Legislature(2015 - 2016)BARNES 124
03/07/2016 03:15 PM House LABOR & COMMERCE
Note: the audio ![]()
and video ![]()
recordings are distinct records and are obtained from different sources. As such there may be key differences between the two. The audio recordings are captured by our records offices as the official record of the meeting and will have more accurate timestamps. Use the icons to switch between them.
| Audio | Topic |
|---|---|
| Adjourn | |
| Start | |
| Presentation: Division of Insurance, Department of Commerce, Community & Economic Development |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| += | HB 248 | TELECONFERENCED | |
| += | HB 304 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
HOUSE LABOR AND COMMERCE STANDING COMMITTEE
March 7, 2016
3:16 p.m.
MEMBERS PRESENT
Representative Kurt Olson, Chair
Representative Shelley Hughes, Vice Chair
Representative Jim Colver
Representative Gabrielle LeDoux
Representative Cathy Tilton
Representative Andy Josephson
Representative Sam Kito
MEMBERS ABSENT
Representative Mike Chenault (alternate)
COMMITTEE CALENDAR
PRESENTATION: DIVISION OF INSURANCE~ DEPARTMENT OF COMMERCE~
COMMUNITY & ECONOMIC DEVELOPMENT
- HEARD
HOUSE BILL NO. 248
"An Act requiring the electronic submission of a tax return or
report with the Department of Revenue; relating to the excise
tax on alcoholic beverages; and providing for an effective
date."
- SCHEDULED BUT NOT HEARD
HOUSE BILL NO. 304
"An Act requiring the electronic submission of a tax return or
report with the Department of Revenue; relating to the taxes on
cigarettes and tobacco products; taxing electronic smoking
products; adding a definition of 'electronic smoking product';
and providing for an effective date."
- SCHEDULED BUT NOT HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
LORI WING-HEIER, Director
Division of Insurance
Department of Commerce, Community & Economic Development
Anchorage, Alaska
POSITION STATEMENT: Provided a presentation and update on
health care insurance.
ACTION NARRATIVE
3:16:38 PM
CHAIR KURT OLSON called the House Labor and Commerce Standing
Committee meeting to order at 3:16 p.m. Representatives Olson,
Kito, Colver, Hughes, Tilton, [Josephson], and LeDoux were
present at the call to order.
^PRESENTATION: DIVISION OF INSURANCE, DEPARTMENT OF COMMERCE,
COMMUNITY & ECONOMIC DEVELOPMENT
PRESENTATION: DIVISION OF INSURANCE, DEPARTMENT OF COMMERCE,
COMMUNITY & ECONOMIC DEVELOPMENT
3:17:15 PM
CHAIR OLSON announced that the only order of business would be a
presentation and update from the Division of Insurance,
Department of Commerce, Community & Economic Development,
provided by Lori Wing-Heier, Director.
3:17:23 PM
LORI WING-HEIER, Director, Anchorage Office, Division of
Insurance, Department of Commerce, Community & Economic
Development, informed the committee that her division has lifted
the order of impairment from Moda Health Plan, Inc. (Moda)
insurance company so that the company is once again doing
business in Alaska. She said it was difficult to deny consumers
access to an insurance company because of the division's concern
over Moda's financial circumstances. Moda has voluntarily
entered into a financial plan with the state and the State of
Oregon, and is disposing of $180 million of assets in order to
return funds to the insurance company to ensure its solvency and
thereby continue to serve its consumers in Alaska and Oregon.
Furthermore, Moda agreed to deposit $15 million in a bank
account under the state's control as a "security blanket" so the
state could pay claims if necessary. Ms. Wing-Heier explained
that Moda is domiciled in Oregon, thus Oregon has greater access
to its assets. The division is hopeful that Moda will remain in
the health insurance market in Alaska through 2017; however, the
division cannot force Moda to stay in the individual or the
group insurance market.
3:21:40 PM
CHAIR OLSON asked how many are currently impacted.
MS. WING-HEIER said enrollment is currently at over 22,000;
however, she anticipated that the number will level off at
21,000 in the individual market.
