications of the provisions of this Act relative to preferred 26 provider arrangements and relative to the relationship between nonparticipating providers and 27 hospital and medical service corporations. 28 (b) The commission consists of a representative of a nonprofit hospital or medical 29 service corporation, a representative of the Department of Law, a representative of health care 30 consumer groups, a representative of health maintenance organizations, and a chair, to be 31 appointed by the governor.
01 (c) The commission shall make its recommendations to the governor and the 02 legislature before October 1, 1994, and shall issue a final report before November 15, 1994. 03 * Sec. 9. TRANSITION. The initially appointed members of the board of the Health 04 Insurance Authority that are serving staggered terms, shall serve terms set by the governor 05 under AS 39.05.055(2). 06 * Sec. 10. Section 8 of this Act is repealed January 1, 1995. 07 * Sec. 11. This Act takes effect July 1, 1993.