Legislature(2015 - 2016)BILL RAY CENTER 230
06/01/2016 09:00 AM Senate FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB374 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 374 | TELECONFERENCED | |
CS FOR HOUSE BILL NO. 374(FIN)
"An Act relating to coverage under a state plan
provided by the Comprehensive Health Insurance
Association; establishing the Alaska comprehensive
health insurance fund; relating to a reinsurance
program; relating to the definition of 'residents who
are high risks'; relating to an application for a
waiver for state innovation for health care insurance;
and providing for an effective date."
9:03:13 AM
FRED PARADY, DEPUTY COMMISSIONER, DEPARTMENT OF COMMERCE,
COMMUNITY, AND ECONOMIC DEVELOPMENT, introduced himself.
9:03:20 AM
LORI WING-HEIER, DIRECTOR, DIVISION OF INSURANCE,
DEPARTMENT OF COMMERCE, COMMUNITY AND ECONOMIC DEVELOPMENT,
introduced herself.
Mr. Parady explained that the bill would initially address
a complex set of issues. The bill would make changes to the
Alaska Insurance Code for assessments made under a
reinsurance program established to reinsure "residents who
are high risks." As the code is currently written, a member
of the reinsurance program may offset 50 percent of the
amount of the assessment made under the reinsurance program
(and other state health insurance programs) as a premium
tax credit. The bill would remove the assessments made in
relation to the high risk reinsurance program from the
offset provision. The bill also would amend the definition
of "residents who are high risks." These changes were
intended to provide a mechanism to help insurers spread the
risk of high-cost claims in the individual health insurance
market. The bill also would authorize legislation to allow
the state to seek a waiver of certain requirements under
the Affordable Care Act (ACA).
Co-Chair MacKinnon surmised that the state was losing
insurance carriers. She felt that the two issues in the
bill were the losing of carriers and the high cost of
insurance. Mr. Parady replied that the assertion was
generally correct. He announced that there were 23,000
Alaskans in the individual insurance market, who would not
have access to insurance if the one provider left the
state. The bill was an attempt to sustain the system, and
get through the crisis in the near term.
Senator Bishop wondered whether Congress was intending to
fix the issue of the risk corridor.
Ms. Wing-Heier replied that the congress had not yet
addressed the risk corridor. She stated the state's
congressional delegation was aware of the risk corridor.
Co-Chair MacKinnon surmised that, under ACA, there was a
subsidy from the federal government as an incentive to
cover Alaskans that may or may not have been insured. She
felt that the federal government was stepping back from the
subsidy. She wanted to know why this was an issue for
Alaska. Ms. Wing-Heier responded that the federal
government had three subsidies: reinsurance program, risk
corridor, and risk adjustment. She stated that two of those
programs would end in 2016. The programs were meant to
stabilize the market.
9:09:35 AM
Vice-Chair Micciche wondered how the individuals were
covered prior to ACA. Ms. Wing-Heier replied that many of
the individuals were in ACHIA in the high risk pool. She
stated that some were in ACHIA, but the majority migrated
to ACA in 2014. She stated that others had enrolled because
of the guaranteed enrollment provision. She remarked that
many could not afford the premium in ACHIA. She stated that
the 495 people were driving the market.
Vice-Chair Micciche wondered how the costs were shifted to
the state. Ms. Wing-Heier replied that the $55 million
looked at the reinsurance fee, and the tax that was paid to
the federal government. She stated that the $55 million
looked to stabilize rates between 15 and 18 percent. She
stated that a healthy rate increase was expected.
Mr. Parady furthered that ACHIA had a narrower definition
of high cost claims of the covered areas. He stated that
there were uninsurable people under the former regime, who
were now under guaranteed coverage.
Senator Hoffman queried a history of ACHIA. Ms. Wing-Heier
replied that ACHIA was formed in the 1980s, because there
were many sick Alaskans who could not receive insurance
because the market would not accept them. In the 1980s, the
market was allowed to underwrite.
