Legislature(1999 - 2000)

03/24/1999 03:30 PM House L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
    HOUSE LABOR AND COMMERCE STANDING COMMITTEE                                                                                 
                   March 24, 1999                                                                                               
                     3:30 p.m.                                                                                                  
MEMBERS PRESENT                                                                                                                 
Representative Norman Rokeberg, Chairman                                                                                        
Representative Andrew Halcro, Vice Chairman                                                                                     
Representative Jerry Sanders                                                                                                    
Representative Lisa Murkowski                                                                                                   
Representative John Harris                                                                                                      
Representative Tom Brice                                                                                                        
Representative Sharon Cissna                                                                                                    
MEMBERS ABSENT                                                                                                                  
All members present                                                                                                             
COMMITTEE CALENDAR                                                                                                              
HOUSE BILL NO. 40                                                                                                               
"An Act combining parts of the Department of Commerce and Economic                                                              
Development and parts of the Department of Community and Regional                                                               
Affairs by transferring some of their duties to a new Department of                                                             
Commerce and Rural Development; transferring some of the duties of                                                              
the Department of Commerce and Economic Development and the                                                                     
Department of Community and Regional Affairs to other existing                                                                  
agencies; eliminating the Department of Commerce and Economic                                                                   
Development and the Department of Community and Regional Affairs;                                                               
relating to the Department of Commerce and Rural Development and                                                                
the commissioner of commerce and rural development; adjusting the                                                               
membership of certain multi-member bodies to reflect the transfer                                                               
of duties among departments and the elimination of departments;                                                                 
creating the office of international trade and relating to its                                                                  
duties; and providing for an effective date."                                                                                   
     - COMMITTEE WAIVER DISCUSSED                                                                                               
HOUSE BILL NO. 121                                                                                                              
"An Act relating to patients' rights under a health care insurance                                                              
plan or contract providing coverage for dental care, and                                                                        
prohibiting certain practices by health care insurers relating to                                                               
dental care."                                                                                                                   
     - FAILED TO MOVE CSHB 121(L&C) OUT OF COMMITTEE                                                                            
* HOUSE BILL NO. 143                                                                                                            
"An Act relating to the executive officer employed for the Real                                                                 
Estate Commission, to educational materials published by the Real                                                               
Estate Commission, to the Real Estate Surety Fund, to contracts by                                                              
the Real Estate Commission, and to disclosures in real property                                                                 
     - HEARD AND HELD                                                                                                           
(* First public hearing)                                                                                                        
PREVIOUS ACTION                                                                                                                 
BILL: HB 40                                                                                                                     
SHORT TITLE: DEPT OF COMMERCE & RURAL DEVELOPMENT                                                                               
SPONSOR(S): REPRESENTATIVES(S) KOHRING, Cowdery, Austerman,                                                                     
Therriault, Harris, Mulder                                                                                                      
Jrn-Date    Jrn-Page           Action                                                                                           
 1/19/99        28     (H)  PREFILE RELEASED 1/15/99                                                                            
 1/19/99        28     (H)  READ THE FIRST TIME - REFERRAL(S)                                                                   
 1/19/99        29     (H)  CRA, L&C, FINANCE                                                                                   
 3/09/99      Text     (H)  CRA AT  8:00 AM CAPITOL 124                                                                         
 3/09/99               (H)  BILL POSTPONED TO 3/18/99                                                                           
 3/16/99       484     (H)  COSPONSOR(S): COWDERY                                                                               
 3/18/99      Text     (H)  CRA AT  8:00 AM CAPITOL 124                                                                         
 3/18/99      Text     (H)  HEARD AND HELD                                                                                      
 3/18/99      Text     (H)  MINUTE(CRA)                                                                                         
 3/24/99       561     (H)  COSPONSOR(S): AUSTERMAN, THERRIAULT,                                                                
 3/24/99       561     (H)  HARRIS                                                                                              
BILL: HB 121                                                                                                                    
SHORT TITLE: DENTAL CARE INSURANCE                                                                                              
SPONSOR(S): REPRESENTATIVES(S) BUNDE                                                                                            
Jrn-Date    Jrn-Page           Action                                                                                           
 3/03/99       341     (H)  READ THE FIRST TIME - REFERRAL(S)                                                                   
 3/03/99       342     (H)  L&C, FINANCE                                                                                        
 3/19/99               (H)  L&C AT  3:15 PM CAPITOL 17                                                                          
 3/19/99               (H)  HEARD AND HELD                                                                                      
 3/19/99               (H)  MINUTE(L&C)                                                                                         
 3/24/99               (H)  L&C AT  3:15 PM CAPITOL 17                                                                          
BILL: HB 143                                                                                                                    
SHORT TITLE: REAL ESTATE:SURETY FUND & DISCLOSURES                                                                              
SPONSOR(S): REPRESENTATIVES(S) ROKEBERG                                                                                         
Jrn-Date    Jrn-Page           Action                                                                                           
 3/19/99       514     (H)  READ THE FIRST TIME - REFERRAL(S)                                                                   
 3/19/99       515     (H)  L&C, JUD, FIN                                                                                       
 3/24/99               (H)  L&C AT  3:15 PM CAPITOL 17                                                                          
WITNESS REGISTER                                                                                                                
ROSEMARIE KALAMARIDES, Administrator                                                                                            
Alaska Teamster Trust Fund                                                                                                      
P.O. Box 240887                                                                                                                 
Anchorage, Alaska 99524-0087                                                                                                    
Telephone:  (907) 565-8310                                                                                                      
POSITION STATEMENT:  Testified in opposition to HB 121.                                                                         
THOMAS G. HIPSHER, DDS                                                                                                          
Dimond Center Tower                                                                                                             
800 East Dimond Boulevard, Suite 3-415                                                                                          
Anchorage, Alaska 99515                                                                                                         
Telephone:  (907) 349-5585                                                                                                      
POSITION STATEMENT:  Testified on HB 121.                                                                                       
REPRESENTATIVE CON BUNDE                                                                                                        
Alaska State Legislature                                                                                                        
Capitol Building, Room 501                                                                                                      
Juneau, Alaska 99801                                                                                                            
Telephone:  (907) 465-4843                                                                                                      
POSITION STATEMENT:  Testified as sponsor of HB 121.                                                                            
MARCI BURTON, Regional Director                                                                                                 
   for Managed Care and Physician Integration                                                                                   
Providence Health System                                                                                                        
3200 Providence Drive                                                                                                           
Anchorage, Alaska 99519-6604                                                                                                    
Telephone:  (907) 261-3105                                                                                                      
POSITION STATEMENT:  Explained point-of-service option during HB
121 hearing.                                                                                                                    
MARIANNE BURKE, Director                                                                                                        
Division of Insurance                                                                                                           
Department of Commerce and Economic Development                                                                                 
P.O. Box 110805                                                                                                                 
Juneau, Alaska 99811-0805                                                                                                       
Telephone:  (907) 465-2515                                                                                                      
POSITION STATEMENT:  Answered questions regarding HB 121.                                                                       
ERIC DYRUD, Co-Chair                                                                                                            
Legislative Committee                                                                                                           
Anchorage Board of REALTORS                                                                                                     
2509 Eide Street, Number 4                                                                                                      
Anchorage, Alaska 99503                                                                                                         
Telephone:  (907) 258-8888                                                                                                      
POSITION STATEMENT:  Testified on HB 143.                                                                                       
SUZANNE MANNIKKO                                                                                                                
We [?] Against Sexual Predators (WASP)                                                                                          
HC33 Box 2859A                                                                                                                  
Wasilla, Alaska 99654                                                                                                           
(Teleconference gives incorrect telephone number; no listing)                                                                   
POSITION STATEMENT:  Testified on HB 143.                                                                                       
CATHERINE REARDON, Director                                                                                                     
Division of Occupational Licensing                                                                                              
Department of Commerce and Economic Development                                                                                 
P.O. Box 110806                                                                                                                 
Juneau, Alaska 99811-0806                                                                                                       
Telephone:  (907) 465-2536                                                                                                      
POSITION STATEMENT:  Testified on HB 143.                                                                                       
ACTION NARRATIVE                                                                                                                
TAPE 99-29, SIDE A                                                                                                              
Number 0001                                                                                                                     
CHAIRMAN NORMAN ROKEBERG called the House Labor and Commerce                                                                    
Standing Committee meeting to order at 3:30 p.m.  Members present                                                               
at the call to order were Representatives Rokeberg, Halcro,                                                                     
Sanders, Murkowski, Harris and Cissna.  Representative Brice                                                                    
arrived after the call to order.                                                                                                
HB 40 - DEPT OF COMMERCE & RURAL DEVELOPMENT                                                                                    
Number 0113                                                                                                                     
CHAIRMAN ROKEBERG announced the committee's first order of business                                                             
is discussion regarding the possible committee waiver of HB 40, "An                                                             
Act combining parts of the Department of Commerce and Economic                                                                  
Development and parts of the Department of Community and Regional                                                               
Affairs by transferring some of their duties to a new Department of                                                             
Commerce and Rural Development; transferring some of the duties of                                                              
the Department of Commerce and Economic Development and the                                                                     
Department of Community and Regional Affairs to other existing                                                                  
agencies; eliminating the Department of Commerce and Economic                                                                   
Development and the Department of Community and Regional Affairs;                                                               
relating to the Department of Commerce and Rural Development and                                                                
the commissioner of commerce and rural development; adjusting the                                                               
membership of certain multi-member bodies to reflect the transfer                                                               
of duties among departments and the elimination of departments;                                                                 
creating the office of international trade and relating to its                                                                  
duties; and providing for an effective date."  The chairman                                                                     
expressed his desire to waive HB 40 out of committee.  The waiver                                                               
has been requested by the House leadership because the bill has                                                                 
been heard in the House Community and Regional Affairs Standing                                                                 
Committee (House C&RA).  Chairman Rokeberg questioned if the bill                                                               
had moved out of C&RA.                                                                                                          
REPRESENTATIVE HALCRO, Co-Chairman of the House Community and                                                                   
Regional Affairs Standing Committee, informed Chairman Rokeberg                                                                 
that HB 40 is scheduled for a second hearing tomorrow, March 25,                                                                
CHAIRMAN ROKEBERG commented this is a waiver pending referral.  He                                                              
noted he will be out of town on March 26.  Chairman Rokeberg                                                                    
explained HB 40 is a consolidation bill and was basically written                                                               
the previous session by the House Labor and Commerce Standing                                                                   
Committee (House L&C).  House leadership wants to move the bill to                                                              
the House Finance Standing Committee (House Finance); Chairman                                                                  
Rokeberg indicated it is his understanding the Governor will                                                                    
present the Administration's proposal on consolidation there.                                                                   
Chairman Rokeberg noted the bill's length and commented he does not                                                             
think the committee would be absolving its statutory authority on                                                               
the area.  If all the committee members agreed to a waiver, it                                                                  
would avoid a lot of work for the committee.  Chairman Rokeberg                                                                 
indicated the bill would be changed in Finance even if L&C closely                                                              
examined the legislation.                                                                                                       
Number 0266                                                                                                                     
REPRESENTATIVE HALCRO expressed his concern about waiving HB 40 out                                                             
of L&C before seeing what transpires in C&RA.  He noted C&RA had                                                                
just received the Administration's fiscal note.  Representative                                                                 
Halcro indicated C&RA members have concerns there are no rural                                                                  
members on L&C, and that the previous legislation [HB 400] had not                                                              
gone to C&RA.  He noted two other C&RA members sit on L&C.                                                                      
Representative Halcro said he cannot sign the waiver until he sees                                                              
what comes out of C&RA.                                                                                                         
CHAIRMAN ROKEBERG stated it would be Representative Halcro's                                                                    
responsibility to read the waiver across the House floor on Friday                                                              
[March 26] and requested Representative Halcro resolve this.                                                                    
Chairman Rokeberg noted with that he would circulate the waiver,                                                                
indicating there is a problem because L&C does not meet again                                                                   
before Finance wants to hear HB 40.                                                                                             
