Legislature(2003 - 2004)
02/17/2004 09:08 AM Senate FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
CS FOR HOUSE BILL NO. 374(FIN) am "An Act establishing the senior care program and relating to that program; creating a new fund for the provision of senior services; relating to aid to senior citizens; and providing for an effective date." This was the first hearing for this bill in the Senate Finance Committee. Co-Chair Wilken noted that this bill is similar to SB 259- SENIORCARE, which the Committee had previously heard. He stated that the bill would establish a senior care program within the Department of Health and Social Services to provide either cash assistance or a drug prescription benefit to Alaskans age 65 or older. He specified that CS HB 374(FIN)am, Version 23-GH2123\W.A and its accompanying fiscal notes are before the Committee. JOEL GILBERTSON, Commissioner, the Department of Health and Social Services reviewed that this legislation was proposed by Governor Frank Murkowski in December 2003 as a method through which to provide a prescription drug subsidy or cash assistance for the purchase of prescription drugs to the State's seniors until the federal prescription Medicare drug program becomes operational in January, 2006. He specified that qualifying recipients of the legislation would be senior citizens who are living at 135 percent or less of the federal poverty level (FPL). He noted that this level would equate to a single individual living at approximately $15,000 a year or a couple living at $20,500 a year. He shared that these individuals are currently eligible for the Department's Senior Assistance Program that was established after the Longevity Bonus Program was eliminated in the fall of FY 04. This program, he commented, provides $120 per month cash assistance to its recipients. Furthermore, he stressed that the recipients of the Senior Assistance Program could, upon the enactment of the SeniorCare program, elect to continue receiving the cash assistance, which would amount to $1,440 annually, or elect a prescription drug subsidy, which would equate to $1,600 annually. Commissioner Gilbertson continued that the seniors who elect the $1,600 prescription drug subsidy would additionally receive a $600 per month federal Medicare subsidy and a prescription drug discount card which would provide an additional ten to twenty-five percent savings on a prescription purchase. He stated therefore, that the average senior would receive approximately $2,450 in prescription drug assistance, if living at or below the FPL. Commissioner Gilbertson continued that seniors living at 135 to 150 percent of the FPL would qualify for a $1,000 per year State prescription drug subsidy. He noted that a single individual or a couple in this category would be living at approximately $17,000 or $23,000, respectfully. Furthermore, he stated that these individuals would also receive the prescription drug discount card. He reiterated that this legislation would terminate upon the enactment of the federal Medicare drug prescription program. Commissioner Gilbertson communicated that during the bill's progress through the House of Representatives, the Legislative Legal and Research Services, Legislative Affairs Agency made "technical and stylist changes," that did not substantially change the bill. Co-Chair Wilken noted that the Members have been provided a summary of the changes [copy on file] being referenced. Commissioner Gilbertson continued that the House bill would establish a SeniorCare Fund, which would be a front-funded sub- account in the general fund to fund the SeniorCare Program during its projected three fiscal year program. He noted that were this legislation adopted "in short order," it could begin in April, 2004 and would, therefore, incur expenses in the last quarter of FY 04, the full year of FY 05, and half of FY 06. He noted that any funds remaining in the SeniorCare Fund would lapse into the general fund upon its termination. Commissioner Gilbertson noted that the House also amended the manner through which a prescriber could prescribe brand name drugs when a generic brand is available, in that, he explained, in this situation, the prescriber must denote on the prescription that the name brand drug is "medically necessary." He specified that the prescriber would not be required to state the reason as was required in the original bill. Commissioner Gilbertson noted that language in the bill that would have denied the prescription drug benefit to individuals residing in public facilities or long-term care facilities was also amended in the House. He communicated that the reason this language was originally included was the understanding that these individuals received prescription drug coverage through the rate that the State paid the facility or that a process already existed to provide this benefit to them. He also noted that to provide the SeniorCare benefit to a senior in the Pioneer's Home, might, in affect, increase their financial resources and result in their rent being increased. He stated that the House change would allow individuals residing in public facilities or long-term care facilities to continue to receive the benefit for up to three months. Senator Bunde ascertained therefore, that a senior residing in a Pioneer's Home could, as a consequence, have their rent increased for three months. Commissioner Gilbertson affirmed that the rent could be affected. However, he noted that the frequency of a rent payment review and whether the individual had opted to receive the cash assistance option of the SeniorCare program would be determining factors. Senator Bunde worried that this might present a "Catch 22" situation wherein the recipient would receive SeniorCare benefits and at the same time is required to pay more rent as a result. Commissioner Gilbertson expressed that "there would be no net harm" to the recipient as the income would offset the rent increase. He stated, however, that this situation would increase administrative expenses related to the bill. Senator Bunde surmised, therefore, that while two Pioneer Home residents might be receiving the SeniorCare cash benefit, one resident, as a result of a rent review, might pay more rent than