Legislature(2011 - 2012)BELTZ 105 (TSBldg)
03/15/2012 01:30 PM Senate LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| Presentation: "how Equality Policies Work to Strengthen Economies and the Labor Force." | |
| SB28 | |
| HB267 | |
| SB116 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| + | HB 267 | TELECONFERENCED | |
| += | SB 116 | TELECONFERENCED | |
| = | SB 28 | ||
SB 116-WORKERS' COMP.: COLL BARGAINING/MEDIATION
2:37:27 PM
CHAIR EGAN announced the consideration of SB 116. He said the
committee would consider an amendment by Senator Giessel.
SENATOR GIESSEL explained that the proposed amendment [27-
LS0549\X.1] would allow individuals to choose his or her own
health care provider rather than bargaining away that patient
choice.
2:38:40 PM
LINDA HALL, Director, Division of Insurance, Department of
Commerce, Community and Economic Development (DCCED), commented
that she had done a lot of work with the Workers' Compensation
system as it affects insurance costs in particular. She was
concerned they were looking at a new system that will only apply
to employers and employees that are engaged in a collective
bargaining arrangement. Approximately 25 percent of the
workforce would be impacted by this bill - if they choose to and
they may not. Some provisions could be advantageous to other
employers and she wasn't sure why they would adopt something for
less than 25 percent of the state's workforce.
2:40:28 PM
MS. HALL said that supporters of HB 116 have alleged there would
be cost savings, but in working with the Division of Workers'
Compensation, she hadn't found a study supporting that claim. A
University of California Berkeley Study of California carve-outs
since 1993 concluded that, "Overall carve-outs do not appear to
harm employees, sometimes they help." Data analysis of one
carve-out showed that it had no effect on costs in dispute
rates.
She said Alaska's costs are driven by the high cost of health
care. Currently, 76 percent of the costs of our system are
driven by medical costs in comparison to a 59 percent average
nationwide. So if lawmakers allow a deviation from the current
system that has any potential to reduce medical costs, she
thought it should be something that all employers could engage
in.
MS. HALL said she had heard this system could cause a single
employer to simultaneously run multiple workers' compensation
systems. The Municipality of Anchorage, for instance, has about
seven collective bargaining units. If they each decided to set
up some type of this arrangement, the municipality would be
running eight different systems (including the state system). It
would be a "system run amuck."
2:43:18 PM
She said these are general thoughts she has had. Another concern
was that that they were considering implementing a new program
and yet the Medical Service Review Committee, a group that was
formed by this legislature, had made an extensive report with a
lot of recommendations for changes in the system as a whole, and
she hadn't seen any real debate of any of those measures. This
committee spent months studying new systems, new ways to develop
fee schedules and had a number of recommendations that were in
HB 12. It proposed the adoption of an advisory committee to
serve as a sounding board for the legislature to review
proposals and make recommendations for various types of changes
in an open and transparent environment.
MS. HALL said a number of options had been put forward to
improve our system including medical treatment guidelines and
utilization guidelines. It appears, and it has been stated, that
the administration of this new exemption program would be
through some kind of trust. But the bill doesn't mention the
trust or how it would be funded. With today's system costs and
with Montana's reforms, she worried that Alaska would be back in
first place as having the highest workers' compensation premiums
in the country - and that is not a place we want to be.
2:45:07 PM
MS. HALL said that SB 116 also provides for the identification
of medical treatment providers, medical evaluators and
vocational rehabilitation specialists who would be the exclusive
source of treatment, but there weren't any principles or
guidelines. So there is a potential for a multitude of little
groups without any consistency, and that concerned her in an
area as critical as workers' compensation. Basically, she wanted
to see a system whose emphasis is on getting an injured worker
back to work and didn't see this doing that.
CHAIR EGAN asked if she had comments on the amendment.
MS. HALL answered no.
2:46:22 PM
PAUL GROSSI, lobbyist, Pipefitters and Iron Workers, said
adopting the amendment to SB 116 would eliminate potential cost
savings and they wouldn't be able to support it any longer.{
SENATOR PASKVAN asked what he thought of the director's concerns
about limited application.
MR. GROSSI responded that her concern was that all employers and
employees wouldn't be affected, which is true, but that doesn't
mean it shouldn't be tried. It could potentially be a "pilot
project" from which things could be extrapolated for the larger
population. So that is not a reason to stop it.