Senator Hoffman queried the experience of other states. Ms.
Wing-Heier replied that the high-risk pools were expiring,
because of the ACA.
9:14:34 AM
Senator Hoffman wondered whether other states had to
provide high checks in the transition. Ms. Wing-Heier
replied that the only other state examining reinsurance was
Oregon.
Senator Bishop noted that the federal government should
have agreed to fully fund ACA. Ms. Wing-Heier replied that
even with federal funding, there would still be an issue
with high cost claims.
Senator Bishop stressed that the amount of money from the
state may be lower, had the federal government met their
financial obligation. Ms. Wing-Heier replied in the
affirmative.
Co-Chair MacKinnon asserted that the federal government set
a number of incentives that anticipated cost shifting. Ms.
Wing-Heier agreed.
9:17:24 AM
Senator Dunleavy queried the future projections of the
bill, with the current fiscal note. Mr. Parady replied that
the bill took care of the first year. He stated that Alaska
had experienced 30 to 40 percent rate increases in each of
the last two years. He asserted that, without the bill, it
was anticipated that the 23,000 would face a similar rate
increase in the current year. He stated that the $55
million addressed those high cost claims in the coming
year, and directly impacted the rate filing that would
occur and be approved in July and August. He remarked that
the bill left the legislature with the discretion to how it
would approach the issue in the future.
Ms. Wing-Heier shared that the bill also allowed for the
state to apply for Section 1332 Waiver. She stated that, in
2017, ACA allowed the state to bring ACA home.
Senator Dunleavy wondered if there would be additional
calls upon the state to continually fund the program. Ms.
Wing-Heier replied in the affirmative, but it may be a
different funding mechanism.
9:20:51 AM
Vice-Chair Micciche queried the conditions that caused a
company to leave the state or county. Ms. Wing-Heier
replied that the state had no control over whether a
company leaves the state. The only requirement was
statutory notice.
Vice-Chair Micciche queried the economic conditions draw
coverage to the state. Ms. Wing-Heier replied that there
was a concern about Premera leaving Alaska, or only
continue in the urban areas.
Vice-Chair Micciche queried a list of future impacts from
ACA. Ms. Wing-Heier replied that there was a hope to see
changes in the ACA to benefit Alaska and the nation.
Mr. Parady furthered that the issue resided with the
federal government's payment of 12.6 percent on the
anticipated risk base corridor, which was Moda's impetus to
leave the state. He stated that there was not a huge volume
of people to spread the high cost of a limited number of
people.
9:25:15 AM
Senator Olson wanted to ensure that the state would not
have to draw further. He queried preparations for a
possible revocation of ACA. Ms. Wing-Heier replied that she
did not believe that ACA would be recalled, rather it would
be amended.
Senator Olson remarked that the legislature was continually
confronted with federal overreach, and the state had
control over its response to the situation. He queried the
safeguards to ensure the issue would not happen again. Ms.
Wing-Heier replied that she hoped that the bill would be a
safeguard.
Senator Olson stressed that there was not optimism that the
bill would be the last effort to draw from the general fund
to cover the cost of health care.
Co-Chair MacKinnon recommended history as requested by
Senator Hoffman. She remarked that everyone was concerned
about Alaskans who had trouble accessing health care. She
wondered what the other states, in the 1980s enacted, other
than the high-risk pool. Ms. Wing-Heier replied that almost
every state had a high-risk pool, but most of them were
limited to those who were rejected from an insurance
company; limited in diagnoses; and were very expensive. She
shared that many people were able to get insurance, but
could not afford the insurance. Those people were then
treated through the emergency room or uncompensated care.
9:30:35 AM
Co-Chair MacKinnon stressed that the bill was not about
excluding anyone from receiving care that contributed to
their wellbeing. She requested a cut sheet on the 495. She
felt that the committee was familiar with the cost of
health care through Medicaid and Medicare reimbursements
for the state.
