Legislature(1997 - 1998)
04/29/1998 03:13 PM HES
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HOUSE HEALTH, EDUCATION AND SOCIAL SERVICES STANDING COMMITTEE April 29, 1998 3:13 p.m. MEMBERS PRESENT Representative Con Bunde, Chairman Representative Joe Green, Vice Chairman Representative Brian Porter Representative Fred Dyson Representative Tom Brice MEMBERS ABSENT Representative Al Vezey Representative J. Allen Kemplen COMMITTEE CALENDAR HOUSE BILL NO. 44 "An Act relating to admission to an Alaska Pioneers' Home." - PASSED HB 44 OUT OF COMMITTEE CS FOR SENATE BILL NO. 197(RLS) am "An Act relating to health care services provided by, and practices of, a health maintenance organization; providing that an enrollee in a health maintenance organization has the right to select a treating chiropractor; specifying certain chiropractic health care reports, examinations, and limits on treatment; and prohibiting health maintenance organizations from limiting free speech of health care providers." - PASSED HCS CSSB 197(HES) OUT OF COMMITTEE HOUSE JOINT RESOLUTION NO. 58 Proposing amendments to the Constitution of the State of Alaska relating to the education fund. - HEARD AND HELD (* First public hearing) PREVIOUS ACTION BILL: HB 44 SHORT TITLE: ADMISSION TO PIONEERS' HOMES SPONSOR(S): REPRESENTATIVES(S) BRICE Jrn-Date Jrn-Page Action 1/13/97 39 (H) PREFILE RELEASED 1/3/97 1/13/97 39 (H) READ THE FIRST TIME - REFERRAL(S) 1/13/97 39 (H) STA, HES, FINANCE 3/31/98 (H) STA AT 8:00 AM CAPITOL 102 3/31/98 (H) MINUTE(STA) 4/02/98 (H) STA AT 8:00 AM CAPITOL 102 4/02/98 (H) MINUTE(STA) 4/02/98 2851 (H) STA RPT CS(STA) 6DP 4/02/98 2851 (H) DP: JAMES, ELTON, BERKOWITZ, IVAN, 4/02/98 2851 (H) RYAN, HODGINS 4/02/98 2851 (H) ZERO FISCAL NOTE (ADM) 4/02/98 2851 (H) REFERRED TO HES 4/29/98 (H) HES AT 3:00 PM CAPITOL 106 BILL: SB 197 SHORT TITLE: REGULATING HEALTH MAINTENANCE ORGS. SPONSOR(S): SENATOR(S) DONLEY, Taylor, Ellis, Duncan Jrn-Date Jrn-Page Action 5/07/97 1783 (S) READ THE FIRST TIME - REFERRAL(S) 5/07/97 1783 (S) HES 1/14/98 (S) HES AT 9:00 AM BUTROVICH ROOM 205 1/14/98 (S) MINUTE(HES) 1/16/98 (S) HES AT 9:00 AM BUTROVICH ROOM 205 1/16/98 (S) MINUTE(HES) 1/16/98 2224 (S) COSPONSOR(S): ELLIS 1/21/98 (S) HES AT 9:00 AM BUTROVICH ROOM 205 1/21/98 (S) MINUTE(HES) 1/21/98 2250 (S) HES RPT 2DP 1NR 2AM 1/21/98 2250 (S) DP: WILKEN, WARD NR: LEMAN 1/21/98 2250 (S) AM: GREEN, ELLIS 1/21/98 2250 (S) ZERO FISCAL NOTE (DCED) 2/06/98 2428 (S) COSPONSOR: DUNCAN 2/17/98 (S) RLS AT 11:20 AM FAHRENKAMP RM 203 2/17/98 (S) MINUTE(RLS) 2/23/98 2612 (S) RLS CS, NEW TITLE AND CALENDAR 2/23/98 2/23/98 2613 (S) PREVIOUS ZERO FN (DCED) 2/23/98 2613 (S) READ THE SECOND TIME 2/23/98 2613 (S) RLS CS ADOPTED UNAN CONSENT 2/23/98 2614 (S) AM NO 1 ADOPTED UNAN CONSENT 2/23/98 2614 (S) AM NO 2 ADOPTED Y10 N8 E2 2/23/98 2615 (S) ADVANCED TO THIRD READING UNAN CONSENT 2/23/98 2615 (S) READ THE THIRD TIME CSSB 197(RLS) AM 2/23/98 2615 (S) RETURN TO SECOND FOR AM 3 UNAN CONSENT 2/23/98 2615 (S) AM NO 3 ADOPTED UNAN CONSENT 2/23/98 2615 (S) AUTOMATICALLY IN THIRD READING 2/23/98 2616 (S) PASSED Y17 N1 E2 2/23/98 2616 (S) WILKEN NOTICE OF RECONSIDERATION 2/24/98 2635 (S) RECON TAKEN UP - IN THIRD READING 2/24/98 2635 (S) PASSED ON RECONSIDERATION Y19 N- A1 2/24/98 2636 (S) TRANSMITTED TO (H) 2/25/98 2417 (H) READ THE FIRST TIME - REFERRAL(S) 2/25/98 2418 (H) HES 4/29/98 (H) HES AT 3:00 PM CAPITOL 106 BILL: HJR 58 SHORT TITLE: CONST AM: EDUCATION FUND SPONSOR(S): REPRESENTATIVES(S) COWDERY Jrn-Date Jrn-Page Action 2/12/98 2306 (H) READ THE FIRST TIME - REFERRAL(S) 2/12/98 2306 (H) HES, JUDICIARY 3/31/98 (H) HES AT 3:00 PM CAPITOL 106 3/31/98 (H) MINUTE(HES) 4/07/98 (H) HES AT 3:00 PM CAPITOL 106 4/07/98 (H) MINUTE(HES) 4/29/98 (H) HES AT 3:00 PM CAPITOL 106 WITNESS REGISTER SENATOR DAVE DONLEY Alaska State Legislature Capitol Building, Room 508 Juneau, Alaska 99801-1182 Telephone: (907) 465-3892 POSITION STATEMENT: Testified as sponsor of CSSB 197(RLS)am. QUINN MCKENNA Providence Health System 3200 Providence Drive Anchorage, Alaska 99519 Telephone: (907) 261-3055 POSITION STATEMENT: Testified on CSSB 197(RLS)am. GORDON EVANS, Representative Health Insurance Association of America 211 Fourth Street, Suite 305 Juneau, Alaska 99801 Telephone: (907) 586-3210 POSITION STATEMENT: Testified on CSSB 197(RLS)am. ANNETTE DEAL, Researcher to Representative John Cowdery Alaska State Legislature Capitol Building, Room 416 Juneau, Alaska 99801-1182 