He said the director's concern about it leading to two different
systems isn't really accurate, because if an employer thinks
this is not effective for them they could choose to not be a
part of it. No one is being forced into this system. This is
just enabling language.
SENATOR PASKVAN asked his understanding of competing physicians
being able to meet and communicate.
2:50:55 PM
MR. GROSSI replied that he is not an expert on this type of
system, but to him it means that doctors would be permitted by
law to form groups to bid on these types of systems to get this
work.
SENATOR GIESSEL said a 2009 report from the Minnesota Department
of Labor indicated that the costs have actually gone up in
Minnesota where this system is used over the past few years.
Alaska has an even smaller pool of health care providers and
although it's similar to Minnesota in that Minnesota is kind of
rural, it has the Mayo Clinic and some large universities. She
asked if he had run any numbers as far as costs.
MR. GROSSI answered no; Director Hall talked about a small
California study but he wasn't sure if it was accurate. Getting
back to Minnesota, he said you have to look at costs relative to
the rest of the system. He guessed that costs would still go up
in Alaska, but they might not go up as much. While he didn't
have any numbers on workers' compensation, itself, some of the
labor groups and their employers have formed similar systems for
their health care benefits that have shown a savings.
SENATOR GIESSEL asked if overall he regarded the existing
workers' compensation system as broken - excessively expensive
and slow to settle claims.
MR. GROSSI replied that he wouldn't couch it as broken yet, but
it is becoming more expensive, and most of it is because of
rising health care costs along with some litigation. At least
there is the potential to improve by trying something different.
The "broken" term could be used in the near future, if they
don't start doing something. They should consider Director
Hall's suggestions, too, because this measure is not the one
answer to fix the system.
2:55:53 PM
MIKE MONAGLE, Director, Division of Workers' Compensation,
Department of Labor and Workforce Development (DOLWD), observed
that Director Hall had mentioned the cost of benefits and how
Alaska has been going back and forth with the State of Montana
for the last 10 years on who is number one and two in the
country on workers' comp costs. Last year, Montana put serious
reforms for medical costs in place, and as a result, the
National Council on Compensation Insurance, Inc. (NCCI), the
rating organization that also rates Alaska, lowered the premium
costs in Montana by 25 percent, and he had no doubt when the
premium studies come out this year that Alaska will take over
the number one spot on workers' comp costs again.
He also observed that as the director, he often gets comments
from injured workers that the system is difficult to navigate
and complex and he fears that adding carve outs would complicate
it more.
2:57:59 PM
MR. MONAGLE said as far as the selection of medical doctors
goes, he didn't see any incentive to bring costs down under this
process. The Health Care Commission's study noted the biggest
cost driver to the system was lack of competition. Just because
you have a list of doctors who step forward to say they are
interested in participating, that doesn't equate to an incentive
to reduce their fees. And unless something is done to reduce
fees, he didn't see any changes to the medical costs in the
workers' comp system.
Finally, Mr. Monagle said part of the legislation presupposes
that a carve-out will reduce costs, but the 2002 Berkeley study
mentioned by Director Hall and the 2012 State of California
study found no significant differences between rates for a
carve-out employer and the rates for an employer who received
their benefits through the insurance marketplace. He had looked
extensively and hadn't found a single study that said carve-outs
will, in fact, reduce workers' comp rates.
SENATOR PASKVAN said if you can reduce just the mediation costs
(resolution without using lawyers) and the employer isn't
required to use the new system, there is a chance that medical
costs could be reduced a little bit, too.
MR. MONAGLE referenced the California study that found no
difference in the number of disputes in the carve-out process
versus disputes under the workers' comp claim system. He said,
although it's not in statute, the division already does
mediations; he did 60 last year. One of the things that is
concerning about the process is that although the bill doesn't
mandate mediation, it does say once you choose to mediate, and
once that process is broken off either by the hearing officer or
the parties, it must go to arbitration. That process doesn't
simplify the system, but it does add costs to it.
3:01:13 PM
MR. MONAGLE explained that the prior version of SB 116 had an
appellate provision saying that the arbitrator's decision could
be appealed to the Workers' Comp Appeals Commission, but he
didn't see that in the CS, where it would seem as though the
arbitrator's decision would be final, and that could potentially
lead to some additional administrative costs.
CHAIR EGAN said the committee still had questions about Senator
Giessel's amendment. He held SB 116 in committee.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 116 lttr opposing, WCCommittee of AK 030512.pdf |
SL&C 3/15/2012 1:30:00 PM |
SB 116 |