Legislature(2005 - 2006)HOUSE FINANCE 519
04/20/2006 01:30 PM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB29 | |
| SB200 | |
| SB253 | |
| SB254 | |
| SB255 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | SB 253 | TELECONFERENCED | |
| + | SB 254 | TELECONFERENCED | |
| + | SB 255 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 29 | TELECONFERENCED | |
| += | SB 200 | TELECONFERENCED | |
HOUSE BILL NO. 29
An Act relating to health care insurance and to the
Comprehensive Health Insurance Association; and
providing for an effective date.
REPRESENTATIVE NORMAN ROKEBERG, SPONSOR, stated that the
Alaska Comprehensive Health Insurance Association (ACHIA)
was established to provide access to health insurance to all
residents of the State who are unable to find or are denied
health insurance or who are considered uninsurable. It is
additionally required coverage for those federally eligible
individuals under the Health Insurance Portability and
Accountability Act of 1996 (HIPAA).
The plan was first implemented in 1993 and is funded through
premiums collected from insured and assessments received
from health insurers transacting business in Alaska. Prior
to the time that the State became self-insured, the State
also participated in providing funds to ACHIA (through
assessments received from its health insurer). The effect
of the decision not to remain in ACHIA, reduced ACHIA's
funding by approximately $400,000 dollars per year.
In December 2003, there were 484 insured individuals
participating in ACHIA. He stated that as the insurer of
last resort, it is important that the State guarantee ACHIA
remains viable and in place. During 2003, over $4 million
dollars was collected in assessments from ACHIA members
(those companies or entities who do business in Alaska and
pay into ACHIA) and over $2.6 million dollars was collected
in premiums from insured individuals. ACHIA paid out over
$6.6 million dollars in claim expenses in that same year.
Representative Rokeberg continued, the majority of Alaskans
that receive health care benefits do not contribute to the
high-risk pool; thereby, shifting costs to only individuals
and small groups that purchase health insurance. That is
poor public policy, particularly on an unfunded Federal
mandate.
Many of the self-insured companies, objected to the original
version of the bill. In order to accommodate the needs of
ACHIA, the legislation has been modified to grant a tax
credit to the insurance companies who are currently assessed
for the entire ACHIA shortfall, by using a small portion of
the premium taxes paid into the State. A premium tax credit
would be justifiable given the importance of maintaining the
viability of the Association and its requirement under
HIPAA. He maintained that when viewed against the demands
of the general fund, viability of ACHIA exceeds most other
legislation and he urged support.
2:01:43 PM
Representative Rokeberg presented a handout, demonstrating
ACHIA contribution breakdowns from 1993 through 2005. (Copy
on File). The attachment highlights:
· 1998-2005: Proforma With HB 29
· 1993-2005: Historical
· 1998-2005: Proforma Assuming State Had Remained Insured
Representative Rokeberg noted the State's original
participation in the program, dropping out and giving up
responsibility. He emphasized the need to meet that burden,
which can be addressed through a tax credit, not an
allotment.
2:04:22 PM
Co-Chair Meyer advised that the Committee is concerned with
rising costs in the out years. Representative Rokeberg
pointed out that all insurance premiums continue to
increase.
Representative Weyhrauch commented on the unfunded liability
burden to the Department and the Division of Retirement and
Benefits. Representative Rokeberg was not sure, understood
this would be a tax credit. He said Representative
Weyhrauch referenced an old fiscal note to the previous
version of the bill and that there would be no impact to the
unfunded liability. The prior version did spread the risk.
Representative Weyhrauch inquired if the bill was related to
HB 10, the non-profit pool. Representative Rokeberg stated
it wasn't, however, has the same goal.
2:08:03 PM
Representative Kelly asked if other states use the proposed
system.
Co-Chair Meyer inquired why the legislation was coming to
the Committee at such a late date. Representative Rokeberg
explained that he had changed the source of funding and the
style of the bill.
2:10:16 PM
CECIL BYKERK, EXECUTIVE DIRECTOR, ALASKA COMPREHENSIVE
HEALTH INSURANCE ASSOCIATION BOARD (ACHIA), OMAHA, NEBRASKA,
advised that ACHIA is an important program, which first
passed in 1992. He offered to provide the FY04 annual
report to the Committee.