Telephone: (907) 465-3879 POSITION STATEMENT: Testified on HJR 58. MARCO PIGNALBERI, Legislative Assistant to Representative John Cowdery Alaska State Legislature Capitol Building, Room 416 Juneau, Alaska 99801-1182 Telephone: (907) 465-3879 POSITION STATEMENT: Testified on HJR 58. ACTION NARRATIVE TAPE 98-50, SIDE A Number 0001 CHAIRMAN CON BUNDE called the House Health, Education and Social Services Standing Committee meeting to order at 3:13 p.m. Members present at the call to order were Representatives Bunde, Green, Dyson and Brice. Representative Porter arrived at 3:29 p.m. Representatives Vezey and Kemplen were absent. HB 44 - ADMISSION TO PIONEERS' HOMES Number 0062 REPRESENTATIVE TOM BRICE, Sponsor of HB 44, said the concept of this legislation was brought to his attention during the last campaign by one of his constituents who, while on the waiting list for the Alaska Pioneers' Home, inquired if he would be denied admission if the monthly rent increased to a point where he couldn't afford it. While it is current policy that the Pioneers' Home will not disqualify a person based on failure to make an initial payment or provide security for monthly payments, his concern is that policy could change during the annual policy update. House Bill 44 would place that policy in statute, thus protecting the state's senior population from being denied admission into the Pioneers' Home. Number 0140 REPRESENTATIVE BRICE made a motion to adopt Amendment 1 which reads: Page 1, line 10: Following "on" Insert "financial" CHAIRMAN BUNDE objected for the purpose of discussion. REPRESENTATIVE BRICE withdrew Amendment 1 because his concern was addressed on line 13. Number 0260 CHAIRMAN BUNDE pointed out the Department of Administration had submitted a zero fiscal note, yet there would be people at the Pioneers' Home at state expense. He inquired at what point is it determined that a person cannot pay. REPRESENTATIVE BRICE said a person would be required to pay as much as possible based on the current determination process. This legislation basically states a person unable to provide security or make an initial payment will not be denied admission. CHAIRMAN BUNDE remarked the zero fiscal note is misleading in that it does cost money, just not additional money. Number 0335 REPRESENTATIVE JOE GREEN asked if that's the case, is HB 44 necessary? REPRESENTATIVE BRICE responded it is necessary because policy is just that - policy, and given that policies can change without legislative approval, he wants that policy codified to statute. REPRESENTATIVE GREEN said, "Last summer, I visited the Pioneers' Home in Anchorage and there were several people in there who were not Alzheimer or dementia people and because they were up to some 80 percent of the people that lived there suffering from some form of dementia, the costs were escalating extremely rapidly. Now if that's the case - and these people were saying they were in danger of being thrown out - if the policy is that if they can't pay, they get to either come in or get to stay in, there's a confusion factor here because the people were already there and fearful that they were going to be thrown out because they could not longer afford these elevated prices." REPRESENTATIVE BRICE agreed that was a good point and added the purpose of HB 44 is to alleviate some of that concern and fear. REPRESENTATIVE GREEN said, "If that's the case and people will make application, the costs are going up because you're treating dementia patients, is that going to exacerbate the problem at the Pioneers' Home because costs are going up to cover the cost of operation, but these people are coming in not paying the costs, which makes them go up even higher." REPRESENTATIVE BRICE responded this will ensure that individuals will not be denied admission to the Pioneers' Home because of their inability to pay. Individuals living at the Pioneers' Home have never paid the full cost of care, yet it is true that individuals are helping to pay the increased costs of having to care for individuals with dementia. He added, "What this might help us with is possibly ensuring that those - as the prices increase and the costs are shifted, that folks still have access because frankly, I don't know too many people who come from the era of the folks who are involved in the Pioneers' Home, who could afford to pay the full cost on the fixed level of retirement they're getting out of jobs they had in the 70s ...." REPRESENTATIVE GREEN said, "If that's happening - if we're treating more and more dementia related illnesses, mental illnesses if you will, in Pioneers' Home, have we lost the idea of the Pioneers' Home originally, should we go back to having a Pioneers' Home and if we have that many mental illness faces, then I think Mental Health ought to come in and take care of those people and not confuse the issue with the Pioneers' Home." REPRESENTATIVE BRICE shared Representative Green's point of view and has drafted legislation that would codify the role of the Pioneers' Home as a communal living environment, breaking off the dementia related illnesses to a separate facility so as to become Medicaid eligible, and refinance their care by 50 percent of federal funds. Number 0660 CHAIRMAN BUNDE observed there have been a number of policy decisions made relating to the Pioneers' Homes. He asked if there was further discussion on HB 44. Hearing none, he closed public testimony and asked the wish of the committee. Number 0697 REPRESENTATIVE BRICE made a motion to pass HB 44 out of committee with individual recommendations and attached zero fiscal notes. CHAIRMAN BUNDE asked if there was objection. There being none, HB 44 moved from the House Health, Education and Social Services Standing Committee. CSSB 197(RLS)am - REGULATING HEALTH MAINTENANCE ORGS. Number 0732 CHAIRMAN BUNDE announced the next order of business would be CSSB 197(RLS)am, "An Act relating to health care services provided by, and practices of, a health maintenance organization; providing that an enrollee in a health maintenance organization has the right to select a treating chiropractor; specifying certain chiropractic health care reports, examinations, and limits on treatment; and prohibiting health maintenance organizations from limiting free speech of health care providers," sponsored by Senator Dave Donley. SENATOR DAVE DONLEY informed the committee that CSSB 197(RLS)am limits certain practices of health maintenance organizations (HMO). First, it prohibits HMOs from initiating the infamous gag rules on doctors. Additionally, it provides that customers shall be informed if there are services that are not covered under a maintenance organization plan to eliminate the element of surprise. He said the bill also sets out specific provisions for direct access to chiropractic care rather than requiring all patients to go through a gatekeeper, as is the practice that has been developed by HMOs in other parts of the country. CSSB 197(RLS)am also provides for a point of service option for enrollees in HMOs that allows an option to choose a different deductible or a higher cost, if the enrollee wishes to go to the health care provider of their choice. SENATOR DONLEY advised the members he has suggested an amendment, which would add language to an existing statute prohibiting unfair discrimination against persons who provide a service. He said it would add HMOs into the existing health insurance so the same prohibition that exists in statute for all other kinds of medical insurance would also apply to HMOs. He said Chairman Bunde had proposed an amendment which he agrees with, which provides that if an HMO or insurance company decides to deny, reduce, or terminate a health care benefit to deny payment for a health care service, it must be based on the recommendation of a licensed health care provider within that specialty or subspecialty, and also a provider who is licensed to practice in Alaska. Number 0868 REPRESENTATIVE GREEN made a motion to move Amendment 1, 0- LS0905\KA.1, Ford, dated 3/18/98. Amendment 1 reads: Page 1, following line 7: Insert a new bill section to read: "* Section 1. AS 21.36.090(d) is amended to read: (d) Except to the extent necessary to comply with AS 21.42.365 and AS 21.56, a person may not practice or permit unfair discrimination against a person who provides a service covered under a group health insurance policy that extends coverage on an expense incurred basis, or under a group service or indemnity type contract issued by a health maintenance organization or a nonprofit corporation, if the service is within the scope of the provider's occupational license. In this subsection, "provider" means a state licensed physician, dentist, osteopath, optometrist, chiropractor, nurse midwife, advanced nurse practitioner, naturopath, physical therapist, occupational therapist, psychologist, psychological associate, or licensed