Senator Hoffman expressed concern with mobility. He
wondered how other people moved from state to state, and
switch their coverage under ACA. He wondered if there was
an anticipation of people examining where they could
receive the best care. Mr. Parady replied that Alaska was
not attractive to a highly sick individual.
Senator Hoffman stressed that he was concerned with all the
individuals. He wondered if people looked to other states
that would have better or higher levels of care than other
states. Ms. Wing-Heier replied in the affirmative.
9:35:04 AM
Co-Chair MacKinnon asked for a graph that showed the
population in the pool over 20 years.
Vice-Chair Micciche wondered if there was a national risk
pool when considering ACA. Ms. Wing-Heier replied that
there were some discussions about doing regional risk
pools.
Vice-Chair Micciche felt that the federal government should
subsidize that pool, in order to cover the risk pool.
Co-Chair MacKinnon requested the demographics of the
population that was driving the cost.
9:38:35 AM
Senator Dunleavy remarked that there was an effort to drive
down cost, but felt that the federal government was in
charge of driving down that cost. He felt that the bill was
only cost shifting. He did not understand how that cost
would be reduced in the long-term. Mr. Parady replied that
the legislature did not miss anything when dealing with the
massive effort of the Medicaid program.
Senator Dunleavy assumed that there was a risk of the
providers leaving Alaska. Mr. Parady agreed.
Co-Chair MacKinnon wondered whether the federal government
expanded the qualified conditions under ACA. Ms. Wing-Heier
replied in the affirmative.
Mr. Parady furthered that ACHIA had a definition of cost
codes. The bill proposed to take the $53 million in high
cost claims, and hand them to ACHIA.
Co-Chair MacKinnon requested a sectional analysis.
9:43:23 AM
Ms. Wing-Heier discussed the Sectional Analysis (copy on
file):
Sec. 1. AS 22.55.320 is amended by adding a new
subsection to require that the when a person with a
disability, (as defined by Title XVIII of the Social
Security Act) is to be referred by the insurer to
ACHIA.
ACHIA's administrator shall then request that the
State of Alaska's Department of Health and Social
Services provide the person with information about
applying for any federal benefits that they may
qualify for, such as Medicare or Medicaid.
Co-Chair MacKinnon wondered if the section caused an
increase to the fiscal note. Ms. Wing-Heier replied that it
did not cause an increase to the fiscal note.
9:44:25 AM
Ms. Wing-Heier continued to discuss the Sectional Analysis:
Sec 2. AS 21.55.400 amends the duties of the director
to allow the director to formulate and adopt
regulations that are reasonably necessary to
administer the chapter (ACHIA) and specify the covered
conditions eligible for payment through appropriations
from the Alaska comprehensive health insurance fund
established under AS 21.55.430.
Sec. 3. AS 21.55.430 (a) amends the Alaska
Comprehensive Health Insurance Association (ACHIA),
Chapter 55, by creating the Alaska comprehensive
health insurance fund and by providing that the
Department of Administration, shall separately account
for revenue collected as insurance premium tax under:
• AS 21.09.210 - Tax on insurers
• AS 21.33.055 - Unauthorized insurance premium
• AS.22.33.061 - Independently procured insurance
• AS 21.34.180 - Surplus lines
• AS 21.66.110 - Title insurance
The net proceeds shall then be deposited into the
Alaska comprehensive health insurance fund. The
Department of Administration shall deposit interest
earned on the Alaska comprehensive health insurance
fund into the general fund.
(b) provides that the legislature may use the annual
balance in the Alaska comprehensive health insurance
fund, as established in (a), to make appropriations to
the Department of Commerce, Community, and Economic
and Economic Development to fund the reinsurance
program under Chapter 55.
(c) states that payment for claims under the
reinsurance program is subject to appropriation.
(d) provides that money in the Alaska comprehensive
health insurance fund does not lapse.
(e) states that the Alaska comprehensive health
insurance fund is not a dedicated fund.
