Legislature(1993 - 1994)
03/16/1994 03:00 PM House HES
| Audio | Topic |
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE HEALTH, EDUCATION AND SOCIAL SERVICES
STANDING COMMITTEE
March 16, 1994
3:00 p.m.
MEMBERS PRESENT
Rep. Cynthia Toohey, Co-Chair
Rep. Con Bunde, Co-Chair
Rep. Gary Davis, Vice Chair
Rep. Al Vezey
Rep. Pete Kott
Rep. Harley Olberg
Rep. Bettye Davis
Rep. Tom Brice
MEMBERS ABSENT
Rep. Irene Nicholia (Excused)
OTHER LEGISLATORS PRESENT
Sen. Jim Duncan
Sen. Suzanne Little
Rep. Nordlund
COMMITTEE CALENDAR
HB 414: "An Act creating the Alaska Health Commission;
relating to the delivery, quality, access, and
financing of health care; relating to review and
approval of rates and charges of health insurers;
relating to certain civil actions against health
care providers and health insurers; repealing
Alaska Rule of Civil Procedure 72.1; and providing
for an effective date."
HEARD AND HELD
WITNESS REGISTER
MIKE FORD, Attorney
Legislative Legal Counsel
Division of Legal Services
Legislative Affairs Agency
130 Seward St.
Juneau, Alaska 99801
Phone: (907) 465-2450
Position Statement: Answered questions on the CS for HB 414
NANCY USERA, Commissioner
Department of Administration
P.O. Box 110200
Juneau, Alaska 99811-0200
Phone: (907) 465-2200
Position Statement: Answered questions on HB 414
BARBARA THURSTON, Actuary
Division of Insurance
Department of Commerce and Economic Development
P.O. Box 110805
Juneau, Alaska 998011-0805
Phone: (907) 465-2573
Position Statement: Testified on HB 414
PREVIOUS ACTION
BILL: HB 414
SHORT TITLE: COMPREHENSIVE HEALTH CARE
SPONSOR(S): RULES BY REQUEST OF THE GOVERNOR
JRN-DATE JRN-PG ACTION
01/28/94 2182 (H) READ THE FIRST TIME/REFERRAL(S)
01/28/94 2182 (H) HES, JUDICIARY, FINANCE
01/28/94 2182 (H) -2 FISCAL NOTES (GOV, DCED)
1/28/94
01/28/94 2183 (H) GOVERNOR'S TRANSMITTAL LETTER
02/15/94 (H) HES AT 03:00 PM CAPITOL 106
02/15/94 (H) MINUTE(HES)
03/04/94 (H) HES AT 03:00 PM CAPITOL 106
03/04/94 (H) MINUTE(HES)
03/09/94 (H) HES AT 03:00 PM CAPITOL 106
03/09/94 (H) MINUTE(HES)
03/12/94 (H) HES AT 01:00 PM CAPITOL 106
03/12/94 (H) MINUTE(HES)
03/16/94 (H) HES AT 03:00 PM CAPITOL 106
ACTION NARRATIVE
TAPE 94-52, SIDE A
Number 000
CHAIR BUNDE called the meeting to order at 3:08 p.m., noted
members present and announced the calendar. He brought HB
414 to the table.
HB 414 - COMPREHENSIVE HEALTH INSURANCE ACT
CHAIR BUNDE stated there were a number of amendments to
address and brought Amendment 9 to the table. He then
indicated that Commissioner Usera, Commissioner Lowe, Dr.
Nakamura and Senator Duncan were present.
Number 094
REP. B. DAVIS asked if she could make a statement. She said
she understood that a considerable amount of work had been
done on HB 414, but stressed that much more work needed to
be done. She asked Chair Bunde if HB 451 would be heard
again in committee and suggested that the two bills be
addressed at the same time. She then asked if HB 451 could
be addressed when committee work has been finished on HB
414.
Number 154
REP. TOOHEY explained that HB 451 had been heard previously
and it was decided then that because of budget restraints,
HB 414 would be a more effective vehicle.
REP. B. DAVIS asked what Rep. Toohey's intent was.
REP. TOOHEY said she wanted to see HB 414 move forward.
REP. B. DAVIS asked if portions of HB 451 could be brought
back in the form of amendments.
REP. TOOHEY stated that the reason HB 414 was the preferred
bill was because "it is the only one on the floor that has
funding."
REP. B. DAVIS asserted that HB 414 needs a considerable
amount more funding to make it effective. She felt that the
provisions in one bill should not be ignored because the
other bill was cheaper.
Number 189
REP. TOOHEY maintained that the issue was not which bill was
cheaper, it was which one has funding to begin with.
CHAIR BUNDE observed that if either bill "costs new money,"
they will not pass out of committee.
REP. B. DAVIS said the issue was new money.
CHAIR BUNDE asked Rep. Toohey to move Amendment 9.
REP. TOOHEY moved Amendment 9 for purposes of discussion.
CHAIR BUNDE asked Rep. Toohey to address the amendment.
Number 223
REP. TOOHEY indicated that the work draft (version 8-
GH2024\E) was dated 3/14/94.
CHAIR BUNDE said the latest version of the work draft for HB
414 was dated 3/14/94, version E.
REP. TOOHEY said her committee substitute (CS) was dated
3/11/94 but indicated that the committee would work from
version E, 3/14/94. She indicated that on page 2, line 5,
the word "all" would be inserted before the word "Alaskans."
CHAIR BUNDE questioned if there was a difference between
"all Alaskans" and "Alaskans."
Number 288
REP. TOOHEY felt there was no difference. She continued on
to say that the words "market-based" would be inserted
before the word "single" on page 13, line 16.
CHAIR BUNDE said the phrase would be, "is based on a market
based single payor..."
REP. TOOHEY stated the language was contradictory.