clinical social worker, or certified direct-entry midwife." Page 1, line 8: Delete "Section 1." Insert "Sec. 2." Renumber the following bill sections accordingly. REPRESENTATIVE BRICE objected for purposes of discussion. CHAIRMAN BUNDE noted that Senator Donley had explained Amendment 1 would include HMOs and the list of other physicians and medical care providers. REPRESENTATIVE BRICE said, "They cannot discriminate." SENATOR DONLEY explained it is already an existing law. Amendment 1 adds HMOs to the existing law. Number 0935 CHAIRMAN BUNDE called an at-ease at 3:28 p.m. He reconvened the meeting at 3:30 p.m. He noted the arrival of Representative Porter at 3:29 p.m. REPRESENTATIVE FRED DYSON expressed confusion as to the intent of Senator Donley's amendment. CHAIRMAN BUNDE explained that Senator Donley's amendment is merely adding HMOs to the current statute. SENATOR DONLEY said the language in Section 1 is all in existing law and applies to all other types of health insurance policies. The amendment just adds HMOs to the existing law so the same prohibition against unfair discrimination would also apply to contracts issued by HMOs. Number 1010 CHAIRMAN BUNDE asked if Representative Brice maintained his objection. Hearing no objection, Amendment 1 was adopted. Number 1020 REPRESENTATIVE GREEN made a motion to move Amendment 2 offered by Representative Bunde which reads: Page 4, after line 6 Add a new section. A utilization review decision to deny, reduce, or terminate a health care benefit to deny payment for a health care service because that service is not medically necessary may only be made by a health care provider trained in that specialty or subspecialty and licensed to practice in the state after consultation with the covered persons's health care provider. CHAIRMAN BUNDE asked if there is an objection. There being none, Amendment 2 was adopted. Number 1032 QUINN MCKENNA, Providence Health System, testified via teleconference from Anchorage. He said he will not argue that managed care companies should not be regulated; obviously they should be. He will not argue against a legislator aggressively reviewing organizations, especially if there is any fear of infringing upon the rights of their constituents. Nor will he argue against the appropriateness of chiropractic services. Those items he just mentioned are not in question in his testimony. However, he would like to add testimony on where the line should be drawn that balances our personal desire to have free and unfettered access to any care that a person wants to receive and the cost related to that care. The only issue he was raising with this legislation is with regard to the mandating of chiropractic coverage by a managed care company. He recalled back in the early 90s across the country, our society was screaming about the dramatic increases in health care cost; health care costs were increasing three times the rate of inflation. He stated "Subsequent to that, managed care had grown quite dramatically, and actually health care inflation has come in check during this period of time. In fact, in 1996, health care inflation was just, I believe, 1.6 or 1.9 percent above the inflation rate, quite dramatically down from the double digit inflation of just a few years prior. A lot of that because of the ability of managed care companies to come in, do utilization management, promised volume for discounts, and leveraged the providers into providing lower costs because they could provide that volume discounts." MR. MCKENNA continued his testimony. "Health care is such a strange service and industry. In most other industries -- like if I were to go buy a car, I would go negotiate with the car salesman and I would write a check, or I would go to the bank and pick up money, but be obligated to pay that. In health care we buy insurance, which the insurance company then pays for the health care that I receive. And maybe during the year I pay $4,000 for my health care insurance, maybe I only need $1,000 of coverage, or maybe I need $100,000. I am, all of a sudden, taken away from my obligation of paying for that service if someone else is paying for it. And we need to be careful when our initial desire as people and society is to get as much as we can and demand as much as we can and you, as the legislature, need to be careful that we also balance the cost of that care because as we saw just less than a decade ago, it can easily spiral out