Number 0361                                                                                                                     
REPRESENTATIVE HALCRO understands, but indicated again that he is                                                               
uncomfortable waiving the legislation.  He has made some                                                                        
commitments; he has assured members of his committee that their                                                                 
concerns would be taken into consideration.                                                                                     
CHAIRMAN ROKEBERG referred to the presence of the other co-chairman                                                             
of House C&RA.                                                                                                                  
Number 0395                                                                                                                     
REPRESENTATIVE HARRIS, Co-Chairman, House Community and Regional                                                                
Affairs Standing Committee, stated he has no problem waiving the                                                                
legislation.  House C&RA will not move the legislation unless the                                                               
committee is happy with it.  Representative Harris indicated the                                                                
bill before C&RA is the previous session's HB 400 that was                                                                      
basically rewritten by House L&C, and those HB 400 hearings were                                                                
pretty well-documented.  Representative Harris noted three L&C                                                                  
members would be very familiar with the legislation once it leaves                                                              
CHAIRMAN ROKEBERG thinks that is a good idea and he would recommend                                                             
the co-chairmen of C&RA speak to leadership about this issue so                                                                 
they have a clear appraisal of what is happening.                                                                               
Number 0464                                                                                                                     
REPRESENTATIVE CISSNA voiced her personal objection to signing the                                                              
waiver, noting that although the previous session's committee may                                                               
have reviewed the bill, she would like to look at it.                                                                           
REPRESENTATIVE BRICE thinks they had the discussion last year, and                                                              
his stance is pretty much the same.  They are making small                                                                      
government big and schizophrenic at the same time; he feels that                                                                
term of art is probably applicable.  He does not support the                                                                    
concept or the legislation, with nothing against the sponsor's                                                                  
intentions.  Representative Brice indicated he would not be                                                                     
interested waiving the legislation out of committee because he does                                                             
not think the bill is appropriate business.                                                                                     
Number 0539                                                                                                                     
CHAIRMAN ROKEBERG indicated he would not normally waive a bill if                                                               
committee members objected.  However, as he understands it, the                                                                 
leadership has spoken with the Governor, and the Governor,                                                                      
basically as the chairman was told, wants to have the legislation                                                               
recast in Finance.                                                                                                              
REPRESENTATIVE BRICE indicated the chairman has been very good                                                                  
about not waiving legislation in this type of situation.  He                                                                    
further indicated he had received no communication from the                                                                     
Administration regarding this matter.                                                                                           
CHAIRMAN ROKEBERG explained waiving legislation is left to the                                                                  
pleasure of the chair.  He has done what he could to satisfy the                                                                
concerns of the members of the committee; therefore, if members do                                                              
not want to waive the legislation, that is their prerogative.                                                                   
Chairman Rokeberg noted this project would be left in the hands of                                                              
Representative Halcro, because the chairman will be in Anchorage                                                                
the next two days.  Chairman Rokeberg asked Representative Halcro                                                               
to talk with the Speaker about this matter; the chairman would rely                                                             
on Representative Halcro to coordinate with the leadership and see                                                              
what is to be done.  Chairman Rokeberg understands that the rule of                                                             
the chair is the official ruling with regard to waiving a bill from                                                             
committee, and nothing requires unanimous consent on a waiver.  [HB
40 WAS NOT WAIVED BY THE COMMITTEE]                                                                                             
HB 121 - DENTAL CARE INSURANCE                                                                                                  
Number 0671                                                                                                                     
CHAIRMAN ROKEBERG announced the committee's next order of business                                                              
is HB 121, "An Act relating to patients' rights under a health care                                                             
insurance plan or contract providing coverage for dental care, and                                                              
prohibiting certain practices by health care insurers relating to                                                               
dental care."  He indicated the first witness, Ms. Kalamarides, had                                                             
wished to testify at the March 19, 1999, hearing but the                                                                        
teleconference had been mistakenly disconnected through a                                                                       
Number 0718                                                                                                                     
ROSEMARIE KALAMARIDES, Administrator, Alaska Teamster Trust Fund,                                                               
testified via teleconference from Anchorage in opposition to HB
121.  Ms. Kalamarides noted the trust fund opposes the legislation                                                              
but would not be impacted by it.  She stated, "This fund represents                                                             
more than 100 employers and more than 8,000 covered lives, and we                                                               
understand that when ... small employers cannot afford to buy                                                                   
insurance to cover dental expenses, then the unpaid costs often                                                                 
shift to employers like those in our plan.  I'm not aware of any                                                                
dental PPOs [preferred provider organizations] in Alaska.  However,                                                             
they are negotiating such arrangements in the Lower 48 and it                                                                   
creates a very strong competitive marketplace.  Dentists who choose                                                             
to participate in these PPOs are selling their services at lower                                                                
prices in exchange for some assurance by employers that they will                                                               
get more patient traffic.  Those who have not agreed to participate                                                             
are seeing their patients go to the preferred group of doctors.                                                                 
Therefore, I understand why some Alaskan dentists are afraid of                                                                 
PPOs.  According to a Daily News [Anchorage Daily News] article                                                                 
just last year, dentists in Alaska enjoy the distinction of being                                                               
the highest paid professionals in the state.  If I were in their                                                                
shoes, I wouldn't want to lose that distinction either.                                                                         
Number 0802                                                                                                                     
MS. KALAMARIDES continued, "We understand why they are seeking                                                                  
protection from competition, why they are attempting to regulate                                                                
their industry here in Alaska.  However, we must oppose it because                                                              
ultimately those who can least afford it will pay for the                                                                       
protection.  I heard testimony last week advocating that this                                                                   
legislation would protect small businesses and I think it was                                                                   
directed at dentists as being small business people, and that's                                                                 
certainly true that this would protect them but it would be at the                                                              
expense of other small business people.  Insurance companies are                                                                
not going to pay the extra costs.  I think the sponsor bill made a                                                              
reference that the insurance companies would be paying this, but                                                                
the insurance companies are not going to pay the extra costs for                                                                
this.  When a small business person goes to the market place to buy                                                             
insurance, the insurer for the insurance company sells them                                                                     
insurance based on the cost experience in that market place.  So,                                                               
if they were buying an insurance product with a PPO ... their                                                                   
premium's gonna be less than it would be without a PPO.  ... If                                                                 
this proposed legislation is passed, then providers are not gonna                                                               
negotiate into PPOs because there's no assurance then that they                                                                 
would get the volume.  It's a real simple concept.  Discounted                                                                  
rates for volume referral.                                                                                                      
Number 0884                                                                                                                     
MS. KALAMARIDES continued, "By creating regulations which do not                                                                
permit employers to negotiate lower health care costs then you                                                                  
directly impact their ability to compete with other Alaskan                                                                     
companies who do not provide insurance, or outside companies who                                                                
enjoy lower health care costs.  What happens then is the Alaskan                                                                
company must shift the costs to their employees and in the end the                                                              
patient pays for this protection bestowed on them, or, when the                                                                 
insured patient does not or cannot pay, the provider simply shifts                                                              
the costs to plans who are paying.  If you pass this legislation,                                                               
then small employers who have no choice but to buy insured products                                                             
will not have the cost benefit of these preferred arrangements.                                                                 
Our membership task force, by the way, and these are rank and file                                                              
members, looked at this legislation and they quickly recognized                                                                 
that this was simply a cost shift from the patients' pocket to the                                                              
doctors' pocket.  Please keep in mind that Alaskans pay more for                                                                
medical costs ... than in any other state and the only way we can                                                               
keep costs down is by negotiating preferred arrangements.  Please                                                               
do not regulate this industry and preclude the opportunity for                                                                  
competition among health care providers.  I want to quote Henry                                                                 
Aaron again, and I've done that in the past at similar hearings,                                                                
because Henry Aaron of the Brookings Institute [Henry J. Aaron,                                                                 
Senior Fellow, Brookings Institution] put it best when he said,                                                                 
'This legislation is not about consumer choice or consumer                                                                      
protection.  It is, quote, meant to prevent the impairment of                                                                   
doctor's income.'  And in closing, please remember that the support                                                             
for this bill has come from doctors.  The patients or consumers are                                                             
eerily absent and of course the employers oppose it, so thank you                                                               
very much for your time, and thanks for the extra time too."                                                                    
CHAIRMAN ROKEBERG confirmed there were no questions for Ms.                                                                     
Kalamarides.  The chairman confirmed the next witness, Dr. Hipsher,                                                             
had not previously testified on HB 121, although Dr. Hipsher noted                                                              
he had testified on the previous session's HB 300.  The chairman                                                                
indicated there are materials in bill packet from Dr. Hipsher.                                                                  
Number 1020                                                                                                                     
THOMAS G. HIPSHER, DDS, testified next via teleconference from                                                                  
Anchorage.  He said he is a general dentist in Anchorage.  Dr.                                                                  
Hipsher stated that the Alaska Dental Society and most of the                                                                   
dentists in Alaska are not anti-PPO or anti-HMO [health maintenance                                                             
organization], but rather are pro-patient which is what HB 121 is                                                               
about.  Dr. Hipsher offered the following statements in response to                                                             
issues mentioned at the March 19, 1999, hearing on HB 121, using                                                                
his March 24 letter to the committee as the basis for his remarks:                                                              
     "Dentistry versus medicine:  Everyone in the insurance                                                                     
     industry categorizes dentistry the same as medicine when                                                                   
     in fact they are very different.  Here are the                                                                             
     "Medicine is reactive whereas dentistry is preventive.                                                                     
     In medicine there are a high number of specialists, a low                                                                  
     number of generalists, whereas in dentistry just the                                                                       
     opposite.  In medicine we see a high number of                                                                             
     catastrophic incidents whereas in dentistry we rarely                                                                      
     ever see catastrophic claims.  Does medicine meet the                                                                      
     criteria for insured risk?  Absolutely.  Does dentistry                                                                    
     meet the criteria for an insured risk?  Absolutely not.                                                                    
     The average claim amount for medicine is usually high                                                                      
     whereas ... with dentistry it is usually low, whereas                                                                      
     with medicine [it] is usually quite high.  Dentistry has                                                                   
     done an excellent job with prevention and education to                                                                     
     minimize oral disease.  Cavity rates in children have                                                                      
     been reduced significantly over the years and more older                                                                   
     people than ever still have their teeth.                                                                                   
     "Insurers say they will lose ... patient control if HB
     121 passes:  Insurers will not lose patient control,                                                                       
     meaning patients will not leave PPOs and HMOs in droves                                                                    
     as a result of the passage of this bill.  There is a                                                                       
     financial disincentive for patients to leave their PPOs                                                                    
     and HMOs because when they see a non-participating                                                                         
     provider, they will have to make up the difference                                                                         
     between what the insurance company pays and what the                                                                       
     provider charges.  If many people elect to leave their                                                                     
     PPO and HMO, and are willing to pay the difference, then                                                                   
     there's something fundamentally wrong with the PPO or                                                                      
     the HMO.  It should be the patients' choice as to whether                                                                  
     or not they want to spend their own money to see another                                                                   
     "Insurers also say they will not be able to guarantee                                                                      
     participating providers adequate numbers of patients if                                                                    
     this bill passes:  The truth of the matter is, is that of                                                                  
     all of the contracts that I have seen inviting me to join                                                                  
     a PPO or HMO, not a single one has mentioned, let alone                                                                    
     guaranteed, any patients as a condition of my signing the                                                                  
     PPO or HMO contract.  I'm sure that if you ask any                                                                         
     provider, you will find the same is true with them.  The                                                                   
     insurance industry is simply not telling the truth about                                                                   
     this matter.                                                                                                               
     "Insurers say they will not be able to attract providers                                                                   
     to join their PPOs and HMOs:  Dentistry is very                                                                            
     competitive business and many providers spend $2,000 to                                                                    
     $3,000 per month on advertising in an effort to attract                                                                    
     patients.  There are those that will join a PPO (indisc.)                                                                  