CHAIR BUNDE said he would recommend that the language
remain.
Number 322
REP. B. DAVIS asked who the person was that submitted the
amendment and why the committee wanted to address the
amendment. She asked if Rep. Toohey had reviewed the
amendment and felt that the changes indicated should be
made.
REP. TOOHEY said she also had just received the amendment.
Number 325
REP. B. DAVIS asserted that the committee should have time
to review the proposed amendment so that any undesirable
changes can be omitted.
REP. TOOHEY asked if any of the proposed amendments had been
reviewed by the committee.
REP. B. DAVIS stated that there were several members who had
reviewed the amendments.
REP. TOOHEY said that all the proposed amendments that were
before her, she had never seen until right then.
REP. B. DAVIS said it was her understanding that the purpose
of the meeting was to review the changes that had been made
previously.
CHAIR BUNDE indicated that the work draft had been available
to all committee members and asked if Rep. B. Davis had any
questions or concerns.
REP. B. DAVIS said no. She said she was unsure if the
committee had enough time to review.
Number 374
CHAIR BUNDE suggested that perhaps Rep. Toohey could
highlight the changes and then the committee could move on
to the amendments.
REP. TOOHEY agreed.
CHAIR BUNDE suggested that Rep. Toohey withdraw her motion
to adopt Amendment 9.
REP. TOOHEY withdrew her motion.
CHAIR BUNDE, after prolonged discussion, asked Mr. Ford to
address the changes that were made previously on Saturday,
March 12, 1994, to HB 414. He also invited Commissioner
Usera to join the discussion.
Number 428
MIKE FORD, Attorney, Legislative Legal Counsel, Division of
Legal Services, Legislative Affairs Agency, testified on the
CS for HB 414. He stated that there were two provisions
changed as a result of the meeting held on Saturday. He
said the changes both relate to the commission. He referred
to page 14, lines 11-14, and said it related to a limitation
on the composition of the commission whereby not more than
one member can be a health care provider or employed by a
health insurance company.
CHAIR BUNDE indicated that the other change pertained to
page 13, line 20.
MR. FORD indicated that the new language requires that
benefit packages must include coverage without an existing
condition exclusion. He said those were the only changes
made.
Number 476
REP. BRICE asked if page 13, line 19, Section A was new.
MR. FORD said the change was made to the end of line 20 and
then lines 20 and 21.
REP. BRICE referred to page 14 and said the change focused
on the composition of the commission.
MR. FORD concurred.
REP. B. DAVIS said during Saturday's meeting, Commissioner
Usera indicated that she had only just received the work
draft for that day and was completely unfamiliar with some
of the changes that were made to that particular draft by
Legal Services. She said it was her understanding that the
purpose of today's meeting was to go through the changes
that were made prior to Saturday. She also indicated that
there was no one present from the Division of Insurance on
Saturday and that the committee was assured that there would
be a representative present today. Rep. B. Davis said she
thought those issues would be addressed in the meeting.
Number 522
CHAIR BUNDE asked Mr. Ford to address the changes that were
made prior to Saturday's meeting.
MR. FORD stated that when the first CS work draft was
produced, the bill was changed in a manner to conform with
drafting requirements. He indicated that there were a
number of provisions in the bill that did not comply with
the drafting manuals, and the bill was changed accordingly.
He explained that the changes were not substantive but were
technical changes made to comply with drafting style.
MR. FORD further indicated that there were a couple of
provisions that were omitted in the bill that actually
should have been included. He said those provisions have
been added and they start with Section 2 and Section 3 where
"we have simply removed a reference that is affected by a
change in the governor's bill." He said it should have been
done initially but was not. He explained that the change
relates to the arbitration of medical malpractice actions.
Mr. Ford asserted that now that the bill has been amended to
provide for mandatory arbitration, there were sections that
became obsolete and had to be deleted. He further indicated
that the changes made were added and renumbered accordingly.
He said he did not like to see dated material contained
within the provisions being amended so they have been moved
to a transition section that conforms with drafting style.
MR. FORD addressed questions that he had raised in a memo.
He said the first question pertains to Section 24 (b) which
allows the governor to extend deadlines and indicated that
the provision creates a problem. He said, "...in fact,
allowing the governor to do that amounts to an impermissible
delegation of legislative authority."
Number 611
CHAIR BUNDE said Mr. Ford was referring to page 22.
(Chair Bunde indicated that Rep. Kott arrived at 3:25 p.m.)
CHAIR BUNDE clarified by saying that the delegation of power
would be unconstitutional.
MR. FORD agreed and said it would probably be a separation
of powers, as well.
CHAIR BUNDE asked Commissioner Usera her opinion on the
matter.
Number 620
NANCY USERA, Commissioner, Department of Administration
(DOA), testified on HB 414. She stated that she does not
have legal background and said she would defer to some one
in the Department of Law to make that determination. She
indicated that the directors of the administrators who were
attorneys in the Department of Law did not identify that
problem. She said a more thorough analysis could be done.
CHAIR BUNDE said that would be appropriate.
COMMISSIONER USERA said a written response would be
submitted.
CHAIR BUNDE asked Mr. Ford to address the next question.
MR. FORD explained that question two pertains to the
provision on page 17, line 28. He said if the director of
the Division of Insurance adopts a regulation and the
regulation is inconsistent with a law that has been passed
by the legislature, the adopted regulation would supersede
the legislative law. He felt that would be
unconstitutional. He said regulations flow from laws, not
the other way around.
Number 673
COMMISSIONER USERA indicated that she would have the
Department of Law review the issue.
MR. FORD said, "I think lastly, there were some provisions
in here that we believe affect court rules. So, we have
simply added those references to the bill in compliance with
the uniform rules and the constitution."