of control." MR. MCKENNA urged the committee not to pass this amendment, not necessarily because it's so broad, but because it could set a precedent on limiting the ability of managed care organizations to help control health care costs for their community. He asked, "Out of all the services that are available - health care services, open heart surgery, treatment for diabetic patients, et cetera - how is it that this amendment protects chiropractic services and mandates that all chiropractors have to be (indisc.) and have to be paid for their services? How is it that out of all of the services available this is the very first one to come to be protected?" He indicated he has not heard testimony that out of all of the services available that chiropractic care is the best one that would provide (indisc.) services the health of all of the communities is going to be increased. He said he would encourage the legislature to go back and say as they start to draw the line, is this the best place to draw the line. Number 1271 DR. R. H. BANKS, President, Alaska Chiropractic Society, testified via teleconference from Anchorage. He said he would like to speak to the issues just brought up by Mr. McKenna. He believes Mr. McKenna may be a little confused with the legislation. He said first of all it's not managed care legislation, it is HMO legislation. Secondly, the bill does not mandate chiropractic care. He said in a separate clause the first amendment to mandate all services, it prohibits discrimination and so the first clause in the bill would mandate chiropractic care. The separate chiropractic clause in the bill is to ensure access to chiropractic care. He reiterated that it does not mandate chiropractic care, it assures that there would be access to chiropractic care. He said, "On par with subsistence, health care is the issue on voter's minds. Voters are concerned with access to quality care. Voters are concerned with the ability to choose a doctor who is concerned about them; a professional they can trust. Patients are demanding that their doctors be able to discuss all treatment options available to alleviate their health problems. .... We may not see HMOs in Alaska for several years and now is the time to act on behalf of thousands of Alaskans who signed a petition and sent public opinion messages in support of SB 197." He urged the committee members to move this bill out of committee today. Number 1400 GORDON EVANS, Representative, Health Insurance Association of America (HIAA), came before the committee to testify. He told the committee that HIAA opposes the bill in general because it is unneeded legislation since there are no HMOs in Alaska and no prospects for any in the unforeseeable future. He said HIAA is also concerned about certain managed care initiatives being proposed in this and other legislation and contrary to the testimony of Dr. Banks, this is not only a managed care legislation, it is also a mandate for chiropractors. MR. EVANS referred to Section 2 of CSSB 197 and read into the record, "SB 197 proposes to amend current law to require a carrier to include in his evidence of coverage guidelines explaining when treatment may be denied. Managed care plans already offer coverage guidelines in their schedule of benefits. The schedule of benefits is a legal document filed with the state Division of Insurance that describes in detail what the plan covers, what it does not cover, and the rules and procedures governing eligibility, and a copy of that schedule of benefits is provided to ensure (indisc.) enrollment. The schedule of benefits does not provide detailed utilization review or quality insurance criteria, which are very detailed and, therefore, can be voluminous." He continued, "Also, utilization review and quality insurance criteria are subject to change in order to keep up with advancing medical technology. Health insurers are not opposed to providing, upon request of a patient or the health care provider, a written explanation of an adverse determination, that is a copy of the contract basis or relevant medical rationale used to make that determination." He said he is prepared to offer a proposed amendment to replace the current Section 2 with a new Section 2 entitled, "Adverse Determination" together with a new Section 5 which would then add a definition of the term "adverse determination." Number 1500 MR. EVANS said he has a few comments to elaborate on HIAA's opposition