04/01/2015 01:30 PM Senate HEALTH & SOCIAL SERVICES

           SB 78-MEDICAL ASSISTANCE COVERAGE; REFORM                                                                        
                                                                                                                                
1:36:01 PM                                                                                                                    
CHAIR  STEDMAN announced  the consideration  of SB  78 and  noted                                                               
that Legislative Finance would give a presentation.                                                                             
                                                                                                                                
1:36:56 PM                                                                                                                    
AMANDA  RYDER,  Fiscal  Analyst,  Legislative  Finance  Division,                                                               
Legislative Affairs  Agency, presented information on  SB 78. She                                                               
said  she  is responding  to  the  request  by the  committee  to                                                               
produce  graphs related  to Medicaid  history,  growth rate,  and                                                               
inflation impacts. She showed graphs  comparing the fiscal impact                                                               
of the  Governor's amended budget  and SB 74  and SB 78  on state                                                               
general funding and on state and federal total spend.                                                                           
                                                                                                                                
1:39:40 PM                                                                                                                    
MS. RYDER  turned to two graphs  that show the budget  history of                                                               
Medicaid, for general funds and for  total funds, as well as cost                                                               
per recipient.                                                                                                                  
                                                                                                                                
She  showed  graphs   depicting  inflation-adjusted  numbers  for                                                               
Anchorage and for Anchorage health care.                                                                                        
                                                                                                                                
1:42:44 PM                                                                                                                    
MS. RYDER  discussed a  graph of  Alaska's population  growth and                                                               
Medicaid enrollee growth.                                                                                                       
                                                                                                                                
She turned to  graphs of historical Medicaid  growth adjusted for                                                               
Anchorage inflation and cost per enrollee.                                                                                      
                                                                                                                                
1:46:09 PM                                                                                                                    
She   showed  graphs   of  historical   and  projected   Medicaid                                                               
appropriations  adjusted  for  medical  inflation  and  cost  per                                                               
recipient.                                                                                                                      
                                                                                                                                
1:48:11 PM                                                                                                                    
She  highlighted graphs  of the  projected Medicaid  growth rates                                                               
for general funds  and for all funds from 2006  to 2016, and from                                                               
2012 to 2016.                                                                                                                   
                                                                                                                                
1:49:11 PM                                                                                                                    
CHAIR STEDMAN  commented that it  is not as scary  when inflation                                                               
and population  growth is  considered, but  state revenue  is not                                                               
tied to those, unfortunately.                                                                                                   
                                                                                                                                
1:49:41 PM                                                                                                                    
JON  SHERWOOD,  Deputy  Commissioner, Department  of  Health  and                                                               
Social Services (DHSS), presented information  on SB 78. He began                                                               
by answering  a previous question  from Senator Stoltz  about the                                                               
PFD hold harmless provision, a  complicated piece of the bill. He                                                               
provided  background about  changes  in the  Affordable Care  Act                                                               
(ACA)  that  dealt  with  old  Aid  to  Families  with  Dependent                                                               
Children rules. Under  ACA, rules were changed  from income rules                                                               
to those based on modified adjusted  gross income, as well as who                                                               
is considered  in the household.  One difference is that  the old                                                               
rules  would  take  a  gross   income  amount  and  apply  income                                                               
"disregards,"  like child  care  expenses  and other  deductions.                                                               
Alaska applied for the disregard of  the PFD and it also provided                                                               
for a hold  harmless provision that says if a  person is required                                                               
to count  the PFD  and it  makes them  ineligible for  a program,                                                               
they can  continue to receive  benefits at state expense,  but it                                                               
is  paid out  of the  dividend  account, not  general funds.  The                                                               
person can continue to receive benefits  for up to four months if                                                               
the "disregard" makes them ineligible.                                                                                          
                                                                                                                                
Under the  old rules  income was considered  at "point  of time."                                                               
Under the new modified gross  income rules, income is annualized.                                                               
That is  significant so people  can move back and  forth smoothly                                                               
between the  exchange and Medicaid  as their income  changes, and                                                               
not  lose  eligibility.  States were  required  to  raise  income                                                               
standards to reflect the loss of the "disregards.                                                                               
                                                                                                                                
Because the expansion  group was not an  existing category, there                                                               
is  no provision  for making  such a  conversion. Income  for the                                                               
expansion  group  is annualized  and  the  PFD hold  harmless  no                                                               
longer provides  protection. There was  no easy solution  to this                                                               
problem. If  members of the  expansion group received a  PFD that                                                               
made  them ineligible  for Medicaid,  they would  be eligible  to                                                               
receive subsidized  insurance coverage through the  exchange with                                                               
minimal premiums  or cost-sharing. It  would be a  relative minor                                                               
loss of  benefits and it  would solve a  difficult administrative                                                               
problem.                                                                                                                        
                                                                                                                                
MR. SHERWOOD summarized  that the most practical  solution was to                                                               
exempt  these individuals  from the  hold harmless  provision and                                                               
they  would receive  subsidized coverage  from the  exchange. All                                                               
existing  beneficiaries  would  not be  impacted;  the  expansion                                                               
group would be the only one this applies to.                                                                                    
                                                                                                                                
1:58:46 PM                                                                                                                    
SENATOR  STOLTZE clarified  that the  hold harmless  provision is                                                               
such that,  "We pay up  to four months  of benefits so  people on                                                               
welfare can continue  to receive the dividend. That  comes out of                                                               
every  other Alaskan's  dividend." He  asked Mr.  Sherwood if  he                                                               
would like to  extend that benefit to the  potentially new 42,000                                                               
beneficiaries.                                                                                                                  
                                                                                                                                
MR. SHERWOOD said  state law would compel them to  do it, so they                                                               
proposed the exemption to satisfy the requirement.                                                                              
                                                                                                                                
SENATOR  STOLTZE  asked if  the  first  approach  was to  try  to                                                               
continue the hold harmless provision.                                                                                           
                                                                                                                                
MR. SHERWOOD said yes.                                                                                                          
                                                                                                                                
SENATOR  STOLTZE  asked  if  the exemption  would  apply  to  all                                                               
dividend  recipients in  a family.  He wondered  if there  was an                                                               
option for declining a PFD.                                                                                                     
                                                                                                                                
MR. SHERWOOD explained that in  the Medicaid application there is                                                               
a requirement for a person to  apply for income they are eligible                                                               
for, which would include one's PFD.                                                                                             
                                                                                                                                
SENATOR  STOLTZE  asked if  families  can  decline to  apply  for                                                               
minor's PFD's, which they then can collect when they reach 18.                                                                  
                                                                                                                                
MR. SHERWOOD said  he would have to look into  that. It generally                                                               
does  not happen.  Expansion cases  are primarily  adults without                                                               
children.                                                                                                                       
                                                                                                                                
2:02:50 PM                                                                                                                    
SENATOR STOLTZE asked if a  dependent's dividend is calculated as                                                               
part of the family's income.                                                                                                    
                                                                                                                                
MR.  SHERWOOD said  for  the Medicaid  population  all income  is                                                               
included. There  are some  exceptions. Those who  do not  have to                                                               
file tax returns, their incomes don't count.                                                                                    
                                                                                                                                
SENATOR STOLTZE requested a written explanation.                                                                                
                                                                                                                                
CHAIR STEDMAN  asked the department  to prepare  that information                                                               
for the committee.                                                                                                              
                                                                                                                                
SB 78 was held in committee.