     HMO for [the] free advertising it provides in exchange                                                                     
     for the reduced fees.  In the case of United Concordia in                                                                  
     Alaska, not a single dentist joined their PPO because                                                                      
     their initial fee schedule was far too low for Alaska                                                                      
     standards.  What they simply did was raise their fee                                                                       
     schedules and they had a drove of young dentists join.                                                                     
     ... The cost of providing dental care in Alaska is                                                                         
     extremely high and, as businessmen, we must make a profit                                                                  
     in order to stay in business, the same as any other                                                                        
Number 1213                                                                                                                     
     "A couple of other major points I'd like to say.  The                                                                      
     insurance industry has convinced employers and                                                                             
     legislatures [legislators] that HB 121 and HB 300 is Any                                                                   
     Willing Provider legislation.  I prepared a detailed                                                                       
     explanation comparing those two pieces of legislation.                                                                     
     The comparison is included in your packet of letters.  I                                                                   
     ask that you carefully review this comparison to see that                                                                  
     HB 121 is not (indisc.) Any Willing Provider legislation.                                                                  
     "... Patient Testimony:  It was alluded to that when HB
     300 was introduced last year and a public hearing held,                                                                    
     patients did not show up to testify.  It is likely they                                                                    
     won't show up to testify for HB 121 as well.  Patients                                                                     
     are intimidated by the process and fear retaliation by                                                                     
     their insurance companies.  Just as patients rely on                                                                       
     providers to sort out the mess that occurs with dental                                                                     
     claims, they rely on their providers to carry out                                                                          
     (indisc.) message to the legislature [3/24/99 letter:                                                                      
     "... carry their message to ..."].  Patients don't live                                                                    
     in a political (indisc.) [3/24/99 letter: "... political                                                                   
     world nor do they live in a dental world."].  As such,                                                                     
     they feel uncomfortable when asked to speak up about                                                                       
     problems they are faced with their insurance.  Therefore,                                                                  
     who else will stand up for them if not their providers?                                                                    
     "And for Employers, if employers listen:  Since dental                                                                     
     care does not meet the criteria as an insured risk, there                                                                  
     are several other alternatives that employers can pursue                                                                   
     that will allow employees complete freedom of choice,                                                                      
     freedom to have the dental care they need without                                                                          
     interference from a third party, and save money at the                                                                     
     same time.  If employers will only take the time to                                                                        
     listen, there is a lot to be learned about this matter."                                                                   
DR. HIPSHER noted that the Teamsters are a great situation for                                                                  
this.  The Teamsters can contact the American Dental Association                                                                
(ADA) to learn how to provide a dental benefit plan which provides                                                              
dental care at a lower cost than that which can be purchased from                                                               
insurance companies.                                                                                                            
Number 1320                                                                                                                     
CHAIRMAN ROKEBERG pointed out that the committee packet includes                                                                
letters from Dr. Hipsher dated March 17 and March 24, 1999.  The                                                                
chairman believes that is what Dr. Hipsher referred to as the                                                                   
analysis regarding "any willing provider."                                                                                      
REPRESENTATIVE MURKOWSKI noted that she has had conversations with                                                              
both sides of this issue and has received conflicting information                                                               
regarding whether HB 121 is "any willing provider."  Representative                                                             
Murkowski understood that if she choose to go to a dentist that is                                                              
not on a preferred provider list, she can do so and would pay the                                                               
difference.  She asked how this would take her dentist out of the                                                               
"any willing provider" category.                                                                                                
Number 1409                                                                                                                     
DR. HIPSHER explained the main distinction between any willing                                                                  
provider legislation and HB 121 is that any willing provider                                                                    
legislation would allow any dentist to join a PPO.  The dentist                                                                 
would merely ask to join the PPO and the dentist would be a member.                                                             
Normally, providers are invited to join a PPO in order to limit the                                                             
number of providers allowed in the PPO.  Therefore, those people in                                                             
the plan are directed to the PPO providers.  Any willing provider                                                               
legislation dilutes the small number of doctors and in effect                                                                   
destroys the PPO.  On the other hand, HB 121 allows PPOs to exist.                                                              
Dr. Hipsher indicated dentists have no problems with the existence                                                              
of PPOs, as long as the patient obtains care matching his or her                                                                
needs and to the patient's satisfaction.  If a patient seeing a PPO                                                             
doctor is dissatisfied with the care, then the patient should be                                                                
able to utilize his or her benefit, at least to the same level the                                                              
patient would have received under the PPO, to obtain the                                                                        
appropriate care.  Dr. Hipsher believed there is a financial                                                                    
disincentive for patients to do that.  He noted he has patients in                                                              
his practice who have left to join PPOs and subsequently returned                                                               
because the patients were not receiving the level of care he                                                                    
provides.  Dr. Hipsher further clarified for Representative                                                                     
Murkowski that the main distinction is any willing provider                                                                     
legislation allows any doctor to join the PPO which dilutes the                                                                 
number of patients that the doctors can see.  However, in a true                                                                
PPO there may be only a few doctors and a wealth of patients.  In                                                               
that situation, the PPO doctors are seeing many patients in                                                                     
exchange for reduced fees.  Whereas in the other situation it is                                                                
the opposite.                                                                                                                   
MS. KALAMARIDES offered to add to that.                                                                                         
Number 1571                                                                                                                     
CHAIRMAN ROKEBERG noted Ms. Kalamarides could bring a statement to                                                              
his attention and he would provide her an opportunity shortly.  The                                                             
chairman took exception to Dr. Hipsher's definition of any willing                                                              
provider.  Commenting he had introduced a bill on any willing                                                                   
provider legislation in the past, Chairman Rokeberg understood that                                                             
any willing provider legislation allows that a patient may choose                                                               
anyone they wish and the insurer must pay the same reimbursable                                                                 
rate no matter the provider.  He asked if Dr. Hipsher agreed with                                                               
that statement.                                                                                                                 
DR. HIPSHER agreed with Chairman Rokeberg's statement in part.                                                                  
REPRESENTATIVE HALCRO asked Dr. Hipsher if he believed that HB 121                                                              
would increase the cost of providing coverage by small employers.                                                               
DR. HIPSHER answered in the negative.                                                                                           
Number 1639                                                                                                                     
CHAIRMAN ROKEBERG referred to Dr. Hipsher's March 24 letter, which                                                              
refers to fee differentials in paragraph 5 as follows:  "Federal                                                                
law says that dentists cannot charge uninsured patients at a                                                                    
different rate than insured patients."  Chairman Rokeberg                                                                       
questioned what federal law that referred to.                                                                                   
DR. HIPSHER said that he did not have the specific federal law.  He                                                             
explained that dentists cannot, for the purpose of charging                                                                     
patients, make up a difference because an insurance plan may pay at                                                             
a lower rate.  Dentists balance bill their normal patients for the                                                              
difference.  Dr. Hipsher indicated, therefore, that charging                                                                    
uninsured patients at a different rate than insured patients is                                                                 
neither ethical or legal.  In further response to Chairman                                                                      
Rokeberg's question that Dr. Hipsher could not charge someone with                                                              
less money a lower amount for a procedure, Dr. Hipsher explained                                                                
that if he were to enter into an agreement with a PPO and he were                                                               
to charge 70 percent of his normal fee, he would not be able to                                                                 
charge his normal patients the difference.  He said that he could                                                               
not increase the fees to his normal patients to make up the                                                                     
CHAIRMAN ROKEBERG asked, "You can't have a two-tiered fee schedule                                                              
because of federal law?"  Chairman Rokeberg did not believe that                                                                
was correct and asked Dr. Hipsher if he was sure.                                                                               
DR. HIPSHER indicated he was unsure of the federal law, but                                                                     
dentists cannot do that from an ethical standpoint.                                                                             
CHAIRMAN ROKEBERG asked if a dentist joined a PPO and agreed to                                                                 
charge 75 percent of the customary fee schedule; could a non-PPO                                                                
patient be charged 100 percent.                                                                                                 
DR. HIPSHER replied he does charge the patient 100 percent, adding,                                                             
"As a matter of fact, I should probably charge the PPO 100 percent                                                              
and then I have to indicate that as a discount ... on my                                                                        
accounting, as a 30 percent discount or a 25 percent discount to                                                                
the PPO person - and that may or may not have tax implications ...                                                              
to that patient because that is actually a forgiveness of debt."                                                                
Number 1764                                                                                                                     
CHAIRMAN ROKEBERG referred to the fee differential portion of Dr.                                                               
Hipsher's March 24 letter which reads:  "HB 121 is asking that the                                                              
same rules of fairness apply to the insurance companies regarding                                                               
reimbursement.  This means that the patient should be entitled to                                                               
the same reimbursement level for a given procedure regardless of                                                                
the provider that renders that treatment.  Differential                                                                         
reimbursement to a patient based on their choice of provider is a                                                               
monetary penalty imposed on the patient for exercising their choice                                                             
of provider."  Chairman Rokeberg surmised that was the rationale                                                                
for subsection (c)(1) of HB 121, which reads: "(c) A health care                                                                
insurer may not (1) directly or indirectly reimburse a covered                                                                  
person at a different rate because of the person's choice of                                                                    
DR. HIPSHER said that if a person elects (indisc.--scratching                                                                   
sound), they are monetarily penalized because normally the PPO                                                                  
would pay nothing for that procedure or would pay a substantially                                                               
reduced rate.                                                                                                                   
CHAIRMAN ROKEBERG clarified that would be a PPO or point-of-service                                                             
option [POS].                                                                                                                   
DR. HIPSHER agreed.                                                                                                             
CHAIRMAN ROKEBERG pointed out that the committee packet includes a                                                              
legal opinion from Mr. Ford, Legislative Counsel [Legislative Legal                                                             
and Research Services, Legislative Affairs Agency].  Mr. Ford                                                                   
indicates that HB 121 does not preclude an insurer from offering a                                                              
point-of-service option or using a preferred provider type of                                                                   
coverage, but it destroys any financial incentive to do so.                                                                     
Chairman Rokeberg noted the effect, then, is that it would prohibit                                                             
the establishment of new PPOs or point-of-service option type                                                                   
plans.  Chairman Rokeberg surmised that HB 121 mandates a                                                                       
constructive fee for service only type menu to small businesses and                                                             
individuals in the state of Alaska.  He asked if Dr. Hipsher would                                                              
DR. HIPSHER disagreed with Chairman Rokeberg's statement.  He                                                                   
questioned why a PPO couldn't still exist and why couldn't doctors                                                              
still negotiate with insurers.                                                                                                  
CHAIRMAN ROKEBERG understood that under a PPO, the dentist would                                                                
agree to be reimbursed at a lower rate.                                                                                         
Number 1896                                                                                                                     
REPRESENTATIVE CON BUNDE, Alaska State Legislature, came forward as                                                             
the bill sponsor.  He noted he understood that the reduced rate is                                                              
for volume of service.  In other words, a doctor would join a PPO                                                               
and offer a lower rate because that rate could be made up in the                                                                
volume of patients.  If a patient wants to go to a dentist outside                                                              
the PPO, that patient would co-pay the 30 percent beyond the 70                                                                 
percent benefit to the dentist who is not in the PPO.                                                                           
CHAIRMAN ROKEBERG noted the alternative in which there is actually                                                              
a penalty on the copayment if the patient seeks care outside the                                                                
plan.  Chairman Rokeberg pointed out that a patient seeking care                                                                
outside a PPO plan typically receives a 50 or 60 percent                                                                        
reimbursement level.                                                                                                            
REPRESENTATIVE BUNDE identified that as the financial disincentive                                                              
for the patient to have choice.                                                                                                 
CHAIRMAN ROKEBERG asked Dr. Hipsher if that would be a correct                                                                  
description of a PPO doctor.                                                                                                    
DR. HIPSHER answered in the affirmative.                                                                                        
CHAIRMAN ROKEBERG inquired as to the percentage differential                                                                    
between what a patient would pay inside a panel versus the penalty                                                              
for seeking services outside the panel.                                                                                         
Number 1973                                                                                                                     
DR. HIPSHER informed the committee of one of his patients who is a                                                              
foster parent with children covered under an Aetna HMO.  He noted                                                               
he had hoped this patient would testify.  When this patient                                                                     