to Section 3 of the bill. He said that section, among other things, would allow an insured direct access to the services of a licensed chiropractor of his or her choice without prior approval of the enrollee's health maintenance organization, a gatekeeper, or a primary care physician. He said this provision is a mandated benefit that will directly benefit a specific group of providers - chiropractors - and he predicts that it won't stop with them. He said, "Such legislative benefits, as we have noted on many occasions before this committee, will simply drive up costs and ultimately limiting the affordability of quality care for consumers." He said for that reason, HIAA has always opposed mandating of benefits. MR. EVANS referred to Section 4, stating that CSSB 197(RLS) am proposes to add a new subsection (i) that would prohibit HMOs from imposing limits regarding criticism by a provider of health care services provided by an HMO; written or oral communications between a health care provider and an enrollee regarding health care services; and employment of a health care provider to be terminated unless the provider receives written notice of the cause for the termination before being terminated. He indicated HIAA doesn't object to all of that subsection, but objects to part of it. He said, "Most managed care firms carefully guard their current customers and information about their plan that they consider to be confidential. Consequently, plans will include contractual provisions asking the health care provider to agree not to disparage the health plan to enrollees or to attempt to induce enrollees to leave a plan or join another plan. These types of contractual provisions are not unique to HMOs, but are imposed by many other employers through contracts or employment manuals. No business can tolerate its employees driving customers away. In addition, there are many legitimate business precautions a managed care plan must consider when contracting with an independent professional or organization." MR. EVANS continued, "These include first, as a general contractor employing the provider, health plans could be held jointly liable for libelous statements by a provider or spurious claims, which impact on other providers' or institutions' business. Secondly, providers who might have mobile contractual arrangements with health plans and facilities could attempt to steer patients to facilities in which the provider has a personal financial stake. Lastly, the medical community has very jealously protected itself against any disclosure data which compares physicians or facilities based upon their clinical outcome. The same level of analytical objectivity should be required in any qualitative statements made by contracting physicians." He noted that HIAA does not believe HMOs should limit or manage clinical discussions between physicians and their patients regarding treatment options. In fact, most managed care plans already require language to that effect in their agreements. He said Section 4 would also prohibit carriers from denying health care coverage for enrollee unless enrollee has been examined by at least two physicians. It would also prohibit a carrier from imposing financial incentives to be given or offered to a provider for denying or delaying health care services. He said denial of health care coverage can occur for a number of reasons: for instance, a particular benefit may not be covered by an insured's policy. Many procedures are subjected to utilization review and quality assurance criteria. For instance, the most expensive treatment is not always the best and sometimes surgery is not the only available intervention. The insurer is not prohibited from seeking a second medical opinion, however, the insurer should not be required to subject every denial of health care coverage to a second provider's opinion and the law as stated now would require that. Number 1667 MR. EVANS told the committee that managed health care plans have attempted to create reimbursement systems which reward providers for keeping their patients healthy in the most efficient way possible, but do not, of course, encourage over-utilization of scarce health dollars. If a physician provides too few services, that could be just as costly as providing too many. MR. EVANS expressed confusion as to where Amendment 2 would fit into the bill. SENATOR DONLEY was of the impression that Amendment 2 added a new section to the