ACHIA is an important piece of the insurance system in
Alaska. It serves & benefits all Alaskans in one-way or
another. Over the 14 years, ACHIA has paid over $45 million
dollars in claims; collecting $17 million dollars in
premiums. The people purchasing those premiums for the most
part are uninsurable individuals. ACHIA offers coverage on
a subsidized basis. The primary purpose is to serve the
uninsurable population. ACHIA is the Healthy Insurance
Portability and Accountability Act (HIPAA) solution for
Alaska and under which Alaska has fulfilled the federal
requirements.
Mr. Bykerk added that ACHIA offers an outlet of insurance to
those that would otherwise be uninsurable. Member's pay a
high rate @ 140% above the standard rate. In reality, they
should pay 300% more given the health issues. ACHIA offers
an in for the system. Those people become "payers" to the
health system, which eventually, benefit everyone in the
State. There is no cost shifting using these mechanisms.
Currently, short falls are made-up by assessing health
insurers. It has been estimated that premium taxes paid by
health insurers, are somewhere between $10-$12 million
dollars. When companies get assessed for shortfalls, the
costs get transferred back to the policyholders. Those are
expenses that insurance companies must cover in some manner,
ultimately transferred back through premiums to individuals.
HB 29 will ease the burden by broadening ACHIA's overall
funding base.
Mr. Bykerk added, AHCIA anticipates receiving $1 million
federal dollars over the next five years. He reiterated
that all Alaskans would benefit from ACHIA. He offered to
answer questions of the Committee.
2:18:26 PM
BRIAN ANGEL, VICE CHAIRMAN, ALASKA COMPREHENSIVE HEALTH
INSURANCE ASSOCIATION BOARD (ACHIA), NEBRASKA, echoed
comments made by Mr. Bykerk. He emphasized that ACHIA does
benefit all Alaskans. The $45 million dollars that ACHIA
has paid in claims is money that would not have gone into
the system, rather "free-care". He acknowledged that
everyone knows, there is no such thing as "free care".
2:19:23 PM
Co-Chair Meyer asked if the legislation could reduce
insurance rates. Mr. Bykerk replied that health insurance
costs and premiums continue to go up. The bill could help
mitigate some costs for individuals and small groups buying
coverage. Those assessments have been in a range of 1% -
1.5% of premium costs each year. He believes it could
become more equitable for those purchasing insurance.
2:22:14 PM
LINDA HALL, DIRECTOR, DIVISION OF INSURANCE, DEPARTMENT OF
COMMERCE, COMMUNITY AND ECONOMIC DEVELOPMENT, commented that
the ACHIA plan would not prevent the type of concerns voiced
by Representative Kelly and those seeking different kinds of
relief. People that are a part of ACHIA, do pay health
insurance premiums, but pay at a reduced rate. There is a
150% cap of the average rate. Uninsurable people can buy
insurance at a substantially increased premium; the program
does prevent the growth of the uninsured population. She
advised that the Division of Insurance has historically
supported the program and noted they had worked diligently
with Representative Rokeberg to find other funding sources.
The program provides "huge" benefit to Alaskans.
2:24:15 PM
Representative Holm asked what it means to have a 150% of
higher rate cap. Mr. Bykerk explained, the rates are based
upon surveys taken from the top five insurance carriers in
the State of Alaska. Based on that, the Board sets the rate
at a percentage, capped at 150%. There is no intent to
compete with the insurance industry. Those rates are based
on the same structure in the market place and are age-
dependent, offering various deductible choices. ACHIA is
capped at 150% by law, attempting to keep it affordable.
2:28:39 PM
Representative Holm asked if the majority of the subscribers
were non-paying. Mr. Bykerk noted that those that left the
coverage participated in a survey, which indicated that they
could not pay the premium costs. Available data shows that
if they were uninsurable and not HIPAA eligible, they must
indicate that they applied and were turned down. He
emphasized, they must demonstrate that they are uninsurable.
2:31:15 PM
Mr. Angel pointed out that there are 32 states that carry
high-risk pools; 19 states use some form of general fund
revenues to fund the pool.
PUBLIC TESTIMONY CLOSED
2:32:24 PM
Co-Chair Meyer noted concern with the fiscal costs,
indicating he would hold the bill in Committee to determine
other fiscal options.
2:32:59 PM
Representative Kelly asked how it could be determined, who
is an assessed "other insurance company". Mr. Bykerk
replied that there is no correlation or assessment, but
rather defined in statute.
HB 29 was HELD in Committee for further consideration.
2:37:28 PM
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