Legislature(2003 - 2004)
03/26/2003 01:32 PM Senate HES
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SB 105-MEDICAID:CHILDREN/PREGNANT WOMEN/FACILITY
CHAIR FRED DYSON called the Senate Health, Education and Social
Services Standing Committee meeting to order at 1:32 p.m.
Present were Senators Davis and Guess and Chair Dyson. He
announced SB 105 to be up for consideration.
SENATOR LYDA GREEN arrived at 1:34 p.m.
COMMISSIONER JOEL GILBERTSON, Department of Health and Social
Services (DHSS), reminded the committee that the department is
undergoing a restructuring in an effort to stabilize the state's
Medicaid program so that the state can continue to have a
vibrant insurance product for low and middle income Alaskans.
The Medicaid program has grown exponentially and its cost has
threatened the viability of the program, the ability of the
state to maintain high eligibility levels and to keep optional
services funded through the program. The department has done a
restructuring in which it will be administering the Medicaid
program budgetarily, in addition to policy through all four
divisions that have some dealings with the Medicaid program.
Right now, some Medicaid services are being provided in four
different divisions in two different departments and he wants
responsible decision-making.
COMMISSIONER GILBERTSON provided members with a series of charts
showing the total Medicaid budget for FY04 to be $935 million
and how the Medicaid program, which currently has all the funds
in the Division of Medical Assistance (which will be replaced by
a new Division of Health Care Services), will be distributed and
how the services will be administered in the department. The
bulk, $630 million, will remain in the remnants of the Division
of Medical Assistance. The remainder will be broken up between
the Division of Senior Disability Services, the Division of
Behavioral Health and the Office of Children's Services. For the
first time the waiver program will be administered within one
division, which will administratively help the process.
SENATOR GUESS asked if this is what he is proposing to do or
whether it is currently the case.
COMMISSIONER GILBERTSON replied that it is a combination of
everything. The budget is proposed for FY04; some elements of
the executive order, which will involve some aspects of the
restructuring, will be effective on July 1; the administration
retains the authority to move forward on a number of the
restructuring items before July 1.
He said the federal government is the largest payer into the
Medicaid program, but the state provides a sizeable amount of
Medicaid match dollars. He explained that the cost of eligible
adults is increasing and that is associated with the number of
pregnant women coming on board with the Medicaid program. The
total eligibility population has decreased because of the
reduction in welfare rolls.
He said SB 105 would freeze income levels for the Denali Kid
Care population and the Medicaid special income limits at FY03
levels. This would solidify eligibility levels for Denali Kid
Care and for pregnant women at 200% of poverty for FY03. The
special income standard for seniors in long term care and
individuals receiving home and community based waivers will be
locked in at 300%. This essentially eliminates the mandatory
cost of living adjustment (COLA) that exists in the programs.
The fiscal note shows modest savings to the department, but it
is part of a larger effort to bring about cost containment. It
is an acknowledgement by the administration that the Medicaid
program has reached a level that the state can fund and
maintain, but that we have reached that point where continued
expansion of it threatens its viability for people who rely on
the services. He said that unchecked expansion of the program
could lead to more drastic reductions in the future and the
administration does not support those types of reductions or a
roll back on Medicaid eligibility levels. To maintain high
eligibility levels, we have to lock in the current population.
SENATOR GUESS referred to the last column of the fiscal note,
which shows a savings of $3 million in general fund money but $6
million of federal government funds the state wouldn't receive.
COMMISSIONER GILBERTSON said that is correct.
SENATOR GUESS said at the end of FY09, he estimates that 263
pregnant women would not receive Medicaid. She asked if DHSS
knows the cost to the state of low birth weight babies that
result from poor women who are not covered for medical services.
She said that fiscal notes are financial analyses, not economic
analyses, especially in the case of pregnant women. She asked if
the state is cutting costs in one place only to pay for low
birth weight babies who need services.
COMMISSIONER GILBERTSON replied that he didn't know if DHSS can
come up with that data, but he would work together with her to
get it.
SENATOR GUESS asked why, instead of using a percentage level, he
is choosing to put a specific number in statute, which is very
difficult and more costly to change in the future.
COMMISSIONER GILBERTSON replied that the administration's
proposal is still needs based and the dollar amount will
continue to be relatively high, about $50,000 for a family of
four. A decision to roll back the program and move to a lower
percent would eliminate individuals who are currently eligible
for the program.
SENATOR GUESS said it is an interesting way to set policy - in
statute for $3 million in savings but 800 people. She noted, "If
you're poor today, you'll get coverage, but if you're poor in
six years, then sorry, that's where we're going to cut it off."