CHAIR BUNDE asked if there was someone from the Division of
Insurance present. He was told there was. He indicated
that insurance rate regulation and review would be
addressed. He asked for further questions. He then asked
Barbara Thurston to testify.
Number 718
BARBARA THURSTON, Actuary, Division of Insurance, Department
of Commerce and Economic Development (DCEC), testified on HB
414. She stated that the division has prior approval
authority over almost all rates written for property
casualty insurance; i.e., auto, home owners and workman's
compensation. She said the division has much less authority
for the life and health types of coverage. She indicated
that the division currently reviews and approves rates for
Blue Cross, which is not technically an insurance company,
Medicare supplements, and smaller lines like credit
insurance. She indicated that the division does not have
prior approval over regular disability insurance which is
addressed by HB 414.
MS. THURSTON stated that the legislation would require
companies to file their rates with the division which would
then review the filing and make a recommendation to the
commission as to the appropriateness of the submitted rates.
The commission, after public hearings, would then make the
final decision of whether to approve the rate or not.
Number 757
REP. BRICE asked Ms. Thurston how the DCEC views the
possibility of taking over the review process of insurance
rates for health care.
MS. THURSTON indicated that the division supports the idea
because more data would be accessible.
REP. BRICE pointed out that his Amendment 10 addresses that
issue.
CHAIR BUNDE said there had been discussion that the review
would be the middle ground between setting rates and having
little or no overview. He asked Ms. Thurston if the
division reviews Blue Cross rates but not other health
insurers.
MR. THURSTON said yes.
Number 786
CHAIR BUNDE asked Ms. Thurston if the bill requires the
division to set rates, not to review.
MS. THURSTON said it was her understanding that the
insurance companies would file their rates with the division
and then the division would review them.
CHAIR BUNDE explained that there has been suggestions that
the bill should require that rates be set by the division.
He asked her to address that issue.
MS. THURSTON maintained that it was the first time she had
heard of that suggestion. She felt it was not the
division's position that they want to set rates. The
division only wants to review.
CHAIR BUNDE asked what the regulatory role of the division
is regarding other types of insurance.
MS. THURSTON explained that regarding property casualty
lines, the companies file their rates with the division.
The rates must be filed and approved before they are used.
She indicated that sometimes the division questions
assumptions and the insurance company will either file for a
higher or lower rate.
CHAIR BUNDE asked if rate approval is not the same as rate
setting.
MS. THURSTON disagreed that approving is the same as setting
a rate because the division does not have the authority to
specify what the rate will be. The division does have the
authority to disapprove a filing which would leave the
company to use their most recent rate.
Number 828
CHAIR BUNDE observed that if a new insurance company that
has had no previous base rate filed for approval of their
new rates and was disapproved, they would be out of
business.
MS. THURSTON said that is correct. She also indicated that
there are limits on the division's authority and that
companies can request public hearings if their rates are
disapproved.
CHAIR BUNDE asked if the division would be comfortable with
the approval of health insurance rates.
MS. THURSTON felt that either the division or the commission
could carry out that responsibility.
CHAIR BUNDE said, "From our previous discussion if the
commission approves rates, they are basically setting
rates."
REP. TOOHEY offered that there are only ten states that have
the approval process for rates.
MS. THURSTON said she was not familiar with the exact
number.
REP. TOOHEY stated that she disagrees with Chair Bunde that
approval means rate setting.
Number 877
CHAIR BUNDE asked if Rep. Toohey would consider disapproval
to mean rate setting.
REP. B. DAVIS asked Ms. Thurston what impact the additional
responsibilities would have on the division. She also asked
what the division felt the strong and the weak points of the
bill are.
MS. THURSTON asserted that the division supports the bill.
REP. B. DAVIS said she understood that, but asked what type
of impact the legislation would have on their budget.
MS. THURSTON said there would be an increase in budget.
Number 900
REP. B. DAVIS asked when the increase would be identified.
MS. THURSTON replied that the increase was in the fiscal
note. She explained that the legislation would call for one
additional rate analyst and a clerk.
REP. B. DAVIS questioned Ms. Thurston as to what the
division would be doing differently that it was not doing
now.
MS. THURSTON explained that the division would review the
health insurers rate filings. She said the legislation
would not change the division's authority regarding
solvency.
Number 920
REP. B. DAVIS asked if the division took over rate review,
would there be any increase in work load or funding.
MS. THURSTON reiterated that there would need to be funding
for one additional person, which was reflected in the fiscal
note.
REP. B. DAVIS indicated that in the present bill the rate
review would be done by the commission.
MS. THURSTON explained that as the bill is written the
division reviews the rates and makes a recommendation to the
commission which would conduct further review and then
either approve or disapprove the rates. She said the extra
person is needed for the division's portion of the review.
REP. B. DAVIS asked what the impact would be on the division
if the amendment is adopted.
MS. THURSTON said she was unsure of the impact.
Number 945
CHAIR BUNDE clarified by saying the division's fiscal note
of $139,300 reflects the intent of the bill in its present
state, which requires the division to review the rates first
and then pass recommendations on to the commission who would
perhaps then duplicate some of the work done by the
division.
MS. THURSTON said she assumed that the commission would not
duplicate any procedures and would focus on other points.
CHAIR BUNDE said the fiscal note would increase to
accommodate the proposed amendments.
MS. THURSTON said she was unsure of what the financial
impact of the upcoming amendments would be.
CHAIR BUNDE asked Ms. Thurston if in her opinion, when the
division finished their portion of the review, would further
work be required.
MS. THURSTON responded by saying that the commission
fulfills a public policy need by allowing more public
participation and that was the reason the division supports
the bill.
Number 978
REP. BRICE asked that Ms. Thurston be available for further
questions pertaining to the amendments to be considered.