bill. CHAIRMAN BUNDE confirmed that. MR. EVANS said the problem with having a licensed practice in this state is a problem because there are some specialties that there may be only one person licensed in this state. In that context he asked, "Is he going to consult with himself to do that?" CHAIRMAN BUNDE replied, "They don't have to live in this state, they just have to be licensed to practice in this state." MR. EVANS said, "I understand, but with the professional utilization review entities that are around the country, they are - and they are very good whether - I know that some people don't think they are, but they are." CHAIRMAN BUNDE said that's not whose profit line we're looking at. MR. EVANS said, "I can't argue with you on that, if that's your view." He indicated that the idea is if a person is licensed in the United States, why not have it that way rather than just licensed in this state? He pointed out the argument was made the attorney general can't get to them if they're not licensed in this state. He contends the attorney general isn't going to bring a civil lawsuit against them anyway; the patient will file a lawsuit. He asked, "Where does the attorney general get involved in it? Jerking their license?" Number 1776 CHAIRMAN BUNDE responded, "We have our own board that I think Alaskans are more comfortable with having them at our standards." MR. EVANS referred to Amendment 1 stating the problem HIAA has with it is that particular statute is being used now for everything except what it was intended to when it was originally enacted by this legislature. He stated originally it was intended to be comparing physician "A" with physician "B" and now it's gotten to the point where it compares physician "A" with chiropractor "B," or if they happen to do the same sort of service, you have unfair discrimination. He said the best thing the legislature could do with that statute is to repeal it and start over from scratch and make it back to what it was intended to be in the first place. He pointed out he is not the only one saying that; the Division of Insurance has told the legislature that many times, also. Number 1829 CHAIRMAN BUNDE announced that public testimony is closed. In summary, he said health care costs are a challenge. One way to limit that is through volume, the other way is to reduce services. He expressed that he understands the concern about limiting health care costs and he also understands that insurance companies exist to make a profit and can make profits many ways; one way is by reducing services. SENATOR DONLEY concluded by stating the concept of repealing the whole statute goes way beyond the scope of this legislation. He said obviously we have this existing statute, which is being enforced by the Division of Insurance who is going through the process of developing the criteria to enforce it. He indicated that it seems completely appropriate that it's there and applies to health insurance; it should also apply to HMOs. Number 1987 CHAIRMAN BUNDE made a motion to move HCS CSSB 197(HES) out of committee. There being no objection, HCS CSSB 197(HES) was moved from the House Health, Education and Social Services Standing Committee. HJR 58 - CONST AM: EDUCATION FUND Number 1902 CHAIRMAN BUNDE announced the next order of business was HJR 58, Proposing amendments to the Constitution of the State of Alaska relating to the educational fund. At the previous hearing, the committee had asked Representative Cowdery to check into the possible use of National Petroleum Reserve in Alaska (NPRA) monies. Number 1950 ANNETTE DEAL, Researcher to Representative John Cowdery, said the Legislative Legal Division staff has advised those funds are already spoken for, which basically leaves HJR 58 as it currently stands. CHAIRMAN BUNDE called an at-ease at 3:53 p.m. Chairman Bunde reconvened the meeting at 3:55 p.m. Number 1985 REPRESENTATIVE GREEN said, "As I read the bill, this would in effect add another 40 percent dedication to the already constitutionally dedicated 25 percent and statutorily dedicated 25 percent in addition. This would then constitutionally add another 40 percent, so that there would only be, in effect, 10 percent left for allocation other than the 90 percent mandated. And my concern is that when we do that, are we binding ourselves to the point that -- as I understand the original intent of the permanent fund was that it would take care of government expenditures when oil