(f) defines net proceeds, as used in (a) to include
the revenue under the taxes listed in (a) less all
return premiums, fess under AS 23.05.067, errors and
other adjustments, penalties and interest on late
payments.
In 2014 the division collected approximately $74M in
total receipts of which $64M was premium taxes. Of
that $64M approximately $5M transfers to the
Department of Labor as a Workers' Compensation Service
Fee as required under AS 23. 05.067. The potential
would be that the legislature could appropriate up to
an estimated $59M based on the division's 2015 annual
report.
The operating expenses of the division are restricted
funds and collected as licensing, surplus lines, risk
retention groups, purchasing groups certificate of
authority, continuing education, examination expenses,
fingerprinting and other fees in addition to
retaliatory taxes and are not be subject to this bill.
9:45:48 AM
Co-Chair MacKinnon wondered if there was a nexus for the
tax collection with any other expenses currently covered
from the general fund. Ms. Wing-Heier replied that 09.210
was the largest collection from the division, which was tax
on insurers that was generally 2.7 percent. The tax was
approximately $55 million in the year prior.
Co-Chair MacKinnon queried the tax codes. Ms. Wing-Heier
replied that 21.09.210 was tax on insurers. She stated that
33.061 was independently procured.
Senator Hoffman asked for clarification.
Co-Chair MacKinnon looked at the sectional analysis, and
remarked that there was a list of tax codes. Ms. Wing-Heier
replied that they should all be 21.
Senator Hoffman wondered if it was 21 in Section 1. Ms.
Wing-Heier replied in the affirmative. She announced that
all codes were 21.09.210 as tax on insurers. She stated
that 21.33.055 was unauthorized insurance premium tax. She
announced that 21.33.061 was independently procured
insurance. She stated that 21.34.180 was surplus lines. She
announced that 21.66.110 was title insurance, at one
percent.
Co-Chair MacKinnon wondered when the statutes were put in
place, and whether the taxes were put in place for specific
funding. Ms. Wing-Heier replied that she did not know why
the taxes were initiated.
Co-Chair MacKinnon queried a comparison to other states.
Ms. Wing-Heier replied that the state's taxes were in range
with other states.
Senator Dunleavy queried a proposed increase on any of the
taxes. Ms. Wing-Heier replied in the negative.
Senator Dunleavy surmised that the tax would be used for
the fund. Ms. Wing-Heier replied in the affirmative.
Vice-Chair Micciche wondered how many states had advocated
a provider tax. He asked whether Alaska was the only state
without a provider tax. Ms. Wing-Heier replied that Alaska
was the only state without a provider tax.
Vice-Chair Micciche asked whether the state was below what
would normally cover the cost. Ms. Wing-Heier specified
that she was addressing the provider-premium tax.
Mr. Parady furthered that there was an analysis by the
Kaiser Commission (copy on file) that addressed the
Medicaid and the uninsured. He agreed to provide further
information.
9:50:52 AM
Ms. Wing-Heier continued to discuss the Sectional Analysis:
Sec. 4. AS 21.55.500 (20) amends the definition of
"residents who are high risks" by deleting the
requirement that the person be unable to obtain
insurance coverage substantially similar to that which
may be obtained by a person who is considered a
standard risk. Under the ACA, an insurer is no longer
allowed to deny coverage to a person based on a pre-
existing condition making this part of statute a moot
point.
Deleting this language enables the creation of the
reinsurance program and provides the director of
insurance with the flexibility needed in designing the
program by authorizing the director to supplement the
definition of "residents who are high risk"
Sec. 5. AS 21.96 is amended by adding a new section to
allow for a waiver for state innovation. Under the
ACA, states may submit an application to the Secretary
of the United States Department of Health and
Human Services requesting a waiver from certain
provisions of the Act. In order to receive this
waiver, the state must have enabling legislation and
Sec. AS 21.96.120 provides that the director of the
Division of Insurance may apply for a waiver and, if
granted, implement a state plan meeting the waiver
requirements in a manner consistent with state and
federal law.