CHAIR BUNDE said, "It sounds as if at this point we're
asking the Division of Insurance to do some work and the
commission to rubber stamp it, and maybe there's some
consolidation that could take place here."
REP. BRICE asked if the committee could address Amendment 9.
CHAIR BUNDE proposed to hold Amendment 9 until there was
someone who would like to "champion" it.
CHAIR BUNDE then brought Amendment 10 to the table.
REP. BRICE made a motion to adopt Amendment 10.
CHAIR BUNDE objected for purposes of discussion.
REP. OLBERG asked if Amendment 9 would be addressed.
CHAIR BUNDE indicated that Amendment 9 would be addressed at
a future date by someone who was familiar with its intent.
REP. BRICE stated that Amendment 10 consolidates the rate
review within the Division of Insurance. He said the
legislation would help to eliminate duplicative services.
He explained that he would feel more comfortable with the
division's staff and expertise in insurance rate review.
Number 048
CHAIR BUNDE indicated that Mr. Ford drafted the amendment
and asked him to come forward to answer any questions.
REP. BRICE explained that Amendment 10 applies to the work
draft dated 3/14/94 (version E).
CHAIR BUNDE said to Mr. Ford that it is Rep. Brice intention
to move the responsibility of rate review to the division.
He said, "It puts people from insurance in a difficult
position because to agree or disagree is to agree or
disagree with the governor, who has proposed this bill. So,
perhaps we need to have a neutral disinterested third or a
neutral third party to discuss this." He then asked Mr.
Ford if he had any legal concerns regarding the amendment.
Number 080
MR. FORD stated that the amendment would delete the rate
review and approval authority of the commission and would
leave intact those sections of the bill that require
additional information to go to the Division of Insurance.
He explained that approval and rate review process would be
left with the division. He said if it was the policy choice
of the committee to not have the commission involved in rate
review and approval, the amendment should be supported.
REP. BRICE suggested that the process would be streamlined
and more coherent if it were within the Division of
Insurance. He then asked if the division would explain the
review and approval process.
CHAIR BUNDE said he shared Rep. Brice's concern regarding
duplication of efforts. He then asked Commissioner Usera to
respond to the proposed amendment.
Number 110
COMMISSIONER USERA said there was tremendous debate while
drafting the HB 414 regarding where the final authority
should rest for rate review and approval. She stated that
it was felt that there would be added value in having the
commission make the final decision, but also indicated that
the administration would have no objection to Division of
Insurance making those decisions. She explained that the
commission would enhance their visibility by being the final
decision maker and would also give further opportunity for
public process.
TAPE 94-52, SIDE B
Number 000
COMMISSIONER USERA further indicated that the cost of the
commission would be reduced if the division were to be
wholly responsible for rate review and approval. She said
it would be the desire of the administration that the
division be required to share their findings and information
with the commission.
CHAIR BUNDE asked Commissioner Usera, if the bill remains
unchanged, would the commission have to hire people with
actuarial skills? He also asked what value would be added
if the commission was to make the final decisions.
COMMISSIONER USERA replied that she anticipated that the
commission would hold public hearings associated with rate
filing. She explained that at a public hearing the division
would present the information. She then said, "Thinking of
this in terms of a more global view toward health care
systems, then other aspects of health care systems can come
into play and be discussed within that context of health
insurance premiums." She asserted that the staffing for the
commission would include analysts, but she did not
anticipate those analysts as being actuaries.
COMMISSIONER USERA referred to a prior statement that said
the commission would only rubber stamp the director of the
Division of Insurance's recommendations and indicated that
was probably true as the Division of Insurance would not
submit recommendations of disapproval, but would advance
recommendations for approval. She said there would have to
be very compelling reasons for the commission not to take
the recommendation under advisement. She reiterated that it
is the process that benefits when the final decision is made
by the commission.
Number 080
CHAIR BUNDE said, "I could understand and support that the
report comes to the commission. And then, the commission
reviews it and then either concurs or disagrees and then we
start all over again. But, I wouldn't, as my question
anticipated, wouldn't want rehashing of the issue." He then
questioned the benefits of a public hearing as he felt that
rate payers would be saying the rate is too high; insurance
companies would say no they are not and that they're going
broke, and eventually it would be the experts who would say
the rate is either justifiable or not.
COMMISSIONER USERA responded by saying it was her feeling
that the more information that consumers have, the better
consumers they become. If they have a better understanding
of what the rates are based upon, they will understand that
the rates are arbitrarily too high or too low. She said the
focus is to have the public take an interest in the issues.
Number 131
REP. TOOHEY asked Commissioner Usera if all types of
insurance policies would have to be reviewed by the Division
of Insurance or by the commission.
COMMISSIONER USERA explained that all licensed insurance
companies would have to submit their rates for review and
approval under the terms of HB 414. She said there are not
that many carriers.
Number 140
REP. TOOHEY said there are many policies. She observed that
there would be an increase in personnel and asked if there
would be duplicated costs.
Number 170
MS. THURSTON indicated that with HB 414, as it is currently
written, the workload would require one more staff person.
She said if Amendment 10 was to be adopted, it would require
somewhat of an increase in staff, but not much more.
REP. BRICE asked what the current process of approval is for
other types of insurance. He also asked if there is a
public process for approving car insurance rates.
MS. THURSTON said, in general, there is no public process.
However, she said that the division has the authority to
call hearings and exercises the option periodically. She
asserted that there is not a public meeting for every
filing.
Number 227
REP. BRICE suggested that because the commission would not
necessarily have staff that has actuarial background, the
approval process should be handled by the Division of
Insurance.
CHAIR BUNDE interjected and said that one of the primary
concerns is the public process and indicated that there are
already public hearings. He said he envisioned one public
hearing but said there may be many and asked what the cost
would be.
MS. THURSTON said she could not address the specific cost.