received services for her children from Dr. Hipsher, Aetna paid                                                                 
nothing on the claim.  Since the children are foster children, the                                                              
children are also covered under state Medicaid.  Medicaid also                                                                  
denied the claim because the foster parent failed to take advantage                                                             
of all the insurance benefits available.  This patient is left                                                                  
holding the entire bill because she was mandated to take those                                                                  
children to see a doctor and dentist within 30 days of her taking                                                               
over the foster care.  Dr. Hipsher said that case was extreme, but                                                              
noted that the average is 15 to 20 percent lower than the normal                                                                
PPO fees.                                                                                                                       
CHAIRMAN ROKEBERG said that when using the 70 percent reimbursement                                                             
of a procedure, when a patient receives service outside of the plan                                                             
there would be a further discount of 20 percent against the 70                                                                  
DR. HIPSHER agreed with Chairman Rokeberg's assessment, but noted                                                               
that it would vary.                                                                                                             
CHAIRMAN ROKEBERG informed Dr. Hipsher that the committee attempted                                                             
to contact the patient who was to testify, but that patient did not                                                             
get back in touch with the committee.                                                                                           
DR. HIPSHER noted that this patient had indicated that she would                                                                
provide written testimony to the committee.                                                                                     
Number 2063                                                                                                                     
CHAIRMAN ROKEBERG expressed concern with the provisions in HB 121                                                               
that prohibit rate differential for reimbursement.  According to                                                                
Mr. Ford's memorandum, there is no incentive to establish PPOs or                                                               
point-of-service type programs in Alaska if HB 121 became law.                                                                  
Chairman Rokeberg agreed with Mr. Ford.  Chairman Rokeberg                                                                      
indicated he had asked Dr. Logan [President, Alaska Dental Society]                                                             
at the March 19 hearing if the Alaska Dental Society would agree to                                                             
modify HB 121 to provide for the point-of-service option.  If that                                                              
modification occurred, Chairman Rokeberg further indicated the need                                                             
to establish a floor on the rate differential allowed on                                                                        
reimbursement.  In other words, a patient would be allowed to step                                                              
out of a panel under a PPO and that patient would be reimbursed at                                                              
perhaps 10 to 15 percent less as a maximum differential.                                                                        
Therefore, the patient would have the choice, and reimbursement                                                                 
would be minimized to dentists outside the PPO.  Chairman Rokeberg                                                              
noted Dr. Logan had not seemed very excited about that option.                                                                  
DR. HIPSHER said that he would not be particularly excited about                                                                
that option either.  He did not believe droves of patients would be                                                             
leaving HMOs and PPOs because of that situation.                                                                                
CHAIRMAN ROKEBERG clarified that Alaska does not have any HMOs.                                                                 
DR. HIPSHER indicated that there could be HMOs in Alaska at some                                                                
CHAIRMAN ROKEBERG stated, "Not with the legislation passed in this                                                              
Number 2161                                                                                                                     
REPRESENTATIVE BUNDE respectfully disagreed with Mr. Ford's belief                                                              
that there is no financial incentive for the PPO.  Representative                                                               
Bunde pointed to the financial incentive of volume which many say                                                               
will allow dentists to operate at a lower cost.  If people are                                                                  
willing to pay a penalty to seek care outside the program,                                                                      
Representative Bunde interpreted that to be a financial incentive                                                               
for people to stay within the program.                                                                                          
CHAIRMAN ROKEBERG pointed out that if there was a point-of-service                                                              
option, the patient would be able to make the choice with the                                                                   
understanding that the patient would have to pay a higher premium                                                               
or a higher copayment.                                                                                                          
REPRESENTATIVE BUNDE stated that what Chairman Rokeberg described                                                               
would exist under HB 121.                                                                                                       
CHAIRMAN ROKEBERG suggested that due to the equality of                                                                         
reimbursement there would not be the formation of any PPO or                                                                    
point-of-service type programs to lower overall health care costs.                                                              
Chairman Rokeberg predicted that the small employers would be                                                                   
affected by this and ultimately opt out of any dental coverage.                                                                 
REPRESENTATIVE BUNDE noted that was a point of disagreement.                                                                    
REPRESENTATIVE MURKOWSKI asked for clarification regarding the                                                                  
definition of point-of-service options and further asked if they                                                                
exist here.                                                                                                                     
CHAIRMAN ROKEBERG referred the question to Ms. Burke, Director,                                                                 
Division of Insurance, Department of Commerce and Economic                                                                      
Development, stating, "Mrs. Burke."                                                                                             
Number 2270                                                                                                                     
MARCI BURTON, Regional Director for Managed Care and Physician                                                                  
Integration, Providence Health System, responded via teleconference                                                             
from Anchorage.  Ms. Burton offered to help answer Representative                                                               
Murkowski's question.  Ms. Burton stated that Alaska does have                                                                  
point-of-service options.  A point-of-service option is similar to                                                              
a PPO.  It allows a patient to go outside of a negotiated network                                                               
to a provider of the patient's choice.  There is a differential in                                                              
the coverage that the plan or employer provides.  Ms. Burton said,                                                              
in her experience, those differentials typically range from 10 to                                                               
20 percent, and there can often be an additional copayment.  Ms.                                                                
Burton informed the committee that Providence Health System offers                                                              
its employees a coordinated care plan which would be an example of                                                              
a point-of-service plan.  She explained that Providence Health                                                                  
System has a negotiated network of primary care providers which are                                                             
typically general medical physicians.  As long as the patient sees                                                              
or receives referrals from one of those physicians, the patient has                                                             
benefit coverage of 80 percent.  If the patient chooses to see                                                                  
another provider without a referral, the patient may do so with                                                                 
coverage at 60 percent.  She pointed out that in the Providence                                                                 
Health System there are only primary care physicians.  Since a                                                                  
discount rate could not be negotiated with specialty physicians, an                                                             
adequately-sized network could not be created, and the plan was                                                                 
opened up to all the providers.  Therefore, it is necessary to have                                                             
a network large enough to serve a group in order to be effective.                                                               
Number 2355                                                                                                                     
REPRESENTATIVE MURKOWSKI indicated Ms. Burton's explanation of the                                                              
point-of-service option was helpful, but she understands that with                                                              
a PPO the patient can also opt to seek services outside the list of                                                             
preferred providers, if the patient is willing to make up the                                                                   
MS. BURTON agreed, but noted that coverage can vary quite a bit                                                                 
from plan to plan.                                                                                                              
CHAIRMAN ROKEBERG clarified that it depends upon how the plan is                                                                
structured.  Often, one can be prohibited from seeking service                                                                  
outside of the PPO, whereas if the point-of-service option is                                                                   
specifically provided in the plan, that choice is available from                                                                
the beginning.                                                                                                                  
REPRESENTATIVE MURKOWSKI asked if the plan specifies that one                                                                   
cannot go outside the panel of the PPO, the person obtaining                                                                    
service outside the plan would pay at 100 percent.                                                                              
CHAIRMAN ROKEBERG said he believes that is correct, referring the                                                               
question to Ms. Burke of the Division of Insurance.  He asked if                                                                
that distinction between the PPO and the POS is valid.                                                                          
Number 2398                                                                                                                     
MARIANNE BURKE, Director, Division of Insurance, Department of                                                                  
Commerce and Economic Development, came forward.  She requested                                                                 
that Representative Murkowski's question be restated.                                                                           
CHAIRMAN ROKEBERG clarified Representative Murkowski had asked                                                                  
about the distinction between a PPO and a POS.  If an individual                                                                
utilized service outside of a PPO, that individual would receive                                                                
zero reimbursement.  The chairman asked if that was correct.                                                                    
MS. BURKE replied she is unaware of any zero reimbursement                                                                      
arrangements, but is aware of significantly less reimbursement.                                                                 
She concurred with Ms. Burton's description of the point-of-service                                                             
option.  Under the traditional system, the indemnity system, for a                                                              
$100 dental procedure the plan pays for 80 percent and the patient                                                              
pays for 20 percent.  The dentist receives $100.  Under a preferred                                                             
provider arrangement, the patient has the option of using a                                                                     
preferred provider or using a dentist outside the network.  The                                                                 
preferred provider has agreed to accept less than $100 for the same                                                             
procedure in exchange for being on this preferred provider list.                                                                
If a patient sees a preferred provider for a $100 procedure, the                                                                
dentist will receive $70 from the insurance company and the patient                                                             
will pay $20.  The dentist receives $90 rather than $100.  If the                                                               
patient in the preferred provider arrangement goes out of network,                                                              
the dentist will receive $100 but the insurance company will only                                                               
pay 50 or 60 percent.  The patient pays the remainder.  Thus, there                                                             
is a disincentive to the patient to go out of network.  From the                                                                
dentists' viewpoint, they receive $100 if they are out-of-network,                                                              
but they receive less if they are preferred providers in exchange                                                               
for the referrals.                                                                                                              
REPRESENTATIVE BUNDE questioned, "(Indisc.) a point-of-service                                                                  
then.  I think you've clarified PPO, but now..." [TESTIMONY                                                                     
INTERRUPTED BY TAPE CHANGE]                                                                                                     
TAPE 99-29, SIDE B                                                                                                              
Number 0001                                                                                                                     
MS. BURKE answered, "...that a PPO, a point-of-service option is                                                                
usually associated with an HMO.  And, again, since we have no HMOs                                                              
in this state.  ... Basically you select the provider, the                                                                      
practitioner that you want, and that person becomes your, if you                                                                
will, preferred provider."                                                                                                      
CHAIRMAN ROKEBERG feels they should examine a point-of-service                                                                  
option within any type of PPO plan or any insured plan written in                                                               
Alaska that would provide that choice with some statutorily                                                                     
stipulated differential.  The disincentive to the patient would                                                                 
still exist but the impact to the dentists would be minimized.                                                                  
MS. BURKE agreed with Mr. Ford's legal advice.  There will be no                                                                
formation of PPOs without the incentive to the creator of a                                                                     
preferred provider arrangement - insurer, employer, whomever - of                                                               
overall lower cost allowing lower premiums that make the product                                                                
more attractive to purchasers.                                                                                                  
CHAIRMAN ROKEBERG asked Dr. Hipsher if it is his testimony that he                                                              
would not be happy with some type of point-of-service provision in                                                              
statute that would have to be mandated for a PPO in Alaska.                                                                     
Number 0105                                                                                                                     
DR. HIPSHER strongly disagreed with the assumption being made that                                                              
all employers have to purchase dental insurance.  There are other                                                               
options available to employers.  It is necessary to disassociate                                                                
dentistry from medicine because they are "two totally different                                                                 
animals."  They are boiling HB 121 down to a matter of cost; if                                                                 
it's a matter of cost, employers need to examine other avenues to                                                               
save money and still provide their employees ["patients"] with                                                                  
dental care.  What is being spoken of definitely applies in                                                                     
medicine, but does not necessarily apply in dentistry.  There are                                                               
other alternatives because dentistry does not meet the need of an                                                               
insured situation.                                                                                                              
CHAIRMAN ROKEBERG questioned what those alternatives would be.                                                                  
DR. HIPSHER replied one alternative would be going into an ERISA                                                                
[Employee Retirement and Income Security Act] plan where the                                                                    
employers can manage a direct reimbursement plan.  He noted they                                                                
have a great deal of data to show that employers can save a lot of                                                              
money.  Some employers in the East are saving as much as 50 percent                                                             
over their insured dental plans by going to direct reimbursement                                                                
CHAIRMAN ROKEBERG asked how they saved the money.                                                                               
Number 0154                                                                                                                     
DR. HIPSHER said the employers are only paying for the care that is                                                             
actually rendered.  Currently, probably only one out of every two                                                               
people go to a dentist.  Out of those people who do go to the                                                                   
dentist,  many are only getting exams and cleanings once a year;                                                                
their utilization rate is very low.                                                                                             
CHAIRMAN ROKEBERG confirmed Dr. Hipsher was basically speaking of                                                               
a fee-for-service self-insured ERISA-type arrangement, rather than                                                              
a premium.                                                                                                                      
DR. HIPSHER agreed, emphasizing that dentistry does not meet the                                                                
need for an insured risk.  He indicated yearly dental costs for                                                                 