revenue no longer was capable, such as the situation ...." CHAIRMAN BUNDE interjected, "Earnings of the permanent fund ...." REPRESENTATIVE GREEN continued, "Yah, not the corpus. This would take of that which we can now allocate, it would dedicate it to schools and leave only 10 percent for other allocations because 50s already spoken for. Is that fiscally responsible?" CHAIRMAN BUNDE said it becomes a policy call. Number 2060 MARCO PIGNALBERI, Legislative Assistant to Representative John Cowdery, said another way to look at it is the money going into this fund is an offset to other general fund monies that would otherwise be going to education. For example, if there was $100 million in the fund, that's $100 million less that would have to be taken out of the general fund to fund education. REPRESENTATIVE GREEN noted the difference is significant; in one case it's a constitutional amendment which means going to the people for a vote if there's a problem in the future; whereas, if it's done by statute, the allocation is done each year by the legislature and statutes can be changed each year. Number 2100 MR. PIGNALBERI said in looking at the first five years of revenue (indisc.) projections, for example, about $75 million would go into the fund - the state's current educational expenditures are running upwards of $700 million. Again, the money going into this fund means less that would be taken out of the general fund and other sources to pay for education. He added it would be quite a long period of time before this fund had enough money in it to be the primary funding source for education. He said, "The point I'm trying to make is that you're not locked in - this resolution would not lock in expenditures until it got to be so large that you had to go to this fund for all funding for educational expenditures. And until it gets that large, you could look at it as an offset of the general fund." REPRESENTATIVE GREEN said if that's the case, what is to be gained by making it a constitutional amendment. MR. PIGNALBERI said it is a way of incrementally getting to a point where there's a stable source of education funds in the state. It may take some years to reach the level of $700 million plus, and may never reach it in our lifetime, but it's a start and future legislatures may find other revenue sources to add to the fund. The overall goal is to establish a stable source of educational funding so it's not so subject to the economic situation of the state. Number 2185 REPRESENTATIVE DYSON said he had two fundamental problems; first, should any government agency have reserved funds and therefore not have to compete with other government services for funding; and secondly, if any government organization should have a noncompetitive standing for funding, is education the appropriate one? He noted it's a philosophical question, but he would appreciate Mr. Pignalberi's remarks. MR. PIGNALBERI said there has been a lot of thought given to the question and basically, when this approach is compared to the approach that's been put forth by this Governor, as well as previous Governors, for an educational endowment, this is a milder, more incremental approach which is still subject to annual legislative appropriation. REPRESENTATIVE GREEN inquired if funds would have to be appropriated under this approach? MR. PIGNALBERI responded yes, this is a funding source; funds would still have to be appropriated to the particular educational programs. REPRESENTATIVE GREEN asked if Mr. Pignalberi meant the revenue from this fund. MR. PIGNALBERI confirmed that. REPRESENTATIVE DYSON inquired if the money would simply remain in the fund and couldn't be used for anything else if it didn't get appropriated. CHAIRMAN BUNDE stated his belief that there were two purposes in the legislation; one was to build a steady source of income for education and the other was to encourage people to have another look at their interest in either developing or not developing ANWR. Number 2279 CHAIRMAN BUNDE observed the committee lacked a quorum at this time. He expressed his appreciation to Representative Cowdery bringing the issue up for discussion. He asked if there were further questions from the committee. There being none, he thanked Mr. Pignalberi for his comments and indicated HJR 58 would remain in committee. ADJOURNMENT Number 2300 CHAIRMAN BUNDE adjourned the House Health, Education and Social Services Standing Committee at 4:05 p.m.