She asserted that the division is equipped to handle the
process but there would be additional costs resulting from
increase travel if Amendment 10 is adopted.
Number 271
REP. BRICE stated that because the commission would not
necessarily have the expertise necessary to make some of the
determinations, they will have to hire staff with the
appropriate expertise. He felt that the division would only
have to hire one or two people but would not have to
duplicate efforts. He agreed with a former statement that
there might even be a decrease in cost.
REP. OLBERG asked if HB 414 was to become law with Amendment
10 adopted, what would the Division of Insurance be doing
that it is not doing now?
MS. THURSTON explained that the division would be receiving
rate filings for all of the health care and disability
insurance.
REP. OLBERG asked if that is not done currently.
MS. THURSTON said no.
REP. OLBERG asked who currently handles the procedure.
MS. THURSTON maintained that nobody approves those rates and
the insurance companies set their own rates.
REP. OLBERG asked, if the division takes on the task of
approval, what will the health commission do that the
division won't be doing?
MS. THURSTON replied that the commission would bring in more
public involvement.
Number 322
CHAIR BUNDE observed that the cost would be the same for
both the Division of Insurance and the commission to hold
public hearings if that portion of the bill is essential to
its passage. He said the question is whether the meetings
are a necessary expenditure.
REP. OLBERG said, "...I think you've already predicted what
these meeting are going to sound like."
REP. TOOHEY asked if there were four insurance companies in
the state and they all submit rates, would the state choose
the best premium.
COMMISSIONER USERA said, "The state still has to put that
out to bid. So, it would be a question of what insurance
companies would bid on the state book of business and what
the terms and conditions were."
REP. TOOHEY explained that Blue Cross and Blue Cross are
nonprofits and asked if they would be under the same
regulations as the rest of the field.
MS. THURSTON said they would be under the same rules as
everyone else. She said they are currently being reviewed,
so there would be little impact on them.
CHAIR BUNDE observed that there was only one company that
bid for the state health insurance policy and if there were
other companies vying for the policy, circumstances could be
much different.
Number 386
REP. OLBERG asked if the division would review the rates of
the single bidder who proposes to sell insurance to the
state of Alaska.
MS. THURSTON said yes.
REP. OLBERG then asked Commissioner Usera if the Department
of Administration would also review those rates.
COMMISSIONER USERA said the department would not review them
in a regulatory sense.
REP. OLBERG asked if the health commission would review the
rates.
MS. THURSTON said under HB 414 the commission would.
COMMISSIONER USERA concurred.
CHAIR BUNDE asked for further discussion of Amendment 10.
Number 421
SEN. JIM DUNCAN said, "I actually support the amendment. I
just had a question for clarification. I wanted to be sure
that all the information is the same. This same proposal is
in the Senate side, Senate Bill 284, and also in the House
bill. But, this one doesn't prepare the bill in rate
approval. It removes rate approval all to the Division of
Insurance. That doesn't track with what's being testified
to, and I just wanted clarification because on 284 they
indicate that in addition to the investigator there will be
the three consumer complaints specialists at a cost of
$135,600 that we need." He asked for further clarification.
MS. THURSTON said she felt there would be an increase in
cost and part of it may cover some consumer complaint
people.
REP. TOOHEY quipped and said, "Mr. Chairman, we might have a
better bill than you do."
SEN. DUNCAN jokingly responded, "It's very unlikely." He
then stated that Rep. Brice's amendment should be adopted
and that the costs being reported to the body should be
accurate and include the cost of consumer complaint experts.
CHAIR BUNDE said he would expect a revised fiscal note that
would reflect those changes if the amendment passes.
Number 481
REP. BRICE said, "I would assume that those costs should be
within 414 as it's currently written as well, if the
amendment isn't passed any way, because they would still
be..."
CHAIR BUNDE interjected and pointed out that HB 414 would
not be paid for by the general fund and that the fiscal note
from the division would be.
REP. BRICE said that could be changed.
COMMISSIONER USERA stated that Sen. Duncan was correct in
that there are some inconsistencies and indicated that the
administration would like Chairman Rieger to give the
administration the opportunity to readdress those issues.
She said she wanted to be sure that everything is priced
correctly and there already were people working on revised
fiscal notes for the Senate. She indicated that she would
be reporting to the Senate the following Wednesday with
regard to those provisions.
COMMISSIONER USERA further stated that the funding source of
the governor's bill was premium tax, which currently is
going into the general fund. She asserted that the
administration is not proposing an increase in the premium
tax to pay for the legislation.
CHAIR BUNDE clarified and said that the funds are a subset
of the general fund.
(Chair Bunde stated for the record that Rep. G. Davis
arrived at 4:05 p.m.)
Number 534
CHAIR BUNDE related to Rep. G. Davis that the committee was
addressing Rep. Brice's Amendment 10 which would locate the
responsibility of rate review and approval in the Division
of Insurance. He then asked for further testimony or
questions regarding Amendment 10.
REP. B. DAVIS stated that although representatives of
insurance companies had testified previously against rate
review, they felt that if there was going to be rate review
and approval, it should be done by the Division of
Insurance. She urged the committee to support the
amendment.
CHAIR BUNDE reminded the committee that Commissioner Usera
had said that Amendment 10 would be acceptable. He then
asked the pleasure of the committee.
REP. BRICE made a motion to adopt Amendment 10.
REP. TOOHEY objected.
Number 576
CHAIR BUNDE called for the vote. Reps. Kott, B. Davis, and
Brice voted "Yea" and Reps. Toohey, Bunde, G. Davis, and
Vezey voted "Nay." Chair Bunde indicated that Amendment 10
was not adopted.
REP. B. DAVIS asked Ms. Thurston if she felt that the
legislation clearly defines the roles of both the Division
of Insurance and the commission, and if not, what were her
areas of concern.