employers can be estimated because a number of people are in                                                                    
routine care situations.                                                                                                        
CHAIRMAN ROKEBERG commented the majority of the people in the state                                                             
who are non-ERISA do not have that choice, and those are the only                                                               
people this legislation affects.  He asked if Dr. Hipsher                                                                       
understood this.                                                                                                                
DR. HIPSHER answered in the affirmative.                                                                                        
CHAIRMAN ROKEBERG continued that a very limited amount of                                                                       
individuals and small employer groups would affected by this                                                                    
Number 0206                                                                                                                     
DR. HIPSHER said the employers have not opened their eyes because                                                               
the insurance people are not telling them the full story.  There is                                                             
a nationwide movement in dentistry toward direct reimbursement                                                                  
plans because employers are discovering they can save a lot of                                                                  
money and still offer their employees ["patients"] excellent care.                                                              
CHAIRMAN ROKEBERG commented, then, the local pizza parlor owner                                                                 
should make a deal with Dr. Hipsher and send all the pizza parlor                                                               
employees to him.                                                                                                               
DR. HIPSHER disagreed; that is not the situation.  The employees                                                                
could still go to any dentist they choose, but the pizza parlor                                                                 
only pays for the treatment rendered, and may only pay a percentage                                                             
of that treatment.  A multitude of plans can be designed.  All he                                                               
is saying is that employers need to look at the alternatives.                                                                   
CHAIRMAN ROKEBERG noted, then, Dr. Hipsher is saying that who needs                                                             
an insurer - a middleman - and accompanying premium, when one could                                                             
go to direct reimbursement.                                                                                                     
DR. HIPSHER stated that is exactly true for dentistry and vision.                                                               
CHAIRMAN ROKEBERG commented it might be the way to go, with the                                                                 
premium schedules he's seen with caps of $1,500.                                                                                
DR. HIPSHER said it is.  He advises a lot of people that they would                                                             
save a lot of money if they simply pay their dentistry as they go,                                                              
rather than participating in their insurance plan.                                                                              
Number 0267                                                                                                                     
CHAIRMAN ROKEBERG closed the public hearing on HB 121, after                                                                    
confirming no one else wished to testify.  He noted some amendments                                                             
had been distributed to the committee and designated Representative                                                             
Halcro's proposed amendment to page 2, line 14, as amendment 1.                                                                 
Proposed amendment 1 read:                                                                                                      
     Page 2, following line 14:                                                                                                 
     Insert a new subsection to read:                                                                                           
          "(e) This section does not apply to a health care                                                                     
          insurer if, as a result of the application of this                                                                    
          section, premiums paid by the insured would                                                                           
          increase by two percent or more above what would be                                                                   
          paid by the insured without including the                                                                             
          provisions of this section in the health care                                                                         
          insurance plan or contract."                                                                                          
     Reletter the following subsection accordingly                                                                              
CHAIRMAN ROKEBERG mentioned Representative Halcro's separate sunset                                                             
REPRESENTATIVE HALCRO confirmed he was withdrawing that amendment.                                                              
[Representative Halcro's withdrawn sunset amendment, labeled                                                                    
1-LS0454\G.1, Ford, 3/23/99, read:                                                                                              
     Page 2, following line 16:                                                                                                 
          Insert a new bill section to read:                                                                                    
          "* Sec. 3.  AS 21.42.390 is repealed July 1, 2004."]                                                                  
CHAIRMAN ROKEBERG stated he was withdrawing his proposed amendment,                                                             
indicating it would have deleted subsection (c)(1).  [Chairman                                                                  
Rokeberg's withdrawn amendment read:                                                                                            
     Page 2, line 8                                                                                                             
          Delete lines 8-9                                                                                                      
     Renumber remaining sections accordingly]                                                                                   
CHAIRMAN ROKEBERG's preference is to see a point-of-service option                                                              
with a fee minimum:  for example, no less than 10 or 20 percent                                                                 
differential.  This would still provide incentive for the creation                                                              
of PPOs, but ensure that dental professionals are at least                                                                      
partially reimbursed for their procedures and minimize the effect                                                               
on their patients.  The chairman noted another approach is to keep                                                              
in mind the committee's goal is to make dental insurance plans                                                                  
available to non-ERISA small businesses and individuals.  He                                                                    
indicated proposed amendment 1, from Representative Halcro, was the                                                             
other way to do it.                                                                                                             
Number 0368                                                                                                                     
REPRESENTATIVE HALCRO moved amendment 1.                                                                                        
REPRESENTATIVE MURKOWSKI objected for purposes of discussion.                                                                   
REPRESENTATIVE HALCRO stated the bill is supposed to be                                                                         
cost-neutral; it is not supposed to cost employers any additional                                                               
money.  Both the sponsor and Dr. Hipsher have said this is true.                                                                
Representative Halcro noted that is the concern.  According to the                                                              
Department of Labor, 86 percent of the businesses in Alaska employ                                                              
fewer than 20 people.  Representative Halcro indicated he believes                                                              
these employers' ability to afford quality health care needs to be                                                              
protected.  He completely supports the intent and concept of HB
121; he has spoken at length with four or five dentists in his                                                                  
district about this legislation.  Representative Halcro noted he                                                                
becomes very nervous when government "starts dabbling" in health                                                                
care.  Since the legislation is not supposed to increase costs to                                                               
employers, he suggested this be included in the statute, mentioning                                                             
there are current provisions in state and federal statute regarding                                                             
mental health coverage allowing employers to opt out if the                                                                     
employers can prove a 1 percent increase in the total cost of                                                                   
providing the service.  Representative Halcro's amendment gives 2                                                               
percent.  He stated, "I think that's fair - I think the intent,                                                                 
obviously, is to make sure that health care is available to all                                                                 
workers in the state of Alaska but it's something the employer has                                                              
to afford and I don't think that government should be dictating the                                                             
terms and conditions without giving some kind of provision to                                                                   
protect small business."  With that, Representative Halcro moved                                                                
amendment 1.                                                                                                                    
CHAIRMAN ROKEBERG confirmed Ms. Burke had seen amendment 1.  He                                                                 
asked how this would work as a practical matter in relation to the                                                              
Division of Insurance.                                                                                                          
Number 0489                                                                                                                     
MS. BURKE replied the individual employer would have to provide                                                                 
documentation of increasing costs; this would be through the                                                                    
employer's premiums.  On the insurer's side, the insurer would have                                                             
to provide documentation that the costs are increasing for the                                                                  
individual plan offered in the state.  Ms. Burke explained the                                                                  
problem with the documentation is that it is not possible to                                                                    
isolate the number of factors which could cause costs to increase                                                               
- to show costs increased just as a function of not being able to                                                               
have a preferred provider.  She mentioned increased utilization or                                                              
a spike in unusual care as other possible cost increase factors.                                                                
Ms. Burke said, "Whenever we try to quantify that, we can't isolate                                                             
a single occurrence and say, 'X number of dollars is a result of                                                                
CHAIRMAN ROKEBERG questioned, then, if this was doable and if the                                                               
department would incur costs.                                                                                                   
MS. BURKE answered that the Division of Insurance would incur                                                                   
additional effort and cost to oversee this because it would require                                                             
the division to invest additional staff time to verify the data                                                                 
Number 0569                                                                                                                     
REPRESENTATIVE BUNDE admitted his view of insurance companies is                                                                
perhaps highly skewed by authors like Mr. Grisham [John Grisham].                                                               
He expressed the belief that it would not be difficult to show a 2                                                              
percent increase.                                                                                                               
REPRESENTATIVE HALCRO referred to discussion at the March 19                                                                    
hearing that the legislation was preventative in nature, and there                                                              
was no current problem.  He questioned Ms. Burke  regarding the                                                                 
fiscal note, noting that if there currently isn't a problem, how                                                                
would the Division of Insurance know what the fiscal would be and                                                               
how much work it would entail?                                                                                                  
MS. BURKE responded she could not quantify for it at this time, but                                                             
amendment 1 would mandate that additional data be checked and                                                                   
verified to see if there had been an increase as a result of the                                                                
legislation.  As statutes currently exist, the division verifies                                                                
data sent in to support an increase in premium in the aggregate.                                                                
At this time, insurance companies do not separate that increase                                                                 
into the various components such as increased utilization, change                                                               
in statutes, change in mandates, et cetera.  Ms. Burke commented                                                                
she would share Representative Bunde's skepticism about the                                                                     
industry she regulates, noting they are creative.  The companies                                                                
would not hesitate to come in with a 2 percent increase that they                                                               
would have to verify to the division.  If the companies said the                                                                
increase was a result of this legislation, they would have to prove                                                             
that to the division.  There is where the additional work on the                                                                
division's part would enter.                                                                                                    
Number 0739                                                                                                                     
CHAIRMAN ROKEBERG commented on the absence of Gordon Evans,                                                                     
lobbyist for Health Insurance Association of America (HIAA).  He                                                                
asked Ms. Burke, "But perhaps you would know [what] the annual                                                                  
adjustments in health insurance premiums are on an annualized                                                                   
basis, (indisc.) increases?"                                                                                                    
MS. BURKE replied there is a 16 percent increase in utilization                                                                 
between 1997 and 1998 for individual policies in the state of                                                                   
Alaska.  She noted that is actual utilization:  going to physicians                                                             
and incurring fees.  For small groups, 2 to 50 as defined in Alaska                                                             
Statute, there was an approximately 22 percent utilization                                                                      
increase.  This translates into a 17 percent increase in individual                                                             
rates; the 1 percent is tied to the premium tax as well as the                                                                  
increased overhead with more clients.  A portion of that 1 percent                                                              
covers the increase in claims.  Ms. Burke commented the large                                                                   
groups are individually negotiated with employers and can vary                                                                  
dramatically depending on the plan's coverage.                                                                                  
CHAIRMAN ROKEBERG asked about the trend in annual premium increases                                                             
over the last 5 or 10 years or so.                                                                                              
Number 0835                                                                                                                     
MS. BURKE said the trend has been up, stating, "And if you trended                                                              
it, using an actuarial term, over time, we have about a 15 to 20                                                                
percent increase ... per annum."                                                                                                
CHAIRMAN ROKEBERG noted, then, this would generate some type of                                                                 
fiscal note.  He questioned if it would be an indeterminate fiscal                                                              
MS. BURKE replied the division could come up with an estimate but                                                               
she could not give a number now.                                                                                                
CHAIRMAN ROKEBERG indicated the 2 percent cost increase figure in                                                               
amendment 1 did not seem a valid figure to use given the                                                                        
circumstances of a 15 percent annual increase in premium.                                                                       
REPRESENTATIVE HALCRO noted the common thread of the testimony is                                                               
that dentistry is not over-utilized, that people only go to the                                                                 
dentist when they absolutely have to.  He asked Ms. Burke if it is                                                              
correct, however, that adjustments in the premiums are not broken                                                               
down into dental health, it is simply total costs.                                                                              
Number 0912                                                                                                                     
MS. BURKE answered that the policy is priced as a total.  There are                                                             
breakdowns by policies that do not include dental options.  Ms.                                                                 
Burke agreed the observation that dentistry is not over-utilized is                                                             
valid, based on the division's experience.  Preventative dentistry                                                              
is "pretty flat-lined."  However, even in dentistry there are                                                                   
unanticipated and extraordinary costs like periodontal diseases or                                                              
crowns.  These costs can cause quite an increase in the cost of                                                                 
dentistry for a particular employer.                                                                                            
CHAIRMAN ROKEBERG expressed his concern about the percentage,                                                                   
asking Representative Halcro if he wished to speak to his                                                                       
REPRESENTATIVE HALCRO indicated the intent is to protect small                                                                  
businesses who provide health care for their employees, with the                                                                
assertion in the statute that this legislation would not raise the                                                              
