01/31/2012 09:00 AM Senate FINANCE

SENATE BILL NO. 70                                                                                                            
                                                                                                                                
     "An Act establishing the Alaska Health Benefit                                                                             
     Exchange; and providing for an effective date."                                                                            
                                                                                                                                
9:06:41 AM                                                                                                                    
                                                                                                                                
Senator  Hollis  French  introduced  SB 70  and  thanked  the                                                                   
committee  for giving thorough  attention  to such a  complex                                                                   
bill.  The  bill would  establish  an  exchange that  was  an                                                                   
outgrowth of the  Patient Protection and Affordable  Care Act                                                                   
(PPACA). The  exchange would essentially  be a  state created                                                                   
website that  contained insurance  policies; it would  direct                                                                   
uninsured  Alaskans to select  a policy  and would  help them                                                                   
make an informed  decision regarding healthcare.  The website                                                                   
would  offer private  company  insurance  policies and  would                                                                   
not be  a state entity. Each  state was authorized  to create                                                                   
its own  exchange; if  Alaska did  not show progress  towards                                                                   
creating  an  exchange  by  January   of  2013,  the  federal                                                                   
government  would   create  its   own  for  Alaska.   It  was                                                                   
federally mandated  that by 2014 each person  in America must                                                                   
be covered  by healthcare  insurance or  be able  demonstrate                                                                   
why they could  not obtain it. He stated that  the bill was a                                                                   
fundamental   step  towards  getting   everyone  covered   by                                                                   
healthcare;  it was designed  to eliminate  the "free  rider"                                                                   
problem, whereby  uninsured individuals enjoyed  free medical                                                                   
care primarily  through emergency  room visits. He  furthered                                                                   
that  the legislation  addressed  the free  rider problem  by                                                                   
attempting  to get  those people  to pay  into the  insurance                                                                   
pool.  He stated  that there  were aspects  of price  control                                                                   
and access issues  that were designed into the  federal bill,                                                                   
but  that SB  70 was  meant to  help people  make the  choice                                                                   
about  healthcare coverage.  The exchange  would also  direct                                                                   
eligible individuals  to government programs that  they might                                                                   
not  be aware  of and  would serve  an important  information                                                                   
sharing function.                                                                                                               
                                                                                                                                
9:09:38 AM                                                                                                                    
                                                                                                                                
Senator  French addressed  the  questions  raised during  the                                                                   
previous  hearing   on  SB  70.  He  discussed   a  sectional                                                                   
analysis  addressing  which  provisions   of  the  bill  were                                                                   
mandated by federal  law (copy on file). He  stated the "vast                                                                   
majority"  of  the  pieces  of   the  bill  were  "basically"                                                                   
mandated by  federal law and were  required in order  to have                                                                   
an exchange. He  furthered that these provisions  were mainly                                                                   
designed  to  protect  consumers   by  insuring  that  people                                                                   
weren't "fleeced" and were able to find a suitable policy.                                                                      
                                                                                                                                
Senator  French pointed  out a  few areas in  Section 2  that                                                                   
were  not  mandated   by  federal  law  but   were  necessary                                                                   
additions. He  explained that (a)(27)  on page 8 of  the bill                                                                   
was  not  mandatory,  but  was  added  because  applying  for                                                                   
federal planning  and establishment  grants was a  good idea.                                                                   
He pointed  out that (a)(28) on  page 9 of the bill  also was                                                                   
not  mandatory,  but  was  added   in  response  to  Co-Chair                                                                   
Hoffman's inquiry  about whether the state could  form pools.                                                                   
One  of the  concerns that  the administration  had was  that                                                                   
Alaska would  not be  a big enough  pool to work  efficiently                                                                   
in the  market; (a)(28) would  allow the exchange to  look at                                                                   
pooling  mechanisms in  order  to join  with other  northwest                                                                   
states with similar populations.                                                                                                
                                                                                                                                
9:11:28 AM                                                                                                                    
                                                                                                                                
Senator  Thomas asked  how  many people  in  Alaska were  not                                                                   
currently  covered   by  health  insurance.   Senator  Hollis                                                                   
responded   that   there   were   about   115,000   uninsured                                                                   
individuals who  would be looking  for insurance  through the                                                                   
exchange. Senator  Thomas stated  that in respect  to forming                                                                   
pools, 115,000 was  a large number if only  a percentage were                                                                   
served by insurance                                                                                                             
                                                                                                                                