MS. THURSTON said she had no areas of concern.
REP. B. DAVIS asked Ms. Thurston if she felt that everything
was clearly outlined in the bill.
Number 625
CHAIR BUNDE stated that his vote against Amendment 10 did
not indicate that he would like the health commission to
"get into the actuarial business." He said the commission
would concur with the decisions of the division and also
conduct public meetings.
REP. B. DAVIS asked Ms. Thurston if the division has
authority over the self-insured.
MS. THURSTON said no.
REP. B. DAVIS asked who will have that authority.
MS. THURSTON indicated that a federal waiver would have to
be obtained to include the self-insured.
REP. B. DAVIS asked Commissioner Usera if the only way would
be by obtaining a waiver.
COMMISSIONER USERA maintained that a federal waiver would
have to obtained.
REP. B. DAVIS asked which section of the bill addresses the
matter.
COMMISSIONER USERA indicated that on the previous Saturday
meeting an amendment was adopted that addressed the issue.
REP. B. DAVIS asked which section it was in and also
indicated it was never clearly discussed.
CHAIR BUNDE indicated that page 16, line 9, addresses
federal waivers. He then brought Amendment 11 to the table.
REP. BRICE made a motion to adopt Amendment 11.
REP. KOTT objected.
CHAIR BUNDE asked Rep. Brice to address the amendment. He
then indicated that Rep. Jim Nordlund was present and asked
him to join the committee.
REP. BRICE explained that the amendment would expand the
commission to make it a public commission versus a
professional commission, which would subsequently reduce the
cost of the commission significantly. He said the members
would be allowed a $400 a day per diem as opposed to paying
each person a range 26, salary which is a commissioner's
salary. He felt the commission would then more adequately
represent the consumer.
CHAIR BUNDE observed that considerable discussion had taken
place pertaining to the composition of the commission. He
indicated that to keep costs down, it was decided that three
people would aptly handle the responsibility. He then asked
Rep. Brice if he had a fiscal note to compare costs.
Number 725
REP. BRICE stated that the commission would perhaps work a
total of two months versus establishing three full time
state employees. He anticipated a savings if the amendment
was adopted. He pointed out that it would cost almost
$340,000 annually for three state commissioners.
CHAIR BUNDE asked how the comparison would look if the
commission, as proposed in Amendment 11, had to work year
round.
REP. BRICE deferred to Commissioner Usera for the answer.
REP. KOTT interjected and said a grade 26C is $72,000 per
year or $6034 per month plus $8000 in per diem monthly. He
said it is a substantial increase.
REP. BRICE added that there would also be 40% benefits.
COMMISSIONER USERA said the amendment would fundamentally
change the entire approach to the commission. She felt the
amendment would increase costs. She stated that if the
people are not working full time on the issues, somebody
must be paid who is. She said a range 26 is equivalent to
that of a division director or a program manager and is
consistent with similar commissions after which the health
commission is modeled. She further explained that to change
the commission into an advisory board of seven people would
increase costs considerably. Commissioner Usera felt that
it would be a very difficult workload dealing with complex
issues. She explained that not only would there be per diem
costs for the seven people, but there would also be travel
expenses. She maintained that those costs would be in
addition to the work that would be done at staff level.
SEN. DUNCAN stated that he supports Amendment 11. He said
the amendment reflects the structure that had been agreed
upon by the work group that met throughout the interim. He
indicated that the group was made up of insurance and health
providers, constituents, consumer groups, and various
legislators. He maintained that the work group decided that
there needed to be as much broad-based public involvement as
possible in any type of health care system and regarding any
type of reform.
SEN. DUNCAN felt that a narrow commission made up of only
three high paid members would limit the ability for the
public to be involved in the decision making process. He
further explained that the structure of the commission as
proposed in Amendment 11 is comparable to that of the
Permanent Fund Board of Trustees. Sen. Duncan stated that
the members of the board are compensated exactly as is
specified in the proposed amendment and there is much public
involvement. He said the board hires staff to do the
technical work as they are not necessarily experts. He felt
the process would be no more expensive than what is being
proposed in HB 414.
SEN. DUNCAN stated that HB 414 allows for any necessary
staff to be hired along with three "highly paid"
individuals. He said, "...the governor is proposing, if you
really do the job right, under the governor's bill, for
example what it does say in the governor's bill is, in
addition to these three highly paid individuals, they can
employ other staff as necessary. Now, the fiscal note says
it's going to be one analyst, a secretary, I guess, or
whatever else. But, that's not realistic if you're really
going to do the job."
SEN. DUNCAN reiterated that he supported Rep. Brice's
amendment because it is structured after that of the Board
of Trustees for the Permanent Fund with seven members
representing broad-based public involvement. He also stated
that the amendment would ensure that those individuals who
are appointed to the commission are committed to designing a
health care system that will serve the needs of the Alaskan
people.
SEN DUNCAN then said, "All of us have been around this
process for a long time. On the other hand, if you have
high paid political appointees, that's what you get --
political appointees. And, those jobs become political
plumbs." He further indicated that there are other
commission members that have worked for the person who
became governor and subsequently became political
appointees.
Number 911
REP. TOOHEY indicated that she was on the work force during
the interim and said many people did not agree on the
issues. She said, "I believe firmly that if you involve
nurse practitioners, mid-wives, psychologists, doctors,
nurses, or everybody in the world, you'll get nothing done.
We need a small commission that is focused on the economy of
the state because that's what's going to drive this health
insurance. It's going to be the economy. Who pays for it?
And, it's not going to be someone that wants to give all
these wonderful benefits to everybody because we can't
afford them. You can't afford personally, nor can the state
afford it. So, there are two opinions out there. And, for
you to sit there and say that I was a part of that group,
and you didn't say my name, but I was a part of that group,
and I did not agree with probably half of what went on."