Sec. 6. Provides for retroactivity for section 3.
Sec. 7. Provides for an immediate effective date.
9:52:20 AM
Ms. Wing-Heier discussed the presentation, "Department of
Commerce, Community and Economic Development; Division of
Insurance; HB 374 - Reinsurance Program; Health Insurance
Waivers presented to Senate Finance; Director Lori Wing-
Heier; May 31, 2016" (copy on file).
9:52:29 AM
Ms. Wing-Heier looked at slide 2, "Division of Insurance":
The mission of the Division of Insurance is to
regulate the insurance industry to protect Alaskan
consumers.
• The division has a statutory responsibility to
review and approve rules, forms and rates based
on an analysis of whether they are excessive,
inadequate, or unfairly discriminatory.
• The division does not have statutory authority
to deny rates because of the financial impact to
the consumer.
Ms. Wing-Heier highlighted slide 3, "Timeline - Update":
• September 2014 - Premera's average increase 37.2
percent.
Moda's average increase was 27.4 percent
• August 2015 - Premera's average increase was 38.7
percent.
Moda's average rate increase was 39.6 percent
• October 1, 2015 - Letter received that the 2014 risk
corridor payments will be paid at 12.6 percent
requests
• May 2, 2016 - Moda announces exit from Alaska's
individual market beginning January 1st, 2017
• January 1, 2017 - State of Alaska has one insurer in
the individual market on/off the federally facilitated
exchange, impacting 23,000+ Alaskans
Ms. Wing-Heier discussed slide 4, "ADN to Governing; Alaska
made the News":
Health and Human Services: Another Health Insurer
Abandons Alaska. by Laurel Andrews
Moda Health will exit Alaska's individual insurance
market next year, the company announced Monday,
leaving only one health insurance provider in the
state's market that, so far, has been defined by
drastic annual rate increases for consumers and big
losses for insurance companies.
Moda will focus on its other group and individual
plans in the state, it said in a release. It may
consider returning in the future but "the market
requires significant reform in order to be
sustainable," the company said.
The exit applies only to Moda's 14,000 customers who
have health insurance plans on the individual
marketplace. The company's other medical and dental
plans are not affected by the decision, the company
wrote.
"Obviously this is not good news," Alaska Division of
Insurance Director Lori Wing-Heier said after the
announcement.
Ms. Wing-Heier highlighted slide 5, "Even the Wall Street
Journal."
By Anna Wilde Mathews and Stephanie Armour
May 15, 2016 7:47 p.m. ET
Health-insurance customers in a growing number of
mostly rural regions will have just one insurer's
plans to choose from on the Affordable Care Act's
exchanges next year, as some companies pull out of
unprofitable markets.
The entire states of Alaska and Alabama are expected
to have only one insurer on the health law's signature
online marketplaces next year, according to state
regulators. The same is expected to be true in parts
of several other states, including Kentucky,
Tennessee, Mississippi, Arizona and Oklahoma, state
regulators said.
Ms. Wing-Heier addressed slide 6, "Washington." The
companies were losing money at least in the individual
market. The state had lost three insurers in the previous
two years.
9:54:38 AM
Ms. Wing-Heier looked slide 7, "Three R's":
• Risk Adjustment transfers money among insurers to
adjust for the possibility that some insurers may get
more or less than their proportionate share of costly
enrollees.
Risk Adjustment is only:
Applied to the individual and small group market;
and
Permanent program to help stabilize the costs of
the ACA
• Reinsurance is one of the taxes associated with the
ACA and is applied against health insurance policies
and employer group health plans. Proceeds are used to
provide the individual market plans with additional
subsidies for higher-cost enrollees. The program
sunsets in 2016
Attachment point in 2014 is $45,000 but will
increase to $70,000 in 2015
Coinsurance decreases from 80 percent in 2014 to
50 percent in 2015
• Risk Corridor provides a range for profits or losses
for insurance on the FFM. If an insurer has higher
than expected profits, the federal government will
"claw back" some of the premiums. Conversely, if an
insurer has higher than expected losses, the federal
government will pay the insurer additional subsidies
to offset those losses. This program sunsets in 2016
9:54:49 AM
Ms. Wing-Heier discussed slide 8, "We are working to keep
the market solvent." She stated that the rates and forms
would originally filed as early as May 11, with the cutoff
date of July 15. She did not have the rates from Premera,
because they were waiting to see what would happen with the
bill.