REPRESENTATIVE LEDOUX expressed her understanding that state
employees are only covered by the Moda dental plan.
MS. WING-HEIER said the state is self-insured and Moda acts as
an administrator of dental plan claims, thus the state dental
plan is not affected. The 22,000 Alaskans that were referred to
earlier are not state employees, but participate in the [Patient
Protection and Affordable Care Act (PPACA)] individual health
care insurance market.
REPRESENTATIVE LEDOUX asked whether all insurance is "under the
[PPACA]."
MS. WING-HEIER said Moda is only insuring PPACA plans, and its
share of the 22,000 individuals insured is a little over 50
percent of the individual market in Alaska. Premera insurance
company and Moda were in competition for this market.
3:24:01 PM
REPRESENTATIVE HUGHES asked if the federal government had not
reneged on its obligation to pay Moda risk corridor payments in
the amount of $150 million over two years, whether the situation
with Moda would have been averted.
MS. WING-HEIER advised the reduced funding would have made a
difference, but not "totally." In 2014, Moda received 12.6
percent of the expected funding, and is expected to receive more
during the three-year term of the program. The reduced funding
caused some insurance cooperatives to fail and although Moda is
not a cooperative, it is a regional insurer, and the reduced
funding was very much a contributing factor to Moda's situation.
In response to Chair Olson, she said Moda operates in Oregon in
the same manner as it does in Alaska. She was unsure as to the
status of a cooperative in Oregon, and the status of
cooperatives that have failed elsewhere is being discussed in
Washington D.C.
CHAIR OLSON lauded Alaska's decision not to utilize
cooperatives.
REPRESENTATIVE HUGHES expressed her concern that the federal
government could fail to fund Medicaid. She then asked about
the status of the Alaska Comprehensive Health Insurance
Association (ACHIA) program which provides "high-risk insurance"
in Alaska.
MS. WING-HEIER referred to draft legislation proposed by Premera
and Moda that would use ACHIA as a reinsurance mechanism. The
insured market would be assessed in the same manner as ACHIA and
all would contribute "a little" to offset high-dollar claims in
the individual market.
REPRESENTATIVE LEDOUX questioned the need for ACHIA now that
PPACA prevents discrimination for preexisting conditions.
3:28:58 PM
MS. WING-HEIER answered that the division considered using ACHIA
as a mechanism for the individual and small group market in
Alaska if it became necessary. Also, there are 211 people
currently participating, most of whom participate in the
Medicare Supplemental Insurance (MEDSUPP) drug coverage, who do
not have another market from which to choose in Alaska. In
further response to Representative LeDoux, she explained that
after Medicare becomes one's insurance, one buys a Medicare
Supplemental Insurance plan to supplement the coverage for
pharmaceuticals, which can be very expensive.
REPRESENTATIVE LEDOUX asked whether AARP supplemental is
available in Alaska.
MS. WING-HEIER said not for MEDSUPP, thus the division is
keeping ACHIA open for those who cannot get coverage elsewhere.
In further response to Representative LeDoux, she said there are
211 participants in ACHIA and about 50 percent participate in
MEDSUPP for high-priced drugs.
REPRESENTATIVE LEDOUX asked about coverage for others in the
state.
MS. WING-HEIER was unsure. In further response to
Representative LeDoux, she explained that for PPACA, people have
to "buy the entire package, but even within the [PPACA] there's
limits to what one, what the plan will pay." So, it may be
better for someone to have Medicare and buy MEDSUPP, rather than
to have to buy an entire individual market policy from PPACA,
which can have quite high co-pays.
REPRESENTATIVE COLVER observed that for a state retiree who is
eligible for Medicare, MEDSUPP is carried by the state, and
asked whether there is a cap to what the Division of Retirement
and Benefits, Department of Administration, pays.
MS. WING-HEIER was unsure of the workings of the state benefit
plan. She added that she was unaware of any state employees or
state retirees in the ACHIA program.