cost of coverage for employers.  He agreed a fiscal note would be                                                               
difficult to determine.  Representative Halcro expressed his                                                                    
concern that the situation which would be remedied by the amendment                                                             
could occur.                                                                                                                    
Number 1020                                                                                                                     
MS. BURKE explained one way this could be quantified.  A PPO                                                                    
arrangement provides the service for 10 percent or 20 percent less                                                              
than the market value.  If an employer was unable to have this type                                                             
of arrangement and the state went to a pure indemnity system, that                                                              
would increase the cost in this range.                                                                                          
CHAIRMAN ROKEBERG commented, "Or if the panel -- if the fee                                                                     
differential reimbursement was not -- was leveled by this bill,                                                                 
then they may (indisc.) premium, and that's where the percentage                                                                
would come about, right?"                                                                                                       
MS. BURKE answered that is correct.                                                                                             
CHAIRMAN ROKEBERG continued, "And then you could make a                                                                         
calculation, or you would discount any overall inflation before you                                                             
had the differential."                                                                                                          
REPRESENTATIVE BUNDE questioned whether the substitution of                                                                     
Representative Halcro's withdrawn amendment [sunset clause] would                                                               
alleviate his concerns about unintended consequences.                                                                           
Number 1102                                                                                                                     
REPRESENTATIVE HALCRO pointed out that the 2 percent increase only                                                              
applies to the effect of this legislation, not to overall premiums.                                                             
He asked Ms. Burke to confirm again that there is, however, no way                                                              
to discern this.                                                                                                                
MS. BURKE replied that because there are a number of variables                                                                  
acting at the same time, they could make educated guesses, but she                                                              
would not be able to definitely say it was an increase of X number                                                              
of dollars, or percentage, as a result of this.                                                                                 
REPRESENTATIVE HALCRO withdrew amendment 1, noting he did not want                                                              
to incur a fiscal note.  He did think it was very important to                                                                  
bring up the concern that whenever government becomes involved in                                                               
mandating health care rules or coverages, the cost is usually borne                                                             
by the employer.  Representative Halcro indicated the legislature                                                               
should protect the interests of small employers since they are such                                                             
a significant percentage of Alaskan businesses.  He mentioned his                                                               
previous discussion with Representative Bunde about the sunset                                                                  
clause; Representative Halcro asked the chairman for permission to                                                              
reintroduce that withdrawn amendment as a last line of defense.                                                                 
Number 1207                                                                                                                     
CHAIRMAN ROKEBERG ruled Representative Halcro out of order.  The                                                                
chairman moved a conceptual amendment on page 2, line 9, after                                                                  
"dentists".  The conceptual amendment would read something to the                                                               
effect:  "except for point-of-service options which may reimburse                                                               
dentists at a discount not to exceed 10 percent".  Chairman                                                                     
Rokeberg commented, "I don't think the words are artful but I think                                                             
they have the elements with which the drafter can work, which would                                                             
allow a point-of-service option within a PPO with any type of an                                                                
insured plan offered, and the intention of the reimbursement is                                                                 
(indisc.) 10 percent is the differential that can be discounted if                                                              
you go outside the panel."  He questioned if the committee                                                                      
understood the amendment.                                                                                                       
REPRESENTATIVE BRICE and REPRESENTATIVE MURKOWSKI both answered in                                                              
the negative.                                                                                                                   
MS. BURKE questioned, "Would that 10 percent apply to the co-pay,                                                               
to the amount the dentist (indisc.)..."                                                                                         
CHAIRMAN ROKEBERG interjected, "Yes, the co-pay, or the direct or                                                               
indirect reimbursement, it's probably what it should -- because the                                                             
term 'direct or indirect reimbursement' I take to mean either                                                                   
direct reimbursement or a copayment.  So that's a good point, ...                                                               
it'd be the direct or indirect reimburse to the covered person.                                                                 
That's what it should read then, 'to the covered person,' it'd be                                                               
discounted -- what I'm trying to do is get a differential not to                                                                
exceed 10 percent.  It's a very small differential but it's enough                                                              
to maybe save some of those organizations and keep them going."                                                                 
REPRESENTATIVE MURKOWSKI requested the chairman read the conceptual                                                             
amendment again.                                                                                                                
Number 1317                                                                                                                     
CHAIRMAN ROKEBERG said, "It's 'except for point-of-service options                                                              
which may directly or indirectly reimburse the covered person at a                                                              
rate differential of not to exceed 10 percent'.  It's conceptual in                                                             
nature and we'll leave it to the drafter to get that.  In other                                                                 
words, you could -- Representative Bunde."                                                                                      
REPRESENTATIVE BUNDE said, "If I might use my [previous] analogy,                                                               
just to make sure that ... I understand where you're going, someone                                                             
within the program has a procedure that costs $100, they get                                                                    
reimbursed at $80.  They choose to go outside the program, the                                                                  
dentist gets reimbursed at $70 ... in round numbers..."                                                                         
CHAIRMAN ROKEBERG interjected, "(Indisc.) $72."                                                                                 
REPRESENTATIVE BUNDE continued, "Plus the patient would still be                                                                
responsible for the additional copayment to..."                                                                                 
CHAIRMAN ROKEBERG agreed.                                                                                                       
REPRESENTATIVE BUNDE said, "Make that the outside dentist                                                                       
(indisc.--talked over) $100 (indisc.) procedure."                                                                               
CHAIRMAN ROKEBERG spoke over, "There'd be a slight -- ... the                                                                   
penalty would be less when you stepped outside the network                                                                      
REPRESENTATIVE BRICE added, "Up to 10 percent."                                                                                 
CHAIRMAN ROKEBERG replied, "Right, outside -- or, you know, you                                                                 
could make it 15 or 20, but now it seems typically it's about 20.                                                               
If it's 80, they step out 60, that'd be a 20 percent (indisc.)                                                                  
actually 25 percent (indisc.).                                                                                                  
REPRESENTATIVE BRICE asked if the chairman wished to limit it to 10                                                             
CHAIRMAN ROKEBERG answered, "It might make the sponsor happier,                                                                 
but, I mean that's kind of an arguable thing - what's the magic                                                                 
number?  I'd like it a little higher."                                                                                          
Number 1397                                                                                                                     
REPRESENTATIVE BUNDE commented, "Insurance companies would say zero                                                             
(indisc.) they would say there would be zero reimbursement, and                                                                 
dentists should say there'd be a 100 percent, ... I guess 90                                                                    
percent's a compromise."                                                                                                        
CHAIRMAN ROKEBERG added, "And it's against whatever they're paying,                                                             
if they're paying 80 percent, then it's, right, 10 percent less                                                                 
than what the 80 percent is." He questioned if the committee                                                                    
understood the intent of the conceptual amendment.                                                                              
REPRESENTATIVE BUNDE stated it is something he can live with.                                                                   
CHAIRMAN ROKEBERG said, "I appreciate that because I think it's                                                                 
important to avoid the appearance even that we're going (indisc.)                                                               
creating legislation that creates a disincentive that ultimately                                                                
may cost people coverage, and we don't want do that, and may be                                                                 
we'll toy with the percentage later on down the stream here as the                                                              
bill moves its way through the process.  But I think it is a                                                                    
compromise that, hopefully, will not be too objectionable to people                                                             
with the bill."  The chairman asked if there were any objections to                                                             
the conceptual amendment.  There being none, the conceptual                                                                     
amendment was adopted.  The chairman indicated that concluded the                                                               
discussion on HB 121.                                                                                                           
Number 1497                                                                                                                     
REPRESENTATIVE HALCRO made a motion to move HB 121 out of                                                                       
committee, as amended, with the attached zero fiscal note and                                                                   
individual recommendations.                                                                                                     
CHAIRMAN ROKEBERG asked if there were any objections.  He indicated                                                             
there were two fiscal notes, one from the Division of Insurance and                                                             
one from the Department of Administration.                                                                                      
There were two objections from the committee.  One was from                                                                     
Representative Brice and the other was not discernable.                                                                         
A roll call vote was taken.  Representatives Rokeberg and Murkowski                                                             
voted in favor of moving the bill.  Representatives Halcro,                                                                     
Sanders, Harris, Brice and Cissna voted against it.  Therefore,                                                                 
CSHB 121(L&C) failed to move from the House Labor and Commerce                                                                  
Standing Committee by a vote of 2-5.                                                                                            
Number 1642                                                                                                                     
CHAIRMAN ROKEBERG called a brief at-ease at 4:56 p.m.  The                                                                      
committee came back to order at 4:57 p.m.                                                                                       
HB 143 - REAL ESTATE:SURETY FUND & DISCLOSURES                                                                                  
Number 1650                                                                                                                     
CHAIRMAN ROKEBERG announced the committee's next order of business                                                              
is HB 143, "An Act relating to the executive officer employed for                                                               
the Real Estate Commission, to educational materials published by                                                               
the Real Estate Commission, to the Real Estate Surety Fund, to                                                                  
contracts by the Real Estate Commission, and to disclosures in real                                                             
property transactions."  The chairman commented the committee would                                                             
take the public testimony, noting two witnesses in Kenai had been                                                               
unable to continue waiting:  Ron Johnson and Dave Feeken.  As the                                                               
bill sponsor, Chairman Rokeberg presented HB 143 to the committee.                                                              
The legislation is in two sections.  1) It affects the real estate                                                              
surety fund of the Alaska Real Estate Commission.  2) It has                                                                    
provisions for nondisclosure of psychological (indisc.) to                                                                      
property.  The first part of the bill changes the use of the surety                                                             
fund.  The chairman indicated the surety fund, by statute, cannot                                                               
exceed $500,000 in contributions from part of the real estate                                                                   
licensees' fees, not to exceed $125 per biennial.  After procedural                                                             
hearings and claims are made, up to $10,000 per incident can be                                                                 
awarded out of the fund.  The chairman indicated the surety fund is                                                             
a form of consumer protection in lieu of bond, established a number                                                             
of years ago.  The current real estate statute allows portions of                                                               
the surety fund above $250,000 to be used for educational purposes.                                                             
The commission has funded portions of personal services from the                                                                
surety fund.  A portion of the executive secretary's salary comes                                                               
from the fund; Chairman Rokeberg noted he thinks another full-time                                                              
position is almost or completely paid out of the fund.  He                                                                      
indicated additional items paid for out of the fund are the                                                                     
sponsoring of certain classes, seminars, et cetera, approved by the                                                             
Number 1815                                                                                                                     
CHAIRMAN ROKEBERG further indicated Alaska Statute requires that                                                                
each occupational license program be self-supporting.  However, the                                                             
real estate licensees are somewhat unusual because of the surety                                                                
fund fee in addition to the biennial license fee.  The chairman                                                                 
expressed his view that the use of the surety fund co-mingled what                                                              
should be entirely the license fee in with the surety fund fee.                                                                 
Money is being removed from the surety fund for what the chairman                                                               
considers operational expenses.  The intent of the first part of HB
143 is to make the biennial licensing fee cover all the                                                                         
commission's expenses, as is the practice with every other license.                                                             
The only money removed from the surety fund would be what is needed                                                             
for the administration and servicing of the fund:  hearing                                                                      
officers, attorneys, and all the other expenses and claims that                                                                 
come out of the surety fund.  The chairman stated, "Therefore, when                                                             
the biennial cycle comes around, if there is very little use of the                                                             
surety fund, which in the last couple years there actually has been                                                             
very little use, and now the law allows for lapsing into the GF,                                                                
the general fund, when you get over a half million dollars in the                                                               
(indisc.), but we put sweep language in the budget so it doesn't                                                                
happen, so it's kind of a ruse, that's what I'm trying to do, is                                                                
straighten this thing out so what we're doing is only having the                                                                
fees paid ... into the fund for the fund, and run the fund                                                                      
operations out of the fund, and have all the other licensing costs                                                              
in their fee.  That's the intention."                                                                                           
Number 1946                                                                                                                     
REPRESENTATIVE BRICE questioned if the sweeping of all the various                                                              
funds wasn't a constitutional requirement.                                                                                      
CHAIRMAN ROKEBERG answered no, it is actually in the statute.  The                                                              
chairman indicated the bill contains a section providing for an                                                                 
ongoing report regarding the surety fund balance to avoid exceeding                                                             