Number 931
SEN. DUNCAN said he did not mean to imply that Rep. Toohey
had agreed with his positions. He said there was broad-
based agreement on the issue of the commission and also
indicated that there was a list of ten or twelve
organizations that endorsed the concept.
TAPE 94-53, SIDE A
Number 000
SEN. DUNCAN further indicated that the amendment does not
require that all different provider groups be represented on
the commission. He explained that Amendment 11 requires the
majority of the members be experts in health care issues
that fairly represent the general public as well as the
providers. He reiterated that there would be no additional
costs and suggested that it would be less costly.
Number 046
REP. TOOHEY said she envisioned the three member committee
to be completely removed from the medical community and
would hold public hearings that would include the general
public and the medical community. She then questioned as to
how many people would be vying for the seven seats on the
proposed commission.
SEN. DUNCAN said there would be as many vying for three
seats.
REP. TOOHEY said, "That's why I'm saying a nonmedical
person."
SEN. DUNCAN explained that as the bill is written it
requires that not more than one member be from the medical
community. He further indicated that a person can be an
expert in health care and not be a physician, nurse, health
care provider, or insurance provider. He then suggested
that the word "knowledgeable" should be used instead of
"expert" in Amendment 11. He felt it would relieve the
concern that the member must be a provider.
Number 143
REP. B. DAVIS explained that she too had participated in the
meetings during the interim and there was a general
consensus that supported HB 451. She indicated that she too
did not support many issues and said it was her vision that
the commission's structure would be similar to the Public
Utility Board, where members make approximately $67,000 and
work full time. She felt the commission should be expanded
and composed of people who are knowledgeable about health
care.
Number 193
SEN. DUNCAN indicated that there are people who have been
appointed at range 26C to other commissions in the state and
have no background in the area that they're serving.
REP. B. DAVIS asserted that the majority of the commission
should have backgrounds in health care. She said she could
support the amendment as written but that there would be an
overload of work for only three people.
CHAIR BUNDE pointed out that the page and line number
references used in Rep. Brice's Amendment 11 are incorrect.
REP. BRICE said he was just about to change the references.
CHAIR BUNDE said to correct the page and line references,
change page 3, line 21, to page 14, line 10. The second
reference would be changed from page 3, line 23, to page 14,
line 11. Change page 4, lines 5-9, to page 14, lines 27-31.
He further indicated that the last reference should be
changed from page 4, line 14, to page 15, line 4. He then
asked Commissioner Usera to respond to the amendment.
Number 270
COMMISSIONER USERA said she appreciated Sen. Duncan's
comments regarding political appointees. But, she indicated
that if the "legislature is going to confirm political
packs, there's more than one culprit here." She said she
can appreciate the other models for the commission used in
other legislation, but as a member of the Permanent Fund
Board of Trustees, there is no substitute for the intensive
day to day work that must be done, particularly on a start-
up basis.
COMMISSIONER USERA reiterated that extensive discussions had
taken place regarding the composition of commission. She
said, "But, I'm going to say one more time for the record
Mr. Chairman, that one of the overriding concerns when we
developed this bill is what can we afford to do? How can we
start moving this forward in a way that is affordable to get
the subject moving and get a focus moving on the attention.
And, this is the model that we think best serves that
intent."
Number 354
REP. B. DAVIS said she understood Commissioner Usera's
position considering the financial constraints facing the
legislature, but she felt the mark is being missed in terms
of what health care is about. She asserted that the costs
for health care are increasing each year and are becoming
less affordable. She further indicated that if the state
keeps "pinching the nickels and dimes based upon the fact
that we can't afford it now, we won't be able to afford
health care five years from now either." She felt a system
needs to be in place and that if it is not, she asked what
the legislature would have accomplished.
CHAIR BUNDE observed that the discussion before the
committee pertains to Amendment 11.
REP. B. DAVIS said she understood, but felt the issue should
be addressed.
Number 390
COMMISSIONER USERA said there is no funding to address
health care in the manner that Rep. B. Davis would like to
see. She explained that either one of two things could be
done. The state can wait and do nothing for the next few
years until there is funding or find a spending plan. She
said the administration recognizes that HB 414 isn't
"everything" but indicated that the administration believes
the state is not financially ready to undertake the entire
issue of health care all at once.
Number 437
CHAIR BUNDE reminded the committee again that Amendment 11
was on the table for discussion.
REP. TOOHEY asked Commission Usera if there was a
termination date for the commission in the original bill.
COMMISSIONER USERA said, "Sunset date -- five years with the
sunset year being the sixth year. And, just to reiterate
our concept here is we believe that this is the first
iteration of this commission. That in fact what we will see
is this process. I mean, if we go into comprehensive
reform, it may very well be that a different model and a
different structure of a commission would make a lot more
sense down the road."
CHAIR BUNDE asked Rep. Brice to speak again to his
amendment.
REP. BRICE referred to Rep. Toohey's comment and indicated
the concerns that Mr. Ford had regarding the governor being
able to extend the sunset date without legislative approval.
Number 475
CHAIR BUNDE indicated that his constituency would not be
happy if another state employee is added. He then called
for the vote to adopt Amendment 11. Reps. Olberg, B. Davis
and Brice voted "Yea" and Reps. Bunde, G. Davis, and Toohey
voted "Nay." The amendment failed.
CHAIR BUNDE brought Amendment 12 to the table.
REP. BRICE made a motion to adopt Amendment 12. He also
indicated that he had additional changes referencing the
appropriate pages.
REP. OLBERG said, "Point of order. Did the Chair define the
fate of Amendment 11?"
CHAIR BUNDE stated that Amendment 11 failed to pass. He
then indicated that Amendment 12 had been moved. He
objected for discussion purposes.