She thought it would be interesting to have an economic analysis
of the cost to the state of emergency room care as this
continues.
SENATOR GREEN pointed out that at the time this was instituted
in Alaska, there was no co-pay or financial participation
requirement, or an asset test for people coming into the
program. She opined:
If we wanted to do something to really change the face
of Denali Kid Care, those are things we would do. This
is a very soft approach and as people grow out of and
grow past the need for this, they should have the
responsibility and ability to move on.
SENATOR GREEN said the program was originally predicted to
attract around 11,000 participants and we're now at 26,000 and
have over 200 children in out-of-state placement in psychiatric
care, which no one was ever told about when this program was
instituted. Preventative care is how it was sold originally.
SENATOR WILKEN said he found the totals on page 3 interesting
and pointed out that the average monthly eligibles in '99 was
$62,000; in '04 it's projected to be about $98,000. The
eligibility headcount has increased by 58% and the average cost
per month in six years has more than doubled. The same sort of
analysis of eligible children and costs can be applied with a
70% increase.
COMMISSIONER GILBERTSON added that Alaska has high eligibility
standards for the optional programs. The administration's
position is that it does not want to see a roll back of Denali
Kid Care from 200% of the poverty level to 150%, but it has to
acknowledge that there has been exponential growth in the cost
of the program and the cost of some of the optional services.
The administration does not support allowing additional growth
in high-income areas to the detriment of services provided to
low income Alaskans.
SENATOR GUESS asked the amount of the average increase of the
percent of poverty in the last five years.
COMMISSIONER GILBERTSON replied that DHSS assumed growth at
2.24% per year, between 185-190.
CHAIR DYSON said he identified with Senator Guess's concern
about putting a set amount in statute. He also agreed with
Senator Green that the numbers are bizarrely high. He asked what
the commissioner's rationale was for the level at which people
qualify to have their lifestyle supported by someone else - what
used to be called charity.
COMMISSIONER GILBERTSON understood his concern and said the
governor's position is: the state is at 200% of the poverty
level; having an insurance product for individuals is
beneficial; and that the Denali Kid Care program has grown at a
far greater rate than what the state expected or can afford. The
governor recognizes the figures are high, but locking them in
now will protect those dollar amounts.
CHAIR DYSON asked if the state is precluded from using asset
disqualifiers for this program.
COMMISSIONER GILBERTSON answered no, but that is under review
right now.
MR. BOB LABBE, Deputy Commissioner, Department of Health and
Social Services, reminded the committee that Denali Kid Care was
an expansion of a prior program that was approved around 1990,
which was the first federal expansion for kids and pregnant
women based on the poverty level. In the past, you could receive
Medicaid if you already received welfare. There were discussions
about using an asset test at that time and it was decided not
to. He didn't think it had been discussed with the expansion of
the program to Denali Kid Care, but nothing precludes that.
COMMISSIONER GILBERTSON said they would make a decision about it
in the near future.
SENATOR GUESS asked if pregnant women are counted as two people.
COMMISSIONER GILBERTSON replied pregnant women are considered as
a family of two.
CHAIR DYSON questioned the language on page 4, lines 7 and 27.
SENATOR GREEN asked if that could apply to a situation in which
a grandparent is caring for a child and only the child
qualifies.
CHAIR DYSON said it looks like a 19-year old male is paid the
same as a 35-year old pregnant woman and asked if that is DHSS's
intention.
SENATOR GUESS replied that she thought the language on line 27
is superfluous because a pregnant woman would never be
considered as a family of one.
CHAIR DYSON suspended the hearing on the bill momentarily. When
he called the hearing back to order, he said he would probably
suggest an amendment that progressively reduces the amounts as
follows:
· line 9 from $3,130 to $3,000
· line 11, $3,700 to $3,400
· line 13, $4,400 to $3,900
· line 14, $5,000 to $4,000
· line 15, $5,697 to $4,900
· line 17, $6,339 to $5,500.
SENATOR GUESS said she would like an explanation of how he chose
those numbers beforehand.
SB 105-MEDICAID:CHILDREN/PREGNANT WOMEN/FACILITY
CHAIR FRED DYSON brought SB 105 before the committee again.
COMMISSIONER JOEL GILBERTSON, Department of Health and Social
Services (DHSS), told members he had an amendment to remove
language on page 4, line 27.
SENATOR LYDA GREEN moved to remove language on page 4, line 27
[Amendment 1]. There were no objections and it was so ordered.
SENATOR GARY WILKEN said he wanted to look further at the four
graphs that the commissioner had.