that cap.  He commented there have been some accusations Ms.                                                                    
Reardon is also aware of that the Real Estate Commission has been                                                               
using the security fund as a "slush fund" for trips to Hawaii, et                                                               
cetera.  The chairman noted commission executive staff members had                                                              
attended "NARELO (ph), National Real Estate Officers Convention,"                                                               
held in Hawaii a few years previously.  Although that expense was                                                               
completely legitimate in the chairman's opinion, "it has the                                                                    
specter."  The chairman continued, "Plus we always have to be                                                                   
aware, particularly of the Administration's and the Department of                                                               
Commerce and Economic Development Occ-Licensing -- well, it's                                                                   
actually the commissioner's office that's (indisc.) tapping into                                                                
the licensing fees but Miss Reardon has to defend the (indisc.),                                                                
she's the great defender  of (indisc.), but there's always that                                                                 
problem too."  Chairman Rokeberg noted, as well, the commission has                                                             
been publishing the landlord-tenant law book for several years, to                                                              
his confusion.  He noted this is like a phantom tax on real estate                                                              
licensees, although he thinks the state has a clear responsiblity                                                               
to publish a landlord-tenant book.  In response to Representative                                                               
Murkowski's question about the publishing costs, the chairman                                                                   
answered about $6,000 every other year.                                                                                         
Number 2105                                                                                                                     
CHAIRMAN ROKEBERG continued that the second part of the bill                                                                    
concerns psychological impairment, and many states have these                                                                   
provisions in statute.  This takes away any obligation on part of                                                               
a real estate licensee to disclose certain background information                                                               
about a property including a natural death, suicide, murder or                                                                  
other crime classified as a felony under state or federal law on                                                                
the property.  He stated, "In other words, if you have a house                                                                  
listing ... you should not have to disclose ... you should all know                                                             
we have a disclosure form.  Any time a residential property is                                                                  
sold, there is a mandate in the statute that requires that the                                                                  
disclosure form be filled out and there are certain requirements                                                                
for the disclosure.  What's happened is there's national case law                                                               
about the expectations of what should or should not be disclosed.                                                               
There's even a case in Massachusetts where the failure to disclose                                                              
... the existence of a ghost in a residential home was grounds for                                                              
recision of a contract."                                                                                                        
There was some discussion among the committee regard this issue and                                                             
ghosts in sold property.                                                                                                        
Number 2279                                                                                                                     
CHAIRMAN ROKEBERG continued, "The real property -- there's certain                                                              
background information which shouldn't be disclosed, (indisc.) for                                                              
example, the AIDS or HIV-positive disease because it's unlikely to                                                              
be transmitted.  This particular provision in the law reflects the                                                              
federal law which is on the books now.  As just a further reminder,                                                             
remembering the licensees have to learn their law to remind them                                                                
that's part of the federal law and ... they shouldn't do that.  And                                                             
the other thing is subsection (D) [(C)] on page 3, an amendment I                                                               
rather intemperately, without committee hearings, put in a real                                                                 
estate bill last year that relieves the obligation of a real estate                                                             
licensee to disclose a registered sex offender (indisc.) property.                                                              
... [We] have some veterans here ... who recall that situation ...                                                              
this is a famous provision.  And what I want to do is flip the                                                                  
feedback on the real estate industry and see how they want to                                                                   
proceed on these particular issues.  The first section I think is                                                               
an important thing that should be taken care of, the second one's                                                               
... something I want to try to get cleaned up."                                                                                 
Number 2388                                                                                                                     
REPRESENTATIVE BRICE said he felt it is appropriate to put the                                                                  
landlord-tenant printing someplace besides the Real Estate                                                                      
Commission.  He does think there is going to be an issue with                                                                   
removing the notification requirements on sex offenders.                                                                        
CHAIRMAN ROKEBERG asked why Representative Brice would say that.                                                                
He indicated the chairman needs to educate the committee.                                                                       
REPRESENTATIVE BRICE noted he was present and when the law to                                                                   
register sex offenders was passed and supported it.                                                                             
CHAIRMAN ROKEBERG stated this has nothing to do with the sex                                                                    
offender registry.                                                                                                              
REPRESENTATIVE BRICE replied yes, it does.                                                                                      
CHAIRMAN ROKEBERG commented, "Well, we have taken care of in a good                                                             
part the disclosure, but we haven't take care of the potential                                                                  
liability on a licensee."                                                                                                       
REPRESENTATIVE BRICE said he purchased a home in December.  He was                                                              
given a piece of paper notifying him the search would not be done,                                                              
but providing the appropriate Internet address if he wished to do                                                               
it himself.  Representative Brice commented he appreciated that                                                                 
very much.                                                                                                                      
CHAIRMAN ROKEBERG noted the previous year's legislation had done                                                                
that.  He commented, "This is the closure, this is the last step in                                                             
Number 2510                                                                                                                     
REPRESENTATIVE HALCRO questioned, "Let me ask you about..."                                                                     
[TESTIMONY INTERRUPTED BY TAPE CHANGE]                                                                                          
[From tape log notes: 'Landlord-tenant (indisc.) original (indisc.)                                                             
having fund pay for that initially']                                                                                            
TAPE 99-30, SIDE A                                                                                                              
Number 0001                                                                                                                     
REPRESENTATIVE HALCRO finished, "...just did."                                                                                  
CHAIRMAN ROKEBERG responded, "I think that probably when the                                                                    
de-funding of consumer protection (indisc.) about, they transferred                                                             
it over there, as I recall.  I don't know, may be it'll come out in                                                             
REPRESENTATIVE HALCRO asked in follow-up, "What about the fact that                                                             
real estate agents sell multi-family dwellings thereby they're                                                                  
selling to somebody who's going to become a landlord."  He                                                                      
questioned whether that didn't fall under the purview.                                                                          
Number 0046                                                                                                                     
REPRESENTATIVE MURKOWSKI clarified that the landlord-tenant                                                                     
handbook is mainly a handbook to aid tenants, primarily, with their                                                             
rights regarding any potential evictions.                                                                                       
CHAIRMAN ROKEBERG said there is no question it is a very valid                                                                  
publication.  He agreed with Representative Murkowski's suggestion                                                              
the court system should publish it, indicating he doesn't think the                                                             
real estate licensees should be required to pay for this.  The                                                                  
chairman further indicated the committee would take the public                                                                  
Number 0139                                                                                                                     
ERIC DYRUD, Co-Chair, Legislative Committee, Anchorage Board of                                                                 
REALTORS, testified via teleconference from Anchorage.  Mr. Dyrud                                                               
referred to AS 08.88.450 which is amended on page 2, Sections 3 and                                                             
4 of HB 143, regarding the surety fund.  This portion [current                                                                  
statute] directs that the surety fund be established in the general                                                             
fund.  The licensees, or at least the Anchorage Board of REALTORS                                                               
legislative committee, would like to see the surety fund in an                                                                  
interest-bearing fund where the interest accrues to the benefit of                                                              
the licensees who pay into it.                                                                                                  
CHAIRMAN ROKEBERG noted the committee would examine that but he                                                                 
thinks there will be restrictions based on the appearance of a                                                                  
dedicated fund situation.  The committee can look into whether it                                                               
might be possible to have a separate fund that is not in the                                                                    
general fund.                                                                                                                   
MR. DYRUD indicated probably about $15,000 to $20,000 in interest                                                               
per year could be gained that could be used to reduce the                                                                       
licensees' fees.  Referring to the landlord-tenant publication, Mr.                                                             
Dyrud said he is not sure it should be paid out of the surety fund,                                                             
but it certainly is a useful book, and is used in the industry as                                                               
well as with tenants.  He wouldn't necessarily call it pro-tenant.                                                              
It is used in the courses taught and in dealing with rental                                                                     
property management.  Mr. Dyrud indicated he used to use the                                                                    
booklet at least once a month and now uses it perhaps once a                                                                    
quarter.  A lot of the tenants request it, and he provides them                                                                 
Number 0321                                                                                                                     
CHAIRMAN ROKEBERG asked if Mr. Dyrud thought the real estate                                                                    
licensees should pay for the landlord-tenant booklet.                                                                           
MR. DYRUD answered that if they had their choice, no.                                                                           
CHAIRMAN ROKEBERG indicated this was a brief hearing on HB 143; he                                                              
wanted to introduce the legislation and circulate it in the                                                                     
industry.  The committee would await further input.  He confirmed                                                               
there was no one else in Anchorage who wished to testify on the                                                                 
Number 0380                                                                                                                     
SUZANNE MANNIKKO, We [?] Against Sexual Predators (WASP), testified                                                             
next via teleconference from the Matanuska-Susitna Borough                                                                      
Legislative Information Office (Mat-Su LIO).  Ms. Mannikko stated                                                               
she is opposed to this bill because it removes the responsibility                                                               
of Realtors to notify potential buyers/sellers of a sex offender in                                                             
the area.  Ms. Mannikko described that she recently put her home on                                                             
the market and she has no problem with the disclosure of this.  She                                                             
continued, "Part of protecting our children is being aware of our                                                               
environment and our surroundings, and I feel like our state does so                                                             
little to protect our children from these sex offenders and repeat                                                              
sex offenders.  By removing this ... from the bill, here we are                                                                 
again taking away from our children and I just think it's the wrong                                                             
thing to do.  And if you're concerned about the sex offender                                                                    
registration not being accurate, then you need to find some more                                                                
financing to put more people out there to make these sex offenders                                                              
comply with the laws that we do have.  I think this is a poor thing                                                             
to do to our children."                                                                                                         
Number 0490                                                                                                                     
CHAIRMAN ROKEBERG informed Ms. Mannikko it is not the duty of a                                                                 
real estate agent to disclose a sex offender and that is the nature                                                             
of this bill.                                                                                                                   
MS. MANNIKKO agreed, but noted on the form she received from her                                                                
Realtor it provided a website address for people, and she would                                                                 
hate to see even that disappear.                                                                                                
CHAIRMAN ROKEBERG noted that was just enacted the previous year.                                                                
MS. MANNIKKO questioned if the bill wasn't to remove the                                                                        
responsibility of the Realtor in giving notice of sex offenders.                                                                
CHAIRMAN ROKEBERG said the real estate agent does not have a                                                                    
responsibility or duty to notify now; this is just to clarify that.                                                             
The chairman commented that is the point.                                                                                       
MS. MANNIKKO replied, "Oh, but that is the point.  ... I guess I                                                                
did misunderstand this, correct?"                                                                                               
Number 0569                                                                                                                     
CHAIRMAN ROKEBERG agreed, stating he just wanted to clarify it with                                                             
her.  The issue is should or should not the real estate agent have                                                              
the responsibility.                                                                                                             
MS. MANNIKKO interjected she believes they definitely should.                                                                   
CHAIRMAN ROKEBERG said the agents can't because they sometimes get                                                              
into what is called dual agency.  The chairman continued, "Where                                                                
you have a duty to two people, one the buyer and one the seller,                                                                
potentially, after it's fully disclosed, and therefore you're in an                                                             
impossible situation."  He noted that is why it is a matter of                                                                  
technicality within the law.  A Realtor can disclose that                                                                       
information if he desires but he shouldn't have a duty to do so,                                                                
particularly if he finds himself in a position where whatever he                                                                
would do would be basically illegal.  Chairman Rokeberg noted that                                                              
is the dilemma they are in.                                                                                                     
Number 0606                                                                                                                     
MS. MANNIKKO noted her understanding is that the Realtor has the                                                                
duty to disclose potential health hazards and she questioned that                                                               
this was not considered a health hazard to children.                                                                            
CHAIRMAN ROKEBERG replied there is a duty to disclose if the real                                                               
estate agent is aware of a defect in a home.  There is also a                                                                   
further duty to be aware of certain things, if the agent has a                                                                  
level of professional expertise.  However, in the chairman's                                                                    
opinion, to impose a further duty to identify sex offenders goes                                                                
beyond the responsibility.  He noted, "We have a technical problem                                                              