3:35:29 PM
MS. WING-HEIER continued to explain that at the time Moda was
taken off of the exchange, there were four days left of open
enrollment, which meant some who had enrolled but not paid, and
others who were waiting to the last minute, only had one choice:
Premera. In response to Chair Olson, she said the four-day gap
affected about 3,200 people, who were concerned and anxious.
The division worked with all parties, and all known to the
division were reinstated with Moda.
CHAIR OLSON asked whether the division was sufficiently staffed.
MS. WING-HEIER said the division retained its same level of
staffing in Fiscal Year 2017 (FY 17). At the height of the
activity related to Moda, the National Association of Insurance
Commissioners (NAIC) opened a call center to assist with phone
calls and to provide callers with the latest information;
however, some did purchase a Premera plan to comply with the
deadline in January, then Moda was returned to the exchange, and
they are stuck with higher premiums for one year. The division
considered holding another enrollment period, but those with the
intent to purchase coverage were accommodated. Ms. Wing-Heier
noted that more information will come to the forefront on the
proposed ACHIA bill; in fact, federal funds are available for
the reinsurance program. Further, the division will continue to
seek relief from the Alaska Congressional delegation. Alaska's
individual market is small and sick, but the division cannot
force members of a younger and healthier population to enroll,
join the insurance pool, and spread the risk.
3:42:59 PM
CHAIR OLSON asked whether health insurers need a filing to add
medical tourism to their policies.
MS. WING-HEIER said no. She said medical tourism is growing,
and the division has contacted individual members of the medical
community about its desire to protect providers from medical
tourism, because certain procedures are cheaper in Seattle than
in Anchorage. Studies have shown that other states, for
example, Rhode Island, have the same problem, and the state
needs to find an alternative to "fee for services [that] is
becoming somewhat of an antiquated way to pay for medical
services."
REPRESENTATIVE LEDOUX said she believes in supporting local
businesses; however, when local businesses are not competitive,
the state should let people go out-of-state or out of the
country if treatment is less expensive.
MS. WING-HEIER observed that the other side of the story is that
if one goes outside it is difficult to keep providers in Alaska,
and also that doctors in Alaska are reluctant to provide follow-
up care.
REPRESENTATIVE LEDOUX suggested that it is possible to let an
insured person return outside for follow-up care.
MS. WING-HEIER cautioned that some cannot make multiple trips
outside due to their health situation. In further response to
Representative LeDoux, she said a choice is often approved when
the cost of the procedure is less expensive; however, residents
also want care available in Anchorage, Fairbanks, or Southeast
Alaska, and she urged for a "happy medium."
3:49:25 PM
REPRESENTATIVE LEDOUX surmised that if people are routinely
allowed to travel with a companion for medical care, the cost of
medical care would come down because there is a natural market.
She provided an example.
CHAIR OLSON added that a provider or hospital that is a member
of the Aetna network anywhere in the country can be
preauthorized to provide the same benefit as an Alaska network
provider.
MS. WING-HEIER pointed out that part of the solution is to
educate insured about the proper utilization of their plans.
Alaska residents go to the emergency room for primary care,
which drives rates up. Also, insured need to use the network
and a preferred provider, although there are many reasons people
do not. She informed the committee that networks are getting
broader, and insurance companies are negotiating for lower
costs. However, she acknowledged that "there may be some things
because of ... the geographic distances we cover that we're
never going to be able to overcome."
REPRESENTATIVE HUGHES was told by a family member working in the
medical community in Anchorage that approximately 70 percent of
those utilizing emergency room services should be utilizing
primary care services. She suggested that hospital emergency
rooms should divert patients to primary care providers at the
time of admission. Representative Hughes then asked for the
mission of the Division of Insurance.
MS. WING-HEIER said the division's mission is to protect
consumers. In that endeavor, the division must address
insurance rates, solvency, networks, and issues of access to
care as directed by PPACA, and under the insurance plans
regulated by the division.
REPRESENTATIVE HUGHES recalled last year there were several
large associations in Alaska that received insurance termination
notices, and she inquired as to whether this could have been
prevented by the division.