MR. CHIP WAGONER, Alaska Catholic Conference, said the
Conference is made up of the three Roman Catholic Bishops in
Alaska. The conference is the vehicle used to allow the group to
speak on public policy matters as they relate to moral values
and Catholic social teaching. One of the main components of
Catholic social teaching is a preferential option for the poor.
He quoted:
A basic moral test of society is how its most
vulnerable members are faring. Both Catholic teaching
and tradition calls us to put the needs of the poor
and vulnerable first and to give our greatest response
to those with the greatest needs.
He said that Jim Wallace wrote a book called "The Soul of
Politics" that went through the Bible verse by verse and looked
at all the times the poor were mentioned. In the Old Testament,
the subject of the poor is the second most prominent theme. In
the New Testament, one out of every 16 verses talked about the
poor. In the gospels, one out of every 10 verses talked about
the poor. He opined, "So, the call of the Lord is to serve those
in need."
MR. WAGONER asked them to consider SB 105 in this light and to
consider Denali Kid Care in particular. The Conference believes
the bill needs to be viewed in the context of the overall
Department of Health and Social Services' budget, the other
agency budgets, the state's current fiscal situation and the
growth of the Denali Kid Care program since its inception. The
governor was faced with a Herculean task to try to continue to
provide direct services to the poor and vulnerable of this
state. They commended the department for its commitment to the
needs of the poor and vulnerable. He stated, "Overall, the
budget protects those direct services that need to be
protected."
When DHSS submitted its application to the federal government
for Denali Kid Care using the 1997 population figures, it
figured there were 201,713 (birth to 18 years of age) children
in the state or 33% of the population. The department hired the
Employee Benefits Research Institute (EBRI) to estimate the
number of those children who did not have health insurance and
EBRI determined that approximately 9% were uninsured. They
figured that there would be 18,154 children in this program. In
2002, the population of children was 211,483 and was still 33%
of the overall population. If DHSS used EBRI's formula, there
should have been about 19,033 children in the program, but that
is not what happened. Figures from October '02 indicate there
are 39,854 children in the program or double what was
anticipated.
The growth could be indicative of the value of the program.
Possibly, the state should continue to pay the necessary amounts
to take care of the caseload increase and the Conference would
have no objection if the committee adopted that. A second option
would be to cap the program, such as the governor is
recommending, which is not an unreasonable approach. A third
option would be to cut back the program from the 200% poverty
level to 150%, which they do not recommend. Of the three
options, they like the first one, but other factors have to be
taken into account.
MR. WAGONER said that the program takes care of children and,
before Denali Kid Care, Alaska placed 41st in the list of states
in terms of health care service to children. It would be
interesting to know where we stand now. The best option would be
the first one. One of the reasons the department adopted this
program was it felt it would help three years down the road in
obtaining a federal matching assistance percentage increase,
also a goal of the current administration.
Denali Kid Care is also preventative. Over 40% of the children
in the 150-200% poverty level that receive services are six
years old or less. So, most of the care they are receiving is
preventative. So, that would be saving money to keep them
covered as opposed to not having them covered.
MR. WAGONER said at the 200% level, a family of four with an
income of $45,264 qualifies for Denali Kid Care. His family of
four purchases health insurance for $9,200 per year. That would
equal 20% of that family's income for health insurance, leaving
a little over $36,000 per year for all of the family's other
needs.
MR. WAGONER said one of the options is to not cut the program
and look elsewhere to make the cuts. He has gone through the
DHSS budget and didn't see any place to cut without hurting some
other vulnerable population. He doesn't think the
administration's position is unreasonable. He said if the
committee wants to consider a cap, he has three recommendations.
The first is to use the 2003 poverty guidelines; otherwise the
bill will be two years behind as opposed to one year. Second,
they should try to find out why they have unexpected growth
since 1997. Third, he urged them to put in an automatic sunset
clause for the figures that are used. So, after a certain amount
of time, the figures would lapse and go back to the 200% of
poverty level.
SENATOR WILKEN asked if there is a definition of household
income on page 4 and if it is net or gross.
MR. LABBE replied that in general, gross income of the household
is used for these kinds of calculations. The PFD is not counted
as income. He said the [calculation] is governed by federal
definitions of income, because it is about the Medicaid program.
SENATOR GUESS said she wanted to know DHSS's approach toward the
eligibility of applicants who currently have other insurance.
She suggested looking at places [to cut] where people are
already covered and have dual coverage rather than ratcheting
down the medical benefits for people based on their income.
MR. LABBE answered that for the regular Medicaid program, health
insurance is not an eligibility factor, because eligibility is
generally based on income and assets, not on an applicant's
health insurance status. He pointed out that the entire senior
population that is on Medicaid also has Medicare, which is
health insurance. Also, people have private coverage sometimes.