the other who had not undergone a rent review. Commissioner Gilbertson responded that "theoretically" that might occur. Co-Chair Green asked whether changing the word "may" to "shall" as was done in Section 1, subsection (a) on line 8, page 1 would be characterized as a "stylist change" or a substantive change. Commissioner Gilbertson responded that the referenced change was the result of an [unspecified] amendment that was adopted in the House Finance Committee. Co-Chair Green inquired as to whether the change is acceptable to the Department. Commissioner Gilbertson responded in the affirmative. Senator Bunde asked for further information regarding the SeniorCare Fund; specifically, whether the unspent money in the Fund would lapse back to the general funds at the end of the fiscal year. Commissioner Gilbertson responded that while the SeniorCare Fund is expected to lapse in FY 06; the language is not specific to a termination date because it is dependent upon when the federal Medicare drug prescription program is implemented. He asserted that this is a "complex program" with an indeterminable termination date. DAVID TEAL, Legislative Fiscal Analyst, Legislative Finance Division, noted that rather than being required to appropriate program funds each fiscal year, the House Finance Committee opted to establish a single front-loaded SeniorCare Fund that would fund the program's anticipated expenses in FY 04, FY 05, and FY 06. He confirmed that upon the program's termination, the funding would lapse. Commissioner Gilbertson noted that the bill would allow seniors to retain their prescription drug benefits provided they were not absent from the State for more than 30 days for non-medical purposes such as vacations or business trips. Commissioner Gilbertson also noted that the House of Representatives' version of the bill changed a portion of the original bill to align its eligibility requirements to those of the Permanent Fund Dividend program, which allows family members to remain eligible when accompanying relatives receiving out-of-State medical care. MARIE DARLIN, Coordinator, AARP Capital City Task Force, voiced support for all of the changes that have been proposed to the SeniorCare program. She noted that AARP has submitted written testimony [copy on file] in support of the program. Amendment #1: This amendment replaces language on page one, line five of the bill that reads "Section 1. The uncodified law of the State of Alaska is amended by adding a new section to read:" with new language that reads as follows. Section 1. AS 47.65 is amended by adding a new section. In addition, the Amendment deletes "SENIORCARE PROGRAM" on page 1, line 7 and replaces it with the following language. Article 4. Cash and Drug Benefit for Older Alaskans. Sec. 47.65.300. Senior care program. The amendment also deletes all material on page five, beginning on line 26 through page six, line 3. This language reads as follows. Sec. 4. (a) This Act is repealed on the date that the Medicare Part D benefit under P.L. 101-173 for prescription drugs for Medicare recipients is operational for recipients in this state, as communicated to the commissioner of health and social services by the United States Department of Health and Social Services. (b) The commissioner of health and social services shall notify the revisor of statutes of the date described in (a) of this section. (c) Money in the fund established in sec. 2 of this Act reverts to the unreserved general fund on June 30 in the fiscal year in which this Act is repealed under (a) of this section. Senator Olson moved to adopt Amendment #1. Co-Chair Green objected. Senator Olson explained that this amendment would make this program permanent in statutes rather than being temporary. He referenced Commissioner Gilbertson's comments regarding the unpredictability of when the federal program would be implemented. He also noted that the State has no control regarding changes that might occur, overtime, in the complex federal program. Therefore, he stated that in order to assure that the State's seniors would be provided for; this program should be permanent in State statute. In addition, he noted that were the federal program to differ from the State's cash supplement program, seniors who might have become dependent on it to supplement their needs would be negatively impacted. Commissioner Gilbertson summarized that this amendment would eliminate the legislation's termination date. He reiterated that the legislation was introduced to serve as "a bridge program" until such time as the federal senior Medicare prescription drug benefit program would become operational "in early 2006." He agreed with Senator Olson's contention "that there are always delays when programs begin;" however, he contended that the bill has been drafted in such a manner as to continue the SeniorCare program "until the full federal program is available to seniors." Commissioner Gilbertson informed the Committee that seniors living below 135 percent of FPL as well as those living between 135 and 150 percent of FPL would "receive preferential treatment under the Medicare prescription drug benefit." He assured that, once the federal Medicare prescription drug benefit program begins, seniors living at below 135 percent of FPL "would have virtually no out-of- pocket costs, including deductible for prescription drugs." He continued that seniors living between 135 and 150 percent of FPL, "would receive drastically lower deductibles, additional premium support, and a reduced co-pay on prescription drugs" than the general federal Medicare population. He declared that "a seamless transition" would occur and that were the SeniorCare program to continue, some of the federal and State services "would be redundant." Co-Chair Wilken surmised therefore, "that while the amendment is well-intentioned," it is unnecessary. Commissioner Gilbertson concurred. He replied, "that it is the position of the Administration that it's not necessary" because the Medicare drug benefit would be available "to essentially provide every service that is going to be delivered" via the SeniorCare program. He stressed that the SeniorCare program "was originally designed to mirror the federal drug program