Vice-Chair Micciche looked at slide 7. He wondered if there
was a requirement to cover the difference between the prior
definition for high risk and ACA. Ms. Wing-Heier replied
that there was no state obligation.
Vice-Chair Micciche felt that there was a delta of what the
state was covering and the expansion for the definition of
every high risk category in ACA. He wondered why the state
would volunteer with the expanded definition of ACA. Mr.
Parady replied that the issue was not the expanded
definition, rather ACA required universal coverage.
Co-Chair MacKinnon wondered if there was an unfunded
mandate to the state if ACA required universal health care.
Vice-Chair Micciche he felt that the answers were opposite
of one another.
9:58:55 AM
AT EASE
10:02:34 AM
RECONVENED
10:02:42 AM
Co-Chair MacKinnon recalled a conversation to refine the
answer to the people of Alaska.
Vice-Chair Micciche remarked that the federal government
had made requirements under ACA, and the state did not put
pressure on the federal government to cover that unfunded
mandate. He remarked that the state had volunteered to
cover the additional risk. Mr. Parady replied with slide 7,
and slide 11, "Actuarial Analysis."
Vice-Chair Micciche appreciated that response. He stressed
that ACA may not work for Alaska.
Co-Chair MacKinnon requested demographic criteria.
10:08:43 AM
Ms. Wing-Heier highlighted slide 9, "Funding Mechanisms":
• Version A of HB 374 funded the reinsurance program
by amending statute to allow for an assessment to
insurers based on total covered lives. This funding
mechanism would have increased costs for organizations
and businesses purchasing stop loss insurance by
approximately 20 dollars per covered life, and met
with strong opposition by those impacted, such as
school districts.
• In version P, the program is funded by creating the
Alaska comprehensive health insurance fund and
separately accounting for insurance premium tax
revenues which would then be appropriated by the
Legislature to pay for ACHIA. Previously, the premium
taxes lapsed to the general fund after being
collected.
Ms. Wing-Heier discussed slide 10, "Premium Taxes":
Annual collections of premium taxes for the prior
three fiscal years are: $52 million in FY2013; $55
million in FY2014; and $64 million in FY2015.
•AS.21.09.210 - Tax on insurers
•AS 21.33.061 - Independently procured insurance;
premium tax
•AS 21.34.180 - Surplus lines tax
•AS 21.66.110 - Annual tax on title insurance
premiums
Ms. Wing-Heier addressed slide 12, "2017 Rate Filings":
• Premera must file rates with DOI by 7/15/16
• Rates must be approved 8/23/16
• Open enrollment begins 11/1/16
• Is then effective 1/1/17
• In order to include the reinsurance program in the
2017 rate filings, the insurer must have two weeks'
notice of the amount (if any) appropriated under HB374
10:09:29 AM
Senator Dunleavy queried the time frame. He felt that the
bill was cost sharing. He wondered whether the $195,000
insured in perpetuity, or only the current issues. Mr.
Parady clarified that the structure was to take the claims
associated with the cost codes. He explained that the
individual would continue to retain their insurance, but
the cost codes would move to ACHIA. He stated the time
frame was a one-year treatment to sustain the individual
market. He remarked that the problem would not disappear
after one year.
Senator Dunleavy felt that there would be annual continued
request of funding to continue to support the issue. Mr.
Parady agreed, coupled with work to be done on sourcing
from mechanisms other than the general fund.
Co-Chair MacKinnon surmised that the legislation would
establish a fund by taking a current revenue stream to
charge the fund. Mr. Parady replied in the affirmative.
