03/31/2006 03:15 PM House LABOR & COMMERCE

HB 29-HEALTH CARE INSUR./COMP HEALTH INS. ASSN                                                                                
                                                                                                                                
3:36:11 PM                                                                                                                    
                                                                                                                                
CHAIR ANDERSON announced  that the final order  of business would                                                               
be HOUSE BILL  NO. 29, "An Act relating to  health care insurance                                                               
and  to  the  Comprehensive  Health  Insurance  Association;  and                                                               
providing for an effective date."                                                                                               
                                                                                                                                
3:36:27 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE ROKEBERG made  a motion to adopt  CSHB 29, Version                                                               
24-LS0191\R,  Bailey, 3/22/06,  for discussion  purposes.   There                                                               
being no objection, Version R was before the committee.                                                                         
                                                                                                                                
3:37:01 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE ROKEBERG  said that  when the bill  was previously                                                               
heard,  objections were  raised  regarding the  assessments.   He                                                               
stated  that Version  R removes  the sections  of the  bill which                                                               
were  of concern  in  addition to  changing  the funding  source.                                                               
Furthermore, Version R  relies on the current  assessments to the                                                               
health  insurance industry  for the  additional monies  needed to                                                               
keep  the  Alaska   Comprehensive  Health  Insurance  Association                                                               
(ACHIA)  pool alive.   He  explained  that it  would entitle  the                                                               
insurer  to a  premium  tax credit  equal to  50  percent of  the                                                               
assessment.  He  added that currently, the  assessments are about                                                               
$3.5 million.  He noted a  letter of support from ACHIA, which is                                                               
included in members' packets.                                                                                                   
                                                                                                                                
3:39:51 PM                                                                                                                    
                                                                                                                                
KATIE CAMPBELL, Actuary-Life and  Health, Juneau Office, Division                                                               
of  Insurance,  Department  of Commerce,  Community,  &  Economic                                                               
Development  (DCCED), explained  the changes  made by  Version R.                                                               
Section 4, she  said, clarifies that the  insurers' membership is                                                               
based on  the major  medical premium.   She  said that  Section 5                                                               
amends  the process  with which  ACHIA  determines liability  for                                                               
unpaid assessments.  She stated  that this section clarifies that                                                               
the insurer must  cease to do business in the  state before it is                                                               
no longer  assessed.   Section 6,  she said,  is the  premium tax                                                               
off-set.   She went  on to  say that  Section 7  redefines "major                                                               
medical".                                                                                                                       
                                                                                                                                
3:41:52 PM                                                                                                                    
                                                                                                                                
JOHN GEORGE, Lobbyist, American  Family Life Assurance Company of                                                               
Columbus (AFLAC), informed  the committee that AFLAC  is a member                                                               
of ACHIA, which is federally mandated.   He stated that while the                                                               
state had  the option of using  general funds to cover  the costs                                                               
of the  program, it chose to  assess the insurance industry.   He                                                               
said that anytime the insurance  industry is required to pay, the                                                               
cost "trickles  down" to the  policy holders.   In this  case, he                                                               
said,  the policy  holders are  small businesses  or individuals.                                                               
He said that the intent of HB  29 is to help small businesses and                                                               
individual  policy holders  who are  "shouldering 100  percent of                                                               
the burden."   He remarked that  it is beneficial to  have health                                                               
insurance because unless  a [business or individual]  is a member                                                               
of a  major self-insured group, insurance  is unaffordable, which                                                               
can be due  to add-ons or paying to  subsidize the aforementioned                                                               
program.  He expressed strong support of HB 29.                                                                                 
                                                                                                                                
3:44:05 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  ROKEBERG  asked  if   the  definition  of  "major                                                               
medical" adopted in  HB 29 would affect AFLAC.   He also asked if                                                               
AFLAC would still be a participant [in ACHIA].                                                                                  
                                                                                                                                
MR. GEORGE  replied that AFLAC  would still be a  participant, as                                                               
it is  a major writer  of [the types  of insurance which  are not                                                               
considered "major medical"  by the legislation].   He stated that                                                               
currently, AFLAC's  assessment costs are  in excess of  its total                                                               
"major medical" premium.                                                                                                        
                                                                                                                                
3:44:51 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  ROKEBERG pointed  out  that AFLAC  has been  very                                                               
forthcoming  in it's  participation  in the  ACHIA  program.   He                                                               
noted  that  Mr.  George  was  previously  the  Director  of  the                                                               
Division of  Insurance, and asked  if he considers  the potential                                                               
rising  amount of  the assessments  as a  "barrier to  entry" for                                                               
health insurance underwriters in the state.                                                                                     
                                                                                                                                
MR.  GEORGE  replied that  Alaska  has  never had  enough  health                                                               
insurers, adding  that any  efforts made to  remove a  portion of                                                               
the burden  will be of  assistance.   He opined that  while these                                                               
efforts  may  not  cause  insurance companies  to  "rush  to  the                                                               
state," it would encourage any  companies considering business in                                                               
Alaska.  He said that this is "the right thing to do."                                                                          
                                                                                                                                
3:46:24 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE ROKEBERG  noted a  drafting error and  offered the                                                               
following conceptual amendment:                                                                                                 
                                                                                                                                
     Page 3, line 29                                                                                                            
     Delete "January 1, 2007"                                                                                                   
     Insert "March 1, 2008"                                                                                                     
                                                                                                                                
REPRESENTATIVE ROKEBERG explained that  the amendment would allow                                                               
zero fiscal  impact in 2007.   He said  that this is  a "backward                                                               
looking  assessment."    There  being  no  objection,  Conceptual                                                               
Amendment 1 was adopted.                                                                                                        
                                                                                                                                
3:47:41 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  LYNN  moved  to   report  CSHB  29,  Version  24-                                                               
LS0191\R,  Bailey, 3/22/06,  as  amended, out  of committee  with                                                               
individual recommendations and the accompanying fiscal notes.                                                                   
There being no objection, CSHB 29(L&C) was reported from the                                                                    
House Labor and Commerce Standing Committee.