benefits." Furthermore, he noted that safety protocols are included in this legislation to ensure that the SeniorCare program would continue until the full federal Medicare drug benefit program is operational. Senator Olson declared that rather than debating the particulars of the program, the emphasis should be on providing the State's seniors with "a lifeline" to assure them that they would be provided for. He opined that the Legislature should establish a State program tailored to the State's situation instead of relying on a federal program developed by individuals who might have never visited the State and who might not have a grasp on the complexity of the State's needs. He urged the Committee to keep the program simple and permanent and tailored to address the State's seniors' needs. Senator Bunde declared that regardless of the efforts or intent of any Legislature, unless specific language is included in the State's Constitution, "nothing binds" a future Legislature" from changing a program. Therefore, he contended, were this amendment adopted, there is no guarantee that it would not be changed. Continuing, he shared that, were "the automatic repealer" not included in this legislation, he could envision "the battle that would ensue in 2006 "about another entitlement that we have created" that people have become to depend upon that the Legislature "could not take back." He concluded therefore, that he could not support the amendment. Senator Hoffman countered that no battle had erupted in the Legislature regarding the funding of the Longevity Bonus Program, which was eventually terminated by Governor Murkowski's veto. Senator Hoffman noted that the Department of Health and Social Services' fiscal note #9 analysis depicts that 90 percent of eligible program recipients would elect the SeniorCare cash program. He wondered whether the cash program would be one of the duplicated services that the Commissioner had alluded to. To that point, he inquired as to whether a similar prescription cash prescription program would be available through the federal prescription drug program. Commissioner Gilbertson responded that it is "a high assumption" that most seniors would elect the cash payment as, he noted, the majority of the individuals currently enrolled in the Senior Assistance Program receive money, because it is the only option provided in that program. He stated therefore that the majority of those individuals would choose "no change." He qualified that the cash component of the SeniorCare bill was included "to continue the benefit as currently constructed." He acknowledged that while the receipt of cash is "more flexible," the Department believes that "the majority of individuals in these income ranges use the cash assistance" to purchase prescription drugs because that expense "is very high." He pointed out that the Senior Cash Assistance program is not the only cash assistance program offered by the Department as another program, the Adult Public Assistance" program is also available. He stressed that a total of $220 million worth of programs are available directly to seniors through the Department. He stated that the Adult Public Assistance (APA) program is an entitlement program that is included in this $220 million, and furthermore, he contended, while a number of seniors might qualify for the APA, they have not applied. Senator Hoffman reiterated that the question is whether there would be a duplicative cash benefits program at the federal level. He stated that this is the issue at "the heart of the amendment." Commissioner Gilbertson responded that through the State APA program, seniors would continue to receive cash assistance. Senator Hoffman interjected that this program already exists at the State level, and he continued, the question pertains to the upcoming federal Medicare prescription drug assistance program. Commissioner Gilbertson responded that the federal program, "once instituted, will be health care insurance." Therefore, he continued, the degree to which individuals are paying out of pocket for prescription drugs" would be determined by the health care insurance system. He declared that the recipients would not receive a direct cash payment. Senator Hoffman surmised therefore that the answer is no. Commissioner Gilbertson affirmed that there would be no direct cash payment by the federal government. Senator Olson informed the Committee that the proposed amendment is supported by the Pioneers of Alaska. He asked that AARP be provided an opportunity to express their position on the amendment. Ms. Darlin expressed that while AARP understands Senator Hoffman and Senator Olson's concern regarding the program, and while AARP does not object to the amendment, it has no "definite stand" on the amendment, as, she reiterated, AARP's primary objective is to assure that the SeniorCare prescription program be adopted this Legislative Session. She noted however, that when the SeniorCare cash assistance program terminates, seniors could participate in the State's APA cash assistance program. Senator Olson asked for clarification that AARP's position is the desire "to get the bill through one way or another," regardless of whether the amendment is adopted or not. He contended that this desire rather than AARP being opposed to the amendment is the primary objective. Ms. Darlin concurred. Senator Bunde stated that were the cash assistance program to continue, some seniors might regard it as a welfare program, and in that case, he contended, some seniors would refuse to apply. A roll call was taken on the motion. IN FAVOR: Senator Hoffman and Senator Olson OPPOSED: Senator Bunde, Senator Dyson, Senator B. Stevens, Co-Chair Green, and Co-Chair Wilken The motion FAILED (2-5) Amendment #1 FAILED to be adopted. Co-Chair Green moved to report the bill from Committee with individual recommendations and accompanying fiscal notes. There being no objection, CS HB 374(FIN)(am) was REPORTED from Committee with five fiscal notes from the Department of Health and Social Services: zero fiscal note #10; $14,649,600 fiscal note #9; $7,100 fiscal note #8; $184,300 fiscal note #7; and $61,500 fiscal note #6. AT EASE: 9:46 AM / 9:46 AM
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