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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