in the law because of the duties of a[n] agent to (indisc.) various                                                             
people in the transaction that he finds himself into a -- actually                                                              
in a legal box that he can't get out of without some legislative                                                                
relief.  This in no way is intended to diminish the importance of                                                               
the sexual register ... it is also intended to tell the public that                                                             
the real estate agents are not the sex offender police either.                                                                  
That's the duty of law enforcement and of government, and everybody                                                             
involved with knowledge of the sexual register.  So, to suggest                                                                 
that the real estate agent has a special duty is not -- I don't                                                                 
think is fair, and that's really the point of the bill.  I authored                                                             
the provision on the disclosure last year to help the public, make                                                              
sure they knew that the registry existed and ... become                                                                         
knowledgeable about that.  It's kind of hard to explain the                                                                     
technical details [of] why we need this kind of legislation, but I                                                              
think it's -- a good case can be made and it certainly isn't meant                                                              
to diminish the  amount of notice and awareness of a potential sex                                                              
offender to the children of our state, that's certainly not the                                                                 
Number 0750                                                                                                                     
MS. MANNIKKO said, "What you're saying is it's just not the way to                                                              
do it."                                                                                                                         
CHAIRMAN ROKEBERG responded, "No, it's really a legal technical                                                                 
problem we find ourselves in to try to impose a duty and that's the                                                             
reason for the bill.  It's not that a[n] agent can't disclose it,                                                               
he can if he so desires but once he does that then he's got a duty                                                              
and responsibility to one of the individuals as part of the                                                                     
transaction -- it gets kind of technical to explain but -- and                                                                  
sometimes that relationship changes so he find himself in a dilemma                                                             
where you have a duty to two masters and that's what the problem                                                                
Number 0793                                                                                                                     
REPRESENTATIVE BRICE thanked Ms. Mannikko for her testimony.  He                                                                
explained the real estate agents don't disclose, but they do ask                                                                
the person buying the property to sign a piece of paper signifying                                                              
that this information has been presented, that the purchasers have                                                              
been made aware.  The purchasers currently sign the paper saying                                                                
that the real estate agent has disclaimed any knowledge of any                                                                  
sexual offenders in the area, and the paper shows,  if the                                                                      
purchasers are interested, where to find out if there are any                                                                   
registered sex offenders in the community.  Representative Brice                                                                
indicated the real estate agents don't necessarily have to disclose                                                             
the information, and he thinks that is appropriate.  However, he                                                                
thinks the provision in the legislation would remove the real                                                                   
estate agents' requirement to make that information available to                                                                
the purchaser; Representative Brice thinks Ms. Mannikko has a valid                                                             
point.  He thinks that is an important service provided to the                                                                  
consumer by the Realtor.                                                                                                        
CHAIRMAN ROKEBERG thanked Ms. Mannikko for her testimony.  He                                                                   
questioned whether anyone else wished to testify on HB 143.                                                                     
Number 0921                                                                                                                     
CATHERINE REARDON, Director, Division of Occupational Licensing,                                                                
Department of Commerce and Economic Development, came forward.  Ms.                                                             
Reardon offered to hold her testimony until a later time if the                                                                 
chairman desired.                                                                                                               
CHAIRMAN ROKEBERG offered a couple of questions, agreeing the hour                                                              
was getting late.  He asked about the interest-bearing fund                                                                     
MS. REARDON replied she would examine it again to give the                                                                      
committee a definitive answer.  She has asked this question before                                                              
herself.  She believes the surety fund can be in the general fund                                                               
and still be an interest-bearing account if the statute specifies                                                               
it will earn interest.  There may be some other types of funds she                                                              
could obtain statutory language from.  Ms. Reardon indicated                                                                    
removing the surety fund from the general fund might create some                                                                
problems.  Noting it is possible the surety fund could be                                                                       
interest-bearing, she commented she did not know if there would be                                                              
extra work for the treasury or the fund managers but the question                                                               
could certainly be posed.                                                                                                       
CHAIRMAN ROKEBERG asked Ms. Reardon to discover when and why the                                                                
Real Estate Commission received responsibility for the                                                                          
landlord-tenant booklet.                                                                                                        
Number 1014                                                                                                                     
MS. REARDON assented, noting it is something they have chosen to                                                                
do; it is not assigned by regulation or statute.  It is a very                                                                  
popular government publication, many requests are received.  Many                                                               
agencies request the booklets so they can further distribute them.                                                              
Ms. Reardon noted the bill, as she understands it, would not                                                                    
prevent or stop the commission or division from publishing the                                                                  
document.  She indicated the legislation simply mandates a                                                                      
publication that is primarily tenant and not equally                                                                            
landlord-oriented can't be published from the surety fund.  Ms.                                                                 
Reardon maintains they currently try to publish a very impartial,                                                               
unbiased item which might very well satisfy the legislation.                                                                    
Noting she does not want to fight the committee on the issue, it                                                                
appears to her publishing the booklet out of the general fund real                                                              
estate funding source would still be an option.  She stated, "So if                                                             
you really don't want that published, we probably need to be real                                                               
clear about that or else you might just get frustrated to find                                                                  
we're still doing it."                                                                                                          
CHAIRMAN ROKEBERG noted it is not a large amount but it is kind of                                                              
a personal thing:  Should the real estate licensees be paying for                                                               
it?  He thinks it came from the disbanded consumer protection                                                                   
division (indisc.) Department of Law, and so they tried to find a                                                               
place to put it.  The chairman questioned again why the real estate                                                             
licensees are paying for it.                                                                                                    
Number 1121                                                                                                                     
MS. REARDON suspects there a couple of reasons.  The real estate                                                                
office receives a lot of telephone calls about landlord-tenant                                                                  
issues, which is not within the office's area of responsibility.                                                                
However, rather than just turning away these members of the public,                                                             
it is helpful to offer to send the booklet so people can inform                                                                 
themselves.  Additionally, as Ms. Reardon understands it, there are                                                             
licensees involved in dealing with tenants and "we" want them to                                                                
know how to deal with tenants legally.  She mentioned that property                                                             
managers are in the business of collecting rent, keeping it in                                                                  
escrow accounts, deposits, et cetera.  Ms. Reardon informed the                                                                 
committee the Real Estate Commission is meeting tomorrow and the                                                                
next day; she or Grayce [Ms. Oakley, Executive Secretary, Real                                                                  
Estate Commission] will bring these questions and concerns to the                                                               
CHAIRMAN ROKEBERG mentioned that another thing is the out-sourcing                                                              
of the surety fund hearings and counsel.  He noted it is not                                                                    
entirely clear but it is his intention to hire other counsel                                                                    
besides the Department of Law for the surety fund hearings.                                                                     
Number 1203                                                                                                                     
MS. REARDON explained that regarding surety fund hearings, the                                                                  
commission is simply the judge.  In disciplinary actions against                                                                
real estate licensees, the division prepares the case acting as the                                                             
prosecution.  Therefore the division is hiring the prosecution                                                                  
lawyer - basically the Department of Law.  That is not the case                                                                 
with the surety fund.  The division pays for the hearing officer,                                                               
not a lawyer, not the Department of Law.  In surety fund                                                                        
proceedings, the member of the public who feels that he/she was                                                                 
injured presents his/her own case.  The division does not                                                                       
investigate for or argue the person's case.  The accused person                                                                 
also argues his/her own case.  The state role is, through the                                                                   
hearing officer, to make a proposed decision which the commission                                                               
then accepts or does not accept.  The division is not paying the                                                                
Department of Law in this particular setting.  Ms. Reardon                                                                      
indicated the Department of Law might become involved if, for                                                                   
example, the commission was sued as a result of a surety fund                                                                   
hearing.  Because the division does not investigate in these                                                                    
situations, the division does not really have any costs in that                                                                 
area.  Ms. Reardon appreciated the removal of the threat that when                                                              
the surety fund balance exceeds $500,000, the licensees who paid it                                                             
would lose it.  She indicated there shouldn't be this inherent                                                                  
pressure to spend to make sure the $500,000 limit is not exceeded.                                                              
That is somewhat this year's situation because it has been a very                                                               
low expenditure year.  She would ask, from a technical point of                                                                 
view, that since the law states they cannot go over $500,000, what                                                              
happens if they do?                                                                                                             
Number 1319                                                                                                                     
REPRESENTATIVE HALCRO commented that wasn't it the desire in the                                                                
bill to create an average over two years, since the fees are higher                                                             
one year and shrink the next year while in some cases the                                                                       
educational and other expenses stay consistent.  He indicated the                                                               
provision allowing the average daily balance of the fund to be                                                                  
based on a two-year period would be useful for these yearly                                                                     
MS. REARDON responded it would be wonderful if the fund could not                                                               
exceed $500,000 at the end of the two-year license period.  Ms.                                                                 
Reardon referred to page 2, line 12, of the legislation, indicating                                                             
she had not actually seen the two-year period.  Something like that                                                             
would be very helpful because that is exactly the problem:  the                                                                 
fund is filled up in one year and it is difficult not to exceed the                                                             
cap four months later, but it has to be high enough to make it                                                                  
through the entire second year.  Ms. Reardon feels the chairman has                                                             
been very supportive and constructive in working with the division                                                              
and the Real Estate Commission.  She informed the committee the use                                                             
of the surety fund for educational purposes and a staff position is                                                             
specifically authorized in the budget each year.  It is                                                                         
appropriated; they are not using it as a "slush fund."  The                                                                     
division is following its budgetary guidelines.                                                                                 
Number 1425                                                                                                                     
CHAIRMAN ROKEBERG expressed his confusion regarding the fiscal                                                                  
note, commenting this should have a zero fiscal impact.                                                                         
MS. REARDON stated her intention was to show that $104,000 less                                                                 
would be spent out of the surety fund and $104,000 more out of                                                                  
general fund program receipts, for a net wash.  Noting that the                                                                 
second paragraph of the analysis on the fiscal note says it is a                                                                
funding source change, Ms. Reardon indicated there may be an error                                                              
in the note and she will review it.  No additional monies are being                                                             
CHAIRMAN ROKEBERG mentioned it should be pretty seamless, but has                                                               
to be done; he questioned that the next cycle begins in January                                                                 
MS. REARDON agreed it does.                                                                                                     
CHAIRMAN ROKEBERG indicated this the reason they need to                                                                        
accommodate this and why the bill needs to pass this session if it                                                              
is going to pass.  The chairman mentioned the possible removal of                                                               
items to ensure the legislation's passage.                                                                                      
CHAIRMAN ROKEBERG asked Ms. Reardon how the hiring was going,                                                                   
questioning if a freeze was still in effect.                                                                                    
MS. REARDON replied the commissioner's office had signed the                                                                    
request to hire memorandums that day, and they could speak of that                                                              
if the chairman wished.  Ms. Reardon commented the other item for                                                               
future discussion regards the title change of the executive                                                                     
secretary on page 1 of the legislation.  Her understanding is that                                                              
this title change is not intended to trigger a change in pay or                                                                 
duties.  Ms. Reardon said she may be suggesting at the next hearing                                                             
that the title be left as "executive secretary", with an additional                                                             
sentence, "who will use the working title 'executive director'".                                                                
She indicated the current title change as written in the                                                                        
legislation might unintentionally trigger job classification and                                                                
pay range changes.                                                                                                              
CHAIRMAN ROKEBERG requested Ms. Reardon pass the legislation on to                                                              
the Real Estate Commission, noting he would appreciate the                                                                      
commission's input.  [HB 143 WAS HELD OVER]                                                                                     
Number 1583                                                                                                                     
CHAIRMAN ROKEBERG adjourned the House Labor and Commerce Standing                                                               
Committee meeting at 5:35 p.m.                                                                                                  

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