Number 523
REP. BRICE clarified the reference changes. He explained
that the amendment would establish a public hearing process
for the development of the health care plan itself. He said
the commission would design, implement, and maintain an
extensive community-based involvement process. He stated
that the provisions would keep the people of Alaska
informed.
CHAIR BUNDE said there was a problem with Rep. Brice's page
and line references.
REP. OLBERG said there is already a Section 44.19.635 in the
bill and asked Rep. Brice if he was making a substitution.
REP. BRICE indicated that he wanted to renumber the sections
appropriately.
MR. FORD indicated that the reference should be page 20,
line 17, and there would be a new Section 44.19.636.
REP. OLBERG asked if the change would start after line 16.
CHAIR BUNDE, after some discussion, asked Rep. Brice to
further address the amendment.
Number 593
REP. BRICE reiterated that Amendment 12 would establish a
public education process which would include the citizens of
Alaska in the process and would keep them informed of health
care services, financing options, revenue sources, cost-
sharing options, and the administration of the health care
plan.
CHAIR BUNDE asked if there would be one meeting a week, a
month, or a quarter and at what cost.
REP. BRICE suggested that there be continuing meetings that
would specifically address the aforementioned points of the
amendment.
COMMISSIONER USERA stated that the term "extensive
community-based" is fodder for lawsuits as it is difficult
to define what is extensive. She said she was more
concerned with the costs associated with those three words.
She indicated that the administration would be supportive of
the amendment if the term "extensive community-based" was
deleted.
Number 667
REP. BRICE disagreed and said there still needed to be a
public "push" on the commission and that perhaps Mr. Ford
could address the matter.
MR. FORD said more specific criteria could be substituted
for the term. He said it could be up to the commission to
determine what is extensive. He further stated that the
term could be narrowed, deleted or further defined.
CHAIR BUNDE stated that the House body recently had much
discussion as to what the legislative intent was of
legislation passed several years ago. He said he had a
strong concern as to what "extensive community-based" means.
He asked if meetings would be held in every "fish camp" or
in three major communities.
REP. BRICE said, "I would suggest more than three major
communities and less than every fish camp."
REP. G. DAVIS said he would like to amend Amendment 12 by
deleting the term "extensive community-based" and inserting
the word "a" before the word "public." He then moved the
amendment to Amendment 12.
REP. OLBERG objected.
REP. BRICE indicated that Rep. G. Davis' suggested amendment
was a friendly amendment.
REP. OLBERG maintained his objection.
Number 738
(Chair Bunde acknowledged the presence of Senator Suzanne
Little.)
REP. OLBERG said he felt the committee would be amending a
bad idea and would prefer to vote only on Amendment 12.
REP. G. DAVIS said he still maintained his amendment to
Amendment 12.
CHAIR BUNDE indicated that the committee was voting on an
amendment to Amendment 12 that would remove the term
"extensive community-based" and the sentence would read in
part, "...and maintain a public involvement process..."
CHAIR BUNDE then called for the vote. Reps. G. Davis, B.
Davis, and Toohey, and Bunde voted "Yea" and Reps. Olberg
and Brice voted "Nay." Chair Bunde indicated that the
amendment to Amendment 12 had been adopted and then called
for the vote to adopt Amendment 12 as amended. Reps. B.
Davis, Brice, and G. Davis voted "Yea" and Reps. Olberg,
Toohey, and Bunde voted "Nay." Chair Bunde indicated that
Amendment 12 had not been adopted.
Number 802
CHAIR BUNDE brought Amendment 13 to the table. He then
corrected the line and page references. He said page 5,
line 6, should be changed to page 16, line 10, Section 8.
REP. BRICE stated that the amendment would address long term
care. He felt that long term care should be included in the
health care reform.
REP. TOOHEY said she "personally" objected to the amendment
and felt the issue should be addressed by the commission.
CHAIR BUNDE asked for further discussion.
COMMISSIONER USERA reminded the committee that in the
previous meeting on HB 414, fairly comprehensive language
regarding public health and the health of senior citizens in
the state had been adopted in an amendment. She felt that
the concept of long term care falls explicitly within the
purview of public health.
Number 866
REP. BRICE suggested that long term care should be an issue
that is discussed separately and given specific focus within
the commission.
REP. G. DAVIS agreed that long term care should be included
as it is a greatly neglected issue. He felt that if the
issue is not addressed now, "it's going to come back to bite
us."
REP. OLBERG asked if a motion had been made to adopt
Amendment 13.
CHAIR BUNDE said the motion had been made. He asked for
further testimony. There being none, he then called for the
vote. Reps. B. Davis, Brice, and G. Davis voted "Yea" and
Reps. Olberg, Toohey, and Bunde voted "Nay." Chair Bunde
declared that Amendment 13 was not adopted.
Number 923
REP. BRICE asked if the committee was going to act under the
recommendations of Mr. Ford regarding the sunset date of the
commission.
CHAIR BUNDE explained that the committee would first need
feedback from the Department of Law before the issue could
be further discussed. He further indicated that Amendment 9
would be addressed at the next meeting on HB 414.
REP. OLBERG asked Commissioner Usera if approximately $1
million would be spent on the health commission annually.
COMMISSIONER USERA said yes, for the first year.
REP. OLBERG asked what the state will have and know then
that the state does not have and know now.
COMMISSIONER USERA said in a year's time the state will have
an incremental improvement to the current system; i.e., a
universal claim form, nonbinding arbitration, and extensive
data collection for pool insurance and rate approval. She
also indicated that there would be an implementation plan
for comprehensive reform.
CHAIR BUNDE added that he hoped something would be in place
before the federal plan is unveiled.
Seeing no further business before the committee, CHAIR BUNDE
adjourned the meeting at 4:55 p.m.
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