3:55:47 PM
MS. WING-HEIER explained that the intent of PPACA is to increase
the number of those in the individual and small or large group
market, and thus the Act does not allow for insurance issued by
associations. The division resolved the issue with the Alaska
Bar Association and the Alaska Federation of Natives by a return
to federal law and verification that the associations are a bona
fide employer. With this information, the division can approve
the filings. Due to conflicting state and federal regulations,
the division worked with the insurance brokers and the
associations to find a solution.
REPRESENTATIVE HUGHES asked whether Ms. Wing-Heier was aware of
a provision in PPACA which gives the state the ability to relax
the aforementioned prohibition.
MS. WING-HEIER stated that the division reviewed a court case in
Washington and studied the effect on associations in Alaska.
The federal regulation under [the Employee Retirement Income
Securities Act of 1974 (ERISA)] required proof that the
association was an employer. Without a ruling from the
Department of Labor & Workforce Development, the division is
accepting a letter in this regard.
REPRESENTATIVE HUGHES requested confirmation on whether or not
there was an opportunity to alleviate this matter.
3:59:29 PM
REPRESENTATIVE LEDOUX questioned whether the division's core
mission includes concern about the negative effect of medical
tourism on the medical community.
MS. WING-HEIER stated her concern is that insurance matters do
not become the reason physicians don't practice in Alaska.
Other states with similar demographics have been able to get
providers, insurers, users, and regulators to control the cost
of insurance, and the division has a role in finding a solution.
In further response to Representative LeDoux, she said her role
is to make insurance available and affordable, although
"affordable" varies with consumers' circumstances. She said,
"Somehow if we could get those physicians and all the providers,
or get to the reason of why is the cost of the services so high
..." premiums could be lowered.
REPRESENTATIVE LEDOUX asked if the division decides whether an
insurance company can offer medical tourism.
4:03:26 PM
MS. WING-HEIER explained that the state controls insurance plans
for 20 percent of the market, excluding plans for the state and
federal government, military, veterans, Medicaid, Medicare, and
the Indian Health Service. The cost of medical services is
paramount to all and the division needs to be involved in
negotiations.
CHAIR OLSON added that the medical insurance component is a
small portion of the responsibilities of the Division of
Insurance, which also includes regulation of homeowners, auto,
commercial, aviation, marine, and life insurance.
MS. WING-HEIER observed that [PPACA] is a new law and is
continually changing, and as problems arise they are being dealt
with, such as the difficulties related to Moda.
4:06:06 PM
REPRESENTATIVE HUGHES referred to the rate increases that have
been requested by insurance companies, and asked whether the
division has the tools to investigate why medical providers are
charging more than in the Lower 48.
MS. WING-HEIER informed the committee that the division has been
seeking the statutory authority to glean information, as other
states have, to determine the source of the providers' cost
increases.
4:08:15 PM
ADJOURNMENT
There being no further business before the committee, the House
Labor and Commerce Standing Committee meeting was adjourned at
4:08 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB304 Opposing Documents-Email Mike Healy 03-02-16.pdf |
HL&C 3/7/2016 3:15:00 PM |
HB 304 |
| HB304 Opposing Documents-Email Paul and Jeannne Wheeler Kitayama 03-02-16.pdf |
HL&C 3/7/2016 3:15:00 PM |
HB 304 |
| HB304 Opposing Documents-Email Tristan Taliesin 03-02-16.pdf |
HL&C 3/7/2016 3:15:00 PM |
HB 304 |
| HB304 DOR Response to HLAC Questions from Feb19 and 22 meetings.pdf |
HL&C 3/7/2016 3:15:00 PM |
HB 304 |
| HB304 Opposing Documents-Email Angela Carroll 03-02-16.pdf |
HL&C 3/7/2016 3:15:00 PM |
HB 304 |
| HB304 Opposing Documents-Email Jeanne Reilly 03-07-16.pdf |
HL&C 3/7/2016 3:15:00 PM |
HB 304 |