Co-Chair MacKinnon announced that moving the money would
cause a "hole" in the general fund.
Senator Dunleavy wondered what would occur to the
appropriated money in the general fund. Mr. Parady agreed
with Co-Chair MacKinnon's comment.
Senator Dunleavy surmised that it was a cost-shift. Mr.
Parady replied that "there's no free lunch."
Senator Dunleavy felt that the hole in the general fund did
not disappear. Mr. Parady stressed that the utilized funds
were generated from a nexus associated with health care.
Co-Chair MacKinnon commented that she assumed that the
taxes were initiated to fund something else.
Senator Olson recalled that there was a medical malpractice
issue in the 1980s. He wondered if the bill was adequate to
ensure more providers come to the state, and queried the
timeline for that effort. Ms. Wing-Heier replied that there
had been an examination of that issue in the 1980s. She
hoped that the bill would not cause the same result.
Senator Olson queried how long the "pendulum" would swing
back. Ms. Wing-Heier hoped for three or four years before
the competition would return to Alaska. There was a hope
for an innovation waiver at that time.
10:15:30 AM
Co-Chair MacKinnon asserted that she was not familiar with
the issues in the 1980s. Ms. Wing-Heier replied that there
was no medical malpractice insurance in the state in the
1980s. She agreed to provide further information.
Co-Chair MacKinnon wondered if the state charged the
doctors a malpractice fee. Ms. Wing-Heier replied in the
affirmative.
Co-Chair MacKinnon queried the opinion on that fee. Ms.
Wing-Heier replied that it was examined as a solution for
the current year. She did not recommend it.
Senator Olson surmised that that recommendation was not yet
occurring. Ms. Wing-Heier agreed.
Senator Olson recalled that the high risk pregnancy
coverage was becoming impossible in the 1980s.
Senator Dunleavy remarked he was concerned about the hole
in the general fund.
Co-Chair MacKinnon remarked that the hole would be in place
in perpetuity.
Senator Olson recalled that it took three years to move
back to normal, without a drastic draw in the general fund.
Senator Dunleavy wondered if there was a hope that it would
only be three or four years, and the competition would
close that gap. Ms. Wing-Heier replied in the affirmative.
Senator Dunleavy struggled with the title of the
"Affordable Care Act."
10:21:25 AM
Co-Chair MacKinnon remarked that there should be a sunset
date on the bill to encourage the department to return to
the legislature to keep the fund.
Senator Dunleavy remarked that there may be a moral
obligation that would be impossible to shift.
Senator Bishop felt that the legislature should work with
the department to come to a solution.
Senator Olson remarked that Premera was watching the
progress of the bill, and would make their business
decisions by mid-July. She wondered whether a sunset was a
positive or negative impact on Premera's business
decisions. Mr. Parady shared that a sunset would not
detract from the overall progress of Premera.
Co-Chair MacKinnon remarked that insurance was one of the
most complex subjects come before any committee in the
legislature. She stressed that it was broad, connected, and
inter-woven with many other state and federal actions. She
remarked that there was a profit at three different levels
of the bill. She wondered how, under the rate filing, the
state determined an acceptable provider when and insurance
provider guaranteed at least 80 percent. She wondered how
closely the profits were monitored. Ms. Wing-Heier replied
that the benefits were a contributing factor to premiums.
10:30:20 AM
Vice-Chair Micciche stressed that he wanted to ensure that
the people had the best possible care. He wanted to ensure
that the state did not pay for care that was not related to
their condition. He felt that the state needed to control
cost across the board. He wondered how the unnecessary
expenses would be restricted. Ms. Wing-Heier replied that
those efforts often resulted in the insurance company
interfering with health care.
Senator Dunleavy remarked that many doctors conducted
extreme diagnostic work, because of the malpractice
protocols requirements. He wondered why there was not an
appropriation request. Ms. Wing-Heier replied that the
original bill specifically said that it would be from the
premium taxes. She could not speak to the change.