Senator  Olson  asked  how  many  of  the  115,000  uninsured                                                                   
people  in   the  state  included   members  of   the  native                                                                   
population   and  stated   that   while   a  majority   those                                                                   
individuals  were not insured,  they were  covered by  Indian                                                                   
Health Services  (IHS). Senator French responded  that he did                                                                   
not  believe  the  figure  included   IHS  beneficiaries.  He                                                                   
observed that IHS  beneficiaries were a unique  group as they                                                                   
were  not formally  covered by  health  insurance, but  still                                                                   
had access to health care.                                                                                                      
                                                                                                                                
Senator  Olson referenced  the  previously mentioned  federal                                                                   
mandate  in  2014 and  queried  how  a change  in  presidency                                                                   
could affect SB  70. Senator French responded  that the House                                                                   
and Senate would  have to agree with a president's  desire to                                                                   
repeal  PPACA,  but that  the  exchange  would no  longer  be                                                                   
required  if it  was  overturned. He  furthered  that it  was                                                                   
possible that  the U.S.  Supreme Court  could "gut"  the bill                                                                   
by eliminating  the individual  mandate from the  legislation                                                                   
and  acknowledged  there  were political  forces  that  could                                                                   
undermine the legislation.                                                                                                      
                                                                                                                                
Senator Olson  referenced Alaska's  current lawsuit  that was                                                                   
challenging the  federal mandate and asked how  challenges to                                                                   
PPACA in court  could affect the legislation.  Senator French                                                                   
responded  that  many  states  were  fighting  court  battles                                                                   
against PPACA, but  were still moving forward  with their own                                                                   
exchanges; Florida  and Texas were good examples  of this. He                                                                   
furthered that  it was possible  to oppose PPACA  through the                                                                   
appropriate venue  and still embrace the idea  of an exchange                                                                   
to comply with the law as it exists.                                                                                            
                                                                                                                                
9:15:13 AM                                                                                                                    
                                                                                                                                
Co-Chair Stedman  asked if  Senator French  was aware  of any                                                                   
federal   grants   that  were   still   available   regarding                                                                   
implementing  the exchanges.  Senator  French indicated  that                                                                   
that  he and  the Department  of Health  and Social  Services                                                                   
(DHSS)  had "battles"  over  the issue  the  prior year,  but                                                                   
that the state had missed out on those grants.                                                                                  
                                                                                                                                
Senator  French   stated  that  DHSS  was   currently  moving                                                                   
forward  with a  plan for  an exchange  and stressed  concern                                                                   
that an issue  this large was being addressed  outside of the                                                                   
legislature.  He spoke  about importance  of the  legislature                                                                   
being  involved  in  the  formulation  of  the  exchange  and                                                                   
expressed interest  about where DHSS  stood on the  issue. He                                                                   
stated that  he had  spoken to  Commissioner Streur's  office                                                                   
the  day  before  and  was  interested  in  talking  to  them                                                                   
further in order  to gauge where they stood  with "respect to                                                                   
this idea".                                                                                                                     
                                                                                                                                
Co-Chair   Stedman  discussed   a   fiscal   note  from   the                                                                   
Department  of Administration  for  $3.0  million in  general                                                                   
funds  for  purchasing  bandwidth,  hardware,  software,  and                                                                   
maintenance   of  the   system,  a  fiscal   note  from   the                                                                   
Department  of Commerce  Community  and Economic  Development                                                                   
(DCCED)  for $1.8247  million  in general  funds  for 12  new                                                                   
positions   for   program  management,   board   costs,   and                                                                   
supplies. The FY  13 fiscal note from DCCED  was increased by                                                                   
$  162,600  due   to  higher  personnel  service   costs.  He                                                                   
discussed  a fiscal note  from DHSS  for $182,700 in  general                                                                   
funds  and  $182,700 in  matching  federal  funds for  3  new                                                                   
part-time analyst  positions and a zero fiscal  note from the                                                                   
Division of Insurance.                                                                                                          
                                                                                                                                
9:17:13 AM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
9:17:50 AM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Co-Chair Stedman  asked if the  bill sponsor had  any closing                                                                   
comments. Senator  French stated  that he would  work outside                                                                   
of the committee  with Commissioner Streur to  discuss DHSS's                                                                   
efforts to start an exchange.                                                                                                   
                                                                                                                                
9:18:26 AM                                                                                                                    
                                                                                                                                
SB  70   was  HEARD  and   HELD  in  committee   for  further                                                                   
consideration.