He explained that the Denali Kid Care program was expanded using
funding from a block grant named the State Children Health
Insurance Program. Congress appropriated the block grants for
uninsured children. Children insured by another means are not
supposed to be able to qualify for it. He noted:
We have constructed our policy for a variety of
reasons for those who are above 150% of the poverty
line and if they are insured, we deny their
eligibility. We also deny their eligibility if they
drop insurance within 12 months prior to application.
This is to avoid this crowd-out provision. We have to
have what is called a crowd-out provision and that was
ours - the 12-month - in fact, it was probably more
restrictive than the other states. Most of them, if
they have one, is like six months, but we chose to do
a year and enforced it with a few exceptions which
were based on particular kinds of hardship and there's
a list, a handful, basically - they're approved
centrally and what not.
But what we haven't been able to get a handle on,
which has been going on for some time in Alaska, has
been the employers dropping health coverage for their
employees. This was going on prior to the advent of
this program and it's continued to go on and that's
not anything that the individual applicant has control
over. So, it could be that part of the increase is
because the people don't actually have the access to
insurance any more. Maybe there was more of it back in
'97 or '98 when we were doing the analysis.
SENATOR DYSON announced an at-ease from 2:45 - 2:53 p.m.
MR. CURTIS KENDALL, Fairbanks, supported Chair Dyson's amendment
and was in favor of the bill, but most of his comments were
indiscernible on the tape.
SENATOR WILKEN moved to adopt Amendment 2.
SENATORS GUESS and DAVIS objected.
CHAIR DYSON explained that the reductions are $130, $272, $414,
$655, $797 and $939.
SENATOR WILKEN said in looking at page 4, he tried to equate
what $3,772 per month is in his terms and thinking about his 20
employees. He interpreted that monthly income to equate to about
a $50,000 per year job, a touch under $25 per hour. He wasn't
sure that was an appropriate level, although he was supporting
the amendment. He didn't think when this program was envisioned,
it was meant to assist those who are making about $50,000 per
year for a family of four with medical assistance. A family of
six with an income of about $67,000 per year would also be
eligible.
SENATOR GUESS said she thought it is important to realize that
these numbers are pretax. She said she objects to Amendment 2,
because it will create a policy change and she only received it
today. Also, she truly believes it is shortsighted to not do all
the committee can to cover pregnant women because, "We're just
going to pay for it. We know that."
CHAIR DYSON said he was quite sympathetic to the pregnant women
and asked if she could suggest different amounts.
SENATOR GUESS replied that she just got Amendment 2 and has
philosophical problems with putting numbers in the bill because
she doesn't believe that is good policy. She said she would flag
the issue in general and added that when she did health care
research she found that society pays when pregnant women do not
have health care coverage.
CHAIR DYSON challenged her to come up with a better idea and
said he would support her in trying to get it through the
Finance Committee.
SENATOR GUESS responded that she was admonished by the Senate
President who said that legislators are not supposed to do
policy work in the Finance Committee.
SENATOR GREEN mentioned that not every state has a program such
as this and she reminded them that it has no asset test for
eligibility. She noted, "It's a very easy program to get into."
She said that brochures that solicit applicants are everywhere.
She noted that the bill does not imply that pregnant women are
not covered.
SENATOR WILKEN agreed that pregnant women are not being excluded
from coverage.
SENATOR GUESS said that wasn't the purpose of her comment, but
it is fact that if eligibility is reduced, there will be
pregnant women that don't have other insurance. She wanted to at
least keep coverage at the current standards.
COMMISSIONER GILBERTSON said the Governor wants to lock in the
standard at 200% of the FY03 program, which is the '02 poverty
standard. He advised members that there might be a problem
because of the state's ability to implement standards [set] in
an amendment, such as these.
MR. LABBE expressed concern that the standard of coverage is
tied to the poverty level and family size for this particular
program and, unless it all lines up to some translated poverty
level, it might cause a technical problem with the federal
government where coverage is scaled uniformly for family size.
He thought conceptually the [department] could make it work, but
it may need to adjust the numbers.
CHAIR DYSON suspended the hearing on SB 105 while they went out
into the hall and figured it out.
SB 105-MEDICAID:CHILDREN/PREGNANT WOMEN/FACILITY
CHAIR FRED DYSON announced SB 105 to be up for consideration
again.
MR. BOB LABBE, Deputy Commissioner, Department of Health and
Social Services (DHSS), provided a chart, which he explained
briefly.
CHAIR DYSON commented that it didn't look like what he was
aiming at and said the committee would continue to work on the
bill.
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