Mr. Parady furthered that the bill was amended in House
Finance Committee.
10:36:03 AM
Ms. Wing-Heier discussed slide 13, "Section 1332 Innovation
Waiver":
Alaska should explore a Section 1332 Innovation Waiver
to allow the state to withdraw from the ACA if, and
subject to many provisions, the state could provide
the same benefits to consumers without any additional
cost to the federal government.
States that are working on 1332:
• Colorado
• Minnesota
• Hawaii
• Massachusetts
Ms. Wing-Heier looked at slide 14, "Section 1332 Innovation
Waiver":
• Provide coverage at least as comprehensive as under
the ACA
• Provide coverage and protection against excessive
out-of-pocket expenditures at least as affordable as
that provided under the ACA
• Cover a number of residents comparable to the number
who would be covered under the ACA
• Not increase the federal deficit
• Must be authorized by the State Legislature
• Developed through a public process
• A state that is granted an innovation waiver that
restricts access to premium tax credits, cost-sharing
reduction premiums or the small employer tax credit
can be paid the amounts that would have been paid to
its residents under these programs to finance its
waiver program
10:38:44 AM
Mr. Parady noted that the attempt was to build on the
foundation of Medicaid reform; develop the innovation
waiver to provide for possible future change; and examine
new concepts. He felt that the sunset as an impetus to the
deeper work was well-founded.
Senator Bishop felt that all the discussions boiled down to
cost and the delivery of services. He noted that there may
need to be a working group to examine the issue.
Co-Chair MacKinnon noted that the original proposal
included cost-sharing with the rate payers. There was
pushback from the self-insured on that proposal. Co-Chair
MacKinnon asserted that there could be a one-time
appropriation and share it in the same structure as the
original proposal. Ms. Wing-Heier replied that there were
parts. She explained that every employee and dependent who
were either self-insured or fully insured paid the
reinsurance of $2.25 per member per month. She stated that
it was originally at $6 in 2014 for the federal
reinsurance. She stressed that the payments would sunset in
the current year. She shared that the original thought was
to have the payments directed to the state. She remarked
that it had not been incorporated into the 2017 budget,
because of the sunset. She remarked that everyone paid a
tax, and the analysis showed approximately $30 per member
per month for individual plans and $18 per member per month
for employer plans. She remarked that a stop loss happened
at large employers self-insurance, so the premium was much
less than a fully insured person. She stated that the 3
percent at stop loss only was much less than the other
plan.
10:44:02 AM
Mr. Parady furthered that the proposal was included in
previous legislation SB 206, there were 236,000 suggested
covered lives and 160,000 were in the stop loss category.
Senator Dunleavy queried asked for age to be included in
the demographic information. Ms. Wing-Heier agreed to
provide that information.
Senator Dunleavy wondered how closely the division had
worked with the insurance companies. Ms. Wing-Heier replied
that the division had worked closely with the insurance
companies to ensure that the mechanism of the reinsurance
would work to stabilize the market.
Senator Dunleavy surmised that the bill would stabilize the
market. Ms. Wing-Heier replied in the affirmative.
Senator Dunleavy assumed that the state would attract more
insurance companies to the state with the passage of the
bill. Ms. Wing-Heier replied in the affirmative.
Vice-Chair Micciche understood the intention of the bill.
He felt that there could be to ways to approach the bill:
stabilizing the market or providing further cash. He felt
that there should be downward pressure, and the services
offered that require payment. Ms. Wing-Heier replied that
there was not a clear answer to the concern. She stated
that the ACA was in its infancy.
Vice-Chair Micciche remarked that there should be a point
of where the cost codes became adequate care without being
an "open checkbook."
Senator Dunleavy appreciated the summary.
10:49:45 AM
AT EASE
10:51:35 AM
RECONVENED
10:51:43 AM
Co-Chair MacKinnon announced that amendments were due the
following day by noon.
CSHB 374(FIN) was HEARD and HELD in committee for further
consideration.
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